Pioneer CEO Confirms Condensate Exports to Europe

September 4, 2014 Kirk Eggleston

Pioneer Resources CEO Scott Sheffield confirmed this week the company has exported its second round of condensate exports - this time to Europe - during an investor webcast presentation. The first exports were to the Asian market in South Korea in July.

In June, Pioneer and Enterprise Products Partners, a midstream service provider, received permission from the U.S. Commerce Department (U.S. DoC) to export minimally processed condensate to foreign buyers. Other major operators in the Eagle Ford like BHP Billiton have also applied for permits, but have not gotten the nod from the U.S. DoC.

“I expect the commerce department to approve several more permits, primarily for condensate, in the Eagle Ford, as long as it goes through the distillation process. I am optimistic this administration or the next one will remove the export ban.”

— Scott Sheffield

he pressure to lift the oil export ban is mounting from other industry executives. This week, Shell's CEO Ben van Beurden urged Barack Obama to lift the ban during a speech he gave at Columbia University.

“Would reinforce the long term future of North American energy production, and help make the global energy system more stable.”

— Van Beurden on lifting the ban,

Under the oil export ban, refined products can be exported. Pioneer's minimally processed condensate exports are considered a refined product by the U.S. DoC.

Listen to the Pioneer Webcast

Eagle Ford's BHP Billiton Seeks to Export Condensate

August 19, 2014 Kirk Eggleston

Houston-based BHP Billiton may soon get the green light to export condensate from the Eagle Ford Shale.

According to the Houston Chronicle, BHP President Rod Skaufel confirmed the company has applied for an export permit with the U.S. Commerce Department (US DoC).

In June 2014, Pioneer Natural Resources Co. and Enterprise Product Partners LP were granted permission by the US DoC in a private ruling to export minimally processed Eagle Ford condensate. In late July 2014, the first exports began.

The US DoC's ruling in June 2014 was the first sign the United State's oil export ban, which has been in place for nearly 40-years, could be subject to change. Following the Arab oil embargo of the early 70s, in 1975, President Gerald Ford signed into law the Energy Policy and Conservation Act, which in effect bans most U.S. oil exports (refined products are not included in the ban). The minimally processed condensate currently being exported by Pioneer and Enterprise is considered a refined product by the US DoC.

With the U.S. slated to become the top oil producing country in the world by 2015, according to the International Energy Agency (IEA), the necessity of the ban is puzzling to some, but still viable to others. In recent months, there's been a push from industry leaders for the federal government to relax and even lift the ban, including Continental Resources CEO Harold Hamm. Continental Resources is the second largest producer in the Bakken Shale in North Dakota, which also produces light oil and condensate.

BHP Billiton Eagle Ford Position in Condensate Window

Due to its position in the play, among other factors, the company is in an attractive position for exporting condensate should it get the go-ahead from the US DoC.

“Our position in the Eagle Ford is right in the heart of the condensate window, and the economics of the wells average a 70% rate of return,” said Skaufel, in an interview for Unconventional Oil & Gas Report.

BHP plans to spend $3-billion of its $3.9 billion budget for onshore U.S. in the Eagle Ford in 2014. The company entered the Eagle Ford Shale in 2011, with the acquisition of Petrohawk for ~$12-billion.

BHP Focused on Liquids Production in Black Hawk Region for Remainder of 2014

April 17, 2014 Kirk Eggleston

BHP Billiton's Eagle Ford production accelerated at the end of the first quarter of 2014. The company expects continued growth in U.S. onshore liquids production of approximately 75% for the year, with a priority focus on the Black Hawk region of the Eagle Ford in Karnes and Dewitt counties.

A the end of March 2014, BHP completed scheduled well remediation activities in its Hawkville acreage. That contributed in part to a 71% increase in liquids production for the company's U.S. onshore production over a nine-month time period, ending March 2014. Across the company's portfolio, liquids production increased 16% to ~210,958 boe/d or 77 MMboe/d over the same time frame.

