Rising Activities in Eagle Ford
From minimal production since the start of 2009, daily production of oil in the Eagle Ford region is now headed toward 1.5 million barrels, per the EIA . This has been supported by an uptick in rig count in the shale play.
The weekly rig count in Eagle Ford was mostly in the range of 188 to 214, per data provided by Baker Hughes BHGE , a GE company. The count fell to below 30 in mid-2016 and is now treading toward 70, reflecting increasing focus on the shale play.
Notably, daily crude production in the Eagle Ford saw upward momentum since early 2011, approaching toward 1.8-million barrels per day. However, production started falling since 2015-beginning as energy market was already grappled with crude weaknesses.
Focus Now on Eagle Ford
EIA predicts new well oil production per rig from Eagle Ford to increase from 1,479 barrels a day in May to 1,532 barrels in June this year. Meanwhile, in the Permian, EIA expects the production growthto be only 2 barrels per day.
This seems that drillers and explorers are redirecting focus from the crowded Permian to Eagle Ford. In Permian, there is a dearth of pipeline capacity for transporting oil to Gulf Coast export facilities, major refinery terminals and principal hubs like Cushing. This has forced Midland operators to sell stranded oil at a big discount to that in Cushing.
Drillers with strong foresight have already booked the existing pipeline capacity for transporting Permian crude to the principal hubs. Thus, other drillers do not have the incentive to operate in the basin.
Also, labor shortage and low pipeline capacity have bumped up the cost of production in the Permian Basin, making the operating scenario unfavorable for new drillers. Hence, upstream players have shifted focus to the Eagle Ford, where the cost of production is relatively low.