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11/08/2013

Market Opportunity Snapshot: South Central Shale

Challenges and opportunities in the Barnett, Eagle Ford and nearby shale plays.

South Central U.S.This article is part of a series from FPDA examining opportunities and challenges in shale oil and gas markets. This article provides a snapshot of the South Central region.

As of the end of 2011, the Barnett shale play underlying Fort Worth in Texas was the largest shale gas play in the U.S., with nearly 33 trillion cubic feet of shale natural gas proved reserves, according to the Energy Information Administration. According to the EIA, Texas' Eagle Ford play, underlying San Antonio, had the most significant increase from 2010-2011 in proved reserves out of the six largest U.S. shale plays; reserves there more than tripled during that time period.

The Woodfood, Haynesville/Bossier and Fayetteville plays underlying parts of Texas, Arkansas, Louisiana and Oklahoma add another 55.1 trillion cubic feet of reserves to the region.

Opportunities

Some of the greatest shale-driven opportunities in the region may be found in the following states, ranked from largest to smallest natural gas gross withdrawals and production from shale gas wells. Reserve, production and well count data are from the Energy Information Administration as of 2011.

Texas accounted for 28 percent of U.S. marketed natural gas production in 2011, making it the top natural gas producing state in the country. Natural gas withdrawals/production from shale wells increased 142 percent from 2007 to 2011 to 3.1 trillion cubic feet. The number of natural gas producing wells in the state jumped 36 percent to 100,966 during the same period.

Dry natural gas reserves in Louisiana, albeit a third of the size of those in Texas, were estimated at 30.4 trillion cubic feet in 2011. Natural gas withdrawals/production from shale wells jumped more than a hundred-fold from 2007 to 2011, to 2.1 trillion cubic feet. During the same period, the number of natural gas producing wells in the state jumped 22 percent to 21,235.

EIA estimates place Arkansas dry natural gas reserves at more than 16.4 trillion cubic feet of reserves. Natural gas withdrawals/production from shale wells was 935.2 billion cubic feet in 2011, a more than 10-fold increase from 84 billion in 2007. During the same period, the number of natural gas producing wells in Arkansas more than doubled to 8,388.

In Oklahoma, 2011 estimates placed dry natural gas reserves for the state at 27.8 trillion cubic feet. Natural gas withdrawals/production from shale wells was 449.2 billion cubic feet in 2011, an increase of 441 percent compared to 2007 levels. During the same period, the number of natural gas producing wells in the state increased 8 percent to 41,238.

Challenges

Producers have reported a high degree of variability in production levels across the Barnett. A study released in September by the Alfred P. Sloan Foundation and the University of Texas, which examined 15,000 wells in northern Texas, shows that many of those drilled there in the past decade haven't produced expected yields.

The impact of anti-drilling regulation has had less of an impact on the South Central market than in other regions. But the region hasn't been entirely immune.

According to Forbes, Texas became the first state in the union in 2011 to require disclosure of all ingredients of fracturing fluids in Texas wells when Gov. Rick Perry signed the Texas Hydraulic Fracturing Fluid Disclosure bill into law. Drillers there must now disclose what chemicals are used in each of their wells on FracFocus.org, although the law allows companies to keep secret those chemicals deemed to be trade secrets.

New research could fuel further regulations.

A study released in March in the scientific journal Geology linked a magnitude 5.7 earthquake in 2011 in central Oklahoma to wastewater injection from oil and natural gas production. According to the study, Potentially Induced Earthquakes In Oklahoma, USA: Links Between Wastewater Injection and the 2011 Mw 5.7 Earthquake Sequence, "the tip of the initial rupture plane is within ∼200 m of active injection wells."

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