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Eagle Ford Shale Production Remains Steady Amidst Lower Fuel Prices
The recent plunge in oil prices has had a significant impact on the oil and gas industry. To be sure, an April article from the Wall Street Journal asserts that energy companies planned to layoff 100,000 workers worldwide, while a separate report claims that 47,000 layoffs are planned in 2015 in Texas alone. Naturally, this would lead many to believe that oil and gas production would rapidly drop as well, along with the massive terminations.
Surprisingly, in the Eagle Ford Shale, one of the largest oil and gas plays in the United States, production is actually up 28 percent since the same time last year. The numbers do show, however, that daily production may have leveled off, and may even begin to decline in the near future.
Behind the Numbers
While the cost of a single barrel of oil may be significantly less than that of a year ago, this hasn’t destroyed operations in the Eagle Ford Shale, or throughout the rest of the U.S. In fact, Bentek, an energy market analytics company, provided that from March 2014 to March 2015, daily oil production in the United States increased by 1.3 million barrels. And the Eagle Ford Shale has been playing its part; production has reached 1.6 million barrels per day, as of March 2015.
But this number has not been growing steadily; in fact, the Eagle Ford Shale produced 1.6 million barrels per day in February as well, highlighting the fact that oil production is beginning to level off for now.
Why is production in the Eagle Ford Shale leveling off, signaling a potential future decline? According to a report, oil producers may be high-grading their possessions, focusing on drilling only the most productive acreage. In doing so, the operators are maximizing efficiency and maintaining production levels.
In time, production levels may drop if operators are unable to maintain the efficiency of their operations. Furthermore, some producers may increase their number of drilled but uncompleted wells, which will lead to decreased activity, as well.
Looking to the Future
Will the fall in oil prices lead to stagnation in production in the Eagle Ford Shale. For now, it is difficult to tell. That said, however, if prices fail to rebound, operators may slow down oil production as they decide on what actions to take next. As mineral rights owners, this news should not startle you as the oil and gas business is both volatile and cyclical. Contact Phillips Energy Partners today for a free property evaluation.