A touch of gray hair is creeping into the South Texas Eagle Ford as the play enters maturity four years after the Petrohawk discovery started the “all hands on deck” rush in October 2008.
And that gray hair suggests the play has achieved a dignified adulthood following its wild and crazy adolescent stage. After four years of spectacular growth in rig count, South Texas Eagle Ford activity flattened in 2012 as rising efficiencies in the drilling and completion process collided with constraints in regional takeaway capacity to reduce the need for rigs, even as operators generated more wells per year.
The maturity theme is a useful tool for interpreting the changes underway for oil services in the South Texas Eagle Ford.
Operators defined the boundaries of the Eagle Ford in its infancy from 2009-2010 as rig count gradually rose from a half dozen units in 2009 to 35 on average during the first quarter 2010. As the play entered adolescence, operators delineated the best rock in the condensate and volatile oil window that gracefully curves in a narrow band from the border with Mexico up to the San Marcos Arch east of San Antonio. Concurrently, rig count expanded from an average 102 in the first quarter 2011 to 180 in the second quarter 2012.
During this era, the Eagle Ford competed with other rapidly developing shale plays in the U.S., overwhelming the supply of drilling rigs and pressure pumping capacity in the domestic market. Shortages of rigs, pressure pumping equipment, labor, and the bulk goods used in well stimulation corresponded with rapidly rising costs for oil services.
Commodity prices set the tone for 2012 with interest fading in the dry gas Eagle Ford window, while oil prices stimulated interest in the under-pressured shallow oil window to the north. As maturity settles in on the South Texas Eagle Ford in 2012, operators have moved from delineation to optimization in completions, or the process of determining which combination of techniques in the engineering toolbox produce the greatest hydrocarbon recovery.
In a few cases, well-financed early movers like Pioneer Natural Resources , EOG Resources , and Anadarko Petroleum Corp, are transitioning into full resource harvest, the holy grail of the resource play model where economies of scale and broad swaths of acreage nudge E&P programs toward wealth creation after years of outspending cash flow.
In the summer of 2012, a handful of Eagle