Drill-rig counts and crude oil production are down sharply in the Eaglebine, one of many less-than-stellar shale plays that drillers and producers have mostly abandoned in favor of superstar counties in the Permian Basin, the southern Eagle Ford and the STACK play in Oklahoma. It’s understandable; in today’s low-oil-price/high-stress environment, everyone’s chasing the sky-high initial production (IP) rates that provide the biggest, quickest returns and help pay the bills. Still, as we will discuss today, there are at least a few glimmers of hope in the Eaglebine, including a possible pipeline restart and a new pipeline tie-in that will reduce crude-delivery costs. Now all we need is $60+/bbl oil.
The Eaglebine is an “emerging” shale play that never quite emerged, mostly because the oil price collapse that started in mid-2014 sucker-punched Eaglebine drillers and producers just as they were ramping up their output, benefiting from new pipeline takeaway capacity, and dreaming big. As we said in our We Heard It Through the Eaglebine series a while back, the play is located within an 11-county area east of Austin, TX, south of Dallas and north of Houston, where the Eagle Ford Shale meets the Woodbine Sandstone (hence the clever combo-name). The play got off to a slower start than the Eagle Ford, in part because the Eaglebine formation (up to 1,000 feet thick, and found at depths of between 6,500 and 15,000 feet) has been more complex for drillers to exploit. The Eaglebine and Eagle Ford share similar geology--both are situated above the Buda Formation and below the Austin Chalk—but the Eagle Ford is a carbonate rich organic, while the Eaglebine contains a large percentage of silica-rich sands interlaced in the organic rich shale—a characteristic that makes Eaglebine completion and production a tad (or two, or three) more complicated. Still, the Eaglebine has high hydrocarbon potential, including a mixture of oil and condensate liquids. In other words, in the high-flying days of 2011-14 it was considered too promising a play to ignore, particularly given its handy location, less than a two-hour drive from Houston-area refineries. With prices for West Texas Intermediate (WTI) bouncing above $90/Bbl throughout the period (red line in Figure 1), crude production from the Eaglebine soared (blue shaded area). Output continued rising into early 2015, even as WTI prices were plummeting to less than half their 2011-14 average.
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