Updated Texas Railroad Commission Map of the Eagle Ford Shale

May 23, 2012 R.T. Dukes

The Railroad Commission released an updated well map in May. Since the March 15, 2012 version, the number of gas wells on schedule has only grown by 25, but the number of oil wells on schedule has surged by 422 to 1,376.

We're close to having 2,000 producing wells on record. Take into account the delays in reporting and we're likely well past 2,000.

The number of permits issued in the play jumped 381 to more than 4,000 over the past two months as well.

We're running at a blistering pace. 400+ oil wells in two short months is a substantial feat and with ~250 rigs running, we'll likely replicate the growth of the past two months many times over.

The increased pace of drilling and permitting is exactly why we're seeing higher future production estimates almost weekly.

Eagle Ford Shale Well Map - 3,700 Permits - 1,500 Producing - March 2012

April 17, 2012 R.T. Dukes

As of March 15, 2012, the Texas Railroad Commission reported almost 3,700 permits had been submitted, with 954 oil wells and 578 gas wells on schedule. That's up from ~1,900 permits, with 194 oil wells and 249 gas wells on schedule in June of 2011. That means the industry brought on almost 1,100 wells in 9 months. Add in the many gathering delays in 2011 and that number could have been even higher. In 2012, don't be surprised if as many as 2,500 wells are brought to production.

Also, note the difference in the proportion of oil vs. gas wells. In June of 2011, 56% of producing wells were considered "gas" wells, but in March of 2012 that number had fallen to just 38%. That's a direct reflection of the commodity markets. Natural gas is at multi-decade lows, while oil has held strong above $100 per barrel.

Do you think 2,500 Eagle Ford wells will be drilled this year? Use the comments below to share your thoughts.

TXDOT Task Force to Address Barnett & Eagle Ford Shale Roads

March 12, 2012 R.T. Dukes

Texas Department of Transportation officials are convening a task force to address road damage associated with oil & gas activity in the South Texas Eagle Ford Shale and North Texas Barnett Shale regions.

Within 90 days, the task force will convene an executive-level meeting of local governments, law enforcement, transportation officials, Railroad Commission, energy industry leaders.

Continue research, data gathering and sharing.
Identify future energy developments.
Strategize use of new technology.
Discuss potential legislative issues.
Develop funding strategies.
Routinely monitor, evaluate and revise plans.

Bee County Passes $9,500 Well Permit Fee to Fund Road Repairs

February 14, 2012 R.T. Dukes

Bee County Commissioners passed a resolution that will require Eagle Ford oil & gas operators to pay a $9,500 fee for each approved well permit. The fee will be contributed to the Bee County Road and Bridge Fund and will be used to make needed repairs in areas of high traffic. Road repairs can cost as much as $50,000 per mile. There are 18 approved permits, from five companies, in the northern area of the county that will be affected by the new fee. $171,000 will be raised almost immediately.

This is the first required fee I've seen, but I know I've seen talk of others. Use the comments below if you know of other counties with similar permit fees. In Dewitt County, one operator is voluntarily donating $8,000 to the road fund for every well it drills.

Eminent Domain Might Be Losing Power in Texas

November 17, 2011 Kenny DuBose

Eminent domain in Texas might be redefined if a recent court ruling is upheld by higher courts. The court considered the remainder value of the Donnell's family lands in McMullen County, TX and not the pipeline right-of-way alone. The decision required the Eagle Ford pipeline company to compensate the family for depreciation of all lands. That includes land not directly impacted by the pipeline. The family successfully argued that the land lost value due to its proximity to the pipeline. Essentially, they argued more than just the right-of-way was affected by the pipeline and additional compensation should be required. The pipeline company has been ordered to pay the family $600,000, but the decision will be challenged in higher courts before we get a final decision.

The question wasn't whether LaSalle Pipeline LP — which has the right of eminent domain — could lay a 16-inch, 52-mile pipeline that would cross two tracts of McMullen County land owned by Donnell Lands LP, a family partnership.
The biggest issue was whether the value of the rest of the ranchland would be affected by the pipeline's presence.
The company said no. But the landowners said yes, and a trial jury agreed with them to the tune of more than $600,000.
That decision has been winding its way through the Texas court system, and along with some legislative changes that went into effect in September, could represent a small step in giving landowners a larger voice in eminent domain battles.