A Tale of Two Plays: the Eagle Ford Basin and the Austin Chalk

The Eagle Ford is the second most actively drilled basin in the United States with 80 rigs (compared to the Permian Basin count of 522). Unlike the Permian Basin, which has shale and marine deposits from multiple eras, the Eagle Ford Shale is a singular age; it was formed during the Cretaceous Period in the Mesozoic Era. Traditional shale plays produce primarily oil or primarily natural gas; the Eagle Ford produces vast quantities of both.

 

Eagle Ford Rig Count

 

The formation is split into the upper and lower Eagle Ford. It underlies 14 counties in Texas and continues across the Mexican border between Eagle Pass and Laredo. Approximately 50 miles wide and 400 miles long, the Eagle Ford is recognized for its hydrocarbon, and until the last decade was not known as an oil or natural gas producer. The formation lies between 4,000 feet and 12,000 feet, and was originally thought to be the source rock for the Austin Chalk formation.

 

Eagle Ford Counties

The Eagle Ford 8 Years Ago

The Eagle Ford Shale did not see any significant drilling until the discovery of horizontal drilling and modern hydraulic fracturing techniques. Petrohawk drilled the first well in 2008 in LaSalle County. By 2010, producers completed over 200 wells. The Eagle Ford rose as the most prolific shale formation over the course of the next five years. By 2015, over 6,000 drilling permits were issued, and the Eagle Ford became one of the most heavily drilled rock units in the U.S. with a historically high rig count of 284.

 

A single formation, the Eagle Ford has only one “pay zone” layer from which oil and gas can be extracted. In contrast, the Permian is a multi-stacked play from which operators can hit many pay zones. Coupled with the knowledge gained from hydraulic fracturing in the Eagle Ford and weak crude oil prices dropping the appeal of the Eagle Ford from mid-2014 to mid-2016, the economic opportunities in a stacked play drew a mass migration of companies in search of prime acreage in the Permian. As the early stages of the furor over the economic advantages in the Permian basin rose, the rig count in the Eagle Ford began to fall, hovering as low as 31 active drills.

 

Eagle Ford Stratigraphy

The Eagle Ford Today and its Top Players

Now, however, the Permian is rift with pipeline capacity complications and the fallout of the sudden Permian shale boom. As salaries rise to entice employee applications and traffic jams and accidents run amok, companies are beginning to look elsewhere in anticipation of the Permian’s inevitable production block. Among the rising hot plays are the Eagle Ford and the Austin Chalk. The Eagle Ford is advantageous for operators today due to its established infrastructure, local frac sand sources (with a new sand mine on the way in 2019 courtesy of Preferred Proppants), and proximity to Houston pipelines. There is housing available for any reallocated employees from the Permian, and the roads are significantly less congested.

 

Eagle Ford Mines & Transloads

 

Currently, the Eagle Ford is an established play and generates about 12% of U.S. daily oil production. EOG, Chesapeake, Sanchez, Marathon, and Carrizo are the top five operators when defined by well count. EOG is the dominating oil producer in the Eagle Ford, regularly pulling ahead in well count. In response to the Permian growing pains, ConocoPhillips has announced intentions to temporarily reallocate assets from the Permian to Eagle Ford during the pipeline crisis, and other companies are likely to follow suit.

 

 Eagle Ford well completions

The Austin Chalk 100 Years Ago

The Austin Chalk is a layer composed of chalk and marl overlying the Eagle Ford that has produced 1.7 billion barrels of oil. It is considered a separate play from the Eagle Ford as it extends past the Eagle Ford’s boundaries into Louisiana and Mississippi. Stretching across over 29 counties in Texas and 12 parishes in Louisiana, the Austin Chalk is dotted with natural fractures that have absorbed oil from the Eagle Ford formation below. The Austin Chalk formations consist of varying porosity and permeability; most of the chalk has a porosity of 2 or 3%, but some intervals reach as high as 8%. The chalk accumulated its oil through the Eagle Ford beneath it, filling irregularly spaced fractures and tectonic fissures throughout. Many of these larger fractures are connected to smaller microfracture systems. The Austin Chalk is loosely divided into the upper, middle, and lower chalk.

 

Austin Chalk counties & parishes

 

Operators discovered the Austin Chalk in the 1920s, but serious oil production did not begin until the 1970s during the U.S. oil crisis. Drilling in the Austin Chalk was primarily focused in West Texas near the Eagle Ford. Initially, operators drilled in areas thought to be more porous and permeable, but success was erratic and seemingly contingent upon chance – occasionally a well didn’t tap into a fracture or the fissure proved to hold sparse amounts of oil. The application of horizontal drilling in the 90s widened payzones and removed most financial risks as it almost guaranteed operators would pierce a natural fracture.

 

While the majority of the industry took interest in the shale boom in the 2010s, Blackbrush Oil & Gas and Gulftex Energy marked the middle chalk as a point of interest for its higher porosity and began drilling. EnerVest, Marathon, EOG, and Murphy soon followed suit, and as a result are also credited with the development of the Austin Chalk.

 

The Austin Chalk Today and its Top Players

Currently, the big players in the Austin Chalk are Enervest, Wildhorse Resources, and Geosouthern Energy. Enervest is serving as the operator for properties owned by Magnolia Oil and Gas, which owns 1,000 locations in the Enervest Giddings Field. Competing in the smaller drilling bracket are operators EOG, Blackbrush Oil and Gas and Verdun Oil and Gas. More interest is currently garnering for future drilling in the Louisiana Austin Chalk; ConocoPhillips and EOG Resources have announced leasing of up to 130,000 acres, some of which already have test wells drilled. The additional use of hydraulic fracturing is producing positive results in areas previously avoided for having fewer natural fractures. Defined by well count, the top operators in the Austin Chalk today are EOG Resources, Chesapeake, Marathon, Devon and Anadarko Petroleum.

Austin Chalk well completions

The Eagle Ford and the Austin Chalk in the Future

Now that the Austin Chalk and Eagle Ford are currently under a new light following the Permian’s dropping prospective abundance, deals are expected to surge in the next 6 months – particularly in the Eagle Ford. Any companies interested in drilling in the Eagle Ford and in the Austin Chalk surrounding it must barter a deal, as acreage available for purchase is few and far between having been snatched during the initial shale boom. BP has already agreed to purchase BHP shale assets in the Permian, Eagle Ford, and Haynesville for $10.5 billion. Royal Dutch Shell and Chevron may be potential future buyers in upcoming mergers and deals.

 

Operators in the Eagle Ford are steadily taking advantage of the dual stacked plays and planning for production in both formations. One such company, WildHorse Resource Development Corp., expects to become a pure-play Eagle Ford producer with 100% reserves in the Eagle Ford and Austin Chalk in 2019. Together, the Eagle Ford and the Austin Chalk are poised to become the hottest plays in 2019.

 

Eagle Ford counties: Atascosa, Bee, De Witt, Dimmit, Frio, Gonzales, Karnes, La Sale, Live Oak, Maverick, Mc Mullen, Webb, Wilson, Zavala

Austin Chalk counties and parishes: Atascosa, Bastrop, Bexar, Brazos, Burleson, De Witt, Dimmit, Fayette, Frio, Gonzales, Guadalupe, Jasper, Karnes, La Sale, Lee, Live Oak, Maverick, Mc Mullen, Milam, Newton, Polk, Robertson, Throkmorton, Tyler, Washington, Webb, Williamson, Wilson, Zavala

 

Read our other basin overviews: Permian, Eagle Ford & Austin Chalk, Haynesville, Bakken, Anadarko, DJ-Niobrara, Powder River & Uinta, Marcellus & Utica