Energy Independence: Fracking the Eagle Ford

Betting on this vast new energy source could be a portfolio-changing event

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Energy Independence: Fracking the Eagle Ford

Over the last few weeks in InvestorPlace’s continuing series on America’s newfound energy independence, we’ve showed how the technology revolution in advanced drilling techniques have redrawn the energy landscape.

From giving old dogs such as the Gulf of Mexico or Alaska’s North Slope fresh life to the new vast network of pipelines that need to be built, innovations in fracking and horizontal drilling have transformed the U.S. from a net energy importer into an energy exporter.

Horizontal drilling and hydraulic fracturing (fracking) success stories include the Marcellus field in Pennsylvania and the Bakken in North Dakota, which have been the prime drivers of this energy revolution.

But while the Marcellus remains the king of the natural-gas hill and the Bakken is still the reigning shale-oil champ, another section of America’s geology could give them both a run for their money.

Offering access to both natural-gas liquids (NGLs) as well as an abundance of dry gas, the Eagle Ford in South Texas could be the new model of success. The formation’s plentiful reserves continue to support job growth, tax revenues and a host of other economic benefits aside from energy production.

For investors, betting on this new source of supply could be a portfolio-changing event.

Petro Hawk Energy, which was recently bought out by resource conglomerate BHP Billiton (NYSE:BHP), drilled the first advanced-technology well in the Eagle Ford back in 2008. Featuring a vast ocean of hydrocarbons located 4,000 to 14,000 feet below ground, Texas’ Eagle Ford field is quickly becoming one of the most active shale plays in the country.

Rig counts for the region continue to climb as E&P companies move in to take advantage of the field’s rich resources, which are estimated to be as high as 10 billion barrels of oil equivalent (BOE).

According to data and reports from the Texas Railroad Commission, the chief energy regulator in the state, an amazing story is unfolding in the Eagle Ford. Production across the field increased nearly sevenfold from 2010 to 2011. That’s an average of just under 12,000 barrels a day to nearly 83,400 barrels. Overall, the Eagle Ford produced 30.5 million barrels of oil and 243 billion cubic feet worth of natural gas in 2011.

And that’s just a drop in the bucket of the field’s potential. Analysts estimate that production in the region will explode to nearly 500,000 barrels a day by the end of 2012 and hit a staggering 1 million barrels a day by 2016. That would make the Eagle Ford the nation’s second-largest energy-producing region, behind North Dakota’s Bakken.


Article printed from InvestorPlace Media, http://investorplace.com/2012/05/energy-independence-fracking-the-eagle-ford/.

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