SAN ANTONIO—As one of the top oil-producing basins in the U.S., it’s easy to understand the ongoing chatter about the Eagle Ford. But there’s hardly any mention of its gas fairway. Some chalk it up to natural gas’ bad reputation while others believe the region is being overlooked.
Fortunately, a select few are returning to the basin to sift through the dirt and discover what the strata has to offer—all equipt with modernized strategies and technologies.
“People always wonder why we are here, …” said John Thaeler, CEO of Vitruvian Exploration LLC, while speaking as part of an operators panel at Hart Energy’s DUG Eagle Ford conference and exhibition. “This is great rock.”
In fact, Thaeler said the rock quality in the basin is one of the leading factors that encouraged Vitruvian to explore for gas in the Eagle Ford. The area is highly overpressured with about 0.75 psi/ft to 0.99 psi/ft, has organic rich mudstone and low clay content.
In 2017, private equity-backed Vitruvian entered the Eagle Ford to break ground on Vitruvian IV, its Althea Project. The company has over 130,000 net acres of leasehold in the region as of September and gross production of roughly 33 million cubic feet per day (MMcf/d).
Vitruvian has one running rig with four wells drilled to total depth, which are completed and producing. A fifth well is being drilled to total depth and is waiting on completion, and a sixth well is near total depth.
Thaeler also said developing infrastructure and markets for natural gas as are appealing draws Eagle Ford gas exploration.
Also on the panel, Gleeson Van Riet, CFO and executive vice president of SilverBow Resources Inc. (NYSE: SBOW), agreed that the Eagle Ford is appealing because of its location.
“If you’re going to produce gas in the United States, this is where you want to be,” he said. “And why is that? The old real estate mantra is location, location, location. We are next to all the main growth drivers in gas demand—petrochemical complex, LNG exports, Mexico. We’ve got it all there.”
SilverBow is another operator that has pinned Eagle Ford gas as an overlooked opportunity. The company has about 100,000 acres mostly in the dry/wet gas window and is producing roughly 160 MMcfe/d as of second-quarter 2018.
Other operators have been drawn into the fairway within the last two years, including Teal Natural Resources, Sierra Resources, Pursuit Oil & Gas and Verdun Oil Co.
So why aren’t other operators talking about Eagle Ford gas?
According to Van Riet, it’s because SilverBow is the only public pure play while the other operators focused on Eagle Ford gas are either private companies or are mulitbasin operators that haven’t published much information about their results in the region.
Even so, the two men said some operators don’t view Eagle Ford gas as an opportunity, questioning its breakeven price and the gas fairway’s ability to produce.
“My guess is one of the confusing things may be taking the completions style and cost from the oil window and moving them into the dry gas window because these are different beasts,” Thaeler said.
“And what you need in a really tight oil formation and how you fracture and stimulate that rock is different than what you need in gas.”
He added that the basin changes quite a bit not only in depth, but also in rock type.
“We are finding that different areas require different casing programs. They require different efforts to drill the curve, different types of drilling in the landing, drilling the horizontal,” he said.
Van Riet also discussed the region’s severe conditions and how it increases pressure and temperature with increased depth, but said the company is finding success in applying generation five technologies and utilizing modernized strategies.
“The big difference is well lateral lengths have gone up about 40%. Proppant intensity has gone up about 150%. EURs in the gas windows have gone up three times,” Van Riet said..
SilverBow’s strategy remains longer laterals and more proppant to equal higher EURs.
“It’s worked in every basin in the U.S.; it works here in the gas window,” Van Riet said.
Upon its emergence from bankruptcy, SilverBow reduced its portfolio and became an Eagle Ford gas pure play. The company has decreased its drilling cost per well by 58% from $4,560 in 2013 to $1,933 in 2017. It has also decreased its completion well cost by 40% from $4,533 in 2014 to $2,630 in 2017.
In addition, SilverBow has increased its well count in the Eagle Ford dry gas window from 55 in 2016 to 72 in 2017. The company has increased its daily production from 154 MMcfe/d in first-quarter 2018 to 160 MMcfe/d in second-quarter 2018 and estimates a roughly 40% growth in fourth-quarter 2018. The company has 335 producing wells in the area and plans further development in the coming years.
Both Vitruvian and SilverBow said they are in the beginning “innings” of their operations in the Eagle Ford gas fairway and are still learning from their own data and shared information from competitors.
“I think there is enough data out there, and I would advise people to look, well cost and performance, by some of the people that are public that clearly show these are economic wells at today’s gas prices,” Thaeler said.
As for the debate of whether Eagle Ford gas is an overlooked opportunity, it seems to be determined as by the results of the later innings.
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