Japan Eyes Eagle Ford Natural Gas

Japan Eyes Eagle Ford Natural Gas
Japan Eyes Eagle Ford Natural Gas

Natural gas from the Eagle Ford Shale may soon be making its way to Japan.

A delegation from the Consulate General of Japan is in Texas this week touring facilities in Freeport, Houston, Moulton and San Antonio as they look to the Eagle Ford as a potential source of much needed natural gas.

Related: More Pipelines Cross Texas-Mexico Border

In 2011, Japan suffered a devastating earthquake that wrecked a great deal of its energy infrastructure, which centered on nuclear power. None of Japan’s nuclear reactors reactors have reopened since the quake and officials have turned to natural gas as a way to to generate electricity as an alternative to nuclear power.

While this seems like a win-win for all sides there are some serious administrative hurdles to getting Texas gas to Japan.

Japan and the United States do not currently have a free trade agreement, which means that natural gas producers in Texas need to obtain an extra permit from the U.S. Department of Energy before they can ship natural gas to Japan.
— Former Japanese Ambassador, Yasuo Saito

Many are looking to the Trans-Pacific Partnership to ease the burden and make trade possible. This will be important as our domestic production continues to outpace our demand. EIA analysts predict that America will transition from a net importer of natural gas to a net exporter by 2017 as we increase domestic production, which will reduce our demand for gas imports from Canada and support growth in exports to Mexico, Asia and Europe.

Eagle Ford Natural Gas up 349%

Eagle Ford Natural Gas May 2015 | click to enlarge
Eagle Ford Natural Gas May 2015 | click to enlarge

The Energy Information Administration reported last week that Eagle Ford Shale gas production increased by 349% in the past eight years, even as rig counts plummeted.

Related: Eagle Ford Shale Midstream Sold

In May 2007, the region was producing 1.63 Bcf per day with less than 100 rigs, and one year ago 260 drilling rigs were producing around 6.2 Bcf per day. In May 2015, the region produced a record 7.33 Bcf per day while running about 120 rigs.

At the start of 2014, the Eagle Ford was producing less gas than either the Barnett or the Haynesville. However, as of June 2015, Wood Mackenzie estimates that the Eagle Ford is producing approximately 5.2 bcfd of gas, which is 34% more than the Barnett and 15% more than the Haynesville.

For the first time in many months, Webb County has taken over Texas top gas production spot for the month of March, producing 55,645,145 MCF compared to Tarrant County’s 53,003,565 MCF.

Eagle Ford is quickly gaining ranks as a major natural gas producer with companies such as Anadarko, Chesapeake, Swift and Rosetta growing production as they successfully reduced cycle times and maximize scale in the play.

2014: Record Breaking Year for Texas Oil

2014 Great Year for Texas Oil
2014 Great Year for Texas Oil

With plummeting oil prices garnering much of the recent energy news, it may be easy to forget that 2014 was a record-breaking year for the shale oil industry and Eagle Ford Play specifically.

Here are a some of the record-breaking news stories we covered during 2014:

  • January began with predictions that 2014 would be a banner year for Eagle Ford Shale as analysts suggested that Texas could become the eighth largest oil producing country in the world passing Iraq, Kuwait, and Mexico within the year. This bold announcement was due in part because the EIA noted that U.S. oil production grew faster in 2013 than any other country in over two decades.
  • Even as oil prices declined through the fall months, it was only good news for producers in Eagle Ford. Wood Mackenzie announced in November that Eagle Ford finally hit a long-anticipated milestone as crude production topped one billion barrels.

While the low oil prices make the 2015 uncertain, most analysts predict that U.S. shale will remain strong.

Kinder Morgan - Copano Reach $5 Billion Deal

Copano Energy Assets Map
Copano Energy Assets Map

Kinder Morgan and Copano Energy have reached a $5 billion agreement whereby KMP will acquire Copano. The transaction prices Copano at a 23.5% premium to its closing prices on January 29, 2013. The combined company has over 80,000 miles of pipelines and more than 180 terminals. The deal is expected to close by the third quarter of 2012

Richard Kinder, CEO stated, "The footprint we now control has never been paralleled........I'm absolutely convinced US natural gas is the future of energy......everything points to infrastructure being the biggest hurdle to continued growth.....We're seeing increased use of US hydrocarbons in every portion of the economy."

Copano's assets are centered around the South Texas Eagle Ford, Fort Worth Basin Barnett Shale, Oklahoma's Woodford Shale & Mississippi Lime plays, and the Powder River Basin in Wyoming. The company has more than $1 billion in identified growth projects and Rich Kinder expects that number will grow once the assets are under KMP control. Copano operates:

  • 6,900 miles of pipelines with 2.7 Bcf/d of throughput capacity
  • 9 processing plants with 1 Bcf/d of capacity
  • 315 mmcfd of treating capacity
Kinder Morgan Asset Map
Kinder Morgan Asset Map

Kinder Morgan will now own 100% of the two companies' Eagle Ford Gathering JV. Eagle Ford Gathering comprises approximately 400 miles of pipelines (including its capacity rights in certain KMP pipelines) with capacity to gather and process over 700,000 mmbtu/d.

Kinder plans to retain the "vast majority" of Copano's 415 employees and the company's Tulsa office.

KMP's Analyst day call will be streaming at kindermorgan.com until 2 pm CST.

Forest Oil Sells South Texas Assets - Keeps Eagle Ford

Forest Oil Eagle Ford Acreage Map
Forest Oil Eagle Ford Acreage Map

Forest Oil has entered an agreement to sell its South Texas oil & gas properties outside of the Eagle Ford Shale to Hilcorp. The deal will raise $325 million that will be used to pay down debt. The company has sold approximately $600 million in non-core assets in the past six months. This deal is estimated to cover 129,000 acres. Forest will retain all of its natural gas hedges and now has approximately 95% of its gas production hedged for 2013. The properties sold included production of 66 mmcfed (86% natural gas) and 272 Bcfe of proved reserves.

Patrick R. McDonald, CEO, stated, “We are pleased to announce further progress in our deleveraging plan with the sale of our non-core South Texas natural gas properties at metrics that are attractive to Forest shareholders .......The allocation of capital and resources towards our core oil and liquids assets in the Texas Panhandle and Eagle Ford,....on a pro forma basis, the liquids contribution of our production mix is approximately forty percent and will continue to increase due to our oil-focused drilling program.....”