Pioneering the Eagle Ford

There’s a burgeoning play afoot in the brush country of South Texas. In and among the thorny shrubs, prickly pears and scattered live oaks rise tall derricks. Some 45 rigs are drilling for Eagle Ford Shale in this storied part of Texas, the land of Texas Rangers, hardened desperadoes, and Mexican revolutionaries.

The Eagle Ford Shale trend ranges some 330 miles (531 km) from Grimes County down to the Rio Grande in Webb County. The Cretaceous play has blossomed like the desert after spring rain: it is delivering remarkable wells, especially in La Salle, McMullen, and Live Oak counties. (For more on the geology and genesis of the play, see “Fly Like An Eagle Ford,” July 2009, Oil and Gas Investor.)

Sharpshooting the shale
Dallas-based Pioneer Natural Resources Co. has been the talk of the Eagle Ford of late, with completion of its Robert Crawley Gas Unit #1 in Live Oak County. The well, east of Petrohawk Energy Corp.’s Hawkville Field, was recently completed for 17 MMcf/d, the highest rate yet announced in the shale.

Pioneer’s 310,000 acres prospective for the shale are spread across the margin of the Edwards shelf. The Crawley is the company’s third horizontal Eagle Ford well; its first was the #1 Friedrichs Gas Unit, in DeWitt County. “We did not get a proper completion in the Friedrichs,” said Tim Dove, president and chief operating officer. “The horizontal section was not properly situated within the pay zone, so only a couple of frac stages were successful.” Nonetheless, the well initialed at 2.7 MMcf and 160 b/c per day from a partial completion.

Tim Dove. (Photos by Lowell Georgia)

“We then focused on getting a successful well down, both to prove up the area and to show Pioneer could get these wells down technically, and on budget and on time,” Dove said.

The company’s second test was much more satisfying. Pioneer moved southwest to its Live Oak County acreage holdings and drilled the Sinor #5. That test flowed 8.3 MMcf and 500 b/c per day, firmly in the liquids-rich slice of the shale play. Its 2,600-ft (793-m) lateral was fractured in nine stages.

“We were able to see a substantial amount of condensate in the well, and liquids-rich gas,” Dove said. Given today’s oil and gas prices, Pioneer was quite encouraged by the economic implications. Indeed, the liquid component of the Sinor, both in condensate and natural gas liquids, boosts its revenue to the equivalent of a 19.3 MMcf/d dry gas well.
Next, at a location 3 miles (4.8 km) south and downdip of the Sinor #5, the Crawley #1 was tested at 17 MMcf/d on a 24/64-in. choke with 7,300 psi wellhead flowing pressure. The Eagle Ford was encountered 1,000 ft (305 m) deeper than in the Sinor and was firmly in the dry gas window. The Crawley was completed in a 5,400-ft (1,647-m) lateral with a 16-stage fracture stimulation.

“We believe the Crawley to be the highest-rate gas well yet drilled in the Eagle Ford shale,” he said. “It was very encouraging and highly economic.”

The company now has a two-rig horizontal campaign under way to assess resource potential across its acreage, which can be split into three areas depending on the liquids content of the shale. The Eagle Ford play grades from oil to gas/condensate to dry gas in the dip direction — from the northwest to the southeast — across its extensive trend.

“About 70% to 75% of our acreage is in the gas/condensate window,” said Chris Cheatwood, executive vice president, geoscience. The current drilling drive features a couple of wells near the Sinor and Crawley and also locations much farther northeast. “We have two wells currently drilling in the gas/condensate window up on the Edwards margin,” he said. The company is testing different portions of its extensive leasehold to determine the variability of the shale.

‘Technology leader’
“We feel like we are a technology leader in the play,” Dove said. “We have a huge 3-D seismic database, and we’ve drilled through this reservoir for years.”

Throughout 2006 and 2007, Pioneer shot 2,000 sq miles (5,180 sq km) of 3-D seismic for Edwards development, which lies immediately below the Eagle Ford. Now it’s taking advantage of that impressive dataset for its Eagle Ford efforts.

“We have a very detailed picture of both the Eagle Ford and Edwards,” Cheatwood said. That’s necessary for precision targeting of its laterals. The company places heavy emphasis on geosteering and keeping horizontals within the correct zones. “We think this approach makes a tremendous difference in results.”

Pioneer also employs seismic attributes such as coherency processing to improve its imaging of faulting and fracturing in the Eagle Ford. It prefers to drill in areas with minor fracturing that will enhance productivity but without major faulting that can provide conduits for water. “Until we learn differently, we want to stay away from large faults,” Cheatwood said. Additionally, the company uses seismic to figure the direction of maximum stress and then orients its laterals perpendicular to that direction.

On the drilling front, Pioneer is stretching out its laterals to determine the relationship between recoveries and lateral length and frac stages. “We’re in an experimentation mode now,” Cheatwood said. At present, 5,000-ft (1,525-m) laterals seem optimum, achieving a balance between sufficient length and mechanical risk. Like other operators in this shale play, Pioneer cements liners in its laterals.

During completion, microseismic monitoring is a prime tool. “Microseismic has been an eye-opener for us,” he said. One benefit the company enjoys is an abundance of potential monitor wells due to its extensive Edwards drilling. The microseismic data allow Pioneer to size its fracs appropriately.

In a field development mode, Pioneer expects per-well costs to fall to between US $6 and $7 million. “We’re still in the experimentation mode, doing a lot of research, but we expect to pull down well costs as we move forward,” Dove noted.

Meanwhile, Pioneer also has a substantial number of Edwards locations in inventory. “We’re evaluating what’s going to happen with gas prices this year and beyond,” he said. “These are dry gas wells, and if we feel confident gas prices will be $5 to $6 per thousand long-term, we’ll drill the Edwards as well as the Eagle Ford.”

Helmerich & Payne Inc.’s Rig #254 drills the Charles Riedesel Gas Unit #1, a horizontal Eagle Ford test, for Pioneer Natural Resources Co. in DeWitt County, Texas.

Pioneer is contemplating extensive Eagle Ford development across a substantial swath of acreage, and as part of that effort it is currently seeking a joint-venture partner. “Potentially the Eagle Ford will demand thousands of wells and billions of dollars. It sets itself up naturally for a JV partner for Pioneer,” Dove said. The company would like to accelerate drilling to preserve its acreage, as leases in the area typically carry three-year primary terms with two-year options. “Accordingly, lease preservation is of the utmost importance.”

Accelerated drilling can also substantially increase the net present value of the play. Production, cash flow, and reserves would all advance. “From our standpoint, we wish to continue our model of running a company that generates free cash flow,” Dove said. “We do not want to overspend our cash flow or increase our debt.”

The Eagle Ford has rapidly become one of Pioneer’s premier projects. The company has its data room open at present and will take bids in the second quarter. Not surprisingly, industry interest in its impressive position has been strong. “We hope to tee up a massive drilling acceleration by midyear,” Dove said.