TX RRC Data - Eagle Ford Production Surging Ahead

Oil Drum

Texas Railroad Commission data from July shows the Eagle Ford produced approximately 310,000 b/d of crude oil. Unless the industry has gotten more timely at reporting figures, that number is likely conservative. If recent trends prove true, July's figures could be revised upwards by as much as 10%, which puts crude oil production near 350,000 b/d today. Railroad Commission data also shows the play produced over 50,000 b/d of condensate and 1.21 Bcf/d of natural gas. As pipeline and gathering systems expand, natural gas production will show itself to have considerable upside from where it stands now. Many wells are brought to production before natural gas pipelines are tied in, but that number is decreasing as midstream companies catch up to the operators.

Texas Oil Production Poised to Set New Highs

Texas oil production has risen to levels not seen since the early 90s and late 80s. The state has the potential to break 2 mmbbls/d of production by year-end. It has been more than 20 years since the state produced this much crude.  Both the West Texas Permian Basin and the Eagle Ford are driving production growth and don't expect it to stop any time soon. I've seen predictions for Eagle Ford crude and condensate production to grow by as much as 400,000-500,000 b/d by year-end 2013

Eagle Ford School Districts Prep to Send Money to the State

Eagle Ford Shale Well Map - July 2012

School districts in the South Texas Eagle Ford Shale region are preparing to send millions back to the state in coming years. Eight local districts were added to the Texas Education Agency's list of property-wealthy districts.

The reason is skyrocketing property values. In the past two years, property values in the Carrizo Springs district have increased from $441 to $2.5 billion. Cotulla ISD has seen a similar rise.

This year Cotulla will pay in a little less than $1 million, but next year the payment could swell to as much as $15 million. The wealth is welcomed, but it comes with a host of other obstacles. Several of the disstricts employees are living in trailers on site because of an Eagle Ford Housing shortage.

Read the full story at fuelfix.com

TXOGA's Response to the KENS Story Regarding County Lawsuit Threats

The Texas Oil & Gas Association (TXOGA) issued an official response to a story reported by KENS Channel 5. You can watch the report in the article Eagle Ford Oil Companies Fight Back - State Revenues Should Be Shared. KENS 5 reported that oil companies were threatening counties with lawsuits and the organization released this response:

Texas Oil & Gas Association Memo Explained Current Law on Counties’ Authority and Roads -- TXOGA Did Not Threaten Lawsuit and Believes Current Law May Need to Change so Counties Receive Necessary Funding

The following can be attributed to Deb Hastings, executive vice president of the Texas Oil & Gas Association (TXOGA):

In April 2012, the Texas Oil & Gas Association prepared a reference memo describing current law with regard to counties’ authority to assess fees or require agreements with oil and gas operators. The Texas Oil & Gas Association has not threatened to sue any county regarding transportation fees.

The roads situation is serious in South Texas and elsewhere where oil and gas development is expanding. Funding is necessary to repair and improve existing roads. The Legislature will determine the source of that funding. A change in law may be required to re-figure how funds are allocated to local municipalities. For example, oil and gas operators paid more than $9 billion in taxes and royalties to the state in fiscal 2011. We need to assess if those funds are getting into the right hands for emerging needs.

The Texas Oil & Gas Association is committed to helping to develop a solution to repair, maintain and strengthen the infrastructure necessary to support the tremendous economic activity that is generating thousands of jobs and billions of dollars in state and local tax revenue.

You can read more about the association at www.txoga.org

South Texas School Districts Become Robinhood Targets

It's a nice problem to have. Tax appraised values are rising by hundreds of millions of dollars across South Texas. Our schools will be getting better, but the state's "Robinhood" provision means they'll also be sending money elsewhere.

Robstown ISD saw an almost 20 percent increase in values from 2011, from $375.4 million to about $450 million, and London ISD's preliminary estimate came in 23 percent above 2011, rising from about $233 million to about $287 million.

Those numbers pale in comparison to districts in the heart of the Eagle Ford Shale. Karnes City ISD has seen valuations increase nearly sixfold in the past two years.

Read more at Caller.com

Eagle Ford Task Force Turns to Natural Gas Flaring

Natural Gas Flare

The Eagle Ford Task Force is turning its attention to natural gas flaring. Texas set a record for flaring permits earlier in the year and the trend will continue until pipelines and gathering systems catch up with drilling.

In oil producing areas like the Eagle Ford, drilling and first production is reached weeks and sometimes months before pipeline companies get natural gas infrastructure to the area. Oil can be moved with a truck, but natural gas needs pipelines.

Flaring is commonplace in oil producing areas and is very rarely abused. More often than not, flaring lasts only a few days or weeks. It is in the operators best interest to get paid for natural gas they're producing.

The task force plans to work with companies to increase the use of natural gas generators on location. On-site generators can power electric machinery and will help limit the amount of flaring.

A main concern for the region is whether or not the Eagle Ford will push the San Antonio Metro Area over the federal limits for ozone standards. The ozone issue alone will have politicians anxious.

Comments from David Porter indicate the TX RRC is going to review its rules to make sure they are relevant in the modern shale era. I suspect there won't be major changes. Even if big changes come, infrastructure in the Eagle Ford will be catching up and flaring won't be near as prevalent by the time any legislation is enacted.