U.S. Oil Production Growth Expectations Continue To Rise

U.S. oil production is expected to rise more than 2 million barrels per day by 2015. That's from a new report written by Bentek that was released after the National Petroleum Council's Production Report last week. The bulk of production will be added by the Bakken, Eagle Ford, and other plays in West Texas. IHS predicts that same oil growth could fuel the addition of 1.3 million jobs and add $97 billion in tax revenues. I think it's safe to say all three, production, jobs, and tax revenues, should be welcomed during this economic climate.

North America appears headed for an oil renaissance, with crude production expected to hit an all-time high by 2016 given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.

U.S. oil production in areas including West Texas' Permian Basin, South Texas' Eagle Ford shale and North Dakota's Bakken shale will record a rise of a little more than 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.

Read the full news release at mysanantonio.com

Addressing Roads and Pipeline Easements in South Texas

South Texas roads and pipeline easements become a source of contention when an industry moves in as quick as we've seen in the Eagle Ford. Operators end up negotiating 95% of pipeline right-of-ways, but approximately 5% have to be condemned. That doesn't make for a happy landowner. In addressing road needs, one operator is donating $8,000 per well to a road fund in Dewitt County. Creative solutions will be needed. You can't add heavy trucks to roads without more frequent maintenance. Road funds and increased tax payments will come and in a couple of years it will all equal out. In the mean time, a compliment should go to operators who are acting early in addressing the needs of the communities.

Along with oil and gas prosperity, tricky problems come with the Eagle Ford shale boom.

Roads in small communities are taking a beating from oilfield truck traffic. There's a housing shortage.

And billions of dollars in new pipeline will crisscross the oil and gas play, an eminent domain issue that inevitably will make some private landowners unhappy.

The issues are nothing new in a state with a long history of oil and gas production. But the speed at which drilling activity has ramped up across the Eagle Ford has taken many by surprise.

Read the full news release at mysanantonio.com

Small and Large Businesses in on the Eagle Ford

Businesses in South Texas all stand to be impacted by the Eagle Ford Shale. Many predict the development of the play will have the largest economic impact of any event in Texas history. This year alone, oil & gas development is expected to add $13.9 billion in direct impact and that number might grow closer to $50 billion by 2020. If you haven't already, you need to consider how your business will evolve with the Eagle Ford.

...It (Eagle Ford Shale) is having a major impact on small business opportunities in and around the 24 counties that sit atop the formation. The total impact is expected to be $13.9 billion this year and increase to $48 billion in 2020. By comparison, the annual GDP of the three county Corpus Christi metropolitan area is about $15 billion. Recovery of oil and gas from tight shale became possible about five years ago with the development of horizontal drilling and fracturing technology. Fracturing of the rock holding the oil and gas with high pressure water and sand releases it to flow to the surface. The Eagle Ford formation is about 50 miles wide and 400 miles long running roughly Northeast from Laredo.

Eagle Ford is expected to be the greatest single economic boom in Texas history. You need to figure out how your business can participate.

American Shales Add Jobs and Oil Production

American shale plays, such as the Eagle Ford and Bakken, might produce as much as 2-3 million barrels of oil per day by 2020. A recent report by the National Petroleum Council (NPC) and American Petroleum Institute (API) suggest shales might also add 1 million jobs over the next 10 years. That's an employment boom this country needs. The oil & gas industry already supports some 9 million American jobs. As people get hired it will be hard to refute, but we all have to work to help the rest of the nation understand that American energy creates American jobs. 

America needs energy. America needs jobs. A way to get them both is right under our feet.

A recent report by the National Petroleum Council says the United States has a more abundant supply of oil and natural gas than previously believed. The report concludes that by 2035 America could be producing 2 million to 3 million barrels of oil per day from shale formations, including the Bakken shale in North Dakota and Montana and the Eagle Ford shale in Texas.

The Sept. 15 report forecasts that under the most optimistic assumptions, America and Canada combined could produce up to 22.5 million barrels of oil per day, if the U.S. lifts regulatory barriers. This would allow America to reduce its reliance on oil from other parts of the world.

Read the full news release at thehill.com

Horizontal Drilling and Hydraulic Fracturing Brought the Eagle Ford

Anadarko's drilling manager Mark Sunland was interviewed by MyWestTexas. He talks about new technologies opening up what was traditionally thought to be a source rock. The combination of horizontal drilling and hydraulic fracturing have made the play economic and opened vast domestic resources. Future improvements, such as rotary steerable technology, will only improve the efficiency of shale drilling onshore. 

"The technology involved in (horizontal drilling) is not really anything new to us," Sundland stated, adding hydraulic fracturing is not new either, having been around since the late 1940s. "It's applying technology that we use for a different style play and applying it to a new geological setting."

Historically, producers considered shale formations to be sources of oil and gas, but not to be access points because shale is not sufficiently porous nor permeable to release its hydrocarbons efficiently.

Whereas the older vertical drills could access only a small slice of a formation, horizontal drilling can cut through miles of the same layer of rock. Anadarko's record for horizontal hole length is 8,340 feet, with the average Eagle Ford hole coming in at 6,000 horizontal feet. This greater formation exposure was then combined with hydraulic fracturing, which created the artificial permeability needed to allow the oil to flow to the pump.

"This is the beauty of two well-understood technologies being applied in a different way. It has completely changed the paradigm for petroleum engineers," Sundland said.

Rotary steering technology (RST) on the other hand, is "much more high-tech," he said, not relying on bent housing, instead using computer controls to direct the bit. The drawback for RST, and the reason it had been mostly used offshore, is that it is much more costly.

This type of technology has opened not only the Eagle Ford shale - whose reserves Sundland compared to major offshore fields -- but in the Permian Basin and elsewhere as well, driving production rates in Texas to an upward curve for the first time in 40 years.