Crimson Exploration's Woodbine and Eagle Ford Acreage Success Continues

Crimson Exploration announced continued success in the Woodbine and in the Eagle Ford Shale.

Crimson has approximately 18,500 net acres in Madison and Grimes counties, Texas, covering three areas the Company refers to as Force, Iola-Grimes, and Chalktown where it has been actively developing the Woodbine. The oil potential in all three areas has been confirmed by production tests. The Woodbine section in each of these areas has slightly different characteristics, including different sand lobes within the overall Woodbine section and it is expected that more than one well will be required in each area to optimize the best landing point and completion practices required to maximize production and recovery. Crimson is very encouraged by the results to date and confident that this area will deliver a multi-year inventory of impactful and superior rate of return oil projects which will contribute significantly to Crimson’s growth story.

In the Eagle Ford -

Recent wells drilled in adjacent Brazos, Robertson, and Leon counties have had IP’s in excess of 600 bopd. The Eagle Ford section across Crimson’s acreage position has similar reservoir characteristics, thickness, porosity, resistivity, and shows in existing wells. Assuming development on 80 acre spacing, the Eagle Ford could potentially add up to an additional 230 locations and 68 Mmboe of net potential to Crimson’s position.

The company is also discussing tests of the Georgetown and Buda Lime formations.

Read more regarding specific well results at crimsonexploration.com

Port Aransas Housing Boom Supported by New Wealth in South Texas

The Eagle Ford Shale is building wealth in South Texas and locals are stepping up as buyers for highly valued real estate. Port Aransas has seen real estate demand grow by four-fold. Buyers are coming from Ingelside, Cuero, Beeville and Corpus. That's a shift from the major metro areas in the past.

"Primarily, before this a lot of our market had come from Dallas, San Antonio, Austin and Houston," developer Jeff Lamkin said. "Now, the local market here has become a really big segment of our renter and buyer profile."

The Cinnamon Shore development has 300 homes that range in price from $300,000 to $2 million. The development bills itself as the only "beach-front community designed in the new urbanism style".

 

 

Eagle Ford Shale Housing Solutions Need to Be Creative

Eagle Ford Shale Housing solutions need to be creative. A recent study completed by UTSA's Center for Urban and Regional Planning Research concludes that an area from Laredo to Eagle Pass might experience population growth of 24% over the next decade.

"Housing units need to include a flexible design approach that can adopt to changes in demographics after the extraction activities of oil and gas is ended," the study concluded.

Man camps and worker camps are providing housing for the growing industry, but affordable permanent housing is needed for those outside of the industry. Creative solutions are needed to answer the demand for homes and the stress on infrastructure.

Forest Oil Plans to "Go It Alone" in the Eagle Ford - No JV Partner Identified

Forest Oil Eagle Ford Acreage Map
Forest Oil Eagle Ford Acreage Map

Forest Oil will develop its Eagle Ford assets alone and forgo a potential joint venture on its acreage. The company recently moved a second rig into the area and will be able to develop more than 40,000 core acres alone (100% working interest). The company's remaining acreage will either be sold or farmed out to other operators.

Since the last update from Forest:

Three horizontal wells have been completed in the central fairway of the Company’s Eagle Ford acreage position that had an average 24-hour maximum production rate of 787 Boe/d (96% oil). The first two wells had a 30-day average production rate of 535 Boe/d (95% oil), and the third well, which has been on production for 18 days, has averaged 616 Boe/d (94% oil).

Forest is now shifting from a acreage holding strategy to a development strategy. The company has realized the most consistent results in what the company calls the central fairway in Gonzales County. Forest will now target increased drilling efficiencies and begin pad drilling in efforts to drive well costs below $6 million.

