Kinder Morgan Expects Eagle Ford Shale Growth

Kinder Morgan expects future growth in its Eagle Ford Shale pipeline gathering and transport assets. The company expects the acquisition of Petrohawk by BHP to only enhance value across the Haynesville Shale and Eagle Ford Shale.

"On July 1, we closed on our agreement to buy Petrohawk's 50% interest in KinderHawk Fuel Services, and a 25% interest at Petrohawk's Gathering and Treating business in the Eagle Ford Shale in South Texas.  Now we own 100% KinderHawk, which has over 400 miles of pipeline in the Haynesville Shale play and approximately 2 Bcf a day of capacity. We have throughput that is now above 1 Bcf a day and growing. And we think this is just a tremendous long-term asset. We believe its value has been enhanced by the pending purchase of Petrohawk by BHP. And if you look at the BHP's presentation, we saw some pretty significant ramp up in dollars they expect to spend on their drilling program. Now that drilling program embraces Haynesville and Eagle Ford together with smaller position in the Permian. But we think this bodes very well for our assets, both in Haynesville and Eagle Ford.""We now own also the 25% of what's called EagleHawk Fuel Services in the Eagle Ford. That's 280 miles of gas gathering lines and 120 miles of condensate gathering lines. And we think the Eagle Ford Shale is an area that where throughput will grow dramatically as drilling down there continues to expand."

Read the full press release at SeekingAlpha.com

Blue Dolphin Enters the Eagle Ford Shale

Blue Dolphin enters the Eagle Ford Shale processing game through its latest acquisition. The facility sits near Nixon, TX, between Gonzales County and Wilson County. Processing capacity is 15,000 barrels per day with storage capacity of 295,000 barrels.

"Houston-based Blue Dolphin Energy Co. (OTCQB: BDCO) has acquired a processing facility in the Eagle Ford shale play."

"Blue Dolphin bought the 56-acre Nixon Crude Processing Facility from a privately held company in an all stock transaction."

"The Nixon Facility is in the final phase of refurbishment and should restart this quarter."

The processing facility is actually an idled refinery that Blue Dolphin will likely refurbish and bring back online.

Eagle Ford Shale Rig Count - July 22, 2011

Oil Drilling Rig

The Eagle Ford Shale rig count rose from 224 rigs drilling in the prior week to 226 active drilling rigs. The natural gas rig count increased from 108 to 111 rigs drilling, while the oil rig count dropped to 113 from 114 active rigs the previous week. 1 rig is drilling an injection well in La Salle County, TX.  Horizontal rigs account for 205 of the 226 rigs drilling in the South Texas region. The horizontal rig count is still increasing. The natural gas drilling has actually increased alongside oil drilling. Stay tuned each week for an update on the South Texas rig count.  Better yet, Subscribe by RSS.

Drilling Rig Count by County

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas.  The South Texas rig count referred to in this article is for ALL drilling reported by SmithBits and not solely wells targeting the Eagle Ford Shale.

All land rig counts and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count and/or Smith Service Co's (Schlumberger) Smith Rig Count.

Lufkin Industries Gets Eagle Ford Revenue Boost

Eagle Ford Shale oil and liquids production is adding to the bottom line for Lufkin Industries. The company's oilfield division provides pumping units that help with the artificial lift of fluids to the surface. Oil wells have pumping units installed within months and sometimes days of being completed. As drilling ramps up in South Texas, you can expect Lufkin has a lot of work ahead.

Customers continue to spend aggressively in North America, especially in the Permian Basin, the Niobrara and in the Eagle Ford Shale play.

Automation revenues were up 23% sequentially from our new U.S. Automation factory, setting a new high for shipments, as customers continue upgrading to higher-value variable-speed drives to optimize production and minimize well operating costs. Oilfield's new order bookings increased 51% to $195.4 million from a year ago. Sequentially, international bookings more than doubled to $60 million, led by strong increases originating from South America. Automation bookings were stronger than anticipated as several international orders from projects in Oman and Romania helped bookings during the quarter.

Read the full news release at lufkin.com

Frack Water Use a Concern in South Texas

Texas Water Development Board increased its water use estimates for future decades by over 30% year over year due to consumption related to the development of the Eagle Ford Shale. Water use in the Eagle Ford Shale is a growing concern as the South Texas drought continues.  Companies are often drilling water wells that cost as much $500,000 to supply much need hydraulic fracturing fluids. The water produced from these new wells will be transferred to the landowner after the operator has completed its oil wells.

"Changes in South Texas prodded a serious modification in the report’s water-use projections. As early as last month, the Current reported that the board’s estimated water use would peak in 2031 with 32,000 acre-feet of water needed per year. However, final projections for the Eagle Ford shale region across much of South Texas have now spiked as high as 45,000 acre-feet (14.6 billion gallons) at peak production — which is now expected to hit seven years earlier, in 2024.""Industry insiders and regulators are finally starting to realize the possibility for trouble as fracking continues to siphon off more and more water each year. At a conference last week reported by the San Angelo Standard-Times, Stephan Ingram, technology manager for Halliburton, admitted, 'We use a lot of water. We need to figure out a way to utilize less of it.' Leslie Savage, chief geologist for the Texas Railroad Commission said, 'Frankly, in my opinion, it is not the well casing, it is not the hydraulic fracturing chemicals that are a problem in hydraulic fracturing. It is the use of water, particularly in drought.' ”

"And once production peaks, don’t expect an immediate decline in water use. New fields could possibly ramp up at that point, according to the Water Development Board’s report, meaning that 'water use, instead of decreasing after the peak of ~120 thousand AF would stay at that level or possibly higher for a longer period of time.' ”

Read the full news release at sacurrent.com