Saturday, February 25, 2012

Shale Formation in the Eagle Ford Region of Texas

Don't ever write it "Eagleford" because you will be singled out right away as a "outsider." The Eagle Ford shale formation is the biggest boom to hit Texas in the last 40 or so years, and the biggest oil and gas discovery in the United States.
Discovered in 2009, and named for the community of Eagle Ford in South Texas, the Eagle Ford shale formation has been around since the late cretaceous period, about 85 million years ago. This formation, once part of a vast inland sea, starts at the Mexico-Texas border in Webb and Maverick counties, and travels east for about 400 miles.
The shale is mostly carbonate, making it easy to break up using hydraulic fracturing machinery. Over 50 miles wide and 250 feet thick, the formation lies at a depth of from 4,000 to 12,000 feet deep. In all, it goes through 23 counties, and has already made some people very rich.
The community of Eagle Ford is now part of a West-Dallas neighborhood. This is where the formation was first seen. The shale formation is made up of an organic-rich fossiliferous marine shale. The rising and falling of the ancient sea bed, along with the pressures exerted over the millenniums created this vast oil and gas rich area.
While landowners lucky enough to own the rights of minerals on their land will reap profits from the leasing of their mineral rights, there are any number of oil companies wanting to buy the rights. Selling mineral rights in Texas is not as easy as one may think. A landowner who wants to sell mineral rights has to first ascertain if he even owns the mineral rights to his land.
If a landowner finds that he indeed does own the surface and mineral rights to his land, then he may find it more profitable selling mineral rights, rather than leasing them. There are a number of reasons for this move, from combining one's assets, having more liquidity, or even for estate planning purposes. In this case, going to a broker may be the best way to handle the transaction.
But rather than sell their rights, many landowners in Texas are leasing the rights. This move is also profitable. Many people are leasing their mineral rights for as much as $2,000 an acre as an up-front payment, plus getting 25% of the royalties on any profits. All that is required is a legal contract for the use of the land for oil or gas production. With estimated reserves at 3 billion barrels, and an average output of 42,000 barrels a day, Eagle Ford is adding to the economy of Texas.

1 comment:

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