(Guest Post by Matthew Ladner)
HOUSTON — Pumping a barrel of oil out of the Eagle Ford Shale could get $10 to $15 cheaper by summer 2016 as service companies cut costs and operators tune up their wells, analysts say.
The oil slump hasn’t stopped producers in the South Texas play from getting better at targeting oil-rich rock in lateral sections of their horizontal wells, speeding up their pressure pumping systems and adopting better technologies for bringing wells into production.
Those efforts could help lift wells’ initial production rates by an average 33 percent in the Eagle Ford, even as service companies cut prices for drilling tools, proppant and rigs by an average 16 percent this year, Wood Mackenzie analysts said at a meeting with journalists last week.
Those two factors could bring the Eagle Ford’s breakeven oil price down from $56 to as low as $41 a barrel by June next year, putting millions more barrels within reach for producers. Similar trends are emerging in the Bakken Shale in North Dakota and the Permian Basin in West Texas.
“The death of the unconventional business has been greatly exaggerated,” Wood Mackenzie analyst Cody Rice said. “Operators can still make money in the best portions of the best plays in the lower 48.”
Do you really think you have a chance against us, Mr. Cowboy?