In February 2014, the company was forced to close portions of its Eagle Ford gathering line system due to corrosion. According to BHP officials, production continued in the play, despite the interruption from the line closure, as trucking escalated to deliver the company's product to market.

Across BHP's portfolio, production guidance decreased 2% to ~671,233 boe/d or 245 MMboe. Company officials say the reduction is due partially to lower gas and natural gas liquids production in the Hawkville area of the Eagle Ford. BHP's total U.S. Natural gas production for a nine-month period, ending in March 2014, declined by 5% to 624 bcf across the company's portfolio. Onshore production is expected to be ~293,151 boe/d or 107 MMboe.

BHP Eagle Ford Operations at a Glance

BHP Billiton has a priority focus on its Black Hawk acreage in Karnes and DeWitt counties
Hawkville well remediation activities completed in March 2014 - contributes to a 71% increase in liquids production across company portfolio for 9-month time period
Lower gas and natural gas liquids production in Hawkville acreage contributed to an overall production guidance decrease of 2% to ~671,233 boe/d for 2014
Onshore U.S production is expected to be ~293,151 boe/d or 107 MMboe for 2014

Portions of BHP's Eagle Ford Gathering System Closed Due to Corrosion

February 20, 2014 Kirk Eggleston

BHP Billiton Logo

BHP Billiton reported in February 2014 that portions of its Eagle Ford gathering system have been temporarily closed due to corrosion. The cause of the corrosion issue is at present being evaluated by the company. The gathering system closure was revealed in BHP's December 2013 financial report of Petrohawk. BHP is required to report operations updates and financial results to Petrohawk's debt holders, after acquiring the company in 2011.

Read more at bhpbilliton.com

BHP Eagle Ford Gathering Line Closure Operations Impact

According to BHP, production is continuing in the Eagle Ford, despite the interruption from the line closure. The company has increased the use of trucking to deliver product to market, and claims that there should be no significant impact on production.

BHP Eagle Ford Expenditures To Go Down in 2014

Onshore U.S. drilling and development cost BHP $2.4 billion in the second half of 2013. About 75% of this expense or $1.8 billion was spent in the Eagle Ford, mostly in the company's liquids-rich Black Hawk acreage. The company achieved a 72% increase in production for onshore US liquids in the second half of 2013, which was primarily attributable to the Black Hawk acreage.

In 2014, expenditures are expected to decrease in the second half of the financial year, following a 35% decrease in the company's active rig count to 26.

BHP Eagle Ford Highlights in Second Half of 2013

Eagle Ford gathering line system closed due to corrosion
BHP using trucks to deliver product to market
$1.8 billion Eagle Ford spending in second half of 2013
72% increase in production for onshore US liquids
Active rig count down to 26 - 35% decrease

Devon Energy Acquires Eagle Ford Assets From GeoSouthern for $6 Billion

November 20, 2013 R.T. Dukes

Devon Energy has agreed to acquire GeoSouthern Energy's Eagle Ford assets for $6 billion in cash.

The deal includes 82,000 net Eagle Ford acres in DeWitt and Lavaca counties, with associated production of 53,000 boe/d.

Current production is 56% oil, 20% NGLs, and 24% natural gas.

The properties hold an estimated resource potential of 400 million boe.

Devon has an average 50% interest in the properties and a 38% net revenue interest.

“With this transaction, we have secured a premier acreage position in the very best part of the world-class Eagle Ford oil play. This acquisition enhances our already strong North American portfolio by adding another low-risk, light oil asset that provides outstanding well economics and self-funded growth.”

— John Richels, CEO.

There is at least one producing well in each owned unit in DeWitt County and Devon expects EURs as high as 800,000 boe. The company estimates a drilling inventory of 1,200 locations and has a joint development agreement with BHP Billiton.

Devon expects annual growth of 25% from the assets for the next several years, with an ultimate peak of 140,000 boe/d.

The deal will be funded with cash on hand and borrowings.

Read the full press release at devonenergy.com