Eagle Ford oil perks up in response to Permian transportation problems

Fuel Fix:
Houston's ConocoPhillips is bucking the trend of churning as much oil out of the booming Permian Basin as possible, instead focusing on less crowded areas like South Texas' Eagle Ford shale.

While ConocoPhillips has a major Permian presence, it's taking it slow as the Permian rush is creating labor and pipeline constraints, causing ever-greater inflation on oil production costs.

With that in mind, ConocoPhillips Chief Executive Ryan Lance said he sees better a bang for the buck - at least for now - in the Eagle Ford and even in North Dakota's Bakken shale. These are regions that were left for dead by many companies after oil prices crashed in late 2014.

"Now that people have left the Eagle Ford and gone to the Permian and other places around the U.S., we're seeing the opportunity," Lance said. "The cost structure is lower, and we're not seeing the sort of rapid inflation you're seeing in the Permian."

In the first quarter of 2018, ConocoPhillips produced 163,000 barrels a day of oil equivalent from the Eagle Ford compared to 19,000 barrels daily from the Permian. That's more than 8.5 times the volume in the Eagle Ford versus West Texas.
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ConocoPhillips also aims to grow more in South Texas and neighboring Louisiana because much of the Eagle Ford overlaps with the Austin Chalk shale play that extends in Louisiana. ConocoPhillips bought more acreage in Louisiana this year with the intent of taking its successes in South Texas and duplicating it there.
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Both the Eagle Ford and the Austin Chalk formations are much closer to transportation facilities and shipping making them an attractive alternative.   For example, the Austin Chalk is under the part of Texas I am in and there are pipelines near proposed well locations.  The Eagle Ford is also convenient to the Port of Corpus Christi.

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