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The fire last week near Pearsall was the result of an explosion at a disposal facility. The fire was first reported as an explosion during a "frack job", but it was later correctly reported that it was a disposal facility that caught fire. I haven't heard an update on the injuries, so I'm assuming they were minor.
If you were near or involved, we'd love to hear your comments below.
You can watch a video of the fire at ksat.com and can read more at npr.org.
Kinder Morgan provided an Eagle Ford pipeline and midstream update in its quarterly call last week. The company realized better results in relation to it's pipeline and gathering network in the Eagle Ford, while staying on target to complete a $220 million condensate pipeline that will terminate in the Houston Ship Channel. Kinder also announced a $130 million condensate processing facility in Galena Park, TX, that will have capacity of 25,000 b/d initially (potential for 100,000 b/d). Quotes below:
....In the quarter, Rockies Express Pipeline produced improved results due to a property tax settlement, equity income from the Eagle Ford Gathering and EagleHawk Field Services joint ventures increased due to higher volumes, and Kinder Morgan Treating benefited from the SouthTex and Gas Chill acquisitions. “Growth for the year versus 2010 was attributable to contributions from the KinderHawk and EagleHawk acquisitions, Fayetteville Express Pipeline, commencement of commercial operations of Eagle Ford Gathering, increased revenues from the Midcontinent Express Pipeline expansion, and improved gathering results due to favorable processing spreads on Casper-Douglas and increased volumes at Red Cedar,” Kinder said. Results for both the quarter and the year were impacted by lower results from the Trailblazer and KMIGT pipelines.
Kinder is investing approximately $130 million to build a petroleum condensate processing facility near its Galena Park terminal on the Houston Ship Channel. The initial throughput capacity of 25,000 barrels per day (bpd) is being supported by a fee-based contract with a major oil customer, and the plant can be expanded up to 100,000 bpd. The company will own and operate the plant, which will split condensate into its various components. It is expected to be in service by January of 2014.
The location of the facility, when combined with Kinder Morgan’s previously announced $220 million crude/condensate pipeline, will provide customers with unparalleled connectivity to crude oil and clean products markets on the Texas Gulf Coast. The crude/condensate pipeline will transport product from the Eagle Ford Shale in south Texas to the Houston Ship Channel. It will consist of almost 70 miles of new-build construction and 113 miles of converted natural gas pipeline. Construction of the pipeline continues and the company expects it to begin service in the second quarter of 2012.
Eagle Ford Gathering, a joint venture between KMP and Copano Energy in south Texas, executed interruptible service contracts with several producers totaling more than 90,000 MMBtu per day, of which over 21,000 MMBtu per day will convert to long-term firm contracts when the joint venture’s processing capabilities increase in the second quarter of 2013. The joint venture also completed its delivery facilities to the Formosa Point Comfort processing plant in Jackson County and expects to initiate flow to Formosa in February 2012.
The joint venture has about 400 miles of pipelines (including its capacity rights in certain KMP pipelines) with capacity to gather and process over 700,000 MMBtu per day. Including its 50 percent equity interest in Eagle Ford Gathering and its 25 percent interest in EagleHawk Field Services (and excluding the crude/condensate pipeline), this segment has committed approximately $400 million to expansion projects in the Eagle Ford Shale.
Read the entire press release at KinderMorgan.com
The Eagle Ford Shale drilling rig count moved up 2 this past week. The rig count was relatively flat again week over week. Rigs targeting natural gas continue to be the only threat to the region. At current price levels, we're getting close to operational costs for wells and that means tough decisions will have to be made in regards to shutting in lower volume (high cost) wells. Natural gas prices are approaching ten-year lows at ~$2.30 / mmbtu. With that, we still added 5 gas rigs this week. Those units are likely targeting portions of the play with a rich condensate and NGL stream. We dropped 3 oil rigs, but prices held flat at $98/bbl through most of the week. Horizontal wells account for activity from 245 rigs drilling and we have 0 injection or service wells being drilled.
Karnes County expanded its lead in drilling this week with 43 rigs. Webb (40), La Salle (33), DeWitt (26), McMullen (24),Gonzales (21), and Dimmit (19) are the most active counties. Frio County did jump to 10 active rigs this week to round out the counties with double digit rig counts.
