Skilled Workers Needed in South Texas

December 20, 2011 R.T. Dukes

There are thousands of Eagle Ford job openings across South Texas. The only obstacle is that the industry needs skilled and unskilled labor. Skilled labor means we need training and educational programs or we'll have to hire people from other parts of the country. Structural unemployment is an obstacle to coming out of the recession and we're no different in Texas. The San Antonio Manufacturers Association held a meeting on December 14, 2011 to address hiring needs in the area. The association is setting out to identify workforce needs for manufacturers. They hope to help develop programs to educate individuals to fill vacant manufacturing positions that are growing in number due to the Eagle Ford.

SAMA wants to provide the information from the Dec. 14 meeting to Workforce Solutions Alamo and Alamo Colleges so they can direct workers to possible training programs.
Creating training programs for newly needed skills takes time. Chavez said the National Association of Manufacturers is talking increasingly about the need for employers to train people on the job instead of waiting for skilled workers to apply.
Something has to happen. The economic recovery depends on it.

Louisiana Eagle Ford Well Result Promising

December 19, 2011 R.T. Dukes

Indigo's recent well results indicate the commercial extent of the Eagle Ford could extend into Louisiana. Indigo recently completed a successful well in Rapides Parish, La, that flowed over 500 boe/d over a 24 hour period. The company plans to sell an operated interest in its assets in early 2012 and then begin development of the play. For reference, here's a simplified cross section of the Eagle Ford from Texas to Louisiana.

The company's first horizontal well targeting the Louisiana Eagle Ford Shale (“LA Eagle Ford”) formation has been tested resulting in a new oil discovery in Central Louisiana. The Bentley Lumber 34H #1 located in Rapides Parish, LA originally spud back in late July 2011 and recently flowed at a rate of 543 barrels oil equivalent (80% oil) during a 24 hour test period. This first LA Eagle Ford horizontal well in the region was successfully drilled without the need for an intermediate casing string through the shale interval and involved a 15-stage fracture stimulation of the target interval. The hydrocarbon mix is light, sweet 45 API gravity oil, with liquids rich natural gas (1520 Btu and 11 GPM natural gas liquids). The oil is currently being trucked to sales and the gas is temporarily being flared with state approval.
Indigo II has assembled nearly 260,000 net acres in the LA Eagle Ford play and has identified several locations to drill additional horizontal wells in 2012. Prior to doing so, it intends to secure a joint venture operating partner sometime in early 2012 to bring horizontal oil expertise and capital to this large, oil shale development project. Indigo will also be closely following new developments by Encana, Devon and others to the east of its acreage position. Both operators have successfully drilled and completed horizontal wells in the same formation and have announced additional new drilling permits. It is anticipated that 5 to 7 rigs could be operating in this emerging oil play during the 1st quarter of 2012.

Three Rigs Dropped Last Week - December 16, 2011

December 16, 2011 R.T. Dukes

The Eagle Ford Shale drilling rig count fell 3 rigs last week to 256. It was a rough week in the commodities markets. Oil futures prices fell more than $5 (WTI <$94/bbl) and natural gas futures prices (HH<$3.15/mmbtu) continue to fall. The January contract has fallen more than $0.50 over the past two weeks. Spring weather in Texas this past week isn't helping the cause. The natural gas rig count fell 3 to a total of 93 rigs. While $3 gas isn't going to help, the Eagle Ford rig count is more dependent on liquids prices than natural gas.

The number of oil rigs working didn't change 162. Also, one service well is being drilled in Duval County. 233 of the 256 running (>90%) are drilling horizontal wells.

Webb (35) still leads the region, while Karnes (33), La Salle (31), McMullen (26), Dimmit (22), DeWitt (22), and Gonzales (18) round out the top counties in the area. The only significant change by an operator during the week was EOG who dropped 3 rigs.

News highlighted throughout the play included:

Stay tuned for updates on the South Texas drilling rig count.

Drilling Rig Count by Operator

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 rigs referred to in this article are for ALL drilling reported by SmithBits and not solely wells targeting the Eagle Ford formation. All land rigs 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.

Drilling Rigs by County

Forest Oil Dropping to 1 Rig in 2012

December 16, 2011 R.T. Dukes

Forest Oil will develop its Eagle Ford assets utilizing 1 rig in 2012. That's down from two running in past months. The company plas to spend a total of $550-600 million next year, with most of its budget allocated to the Granite Wash and other properties in the Texas Panhandle.

For the year ended December 31, 2012, Forest intends to invest between $550 million and $600 million for capital activities (excluding capitalized interest, capitalized stock-based compensation, and asset retirement obligations incurred) as detailed below. The exploration and development capital budget is expected to include five to six operated rigs in the Texas Panhandle, two operated rigs in East Texas / North Louisiana, one operated rig in the Eagle Ford Shale Play, and one operated rig in the Permian Basin.

Eagle Ford Condensate Processing Expansion - Houston - Kinder Morgan

December 15, 2011 R.T. Dukes

Eagle Ford condensate processing is set to expand by 25,000 b/d with the announcement of a new Kinder Morgan processing facility in Galena Park, TX. The plant will be positioned well to reach Gulf Coast industrial markets and the Houston Ship Channel. The $130 million facility will split condensate into its components: light and heavy napthas, kerosene, and gas oil. The plant will also have the capability to expand to 100,000 b/d.

“The location of our new facility, when combined with our recently announced $220 million crude/condensate pipeline, will provide customers with unparalleled connectivity to crude oil and clean products markets including refineries, chemical companies, gasoline blenders, finished product storage, outbound pipelines and marine facilities on the Texas Gulf Coast,” said KMP Products Pipelines President Tom Bannigan. The transaction is expected to be immediately accretive to cash distributable to KMP unitholders upon the project’s completion in January 2014.

The pipeline, which will transport crude/condensate from the Eagle Ford Shale in south Texas to the Houston Ship Channel, will consist of almost 70 miles of new-build construction and 113 miles of converted natural gas pipeline. Construction on the pipeline began this week and Kinder Morgan expects it to be in service in the second quarter of 2012.