The Eagle Ford play in southeast Texas presents local refineries with the opportunity to get crude oil at lower costs than using imported oil. Refineries that rely on imported Brent oil pay a premium over what Midwest American refineries pay, so getting more cheap oil from domestic sources can boost profitability.
Reuters reports that production in the area is accelerating, averaging 272,000 barrels per day in June from 70,000 in April, according to data supplied by energy consultancy Bentek. Market experts have predicted that this production could surpass 400,000 barrels per day by 2013.
All that new Texas supply, and the short distance it would travel to get to a refinery, will lower the expenses associated with producing and transporting the crude for local refineries, Reuters reports.
Once new pipelines get built from Cushing Oklahoma down to Texas, Texas refineries will also be able to access the cheaper crude supplies in Canada and North Dakota—increasing cost savings.
The Eagle Ford shale resides in South Texas and contains natural resources that range between 4,000 and 14,000 feet below ground. Oil production in the play has been prioritized as abundant shale deposits existing in North America have driven down natural gas prices.