Eagle Ford Rig Count Drops to 127

May 1, 2015 Elizabeth Alford

The Eagle Ford Shale rig count fell by two this week ending at 127 rigs running across our coverage by midday Thursday.

In recent Eagle Ford news, the Eagleville oil field topped the list of the 100 largest oil fields in the country, unseating Alaska’s Prudhoe Bay for the number one spot.

The U.S. rig count fell again this week by 27 ending, ending with 905 rigs running by midday Friday. A total of 222 rigs were targeting natural gas (and decrease of three from the previous week) and 679 were targeting oil in the U.S. (24 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)380 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table near the bottom of this article.

Eagle Ford Oil & Gas Rigs

Natural gas rigs in the Eagle Ford increased by three this week to 21 rigs. Natural gas prices traded at $2.79/mmbtu, a decrease of $.26 from the previous week.

The oil rig count fell to 106, down five from this time last week. WTI oil prices continued to inch upwards this week to $58.67, an increase of $1.60. A total of 118 rigs are drilling horizontal wells, zero rigs are drilling directional wells, and vertical rigs increased to nine. Webb county is running 19 rigs this week and leads the Eagle Ford pack, with LaSalle (18), DeWitt (17) and Karnes (19) follow closely. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Texas Drilling Permits down 50%

Speed Limits Coming for Crude by Rail

Weathering the Oil Crisis

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 Baker Hughes 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.

Texas Drilling Permits down 50%

April 30, 2015 Elizabeth Alford

The Texas Railroad Commission (RRC) released its monthly oil and gas statistics this week confirming a slowdown for production and drilling for the Eagle Ford and across Texas.

Drilling Permits

In March, the RRC issued a total of 923 original drilling permits, a 50% decline from 2014 when 1,894 were issued.

The March total included 799 permits to drill new oil and gas wells, 16 to re-enter existing well bores and 108 for re-completions. Permits issued in March 2015 included 239 oil, 75 gas, 556 oil and gas, 41 injection, three service and nine other permits.

The March total included 799 permits to drill new oil and gas wells and of that, 109 went to the San Antonio area, which is in the heart of the Eagle Ford. 239 permits were issued for oil, 75 for gas and 556 for oil and gas.

Oil & Gas Completions

The total year-to-date well completions for 2015 are 5,946 down from 10,130 recorded during the same period in 2014.

March 2015: 1,547 oil, 305 gas, 109 injection and nine other
March 2014: 2,965 oil, 272 gas, 131 injection and 13 other

The Eagle Ford continues to outproduce other Texas areas in oil production with Karnes, La Salle and DeWitt counties maintaining the lead. Following are top oil and gas producing counties in February, 2015 according to the RCC.Top Counties

Speed Limits Coming for Crude by Rail

April 29, 2015 Elizabeth Alford

An emergency order issued by the Department of Transportation will demand that certain crude by rail train to slow down in high threat urban areas.

Related: Crude by Rail Up 1700%

The order formalized a previously voluntary limit and will require a maximum speed of 40 miles an hour for trains hauling crude oil and other flammable liquids. The emergency order defines affected trains as:

20 or more loaded tank cars in a continuous block or 35 loaded tank cars of class 3 flammable liquid
AND at least one DOT-111 tank car loaded with class 3 flammable liquid

“Speed is a factor that may contribute to the severity of a derailment or the derailment itself. Speed can affect the probability of an accident. A lower speed may allow for a brake application to stop a train before a collision, or allow a locomotive engineer to identify a safety problem and stop the train before an accident or derailment occurs.”

The DOT points to “gaps in the existing regulatory scheme” as a reason for the new requirements, which go into effect immediately. Companies that don’t comply could face penalties of $105,000.

Movement of crude by rail is highly controversial with many people questioning how safe of the practice for individuals and the environment. With production at an all time high, crude by rail will probably escalate as producers must find a way to move their product.

EIA: Eagle Ford Oil Field Largest in the U.S.

April 28, 2015 Elizabeth Alford

The Eagle Ford tops the list of the 100 largest oil fields in the country, with Eagleville overtaking Alaska’s Prudhoe Bay for the number one spot.

The Energy Information Administration (EIA) made it official, reporting that the shale oil boom has contributed significantly to the U.S. oil and gas reserves as production numbers skyrocketed between 2008-2013.

A new report released in late March and based on the latest data from 2013, shows the top 100 oil fields accounted for 20.6 billion barrels of crude oil and lease condensate proved reserves, which was 56% of the U.S. total. The top 100 gas fields provided 68% of U.S gas reserves in 2013 with 239.7 trillion cubic feet of total natural gas proved reserves.