Recent wells all meet or exceed the company's 300,000 boe type curve. The expected type curve yields a 25% rate-of-return at $80 oil and $6 million well costs. The 40,000 acres the company is targeting has reported potential of 500 wells at 80-acre spacing. That indicates expected recoveries of 150 million boe. [ic-c]

Capital Budget Cut and Directed to the Eagle Ford

Forest is cutting drilling in East Texas (2 down to 1 rig) and in the Texas Panhandle (5 down to 2 rigs) in favor of Eagle Ford development. The company is slashing its overall capital budget by approximately 50% for the second half of the year. In the first half of 2012, the company spent more than $400 million on exploration & production, and leasehold acquisition. In the second half of 2012, the company plans to spend approximately $200 million.

Electric Power Consumption in South Texas – Growing Due to Eagle Ford Development

Power consumed by month- MW hours
Power consumed by month- MW hours

In response to client inquiries, I've estimated the rate of growth for electric power consumption in the Eagle Ford area. The client is interested in pipelines running in close proximity to high-voltage AC power lines. By looking at the “Electric Reliability Council of Texas” (ERCOT) website and mining their data for counties in South Texas, here are some interesting facts:

1. For the South Texas region including Maverick, Zavala, Atascosa, Live Oak, Bee, Goliad and Refugio Counties, and all counties south of that line, electricity demand has grown at least five percent a year from 2008 through the end of 2011. The growth from 2010 to mid-2012 has been eight to ten percent a year;

2. The Rio Grande Valley’s general growth in population appears to be about two percent per year. Corpus Christi is growing at about one percent a year; Laredo is probably growing at three percent per year. These estimates come from what appear to be credible internet sources. So more generalized population growth in South Texas may be two percent a year, in the population centers mentioned above;

3. What this leaves, for explanation of recent growth rate, is the Eagle Ford Shale development – which affects all of the counties along the northerly line of this “South Texas” geography, and many more counties southward. And it’s just the southwest half of the Eagle Ford that gets described – I did not gather data on Wilson, Karnes, DeWitt, Gonzales and other prolific Eagle Ford counties to the northeast.

Power Lines Carry More Power to Supply the Growing Population

Just as important is how much of this new electric consumption is focused on a dozen or so counties and maybe 20 cities. For instance, the city of Carrizo Springs, in Dimmit County, has probably grown, in terms of “overnighting” residents, from about 6,000 to more than 30,000 people between 2009 and the present. This means that high-voltage AC power lines into the Carrizo Springs area are carrying more than five times the average power than in earlier times. And that accounts only for the typical residential and light commercial usage. What additional electric loads have been added for major new businesses, industrial processes, large motors and pumps on new water wells, new salt water disposal well operations, and so on?

The infrastructure build-out to support this Eagle Ford Shale boom is much broader, and more complex, than any one business person or engineer can grasp. We hope that the water and sewer utilities, the electric power generation and distribution companies, the state and county road authorities, and the telephone and data carriers are all focused closely on this growth. The growth has been clearly described, too, as having at least two phases. There is the heavy surface access, drilling, midstream and other infrastructure development time, which probably will extend another five to seven years out in front of us. Then there is the long-term production – “lift and move oil, condensate and gas” operations, maintenance and repairs – time-frame, which used to look like 10 to 20 years from the present, and now looks like 25 to 35 years. We can call this development and production work sustainable for at least 25 years, and possibly much farther out into the future.

Planning is Essential in Avoiding Shortfalls

Unless all these entities are planning and investing in ongoing and smart fashion, there are going to be periodic and painful shortfalls, bottle-necks, and logistical snarls . . . Cooperative planning, good communications, and visionary people are needed across the landscape – in private business, in the affected city, county and state offices, in the politicians’ meeting spaces, and in civic organizations. A lot of common good stands to be achieved, for many, many South Texas communities. I believe in market forces to allocate resources and labor and work effort. But such”infrastructure” things as roads, and electricity, and water and sewer utilities don’t grow well unless there is good planning and communication, and cooperation between public and private entities.

And back to the high-voltage power lines: as they also grow in capacity and reach, they may represent substantial corrosion risks to adjacent pipelines – a problem Chapman Engineering has described in an earlier blog piece - “AC-Induced Corrosion on Pipelines in the Eagle Ford Shale.”