Did the shale revolution already find its biggest oil field at the Eagle Ford?

— In case you didn't catch it, investment house Credit Suisse had a wonderfully informative conference call for their clients last week on how they see the future of the shale revolution that has engulfed the oil patch in the last decade and become hyper-active especially in the last several years.

Among the bank's conclusions:  shale is a vital component of current US production which is growing at a huge clip -- CS sees as much as 10 million b/d of US oil production in the next several years, up from 6.5 million b/d last year.  CS also noted consistently improving well results from big plays such as the Permian Basin in West Texas and Bakken Shale in North Dakota. 

Moreover, it's not only the upstream that is exploding, but also companies that supply the technologies to eke out more oil in less time. Even ancillary services are exploding, such as technologies that can treat and dispose of water -- a crucial component of well fracturing.  And all this will require many billions of investment dollars into a shale economy still years away from the mature development stage.

But one other thing Credit Suisse said, which echoes the sentiments of many in the industry, was that it was "skeptical" a new large field on the order of the Eagle Ford Shale in South Texas would happen.  The Eagle Ford is one of the most prolific shale fields which boasts an estimated 943,000 b/d of liquids production and is forecast to produce 1.6 million b/d by late 2018.  Instead, Credit Suisse said existing areas with "stacked" pay targets -- i.e., layered formations --are better bets right now.

When you consider how far industry has come in the last five years alone, it seems almost reactionary to make such a statement.  And Credit Suisse is far from alone in that view:  many executives share it -- even from top shale producers.

Five years ago, the Eagle Ford Shale hadn't even been discovered, at least not officially. Although a few companies were out there quietly working the field, it was Petrohawk Energy that announced a gas find there in October, 2008.  By that time, other shale fields had already been discovered -- the Haynesville in Louisiana, a gas field; the Bakken oil field in North Dakota; and of course, the granddaddy of them all, the Barnett in North Texas which sparked the widespread move by operators to shale exploitation in the early 2000s, although the field's first wells were drilled in the early 1980s.  

Five years ago, oil companies were only beginning to explore the merits of a practice that is now standard:  drilling longer "laterals," or horizontal portions of wells.  Nor had other completion practices and rig efficiencies been achieved that are standard today and which are constantly being streamlined and refined, such as "staged" fractures.

Okay, but that's all technology and doesn't speak to the actual discovery of another Eagle Ford or Bakken field.  But here's another thing to consider:  the Eagle Ford was really hiding in plain sight.  That area had been drilled for years, except the shale hadn't been accessed, or at least it wasn't economic to produce in previous decades.  Likewise, the Permian Basin in West Texas has been drilled for nearly a century, yet it's only been literally in the last few years that exploiters have aimed new technology at the vast cache of oil beneath the shallower zones which were the primary targets in all that time.

In the Permian, new shales have emerged in the last few years alone, such as the Wolfcamp and Avalon.  And just this year, Pioneer Natural Resources has turned its attention to the shallow Jo Mill Shale.  Pioneer in its present form has been around for more than a dozen years, but its reputation is largely being built on its recent Permian finds:  it is uncovering zones that until now had been ignored but are proving productive in the multiple "stacked" layers of the basin down to 10,000-11,000 feet. 

The same is true of Continental Resources, a Bakken pioneer, which is now successfully exploring "benches" or subzones of that field.  Who is to say that an Eagle Ford equivalent isn't waiting to be tapped in a deeper zone there or someplace else industry hasn't looked yet?

Petrohawk was a humdrum company before being catapulted into the status of shale guru after its Eagle Ford find.  So much so, that barely three years after discovering the field, the company was sold to BHP Billiton in 2011 for $15 billion. 

Floyd Wilson, who ran Petrohawk, has essentially reincarnated his former independent in another company, Halcon Resources, which he formed last year.  (Even the names is similar to its predecessor:  Halcon means "hawk" in Spanish.)  Wilson recently trumpeted a new play, which he named "El Halcon," in East Texas, another widely-drilled area for many decades; already several companies are said to have congregated there hoping to pan out some shale oil volumes.

If industry took such a flying leap both technologically and geologically in the last five years, can you imagine what the next five years will hold?  Is it really possible, given the astonishing pace of change in the oil industry, that all the major fields have really been discovered?  Just ask the people who guffawed at the first horseless carriages, saying they would never catch on. Or the silent-film mogul who said: "Who would want to see a movie that talks?"  You can bet a theater ticket they all lived to eat their words.

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