At the top of the list are two fields from the Eagle Ford Shale Play in Texas, Eagleville and Briscoe Ranch. Eagleville spans 14 counties in South Texas and is the country’s largest oil field, which produced 238,050 million barrels in 2013. These fields also made the top 20 list for natural gas with Eagleville coming in at 12 and and Briscoe Ranch at #13. Just a few short years before, these Eagle Ford fields did not even appear in the top 100.

“EIA defines a field as an area consisting of a single reservoir or multiple reservoirs grouped on, or related to, the same individual geological structural feature or stratigraphic condition. There may be two or more reservoirs in a field that are separated vertically or laterally by geologic features. However, this definition is not used by all states; consequently, areas classified as individual fields by some states may be combined in EIA’s study.”

Read full report at eia.gov

Weathering the Oil Crisis

April 27, 2015 Elizabeth Alford

Daily news reports continue to announce cuts, layoffs and mergers from big producers, but it is the smaller companies who may be the most vulnerable during the current oil crisis.

Today, I am featuring an interview with independent geologist, Walter Light, to get his perspective on the current downturn.

Thanks for taking a few minutes to give me your perspective on what is happening in your sector. Tell me a little about yourself.

I am an independent geologist and formed Thunder Exploration, Inc. in 1981. We like to see ourselves as a prospect-generating shop with a desire to follow our prospects all the way to production in the terms of moving forward and helping operators. That is what our focus has been for the last 30 years; generate oil and gas drilling projects, market them to the industry and then stay involved with details such as well planning, execution, evaluation and recommendation on completing a successful well.

How have low crude prices affected your work as a geologist?

Well, probably the same as in the rest of the industry. Having been in the business a long time we have the benefit of general stability in our specific business world. But in general, we do see a reduced cash flow into the business.

If you want to continue to drill wells in this environment, you have to get a feel that the cost to do so is commensurate with the price of the commodity. In the free fall pricing environment that we have experienced, nobody’s really been willing to reach up and grab that “falling knife”, as it’s been described-whether it is buying equities in the oil and gas industry or putting deals together or hiring third party services.

Everyone is still trying to correct and to understand if we are at the bottom or not. So generally I think it has slowed the business down and those companies that don’t have debt service and adequate cash flow behind what is required to run their business, they can get into a slower mode of doing business. That’s kinda where we are; kind of a breathing room.

There is time to take a breath, stand back and look at what you have done over the last several years. And if you want to drill new wells, those wells have to be commensurate with the current price. So we are focusing on taking working interest in other people’s deals but also in our generating mode looking at conventional wells, vertical wells and/or horizontal wells that don’t require hydraulic fracturing, because that is a major expense. Or vertical wells that don’t require big completion costs like occur when you hydraulically crack a well. So there are a lot of plays in the $40-50 range where we can play.

It does cause a re-step back and a slow down and a re-think. We are probably just going to try to continue doing business just as we have with those modifications until we get a feel for where the bottom is and then the service companies will have to adjust their pricing, particularly all of the services that are required for fracking. Halliburton, Baker Hughes, Schlumberger, all these companies that provide a lot of services on the completion side, will have to correct pricing if they wanna keep busy. And that takes a little while for them to adjust, but they will.

“Pretty much business as usual at a slower pace and a slight alteration in the targets. But in the short term, we will probably hold off where we’ve been involved for awhile and that is Eagle Ford, that require fracking. Now we may participate in some wells that get drilled and hold off on the fracking part until the wells are completed, that is stable, with pipe in the ground but not producing until fracking companies adjust their price to the current market.”

— Mr Light

You said you have been through this before? Historically, are there any good things that come out of these downturns?

Lots of them. For one thing, it does help everyone to adjust; it forces the service companies to adjust their prices and forces operators to become more efficient in their drilling and recovery methods. So horizontal drilling and fracking are an efficient way to recover light carbons that are more difficult, but even with that spectrum there are things you can do to increase the efficiency of recovering and lower the cost and recover hydrocarbons.

Also, we have been in a frenzy in the Eagle Ford since about 2009. First it was land grab and then it was the intensity of the activity which drove the service company prices up. We’ll get an adjustment downward in pricing, it will give people and operators and geologists like me time to sit back and think about what they have done over the last few years and if they can improve their methods and monitor their existing production. During the frenzy of hitting wells, getting the first wells drilled on a lot of these leases.

That is a fantastic question because it flips it around from a negative to what are the positive things that will come out of this. It will force us as an industry to become more efficient in everything that we do and try to think of new ways. There will be new technology that will come out of this downturn because people want to think of how to do it cheaper, quicker, better and less costly.

For more information about Thunder Exploration, email wthunderx at aol.com