News in the Eagle Ford included:
Jeff Venghaus, from Jones Lang LaSalle, contributed an article addressing Eagle Ford Industrial Real Estate.
Don't forget our blog platform is open. If you have professional experience in the Eagle Ford and would like to be considered as a contributor, please Contact Us about guest blogging.
Come back weekly for updates on the South Texas drilling 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.
Eagle Ford Shale NGLs, along with other liquids producing plays, are helping make the U.S. competitive in the worldwide petrochemical market. "That's a drastic change from just 10 years ago when companies thought there would never be another petrochemical facility built in America", says Wood Mackenzie's Senior NGL Analyst Larry Schwartz.
We recently sat down with Schwartz to get additional insight into the growing natural gas liquids (NGL) market in South Texas. In short, he expects the Eagle Ford will go from producing ZERO barrels of NGLs a few years ago to more than 300,000 barrels per day (b/d) by 2020. For reference, the EIA tracks processed volumes of NGL production (at the plant level) and as of the 4th quarter of 2011 the entire market is a little more than 2.2 million b/d. If total production held flat, the Eagle Ford would easily account for more than 10% of the total U.S. NGL market in 2020.
Over the past decade, modern technology has kept the industry attractive, but the major companies in the chemical industry have been moving closer to supply in the Middle East. That's all set to change now. Combine the most developed infrastructure in the world with Eagle Ford sized supply and it's easy to see why the U.S. is again the talk of the NGL world.
Add volumes of NGLs from oil plays in West Texas and North Dakota to the developing wet-gas plays like the Marcellus Shale and you see why chemical companies are moving to expand and plan the once never thought of "New Build" plants. It's not speculators stepping in to take advantage of this opportunity either. It's energy stalwarts Dow Chemical, ChevronPhillips (a petrochemical JV between Chevron and Conoco), and Formosa (FTC). The companies are exploring potential plants in the Gulf Coast area and Schwartz attributed the main reason for excitement to "the U.S. has more storage, more pipelines, and more integration between facilities than anywhere else in the world."
ChevronPhillips is farthest along in breaking ground on its Gulf Coast Petrochemicals Project. The proposed plant is being designed as a 1.5 million metric tons/year (3.3 billion pounds/year) ethane cracker. That's large enough to consume up to 95,000 b/d of ethane.
Not only will the U.S. benefit from new petrochemical facilities, but we actually have a hydrocarbon supply that is in great demand in the rest of the world. I didn't know this little fact before, but we're already exporting to areas with fewer resources. While there is only capacity to export 180,000 b/d currently, that number could easily grow to over 350,000 b/d if Targa and Enterprise complete expansions at their Gulf Coast export facilities. Much of the current exports end up in Latin American where there is less infrastructure and NW Europe where LPGs can be substituted for Naptha in the summer months.
While the Eagle Ford is important, it is only one piece of the export puzzle. The potential for exports will go up considerably if Enterprise Product Partners completes a proposed 1,200+ mile ethane pipeline from the Marcellus and Utica Shale region of the northeast down to Mont Belvieu. Add the Marcellus volumes to those from oil producing regions and we should see NGL supply growth for several years to come.
With gas prices in the sub-$3/mcf range as of early 2012, NGLs are a welcomed commodity. As long as the value of the product is linked to high value oil, operators will continue to exploit opportunities in the natural gas liquids market
Thank you again to Larry Schwartz, Senior NGL Analyst at Wood Mackenzie, who helped me put Eagle Ford NGLs in perspective. Wood Mackenzie recently released a more involved supply study on the Eagle Ford and I'm sure you can find more information at their website WoodMacResearch.com
The Targeted Job Fairs' Eagle Ford Oil & Gas Career Fair is on Thursday, January 19th, from 11 am to 3 pm. The event will be held at the Henry B. Gonzales Convention Center in Downtown San Antonio. There will be hundreds of jobs on display, so bring your updated resume and be ready to interview. Operators, technicians, heavy truck drivers, mechanics Primarily, employers at the career fair will be seeking to fill positions related to operations, technician/technical roles, heavy machinery and truck drivers, as well as mechanics. The companies on hand will also have openings in the areas of drilling, production, petroleum engineering, maintenance, Geosciences, health, safety and environment. (HSE), and management.
More companies might have been added this week, but the lineup includes
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