The shrinking space between Eagle Ford wells


The space between Eagle Ford wells is shrinking. The idea of “spacing” is a favorite topic of the oil and gas industry, which is agonizing over how closely it can place wells without having them cannibalize each other. Scott Sheffield, chairman and CEO of Pioneer Natural Resources, said the first three years in the field for the company was about “defining the sweet spots.” Now the company — and others in South Texas — are shifting gears, looking beyond exploration and appraisal. “It's all about execution now. And the key to that is understanding how much more oil and condensate we're going to get out, and really down-spacing,” said Sheffield, one of several executives who touched on the topic of well spacing at the recent Hart Energy DUG Eagle Ford Conference at the Convention Center. “The focus of most of us now: Can we down-space to 40 acres?” he asked. “Several operators, including Pioneer, are in the process of developing the play on 40 acres, and that's what's going to take the play to the next step, is the 40-acre spacing over the next several years until we decide what's going to happen to the gas side of the business.” Operators in the Eagle Ford are hunting the more profitable crude oil and liquid condensate, and largely avoiding drilling natural gas wells until prices rise. Allen Gilmer of the research firm DrillingInfo said average well spacing — “Of all the wells they have, how close are they to the next well?” — varies across the field. Anadarko Petroleum Corp. is at around 41-acre median spacing, Rosetta Resources is at 42 acres, Marathon Oil Corp. is at 80 acres, EOG Resources is at 86 acres, and ConocoPhillips is at 272 acres, Gilmer said. Lance Robertson, vice president of Eagle Ford operations for Marathon, said it's using 40- to 60-acre spacing between its wells, and is analyzing subsurface, petrochemical and performance data. “How much value does this create?” Robertson asked. “One of the things we recognize is we could down-space aggressively, but at some point it becomes more capital intensive.” Doug Brooks, CEO of Aurora Oil & Gas Ltd., said the company will drill 14 to 19 wells in the Eagle Ford in 2013 on 40-acre spacing. But Brooks said the issue of spacing has become even more complex as companies start to look at formations above and below the Eagle Ford. Drillers also are targeting rocks such as the Austin Chalk, Buda Limestone and Pearsall Shale. And Aurora has done two Austin Chalk pilot programs with Marathon Oil Co. “So not only has this become just a 2-D issue of how closely we can space the Eagle Ford laterally, but now it becomes a 3-D issue in terms of how closely we can space the Austin Chalk wells immediately on top of the Eagle Ford wells,” Brooks said. Gilmer said well interference, or one well cannibalizing another, seems to happen somewhere around the 50- to 60-acre mark. But it's complicated, because the drop-off in performance may be a tiny percentage, which a company could easily cover with the additional wells. These are not small questions and ones that companies will likely keep asking for years. It's also something that should give landowners in heavily drilled areas of South Texas some idea of what to expect. Rod Skaufel, president of North America shale production for BHP Billiton Petroleum, said the company is spending $3 billion per year in the Eagle Ford. It's among the companies testing everything from the length of laterals to the precise placement of laterals within the shale formation. Skaufel said he agrees with one of the company's vice presidents, who recently told him, “The more I work shale, the more I realize what I don't know.”



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