Eagle Ford Crude Production Near 400,000 b/d in October 2012

Oil Drum

Eagle Ford crude production is approaching 400,000 b/d as of October. We'll know more in a few months when operators who are reporting late submit well data to the state. Initial reports to the Railroad Commission show production of a little more than 323,000 b/d. For reference, initial reports hadEagle Ford crude production at ~320,000 b/d in August, but those numbers have been revised up to more than 380,000 b/d in the months since.

Also, remember TX RRC reports oil measured at the wellhead. Additional condensate and NGLs will fall out or be processed out further downstream. Wood Mackenzie estimates the play is producing more than 700,000 b/d of oil, condensate, and NGLs.

Read the full note from Bloomberg.com

Eagle Ford Capital Spending Makes the Play the Largest in the World

Eagle Ford Capital Expenses

Did you know? The Eagle Ford now ranks as the largest single oil and gas development in the world based on capital expenditures. That means more will be invested in the South Texas oil play than any other single oil and gas development in the world! That's the headline takeaway from a recent report released by Wood Mackenzie Analyst Callan McMahon.

The report notes that BHP, ConocoPhillips, and EOG Resources have a combined value of more than $30 billion in the Eagle Ford. That number likely doubles when you add other large players like Anadarko, Chesapeake, Lewis Energy, Marathon Oil, Murphy, Pioneer, and Talisman. If natural gas prices recover to more than $5/mmbtu, it's quite possible more than $100 billion in value has been created by operators across the Eagle Ford.

“Some of these numbers can be difficult to put into perspective, but US$28 billion would put one at roughly the median country annual GDP.”

— Mr. McMahon

In terms of costs, Wood Mackenzie notes the play will likely surpass the Kashagan project in Kazakhstan, which will have an estimated $116 billion invested in the coming years. At the current rate of spending in the Eagle Ford, the play will surpass the the Kashagan project in as little as four years.

"With US$28 billion in capex being spent in 2013 and development now in full swing, the excitement in the Eagle Ford Shale and value being extracted from the play continues to exceed expectations." explains Callan McMahon, Upstream Research Analyst for Wood Mackenzie.

Eagle Ford Shale From Space - NASA

Other highlights from the report include:

• Growth from zero to more than 700,000 b/d of oil and natural gas liquids (NGLS) in three years
• Eagle Ford is the top liquids producing shale in the world with Q3 volumes of 1 million boe/d (Bakken ranks #1 for oil production alone)
• DeWitt, Gonzales, and Karnes counties account for 50% of liquids production
• 74% of estimated future activity will target liquids areas (this changes if natural gas prices go up)
• Capacity constraints have eased
• The Eagle Ford accounts for 38% and 20% of EOG's and BHP's upstream value, respectively
• In 2013, the play will account for 27% of all upstream spend in the Lower 48

Mr. McMahon added: "Being located near the coast allows Eagle Ford realized (oil and gas) price fluctuations to be mitigated through being linked to a global price index. Additionally, a number of upsides remain in the form of downspacing, increases in natural gas prices, increases in well performance, decreases in well costs and increases in operational efficiencies on the crowded surface of the Eagle Ford."

Read the entire press release at woodmacresearch.com

NuStar - ConocoPhillips Ink Midstream Deal - Expanding Crude System

NuStar - ConocoPhillips Pipeline and Terminal Expansion

NuStar Energy and ConocoPhillips have agreed to a long-term pipeline and terminal services agreement that is supporting expansion of NuStar's crude oil pipeline system in the Eagle Ford.

Nustar plans to expand its pipeline system and add a 100,000 b/d terminal in Pawnee, TX. The new terminal will connect to an existing 12-inch pipeline that moves crude from Pettus to Three Rivers. From there, the pipeline will be extended to an existing Oakville Terminal for delivery to the company's North Beach Terminal. New truck receiving facilities in Pawnee and Oakville are planned, along with new refinery connections in Corpus Christi.

NuStar Announced a $425 Million South Texas Acquisition from TexStar Midstream just a month earlier.

