Road maintenance in South Texas is in the news almost daily and a recent study details the needs in DeWitt County. The study estimates the county needs $432 million to construct and maintain heavily trafficked oilfield roads over the next 20 years. That’s $350 million more than the county would have allocated before the discovery of the Eagle Ford Shale and millions more than the $112,000 the county received from the state last year.
Is $432 Million a Realistic Estimate for Road Repairs?
While the need shouldn’t be a huge surprise, it is likely a high estimate. High in regards to the basic assumptions and multiples higher than local or state officials have planned for.
The study is based on 65-acre spacing across the entire development area and uses an expected number of truck trips for each well. While there will undoubtedly be lots of trucks moving through the area, there will not be the same number of truck trips for every well. As companies begin infill development drilling, there will be multiple wells drilled from single locations. That means fewer trucks and less road damage.
Drilling two wells per pad will drive down traffic significantly. Not quite 50%, but it would be close. The rig move is eliminated completly on multi-well pads and development in other shales indicates that more than two wells/pad will be normal.
Even if needs end up being half of that estimated by the study, road repair costs will be three times prior expectations and millions more than what is allocated from the state. [Read more…]