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

Copano Energy Expanding the Eagle Ford's DK Pipeline To McMullen County

Copano South Texas

Copano Energy announced an additional Eagle Ford pipeline and midstream expansion related to its DK Pipeline. The company is expanding the pipeline 65-miles southwest into McMullen County. The project will begin service in the first half of 2013 and will follow the same route as the Copano and Magellan Eagle Ford Condensate Pipeline.

Total costs are estimated at $120 million and the project is supported by a long-term fee based agreement with Petrohawk Energy, a subsidiary of BHP Billiton. Copano will provide midstream gathering and handling services in exchange for committed volumes of production from BHP in McMullen County. 

Read the full release at copanoenergy.com

Eagle Ford Oil & Gas Completion Technology - HAL - SLB - GFS.TO

GasFrac Photo

Eagle Ford completion technology is evolving as it needs to if operators want to remain competitive. Operators have lots of theories, but the proof is in the pudding. Drilling and completing wells is the only real way to test new technologies.  That technology is needed as we experience rising service costs, along with natural gas prices of $4 per mcf and oil prices that look to be below $90 for the foreseeable future. $90 a barrel isn't bad, but it isn't $100.

Petrohawk was the first to announce a major change in completion technology by using Schlumberger's Hi-way Frac system. SLB refers to it as "HiWay Flow Channel Fracturing". Fancy name and all, nobody really cares unless it delivers. For Petrohawk, it looks to have done just that. Petrohawk had utilized hiway fracs in 12 wells that had a production history of 90 days or more as of June. Those 12 wells had produced 32% more at a pressure 42% higher than other wells with a choke (18/64ths). More production at a higher pressure is about as good as it gets. The higher pressure indicates better overall communication, which is great in tight shale rocks. We'll hear more about hiway fracs as operators test it in other parts of the Eagle Ford and in other plays. Read more on Schlumberger's HiWay Flow Channel Fracturing at www.slb.com [ic-c] The other service companies are not slouches, and are working the technology game too. Halliburton is pushing for speed and has lowered completion times by as much as two days with its "Delta Stim" completion service. Multiply two days per well over 100s of wells per year and you begin saving alot of money. Across 182 wells per year, that's an extra well on production for a full year! Days and hours count in the oil & gas game. If you're offering, I'd be just fine with an extra year of production from an Eagle Ford well.

A GasFrac completion in Maverick County is being tested for Jedela Operating. The results will be interesting to watch as GasFrac's technology is more commonly used in Canada where the company was founded. The idea is interesting. If you can sell your flowback fluids or gas, you might only be out the costs of getting it there. If you're in a drought and have to spend top dollar for water, it gets even more compelling. If better production rates and quicker completions prove true, you'll likely end up with a winning combination. Read more at GasFrac.com.

R.T. 

Loreto Resources - Eagleford Energy Reach Joint Venture Agreement

Loreto Resources and Eagleford Energy have come to an agreement on a potential joint venture. Loreto will have the opportunity to earn a 50% working interest on two leases in Zavala County, TX. In Petrohawk's Q2 conference call, the company announced it was suspending drilling operations at Red Hawk in favor of other producing areas. Read more in our post titled: Petrohawk Abandons the Red Hawk Field. Watch to see if Loreto Resources and Eagleford Energy are able to make a commercial play in Zavala County. Secondary formations such as the Austin Chalk and Buda may become the primary drilling targets.

Loreto Resources Corporation (OTC: LRTC) ("Loreto") today announced that it has signed a non-binding letter of intent with Eagleford Energy Inc. ("Eagleford"), under which Loreto would have the right to farm in to an up to 50% working interest in Eagleford's net working interests in the Matthews Lease and the Murphy Lease in Zavala County, Texas. Key highlights of the letter of intent are as follows:

• Farm-in agreement would cover 5,266 gross acres in the Eagle Ford light oil shale play in the Maverick Basin.
• Drill results on both leases indicate potential for significant volumes of recoverable light oil in the Eagle Ford Shale, Austin Chalk and Buda formations based on core samples, log analysis and analogue modeling by Weatherford International.
• The Matthews Lease is contiguous to the Petrohawk Energy Corporation Red Hawk Land Block, which has shown average initial production rates per well from wells targeting only the Eagle Ford Shale of 375 barrels of oil per day, according to Petrohawk.
• Accelerated work program currently anticipated to include (i) the completion, fracturing and tie in of the Matthews/Dyami #1-H horizontal test well with up to a 15 stage fracture stimulation utilizing a Baker Hughes shot point sleeve, (ii) drilling of a second vertical well on the Murphy Lease which is currently drilling; and (iii) the fracturing, tie in and completion of two Murphy vertical wells.

Read the full press release at prnewswire.com

BHP - Petrohawk's Red Hawk Zavala County Acreage Abandoned

Petrohawk has terminated any further investment in Zavala County's Red Hawk field. We've heard this was a possibility. Eagle Ford Shale Oil wells in the county have not outperformed expectations like many other areas of the play and Petrohawk has now stepped away from the asset. BHP is not expected to continue drilling, but I'm sure the company will consider whether or not the Zavala County Eagle Ford assets fit the company's overall portfolio. Watch for well results from Chesapeake in the eastern part of the county. It will be interesting to see if Chesapeake's acreage provides better returns. Petrohawk and Chesapeake were two of the earliest movers in the county.

Petrohawk announced Results in the Red Hawk prospect in Zavala County, Texas, failed to meet minimum expectations during the quarter. As a result, capital spending at Red Hawk will be terminated and capital budgeted for 2011 will be reallocated to other operating areas.