The US Energy Information Administration’s forecast gas price is below USD 5/Mcf through the 2011 calendar year, prompting many historically gas-focused companies to shift their portfolio emphasis to oil. South Texas has been a hotbed for oil development for the last half a century. The last great oil boom in south Texas occurred in the Austin Chalk formation in the 1970s and early 1990s. Today, the Eagle Ford Shale has renewed oil exploration interest in South Texas.

The Eagle Ford Shale is a very prolific play that for the most part is bounded on top by the Austin Chalk formation. Many operators are wondering if the oil being produced from the Eagle Ford Shale is essentially the same oil (from both a source and geochemical standpoint) as the Austin Chalk. Owing to the tight nature of the shale, it is highly unlikely that oil is being produced solely through pore flow into hydraulic fractures. The industry has not fully grasped the storage mechanism in the Eagle Ford Shale and the factors that indicate a good producing area versus a mediocre one.

This paper studies the possibility that the Austin Chalk and Eagle Ford Shale form a single hydrocarbon system. The potential source, generation, migration, storage, and production mechanisms of both formations will be analyzed from a geologic perspective. The implications of this theory for exploiting the Eagle Ford Shale will also be discussed. From a production standpoint, this paper will compare the production trends of horizontal wells in the Eagle Ford Shale and Austin Chalk formations, analyzing each in detail to determine if there are any similarities in initial production rates and decline trends.

This paper investigates the areal extent of production from the Eagle Ford Shale and Austin Chalk formations and discusses their interdependencies. In addition, geological and petrophysical attributes are evaluated to understand this phenomenon. Lastly, this paper describes the key mechanism(s) for oil/condensate flow in these oil-producing reservoirs and how to best exploit these unconventional formations.