El Paso Corp. may make a decision "in the next few weeks" about whether to bring aboard a partner to help develop its holdings in the Eagle Ford Shale, CEO Doug Foshee said Monday.
Foshee discussed the company's outlook and its potential plans at the Howard Weil Energy Conference in New Orleans.
"We are actively testing the waters for a partner," he told financial analysts. "We expect a decision internally in the next few weeks if we want to take a partner" in the Eagle Ford play.
The Houston-based producer and gas pipeline giant owns around 165,000 acres in the South Texas shale formation.
During a conference call in January exploration chief Brent Smolik said El Paso was considering whether to bring aboard a joint venture (JV) partner to help fund Eagle Ford development (see Daily GPI, Jan. 28). He also detailed El Paso's plans in oil-heavy shale plays during an earnings conference call in February (see Shale Daily, Feb. 25).
"We now have over twice as many oil rigs than gas rigs working, and we plan for that ratio to increase during the course of the year," Smolik said last month. "In the near term, we still plan to run four rigs in the Haynesville program, which is a very optimized and economic activity level. But as I said in our guidance call, depending on gas prices and service costs, we may choose to further reduce our activity and shift capital to one of our oil programs.
"Another factor that can change our activity level is whether or not we take a partner in the Eagle Ford. We're very much in the throes of those discussions and we'll likely decide by the end of the first quarter. If we can accelerate our Eagle Ford program while improving the value of the opportunity by taking a partner, then we'll do it. If not, then we'll go it alone and shift capital as we need to in the second half of the year."
Most of El Paso's Eagle Ford activity is LaSalle County, TX, where it has its largest acreage position.
"We now believe that area contains volatile oil, meaning that we have oil in the reservoir with associated gas at the surface versus having gas wells with condensate dropping out of the surface," Smolik said. "So as we move into development phase, the Eagle Ford will become more impactful in 2011."
El Paso also is a Haynesville Shale producer. Smolik said the company has taken what it learned in that play and applied it to the Eagle Ford, "so we're moving up the learning curve rapidly, which means we're finding ways to cut time and capital costs per well. And we've only been drilling the Eagle Ford for a little over a year..." The play, he told investors, "will be a long-term anchor program for us."
In December subsidiary El Paso Midstream Group Inc. and Kohlberg Kravis Roberts & Co. launched a $1 billion-plus midstream JV to pursue developments that would serve companies that operate in the Eagle Ford and Marcellus shale formations (see Shale Daily, Dec. 8, 2010).
Joint shale-related projects include the Marcellus Ethane Pipeline System (MEPS), which was announced by El Paso last August (see Daily GPI, Aug. 10, 2010). Spectra Energy Corp. has agreed to work on the MEPS project, El Paso said.
The JV partners also are working on El Paso's proposed Camino Real Pipeline in the Eagle Ford Shale. Like its deal with Spectra in the Marcellus, El Paso has said it wants to secure a partner for the Camino Real project.