COP On Eagle Ford; Compare To The Bakken; Papua New Guinea To Ban Fracking? -- CNN Reports Another Big Earthquake

Now, to the back of the envelope

Idle chatter:

• a given: 10 - 12 wells / drilling unit in the better Bakken
• "Everyone" says the Eagle Ford is better than the Bakken
• COP bases their 39% increase in EUR on 5-wells/drilling unit
• Repeat: a given -- 10 - 12 wells / drilling unit in the Bakken
• for ease of calculating, let's say COP goes to 10-wells / drilling unit in the Eagle Ford
• the 2.5 billion boe reserves doubles to 5.0 billion boe (assume wells are about the same in production)

However

Additional note posted at time of original post: readers might want to look at slide 25 of COP's 88-slide presentation, the 4/10/14 "Analyst Meeting," which suggests the 2.5 billion boe EUR might be very, very conservative. On that slide, COP shows that the lower estimate is based on two wells per drilling unit (single later) = 1.8 billion boe. This is called their Lower Eagle Ford 80-Acre Single Layer. [80 acre: 660 feet between horizontal fracks.]

The higher estimate is based on drilling five wells/drilling unit = 2.5 billion boe. That "explains" the press release/San Antonio Express News story below. This is called their Lower Eagle Ford 80-Acre Single Layer High/Low play. ["High/Low" means two "layers" of horizontals in the single Lower Eagle Ford seam.]

However, COP is also evaluating 8 wells per drilling unit in the lowermost layer PLUS an additional four wells per drilling unit in in the upper Eagle Ford/Austin Chalk (40-acre spacing). On top of that, both literally and figuratively, COP is testing a third layer. This is called the Lower Eagle Ford 40-Acre Upper Eagle Ford/Austin Chalk. [40-acre: 350 feet between horizontal fracks.]

My hunch: the 39% increase noted below is just the first of two or three announcements, each with increasing EURs.

By the way, when I first started blogging, I suggested that fracking was effective out to 500' radially at best, and perhaps only 400 feet. In the very small print at slide 25, COP is looking at 350'-interval spacing between fracking horizontals. I must have posted the 500'-effective fracking interval more than three years ago. 

Original Post

The San Antonio Express-News is reporting:

ConocoPhillips, one of the largest acreage holders in the Eagle Ford Shale, has boosted its reserve estimates for the South Texas oil-and-gas play by 39 percent — from 1.8 billion barrels of oil to 2.5 billion.

Officials with the Houston-based exploration and production company say they expect its Eagle Ford production to top 250,000 barrels of oil equivalent per day by 2017. That’s roughly 100,000 more than the company’s target goal at the end of last year.

“ConocoPhillips’ wells in the Eagle Ford have the highest oil rates per well and are leading the industry in value,” CEO Ryan Lance said. “This is attributable not only to the fact that we are in the best part of the play, but also to our relentless focus on technical innovation and drilling and completion cost efficiencies.”

Much of ConocoPhillips’ Eagle Ford acreage is centered around Karnes and Live Oak counties, some of the play’s most active drilling areas.

COP's data points before this press release (some numbers rounded), although it looks like COP noted the 2.5 billion boe net EUR increase at this time:

• 1,472,000 boepd x 56% liquids = 82,430 bopd oil (world wide)
• 9 billion bbls oil equivalent reserves, year-end 2013

Margins:

• oil sands: $30 - $40/boe
• North American conventional oil: $30 - $40/boe
• North American unconventional oil: >$40/boe

North American unconventional where COP operates:

• Bakken
• Anadarko
• Niobrara
• Barnett
• Permian
• Eagle Ford

Average wellhead breakeven price (lowest of all operators): $39

Eagle Ford

• 221,000 net acres; 96% operated working interest
• 1.8 billion to 2.5 billion net EUR increase
• > 3,000 identified drilling locations
• outlook based on 12-rig program
• $20 - 25/boe full-cycle F&D cost

Meanwhile,  the presentation also has four (4) slides on the Bakken. COP is a huge international oil & gas operator. To devote four slides on the Bakken, seven years into the play is quite phenomenal. Some data points from those four slides:

First of all, COP calls the Bakken their "high-margin play"

• 620,000 net acres; mostly held by production or mineral fee
• 600 million boe net EUR
• > 1,800 identified gross drilling locations; based on 10-rig program
• $20 - 25/boe full cycle F&D cost

COP identifies twelve (12) regions in the North Dakota Bakken

Optimal well spacing and placement (per spacing unit)

• Current: 320-acre in Bakken / upper Three Forks (four wells)
• Testing tighter spacing: 160-acre in Bakken / Upper Three Forks (8 wells)
• Evaluating further upside: additional wells in middle Three Forks (12 wells)
• With 8 and 12 wells: 660' fracking intervals
• CAPEX efficiencies

CAPEX efficiencies

• 30% reduction in drilling days
• 50% reduction in completion cost per unit of proppant
• 90% of 2014 wells to benefit from multi

Much more at the presentation. Maybe later. By the way, EOG is saying much the same thing about the Eagle Ford that COP is saying.

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Greatest Energy Success Story of the 21st Century

Benefiting from the booming Eagle Ford Shale and Permian Basin, Texas likely will best the oil output of every OPEC country but Saudi Arabia by year-end, says a top exploration official at ConocoPhillips, a key acreage holder in both of those oil-and-gas formations.

The Lone Star State is expected to end 2014 with 3.4 million barrels per day in oil output, which exceeds that of 11 of the dozen OPEC nations, ConocoPhillips Unconventional Reservoirs Technical Manager Greg Leveille said during a keynote speech at the 3rd Annual Eagle Ford Consortium Annual Conference in San Antonio.

In 2009, at the beginning stages of the Eagle Ford’s development, Texas had daily output of 1.1 million barrels, only putting it above the OPEC state of Ecuador.

“What you’re seeing unfold in the Eagle Ford is probably the greatest energy success story of the 21st Century,” Leveille said. 

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Earthquakes -- Papua New Guinea To Ban Fracking?

CNN.com is reporting:

An earthquake struck late Saturday off Papua New Guinea's eastern coast with a preliminary magnitude of 7.5, the U.S. Geological Survey said.

The quake struck at 11:27 p.m. (9:27 a.m. ET) and occurred at a depth of 19 miles (32 km), the USGS said.

This is almost getting funny. The big earthquakes are not where they are fracking; the small earthquakes are where they are fracking. Fracking must be relieving the tension of the pent-up tectonic plate movement, small bits at a time.  [This has been reported before, and there is science that backs it up. "This is just another inconvenient truth." -- Algore speaking from the front steps of his 35,000-square-foot mansion in Tennessee.]

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The President's Cavalier Approach To The Law

The president signs a bill barring terrorists from entering the US as diplomats. Then he says: I've signed the law, but I have the option of following it in the future.

It's hard for me to believe that thinking US citizens still support this president. I assume rational US citizens have quit listening to his speeches a long time ago.