It is easy to forget about Eagle Ford shale play when you have Permian hydrocarbon production growing at astounding rate supported by continued capital inflow and robust M&A activity. While U.S. majors are pouring billions of dollars into the Permian Basin, international energy companies are all-in on the Eagle Ford Shale like U.K.-based BP which continue to pour investment into new drilling projects in the Eagle Ford. While hydrocarbon production is turning the corner in the Eagle Ford, its strategic proximity to LNG export facilities, crude exports, refining complex and NGL fractionation hubs (i.e. higher netbacks) along with sufficient take-away capacity for crude, natural gas and NGLs should provide tail winds for sustained growth in production. While it may still never be able to match the prolific Permian, Eagle Ford- version 2.0 cannot be ignored anymore.
Eagle Ford Production Trends
In the early years of the shale boom, Eagle Ford was touted to be a huge growth area for crude oil and natural gas. Production saw a significant increase from the Eagle Ford basin up through 2014 when the basin peaked. Following this peak, raw gas production (including NGLs) declined from a high of ~ 9 Bcf/d in 2014 to ~7 /Bcf/d in 2017. This decline was driven by a combination of falling prices due to a growing supply glut, lower demand, and deteriorating drilling economics. During this period, capital and interest were also being drawn to the more promising Permian Basin where producers were seeing prolific hydrocarbon output at significantly superior drilling economics.
The production decline continued until 2017, after which growth resumed as markets from LNG and crude oil exports began to take off. Just as production was returning and growing 2017-2020, covid hit bringing new challenges that resulted in further declines in gas production. With the easing of lockdowns and the gradual recovery of global supply and demand, Eagle Ford/STX production rebounded, with gas production increasing by 2.1 Bcf/d between 2021 and 2023. Given the inflow of capital and Eagle Ford’s strategic value proposition, Enkon Energy Advisors forecasts that Eagle Ford raw gas production (which includes South Texas non-shale portion) will rise again to match highs seen in 2015 at 9 Bcf/d by 2028.