Enterprise sees 750,000 to 800,000 b/d oil potential from Eagle Ford
Houston (Platts)--6Jun2011/523 pm EDT/2123 GMT
platts.com
With the Eagle Ford Shale alone now expected to eventually deliver 750,000 to 800,000 b/d of oil, industry leaders repeated their growing enthusiasm Monday for a newfound focus on US oil plays over natural gas.
That sentiment emerged loud and clear from two sessions of the 2011 RBC Capital Markets Global Energy and Power Conference monitored by webcast from the conference in New York.
While the high-potential Eagle Ford of South Texas continued to grab the spotlight, executives from a number of companies also touted newfound potential from other locations in both established areas like the Permian Basin and previously overlooked trends like Colorado's Niobrara and the Williston Basin with its Bakken Shale play in North Dakota.
"Gas will come back at some point, but over the next five to seven years, the great returns will be in oil," said Jim Brown, chief operating officer for Whiting Petroleum, summarizing the commentary.
The conference began with a new projection on potential Eagle Ford production for 750,000 to 800,000 b/d of oil, with expectations changing all the time, from Enterprise Products Partners executive Mark Hurley.
"The numbers get bigger every time we look," said Hurley, vice president of the pipeline company's oil and offshore business.
He said the new outlook tops previous estimates of 400,000 to 500,000 b/d and noted that some have predicted the play could generate 1 million b/d.
Enterprise is active in building a pipeline network to move production from the play, which currently generates about 50,000 b/d, he said, with half of that output in the Enterprise system.
Hurley told the conference Enterprise considers the Eagle Ford a key focus area and said the company will be able to deliver output to refineries in Houston.
The RBC conference session on the Eagle Ford included representatives from operating companies as well, with Carrizo Oil & Gas CEO Chip Johnson noting his company's earlier announcement of more property acquisitions there.
"So far this play is working very well for us," Johnson told the conference.
Earlier, Houston-based Carrizo announced the addition of 13,000 Eagle Ford acres that would boost its holding in the play to 33,000 acres.
The company said it would make an upfront cash payment of $1,650/acre, or $21.5 million with additional payments in the form of a drilling carry.
In total, Wells Fargo analyst David Tameron estimated the Carrizo deal at $5,500/acre or a total of $71.5 million, calling that a "good price compared to recent transactions."
Johnson said Carrizo hopes to increase the oil component of its portfolio from last year's 5% through increased focus on the Eagle Ford.
Panelists agreed that the inflation on prices for acreage has been dramatic, citing last week's acquisition of acreage by Marathon Oil at $21,000/acre as an example.
They said the play is in the process of transferring value to larger operators like Marathon that can afford increased development costs.
At a later session, however, Marathon's upstream vice president, Dave Roberts, defended the price his company paid for its Eagle Ford expansion.
Emphasizing the "uniformity" of the Eagle Ford's petroleum system and Marathon's need to establish what he called a "signature play," Roberts said: "There are few plays where you can get 80,000 b/d in five years."
Marathon is scheduled to become a pure-play exploration and production company with the separation of its refining business at the end of the month, and Roberts cited that transition in elaborating on Marathon's aggressive outlook for US oil play expansion.
"Much as we moved away from the US in the early part of the last decade, we are coming home with vigor," he said.
Moderating that panel, RBC analyst Scott Hanold cited the movement by US independents toward oil plays, and asked the panel to speculate on other new plays likely to emerge in the near future.
"Every geologist has a lot of maps with oil plays that just didn't make it over the top," Whiting's Brown said in response, agreeing with other panelists that new oil plays likely will emerge close to legacy plays getting new life in an era of improved technology and rising oil prices.
They advised Hanold to keep watching places where oil has been found before only to see drilling stop as prices retreated in the past.
--Gary Taylor, gary_taylor@platts.com |
