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

Phillips 66 Approves Funding for Two Midstream Projects in Southeast Texas - $3 Billion

February 18, 2014 Kirk Eggleston

Funding for two Southeast Texas midstream projects was approved in early February 2014 by Phillips 66's board of directors. Costs for the construction of a fractionator in Old Ocean, TX, announced in August of 2013, and a liquefied petroleum gas export terminal in Freeport, TX, are an estimated $3 billion combined.

According to Phillip's 66, the projects will create more than 50 full-time jobs and over 1,000 temporary construction jobs.

“It’s an extraordinary time of opportunity for our company and our industry, especially in the rapidly growing midstream space,” said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development. “Given the anticipated growth in natural gas liquids production, we see substantial advantages in having fractionation and export facilities on the Gulf Coast outside of Mont Belvieu. These projects allow us to maximize our existing infrastructure and will position us for further growth.”

Fractionator Located Close to Sweeny, TX Refinery

The "Sweeny Fractionator One" will be located close to the company’s Sweeny Refinery, and will supply purity natural gas liquids (NGL) products to the petrochemical industry and heating markets. Y-grade (mixed NGL) supply to the fractionator will come from nearby major pipelines, including the recently completed Sand Hills Pipeline.

The 100,000 bbls per day NGL fractionator is expected to be completed and online in the third quarter of 2015.

Liquefied Petroleum Gas Export Terminal in Freeport, TX

The "Freeport LPG Export Terminal" will be located at the company’s existing marine terminal in Freeport, Texas, and will allow growth for Phillips 66's midstream, transportation and storage infrastructure on a global scale. According to the company estimates, the terminal will have an initial export capacity of 4.4 million bbls per month, with a ship loading rate of 36,000 bbls per hour. The export terminal is expected to come online in mid-2016.

Fractionators are used to separate a raw NGL stream into its various components (ethane, butane, propane, etc.)

Rosetta Resources Plans to Spend $735 Million in the Eagle Ford in 2014

December 19, 2013 R.T. Dukes

Rosetta Resources Eagle Ford Acreage Map By Area

Rosetta Resources will spend approximately tw0-thirds of its $1.1 billion budget in 2014 in the Eagle Ford.

The company will spend $735 million running 4-5 rigs, with plans to drill and complete 90-95 gross wells. Approximately half of the activity will target the Eagle Ford from the company's Gates Ranch leases.

As a result of Eagle Ford and Permian Basin growth, Rosetta expects production to grow 20-30% to 60,000-65,000 boe/d.

“The 2014 capital plan is structured to deliver between 20 and 30 percent combined production growth from our Eagle Ford and Delaware Basin assets. The program reflects increasing activity as we initiate broader scale horizontal development in Reeves County and further expand development in new areas of our current Eagle Ford position,” said Jim Craddock, CEO. “We will continue to focus our efforts on integrating our West Texas assets while continuing to efficiently execute the development of our Eagle Ford leases.”

Rosetta will run six rigs and spend $265 million in the Permian Basin in 2014.

Also read:Rosetta Has Yet To Complete 23% of Its Eagle Ford Wells

Fourth Quarter Operational Delays Impact Production

Rosetta's fourth quarter 2013 production was negatively affected several issues that are estimated to have lowered production by ~4,000 boe/d. Rosetta expects fourth quarter production will average 52,000 boe/d and full-year 2013 production will average 50,000 boe/d.

Operational issues on a third-party gathering system
Operational issues at a third-party processing plant
Wells shut-in due to adjacent well completions
Rosetta compressor station fire

Jim Craddock, CEO, commented, "Our strength is our people and our personnel have done a great job of minimizing the impacts of several external hurdles we faced this quarter. We look forward to discussing our fourth quarter results, as well as our outlook for 2014, with investors in February."

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

December 16, 2013 R.T. Dukes

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.

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

NET Midstream Gets FERC Approval for NET Mexico Pipeline to Export Eagle Ford Gas

November 21, 2013 R.T. Dukes

NET Midstream has received FERC approval for border crossing facilities that will allow the NET Mexico Pipeline to export Eagle Ford natural gas to Mexico. At capacity, the pipeline could double U.S. natural gas exports to Mexico.

The Net Mexico pipeline is a 42-inch, 124 mile pipeline from Nueces County to Starr County in South Texas.

The pipeline is backed by a 2.1 Bcfd transportation contract with MGI Supply ltd (PEMEX Subsidiary).

Read - Net Midstream Plans Eagle Ford Pipeline from Mexico to Nueces County

“We were pleased to receive this timely authorization from FERC last week. Receipt of the Presidential Permit was an important regulatory milestone for NET Mexico.” said Joe Gutierrez, Co-President of NET. “Development and financing of the pipeline is on schedule, with mainline construction beginning in the first quarter of 2014, and mechanical completion in October.”

Much of the pipeline will be 42 inch pipe, but approval has been granted for a 48-inch pipeline into Mexico.

Read the full press release at netmidstream.com