Fewer Drilling Permits for Eagle Ford

September 17, 2015 Elizabeth Alford

Texas drilling permits decreased in August by nearly two-thirds over this time last year as Eagle Ford production tanks.

The Texas Railroad Commission released August drilling statistics this week showing the agency issued 864 permits last month across the state compared to 2,440 in 2014. The breakdown of well types included 222 oil, 59 gas, 518 oil or gas, 54 injection, zero service and 11 other permits.

Well completion statistics are equally discouraging as the RRC reports processing 1,113 oil, 172 gas, 36 injection and 11 other completions inAugust 2015 compared to 2,157 oil, 303 gas, 92 injection and four other completions in August 2014. Total well completions for 2015 year to date are 14,665 down from 20,657 recorded during the same period in 2014.

This latest report comes on the heels of the EIA announcing that oil production in the Eagle Ford has decreased by 300,000 barrels a day since April. The decrease is being seen across several regions with a total production from the shale plays falling by 350,000 barrels.

The RRC reported that Eagle Ford received 125 permits to drill new wells and had 261 oil and gas completions. Since January 1st, 1685 drilling permits have been issued to producers in the Eagle Ford, which is roughly a third of all permits for the entire 2014.

Oil Production Declines in Eagle Ford

September 16, 2015 Elizabeth Alford

After years of steady increase, oil production in the Eagle Ford is on the decline.

Related: Shale Industry Loses Billions

The Energy Information Administration (EIA) released its latest Drilling Productivity Report that predicts U.S. oil production is heading south.

Since April, oil production in the major shale plays are decreasing sharply, with the Eagle Ford being the biggest loser. The Eagle Ford has lost 300,000 barrels a day and other major plays also experiencing a decrease include the Bakken Shale in North Dakota, the Utica Shale in Ohio and the Niobrara in Colorado, Kansas, Nebraska and Wyoming. Total production from shale plays fell by 350,000 barrels.

“Fuelfix reported that outside of the Organization of Petroleum Exporting Countries, crude production in the United States, Russia, the North Sea near the United Kingdom and other regions could fall by 500,000 barrels a day, the biggest decline in more than two decades, and U.S. output “is likely to bear the brunt” of that, even after putting out 1.7 million additional barrels of oil last year.”

In the first half of 2015, U.S. shale producers lost more than $30 billion as the prolonged slump in oil prices continues to take its toll. The data firm, Factset, says that capital spending exceeded cash by about $32 billion in the first six months of the year and is quickly approaching the deficit of $37.7 billion reported for the whole of 2014.

EIA: Benefits of Mexico Oil Swap

September 15, 2015 Elizabeth Alford

Japan Eyes Eagle Ford Natural Gas — Oil Swap

The EIA is reporting that oil swaps with Mexico will bring economic and environmental benefits to both countries.

Related: Swapping Oil with Mexico

Last month, the U.S. Department of Commerce opened the door for a limited amount of oil to be exported to Mexico through an exchange program that will allow the U.S. to 'swap' its light sweet crude for Mexican heavy sour crude.

Light sweet refers to crude with a sulpher content of less than 0.42%. Currently, U.S. Gulf Coast refineries are better suited to process heavy sour crude and Mexican refineries are more equipped to process lighter crude. The swap will allow the two countries to optimize their existing refining processes and increase the supply of lower-sulfur gasoline from Mexican refineries.

The Energy Information Administration (EIA) released a report last week saying that there may be significant environmental benefits from such oil exchanges.

“The partial substitution of Eagle Ford crude for Mexican crudes in Mexican refineries would free up sulfur removal capacity in the Mexican refining system. This would, in turn, allow that capacity to be used to produce more lower-sulfur gasoline than is currently possible. Any increased supply of lower-sulfur gasoline to Mexico’s motor gasoline market, which consumed 761,000 b/d in 2013, would result in reduced sulfur emissions and other environmental benefits.”

Currently, U.S. Gulf Coast refineries are better suited to process heavy sour crude and Mexican refineries are more equipped to process heavier crude.

Many are hoping this new policy signifies a shift in opinion about the oil export ban that has been in effect since the 1970’s, but some analysts believe the effort may be mostly symbolic.

Low Crude "Chipping Away" at Eagle Ford

September 14, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — quarterly reports

More bad news and dire predictions about the shale industry flooded the newswires this weekend.

Related: Eagle Ford Rig Count at 103

As crude prices stay low and rig counts decline, analysts are looking for signs about where the bottom might be.

Goldman Sachs projects that 2016 WTI prices will be at $45, which is down from their previous forecast of $57. More alarming is Goldman's suggestion that prices may briefly hit $20.

“Allen Gilmer, CEO of Austin-based Drilling info told the Houston Chronicle that dropping prices “chip away at the Eagle Ford.” And while a great many producers remain profitable at $60 per barrel, once crude hovers around $40, like it has in recent week, only 15 percent of the field will make money.”

In July, the Texas Railroad Commission issued 979 drilling permits down from 2,419 permits in July 2014. Well completions are also down with producers completing 13,333 wells through July, down from 18,101 wells during the first seven months of 2014.

Even amidst the gloomy forecasts, Wood Mackenzie announced earlier this month that the Eagle Ford Play leads other U.S. shale fields and continues to hold some of the most attractive oil and gas investments in the world. Even as producers slash budgets, spending in the Eagle Ford is projected to be around $20 billion for the duration of 2015.

Eagle Ford Rig Count Falls to 103

September 11, 2015 Elizabeth Alford

The Eagle Ford Shale rig count fell this week to 103 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, Goodrich Petroleum announced this week it has closed on a huge deal to sell off some of its Eagle Ford assets.

The U.S. rig count fell by 16 this week, ending with 848 rigs running by midday Friday. A total of 196 rigs were targeting natural gas (down six from previous week) and 652 were targeting oil in the U.S. (10 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)366 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 fell to 14 this week as natural gas prices traded at $2.70/mmbtu, a $.04 decrease from the previous week.

The oil rig count was at 89 and WTI oil prices are at $45.22, a decrease of $1.40. A total of 94 rigs are drilling horizontal wells, one are drilling directional wells, and eight are vertical rigs. DeWitt County moves ahead with 17 rigs this week, with Karnes (16) following closely behind. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by Count

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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.