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The Eagle Ford Shale Oil Boom

texas oil pump

The Eagle Ford shale, in south Texas, is currently one of the world’s most active oil and natural gas fields. It is the largest in the world when measured by rates of capital expenditure. The area (play) stretches from the Mexican border out to east central Texas.  Eagle Ford consists of nine geographic fields. In total, it’s approximately 50 miles wide, 400 miles long and 250 feet deep. Eagle Ford consists of brittle, high-carbonate rock. Oil companies use the controversial technique called hydraulic fracturing (fracking) to extract resources from its fields. New advances in fracking technology mean previously unreachable deposits are now commercially viable. Productive capacity could expand as extraction technologies continue to improve.

According to this Bloomberg article, production is up 76 percent from last year. The shale produces approximately 323,000 barrels of oil per day. This helped Texas produce over 2 million barrels of oil in September 2012, the most since March 1988. Some estimate that the shale has between three billion and ten billion barrels of recoverable oil. There are over 250 rigs exploring for oil at Eagle Ford, and dozens more are expected.

Eagle Ford is located relatively close to the Gulf of Mexico and many Texas oil refineries. That makes it easier to move oil and gas from the shale to the coast. This in turn can help smooth price fluctuations and lower some transportation costs. Eagle Ford will likely remain profitable as long as oil prices remain above $70 a barrel.

The Eagle Ford Shale is good news for the Lone Star State. It should bring more strong economic growth to the south Texas region. Demand for workers may rise as oil companies move in and existing companies expand operations. Many workers will bring their families and move to the region permanently. These new residents will need places to live, which will fuel construction of new houses and apartments. This may in turn increase demand for new roads, schools, shopping centers, restaurants, and infrastructure.

Here is a list for readers interested in researching individual companies that are exploring the Eagle Ford Shale. These oil and gas operators benefit from the hydrocarbon boom in south Texas:

  • EOG Resources (EOG) – Largest leaseholder and current top producer at Eagle Ford
  • BHP Billiton (BHP) – 2011 purchase of Petrohawk included core Eagle Ford holding
  • ConocoPhillips – (COP) – over 220,000 acres of land leased at Eagle Ford
  • Anadarko (APC) – in partnership with Korea National Oil Corporation in the EFS
  • Marathon Oil (MRO) – 11% jump in third quarter 2012 profits, citing EFS as factor

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