Curt Anastasio, CEO of NuStar commented: “This expansion, backed by major producers like ConocoPhillips, cements NuStar’s position as a key logistics provider for Eagle Ford Shale play. We are fortunate to have extensive pipeline and terminal assets already in operation throughout the region with the capacity to easily support an expansion of this size and help support the incredible production growth taking place in the Eagle Ford Shale play.”

A new ship dock in Corpus Christi is already under construction. The private dock will give NuStar access to waterborne markets.

Pipeline expansions are expected to be completed in the fourth quarter of 2013 and the dock facility will be finished in the first quarter of 2014. Total costs for the Conoco supported expansions is estimated at $100-120 million.

Eagle Ford Shale Regional Rig Count at 248 - Dec 14, 2012

Eagle Ford Shale From Space - NASA

Eagle Ford Shale drilling dropped 18 rigs to 248 running this past week. No single operator accounted for more than two of the rigs that were taken out of action during the week. ConocoPhillips, EOG, and Pioneer led the decline by dropping two rigs each.

Plains All American and Chesapeake dominated headlines. Chesapeake sold over $2 billion in midstream assets in a package that included pipelines and gathering in the Eagle Ford. Plains acquired an Eagle Ford rail facility and oil & condensate pipelines and facilities from Chesapeake.

NASAgave us a better feel for how big the Eagle Ford really is by sharing new satellite photos that show oil & gas development in South Texas is visible from space. Wow.

Eagle Ford Oil & Gas Rigs

The natural gas rig count fell three rigs to 43 and prices fell further. NYMEX natural gas was trading ~$3.30 on Friday. Nice weather across the country has put a damper on demand and natural gas prices. Prices are down more than 15% since Thanksgiving. Ethane prices are not helping either. Prices for the natural gas component are low enough that gas is beginning to be rejected from plants- meaning natural gas that is usually taken out of the system and processed will remain in pipelines. It's not huge volumes, but it adds to the surplus.

The oil rig count fell 15 rigs to 200 running in the area. WTI crude futures were down slightly on the week. Oil was trading ~$87 per barrel on Friday. Eagle Ford crude priced at $98.25/bbl on the 14th of December. Eagle Ford light crude and condensate in the area traded at $83.25 and $82.25, respectively.

There are 239 horizontal rigs running in the region and one storage well is being drilled in Zavala County.

La Salle County leads development with 39 rigs running. Karnes with 33 rigs, McMullen (25), Dimmit (22), Webb (21), Gonzales (20), DeWitt (17), Live Oak (11), Lavaca (8), Atascosa (7), Fayette (7), Frio (7), and Madison (7) round out the top counties in the region. [ic-c] South Texas Oil & Gas News:

• Have you seen the Eagle Ford from Space?
• Access Midstream and Chesapeake Ink $2 Billion Deal for Midstream Assets
• DCP Plans New Processing Plant Near Goliad
• Plains All American Buying CHK Crude and Condensate Assets for $125 Million
• Plains All American Buying US Dev Groups Eagle Ford Rail Terminal

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates.

Eagle Ford 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.

Eagle Ford Shale Drilling by County

Plains All American - Chesapeake Reach Deal for Eagle Ford Gathering - $125 Million

Chesapeake Eagle Ford Rig Map

Plains All American (PAA) added another deal to Chesapeake's list of midstream sales. The companies agreed to a $125 million deal for crude oil and condensate gathering assets located in Webb and Dimmit counties. This follows a Chesapeake deal with Access Midstream Partners for $2.16 billion that also included Eagle Ford assets.

The assets include 40 miles of crude oil and condensate gathering lines with capacity to move 50,000 b/d, 150,000 bbls of storage capacity, 300,000 bbls of storage capacity under construction, and a truck unloading terminal.

Chesapeake also made acreage dedications including future production as part of the sale (CHK's Eagle Ford acreage is highlighted in the map above). The gathering assets will now connect with PAA's existing assets in the area.

CHK's CEO Aubrey McClendon made the following comment as part of a press release related to a larger midstream package:

“We are pleased to announce further progress towards our asset sale goals for 2012-13. We look forward to completing additional asset sales and achieving our goals of strengthening our balance sheet, tightening our asset focus and increasing returns to shareholders.”

Read the press release at paalp.com