Deloitte Oil & Gas Conference Speakers Detail a Bright Future in Energy

Deloitte Oil Gas Conference - Global Capital Budgets

Deloitte held their annual Oil & Gas Conference on Nov 16th and the sessions featured several key leaders from across the industry.

While the conference is about the industry overall, the shale plays naturally commanded the lion's share of the conference. The mood was highly optimistic. We are no longer in the "shale revolution", rather this energy renaissance is a reality that is here to stay.

Overall, the common theme throughout the sessions could be summarized in a word: "Innovation." Whether it is lowering costs or utilizing currently flared gas through a gas-to-liquids (GTL) process, the industry sees room for growth.

A few key points and statistics we noted while at the conference:

• Oil production is at levels not seen since the mid 1980s
• The US has 15% of technically recoverable shale gas and 17% of technically recoverable shale oil resources globally
• The US will pass Russia as leading O&G producer this year; will pass Saudi Arabia next year
• Shale has increased our current trade balance by $200 million/yr and is predicted to give us oil independence by 2020
• A better trade balance has led to increasing geopolitical influence in critical regions
• The oil export ban needs reform. Otherwise, refinery changes are needed and we will consume more expensive crude.
• Operators are focused on cutting costs to increase valuations
• According to Maynard Holt, "we may be in the 8th inning of the shale game, but we're in the 3rd inning of the completion/cocktail game"
• In the last five years, foreign firms have invested over $100 billion in US unconventional assets
• Since 2008, Chinese joint ventures have spent 44 billion to acquire N. America based energy firms and assets
• Gas-to-liquids technology is becoming more and more attractive with current oil and gas prices
• Skip Horvath, Natural Gas Supply Association predicts that natural gas will hit $6.00 by 2020, "assuming Washington leaves us alone over the next few years."

"This boom isn't just for a few years. We believe the shale revolution really has staying power" -Ryan Lance, ConocoPhillips CEO

About the Deloitte Oil & Gas Conference

The Deloitte Oil & Gas Conference is an annual conference for oil and gas executives and leading industry experts to share their views on important issues facing the global oil and gas industry. The objective of this conference is to provide a forum for executives and managers from companies in all sectors of the oil and gas industry, commercial and investment bankers, industry analysts, service providers to the oil and gas industry, representatives of government agencies, trade groups and policy planners, to understand emerging issues.

How Thick Is the Eagle Ford?

The Eagle Ford Shale's thickness varies several hundred feet across the region and there's not a significant correlation to thickness and well productivity. The play's thickness ranges from less than 100 ft to 400 feet near the Mexico border. The average thickness is 250 ft across the most commonly targeted portions of the play.

Eagle Ford Thickness Map

Read more at our Eagle Ford Geology page.

Cotulla's Eagle Ford Growth Exhibited Through $9 Million Airport Expansion

Ground has been broken on an $8-9 million La Salle County Airport expansion in Cotulla. The expansion will add over a mile of runway and additional airplane parking. The expansion is just one example of how Cotulla is changing with the Eagle Ford. 

City officials hope to see additional investment from energy companies in the area. As the video states, more than $100 million has been invested in Cotulla to date and $200 million is not far way.

Don't Let Eagle Ford Drivers Be Put “Out-of-Service”

Drivers Daily Vehicle Inspection Report

In trucking, “out-of-service” criteria define a set of physical conditions under which a commercial motor vehicle (CMV) or commercial driver may be prohibited from operating. An out-of-service violation removes the driver and CMV from the roadway until the violation is corrected, which obviously means no work gets done and no one gets paid. In addition, out of service violations are sometimes punishable by fines.

The Federal Motor Carrier Safety Administration is serious about getting unsafe trucks off our roads and penalizing drivers and owners who fail to follow the regulations. In recent years, there have been more trucking companies and passenger bus companies placed out of service than ever before. The MAP-21 highway funding law that went into effect doubled most fines for serious violations.

Sharing the Blame

New rules that went into effect Oct. 1, 2013, allows the agency to place an entire carrier out of service for operating vehicles “without or beyond the scope of registration,” according to the regulation, whereas previously only the unregistered vehicle itself could be placed out of service. Now both the carrier as well as the vehicle can be penalized. Carriers and drivers who fail to comply with the state and federal regulations can be more easily be prevented from operating.

You can imagine this puts an even greater emphasis on thorough vehicle inspections and preventive maintenance which would catch potential risks to safety before they can cause accidents. A diligently-performed daily vehicle inspection will disclose such potential problems as faulty brake systems and bald tires.

Out-of-service penalties can also be levied against drivers without proper licensing and training. A CMV driver without a CDL or one that has expired can be just a serious a safety liability as brakes that won’t hold or tires ready to blow.

Activity in the Eagle Ford Shale in South Texas has increased truck traffic tremendously and statistics show trucking related accidents are up 41 percent.

Keep Eagle Ford Roadways Safe

[ic-l]In November, 2013, Sergeant Villarreal with Corpus Christi Department of Public Safety (DPS) spoke at the National Association for Publicly Funded Schools Region 4 “Keeping Our Roadways Safe” Conference at Del Mar College in Corpus Christi. Sergeant Villarreal indicated that the top three violations DPS officers see when pulling a commercial vehicle over in the Eagle Ford Shale are:

1. Vehicle Inspections performed improperly or not at all
2. Log Book Violations
3. Driving a truck without a valid CDL license.

Keep Eagle Ford Drivers Trucking

Now that carriers as well as vehicles can be put out of service, here are five tips to help keep drivers “in service” and safely on the road:

• Repair broken equipment.
• Hire qualified drivers that have been properly trained with a valid CDL.
• Have a strict pre/post trip vehicle inspection policy and hold drivers responsible for conducting and reporting them.
• Have a no tolerance policy on faulty log book violations.
• Conduct weekly or monthly safety meetings and reward employees for good audit results and discipline drivers that do not.

An Eagle Ford Rig Adds 400 Barrels of Oil Production Per Month

Eagle Ford Production Added by Rig

The EIA published it’s first “Drilling Productivity Report” for six major producing regions in the U.S. earlier in the week.

The EIA found the Eagle Ford and the Bakken account for approximately 75% of oil production growth in the U.S. each month.

Highlights from the Eagle Ford include:

• The average rig drilling in the area adds ~400 b/d of oil production each month and just over 1 mmcfd.
• The EIA also shows the play is producing more than 1 million b/d of oil (likely includes more than just Eagle Ford "oil" production).

EIA New Eagle Ford Production and Legacy Declines

EIA Eagle Ford Oil Graph

Quick observation - I didn't read through the complete methodology, but I assume the EIA is looking at the entire area and making estimates for Eagle Ford production. They are the first to show "oil" production from the play at more than 1 million b/d. My guess is the number includes condensate and possibly other liquids.

Also, I find it interesting the group has the ability to predict the average Eagle Ford rig added 396 b/d in October and will add 404 b/d in November. The state is just now beginning to report August production figures.

Read the full report at www.eia.gov/petroleum/drilling