1. Unconventional Oil & Gas Activity and Its Implications for Texas Real Estate Harold Hunt, PhD Real Estate Texas A&M College Station, Texas

2. My Focus at the REC Addressing these two questions:
How is “unconventional” drilling different from conventional drilling?
How long will (drilling activity in) the Eagle Ford Play last?

3. What Countries Have the Most Shale Oil and Shale Gas Reserves?

4. Major and Minor Shale Plays

5. Active Drilling Rigs in Texas (As of April 4th, 2014)
Source: Baker Hughes

6. Rig Counts (Land Rigs Only as of April 4th, 2014)
Area Total Gas Oil
U.S. 1, ,498
Texas
Permian
Eagle Ford
Granite Wash
Haynesville
Barnett
Source: Baker Hughes

7. Characteristics of the Best Shale
High organic matter content
The right maturity window
Sufficient brittleness
Sufficient natural fractures
Good porosity

8. Definitions Porosity - the percentage of void space in a material.
Permeability – The property of a porous material to permit a liquid or gas to pass through it.

9. Source: SPE International
Permeability of Shale
Source: SPE International

10. What Shale Rock Looks Like
The pct. of O&G being recovered from the shale is relatively small.

11. The Difference in Conventional and Unconventional Drilling
Source Rock
6,000 ft.
Source: U.S. Energy Information Administration

12. Equipment to Fracture a Well

13. Fracfocus.org Fluid Disclosure by Well
Source: Fracfocus.org

14. A Look at the Eagle Ford Shale
First Wells Drilled: 2008 Area: 20,000 sq. miles or 13 million acres

15. Most Active Eagle Ford Counties in Red (2012 Population Estimates)
Gonzales Co.
Uvalde Co.
Wilson Co.
Pop. 20,045
Pop. 26,752
Pop. 44,370
Atascosa Co.
De Witt Co.
Pop. 20,465
Cuero
Zavala Co.
Maverick Co.
Karnes Co.
Pop. 15,233
Pop. 11,961
Pearsall
Pleasanton
Pop. 55,365
Frio Co.
Karnes City
Crystal City
Pop. 17,702
Pop. 46,446
Victoria Co.
Goliad Co.
Pop. 7,351
Pop. 89,269
Goliad
Cotulla
Tilden
George West
Dimmit Co.
McMullen Co.
Bee Co.
Pop. 10,461
La Salle Co.
Pop. 32,527
Pop. 7,109
Live Oak Co.
Pop. 726
Pop. 11,664
Jim Wells Co.
Webb Co.
San Diego
Nueces Co.
Pop. 259,172
Pop. 41,339
Pop. 347,691
Laredo
Duval Co.
Pop. 11,754
Source: U.S. Census and Real Estate Center

16. Eagle Ford Shale Thickness
Source: Geology.com

17. Eagle Ford Shale Depth
Source: Geology.com

18. Completed Wells in the Eagle Ford
As of Aug, 2011:
263 Producing Oil Wells
394 Producing Gas Wells
Source: Texas Railroad Commission

19. Completed Wells in the Eagle Ford
11 Months Later…
As of July, 2012:
1,690 Producing Oil Wells
710 Producing Gas Wells
An Increase of:
1,427 Producing Oil Wells
316 Producing Gas Wells
Source: Texas Railroad Commission

20. Completed Wells in the Eagle Ford
12 Months Later…
As of July, 2013:
3,868 Producing Oil Wells
1,681 Producing Gas Wells
An Increase of:
2,178 Producing Oil Wells
971 Producing Gas Wells
Source: Texas Railroad Commission

21. Completed Wells in the Eagle Ford
9 Months Later…
As of Apr., 2014:
5,858 Producing Oil Wells
2,896 Producing Gas Wells
An Increase of:
1,990 Producing Oil Wells
1,215 Producing Gas Wells
Source: Texas Railroad Commission

22. Technology Improvements

23. Several Technological Improvements Will Affect the Number of Wells Drilled
Drilling one well to “hold a field by production” giving way to “pad drilling” where multiple wells are drilled from one drillsite, saving time and money.
Drilling rigs that “walk” or move along rails will significantly reduce the downtime between drilling a well.
The well spacing continues to tighten, leading to more producing wells on a given amount of acreage.
Tapping other pay zones will also extend the life of fields.

24. 1) Pad Drilling

25. Pad Drilling Example

26. Karnes Co. Drilling Pads

27. Gonzales Co. Drilling Pads