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

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

Penn Virginia Sells Eagle Ford Midstream Assets to ArcLight Capital - $100 Million

Penn Virginia Eagle Ford Operations Update - Dec 2013

Penn Virginia is selling its natural gas midstream assets in the Eagle Ford to an affiliate of ArcLight Capital Partners (American Midstream) for $100 million.

The deal includes gas gathering, a gas lift system, 119 miles of pipelines and associated facilities in Gonzales and Lavaca counties.

ArcLight has several active midstream investments and will likely make future acquisitions in the area or sell this to a larger midstream operator in the next five years.

Read more:Penn Virginia Acquires Magnum Hunter Resources' Eagle Ford Assets

ArcLight Capital has raised over $10 billion for energy related investments since 2001.

H. Baird Whitehead, CEO, stated, "The divestiture of our natural gas midstream assets is the first step in a series of potential divestitures which will reduce our indebtedness, improve our liquidity and fund further investment in our oily Eagle Ford Shale play."

Read the full press release at pennvirginia.com

Pioneer Natural Resources Eagle Ford Production Up & Costs Down

Pioneer Eagle Ford Production Chart

Pioneer Natural Resources' Eagle Ford production was up to 37,000 boe/d in the first quarter.

That's an increase from 35,000 boe/d in the fourth quarter and a 2012 average of 28,000 boe/d.

Pioneer drilled 37 wells in the quarter and brought 35 of those to production. In total, the company expects to drill 130 wells at a cost of $7-8 million each this year. Those wells will be drilled with just 10 rigs compared to 12 in 2012.

Four out of every five wells will be drilled from centralized pads this year. That's up from just 45% of wells in 2012 and one reason costs continue to fall. Pad drilling saves $600,000-700,000 per well and also saves precious time.

“Our three liquids and resource-rich core assets in Texas, the Spraberry vertical, the horizontal Wolfcamp Shale and the Eagle Ford Shale, were the drivers of this significant increase.”

— Scott Sheffield, Chairman and CEO

Testing Downspacing & White Sand Proppants

Pioneer continues to test the viability of 70-80 acre downspacing and is even testing 40-acre spacing in areas. The liquids prone areas will likely call for tighter spacing. We should know results from the 70-80 acre spacing tests later in the year.

The company is also expanding the use of white sand proppant. Ceramic proppants have been used in the deeper portions of the play, but the use of white sand can save as much as $700,000 per well. Pioneer estimates it will use cheaper sand in 70% of its Eagle Ford completions in 2013.

A total of 11 central gathering facilities are in place and one more will be added in 2014. The major midstream hurdles faced when the company began developing the play have largely been eliminated.

Don't expect natural gas drilling in the Eagle Ford to pick up at current gas prices. The company indicated it is not going to get around to dry gas acreage even at gas prices of $4.25-4.50.

Read the full press release at pxd.com

High Point Infrastructure Building Eagle Ford Gathering - Gonzales

High Point Infrastructure Partners has reached an agreement to build gathering and processing infrastructure in Gonzales County, TX. The company has reached a long-term fee-based agreement with a large operator in the area.

“We are excited to announce a long-term agreement to develop critical midstream infrastructure for a significant producer in the Eagle Ford Shale.”

— Steve Bergstrom, Chairman.

Construction will begin in mid-2013 and the facilities will be operational in early 2014. When completed, the pipelines and gathering facility will have capacity of 95,000 barrels of oil per day and 15 mmcfd of natural gas.

Watch for High Point to leverage this development into other midstream projects in the area.

High Point is the General Partner of American Midstream Partners. You can read the full press release at americanmidstream.com

SM Energy Expects Eagle Ford Condensate Discount - Interruptible Gathering

SM Energy Operated Eagle Ford Acreage Map

SM Energy expects its Eagle Ford condensate production will realize a long-term average discount of $7-8 to NYMEX prices. Oil production in the region averaged price realizations of 101% and 103% of WTI in the fourth quarter of 2012 and first quarter of 2013, respectively.

SM Energy's operated Eagle Ford production grew 15% over the fourth quarter to 51,800 boe/d. That represents 74% growth over the first quarter of 2012. The company's non-operated position (Anadarko operated) grew 3% in the quarter to an average of 16,000 net boe/d.

SM Energy's Eagle Ford Gathering Will Be Interruptible

The company's operated production has regularly exceeded 300 mmcfd in March and April of 2013. Firm transportation agreements are currently in place for 300 mmcfd and the company is confident there is adequate gathering infrastructure in place. Additional firm capacity will be online mid-year 2013 and the company believes current infrastructure will allow for growth in the interim.

SM ran five drilling rigs in the quarter and completed 28 wells. Anadarko ran nine rigs.

Expanding East Texas Woodbine & Eagle Ford Acreage

The company now has approximately 150,000 net acres prospective for the Woodbine and Eagle Ford in Walker, San Jacinto, Polk, and Washington counties. Watch for well test results in the second half of the year.

Read the full press release at sm-energy.com