Key Economic Drivers Impacting Eagle Ford Development from Resource to Reserves

The Eagle Ford shale of South Texas has become one of the most active and most important shale plays in the U.S. This success has been possible because of the unique geology and richness of the play, allowing significant production of natural gas, condensate liquids, and oil; the rapid improvement of long horizontal lateral drilling and multi-stage hydraulic fracturing completion technologies; and a long-term period of sustained high oil prices.

This study develops a probabilistic before-tax economic model to estimate the reserves of the Eagle Ford shale, under different stochastic parameters and scenarios usually not considered by evaluators. The model is used to assess impact and sensitivity on reserves and economic yardsticks considering the variability and uncertainty of project inputs such as production streams, commodity prices, capital investments, and operational costs.

We use existing probabilistic methodologies for production and price forecasting and use public and private sources to develop statistical distributions for additional parameters, including differentials for commodity prices, natural gas content for the different production regions, and water/gas and water/oil ratios.

We consider three evaluation scenarios?single-well, 100-well, and Full-well?in each of the proposed production regions of the Eagle Ford shale, with calibrated probabilistic inputs for each region. Single-well results show how it is hard to produce complete distributions of reserves all across the play, although production regions with better productivity are identified. Results from the scenarios with multiple wells, show how the commerciality of the considered development projects is achievable in liquid-rich production regions and with moderate to high price forecasts.

This study provides useful information and results to oil and gas professionals about key areas that influence the commercial development of Eagle Ford shale. The methodology to perform evaluations with probabilistic components enables better project development and investment decisions and can be applied to other shale plays.