Dry Gas Injection In The Eagle Ford Shale

Secondary Recovery Using Dry Natural Gas Injection

It’s not often that you hear oil and gas companies bringing up the subject of secondary recovery methods so early in the life of a newly discovered field, but it seems that EOG Resources is counting on it being a big part of their long term strategy for success in the Eagle Ford shale. In a recent speech that EOG Resources Chairman Mark Papa gave at the Sanford C. Bernstein Strategic Decisions Conference in May of this year,  he indicated that secondary recovery methods such as dry natural gas injection would become a big part of the company’s overall strategy to increase the ultimate recovery factor of Eagle Ford shale wells.  Currently the recovery factor for Eagle Ford Shale wells hovers at around 6%. This means that as much as 94% of the oil contained in the Eagle Ford Shale will remain there forever, unless some kind of unconventional method is used to help force it out of the formation. EOG’s chairman half – jokingly stated that “if the recovery factor could not be improved, we should probably be shot as a company” and that he “personally didn’t want to get shot.”

According to Mr. Papa, laboratory tests on Eagle Ford Shale core samples have indicated that water flooding, (which is being tested by EOG in the Bakken shale,)  will not work in the Eagle Ford. A method that most likely will work to force more crude oil out of the Eagle Ford Shale is to use dry natural gas, injected into a nearby well, to boost overall production in adjacent wells.

The Midas Touch? Transforming $2.50 per MCF Dry Natural Gas Into $15.00 per MCF Liquids – Rich Gas

EOG Chairman Mark Papa used the following example in his speech to show how the company may be able to turn cheap natural gas into valuable liquids – rich gas.

 “In the Eagle Ford, laboratory tests on the rocks tell us that water injection probably isn’t going to work, so in the Eagle Ford we’re looking at something that has also been used for fifty years, but at a much lower frequency of use, (than water flooding) and that’s simply dry gas injection.  You put dry gas in the reservoir and then you push it through the reservoir and it picks up “heavy ends.”  One way to look at it is that when it’s injected it costs $2.50 an MCF, because it’s dry gas, and by the time it passes through the reservoir it picks up a whole lot of heavy ends.  You pull it out of the reservoir and is worth about $15 an MCF,  by the time you get all of the liquid out of it.  So it’ll be interesting to see if that technology works.”

A pilot test using dry natural gas injection in the Eagle Ford shale is planned by EOG in 2013. It should be noted that EOG Resources and other companies, such as Rosetta Resources, are also experimenting with down – spacing in the Eagle Ford Shale. EOG  reports favorable results from a down – spacing pilot test utilizing well spacings of between 65 and 90 acres, down from the initially planned 130 acres to the well. Rosetta Resources is testing a well spacing of 50 acres on the Gates Ranch in Webb county. According to a recent investor presentation by Murphy Oil, there is a lot of talk in the industry of using forty acre spacing in the Eagle Ford Shale. Murphy Oil is downspacing to 80 acres in Karnes county.

In the “dry gas window” of the Eagle Ford shale, as well as in the underlying Pearsall Formation, there is an incredible supply of dry gas. Natural gas prices are at a historic low, due to oversupply, and the near – term outlook is for low gas prices. By utilizing abundant and cheap dry natural gas for injection purposes, and then ultimately selling it down the pipeline, companies may be able to maximize this resource, possibly even leading to more drilling in the dry gas portion of the Eagle Ford shale. If down – spacing and dry gas injection work as well as expected, it will ultimately result in thousands of new Eagle Ford wells being drilled in the coming years.

Note: If Pearsall Shale gas in the area is sour you would not expect companies such as EOG to inject it into a sweet or “less sour” formation. Also, liquids would have to be removed from Pearsall Shale gas, increasing the cost of the gas as a enhanced oil recovery method.

For more on secondary recovery, see Secondary Oil and Gas Recovery Methods

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