Fear of Earthquake Threaten Texas Lease Sales

Texas Earthquake Risk

Texas Earthquake Risk

An oil and gas lease sale in Texas is being threatened by environmentalists and the fear of earthquakes.

Related: Texas on Short List for Fracking-Induced Earthquakes

The Bureau of Land Management has scheduled an auction for oil and gas leases on federal land in Texas for April, 2017. But several environmental groups are asking the agency to reconsider and withdraw the proposed lease sale, which includes 3,100 acres beneath dams that store water supplies for Corpus Christi and Brenham.

A joint letter sent by The Center for Biological Diversity, Clean Water Action and Sierra Club voiced concerns that fracking might trigger earthquakes that could harm the dam infrastructure and threaten the water source for half a million Texans.

“We insist that BLM: (1) cease all new leasing of fossil fuels in the planning area, including oil and natural gas; or, at a minimum (2) withdraw the proposed April 2017 sale pending a programmatic review of all federal fossil fuel leasing which must consider a ‘no leasing’ and ‘no fracking’ plan amendments.”

The letter also cites criticism of the current Environmental Assessment, saying it is “unlawfully deficient”. The group insists that if the BLM continues with the sale, they should do the following:

  • 1) Initiate formal consultation with the Fish and Wildlife Service, as required by the Endangered Species Act (“ESA”)
  • 2) Prepare a full EIS for the proposed lease sale that considers a full range of alternatives, including an alternative that bans new hydraulic fracturing and other unconventional well stimulation activities, and require strict controls on natural gas emissions and leakage

The topic of fracking and earthquakes in Texas has continued to be controversial, with interests on both sides citing scientific evidence that supports their claims. The Texas Railroad Commission continues to be skeptical of the link between fracking and earthquakes and has publicly questioned the mounting scientific evidence of the link.

In April, The U.S. Geological Survey (USGS) released a forecast for 2016 that include maps identifying potential seismic events from both human-induced and natural earthquakes. According to the maps, the Eagle Ford shows a less than 1% chance of any type of seismic activity, either manmade or natural.

 Read more at biological diversity.com

RRC Assesses $8,651,857 in Fines for 2016

The Texas Railroad Commission has released its full year report for oil and gas inspections, violations and assessed fines.

Related: Texas Drilling Permits Down

The Railroad Commission of Texas took action earlier this month for violations in the oil and gas industry. For the month of December, the Commission assessed $556,237 in fines involving 180 enforcement dockets against operators and businesses for the following:

  • 10 oil and gas operators were assessed $294,775 after failing to appear at Commission enforcement proceedings and others
  • Operators were ordered to come into compliance with Commission rules and assessed $49,212 for oil and gas and LP-Gas rule violations
  • Pipeline operators and excavators were assessed $212,250 for violations of the Commission’s Pipeline Damage Prevention rules

For the calendar year 2016, the Commission performed 124,299 inspections and found 41,867 alleged violations. The commission assessed a total of $8,651,857 in fines and report 90 operators are repeat violators.

Last week, the RRC announced it issued 673 original drilling permits in November 2016 compared, a drop from the 687 issued in November 2015. This total includes:

  • 581 permits to drill new oil or gas wells
  • 10 to re-enter plugged well bores and 82 for re-completions of existing well bores
  • 145 for oil
  • 38 for gas
  • 449 for oil or gas
  • 36 for injection

Total well completions for 2016 were 9,923, almost half of what they were a year ago (18,510).

The Texas Railroad Commission regulates oil and gas exploration and production, pipeline safety, surface mining, natural gas utilities and alternative fuels. In April the RRC celebrated its 125th anniversary.

Sundance Energy Gains McMullen County Assets

Sundance Energy Gains McMullen County Assets

Sundance Energy Gains McMullen County Assets

Sundance Energy continues its expansion into the Eagle Ford with the purchase of more assets in McMullen County.

Related: Sundance Closes on McMullen County Property

Australia-based Sundance Energy is pressing hard into the Eagle Ford, announcing its latest acquisition just days before Christmas. The $7.1 million deal gained working interests in 23 gross (1.5 net) producing wells and 1,449 gross (130 net) acres in McMullen County. The wells averaged approximately 300 boepd at time of sale and Sundance operates 12 of the acquired wells.

In July Sundance Energy closed on another deal, gaining 5050 Acres in McMullen County.  The $15.5 million transaction included 27 gross (9.6 net) wells with expected production of 600 barrels of oil equivalent per day (boe/d) to 700 boe/d for the remainder of 2016

In a separate transaction, the Company divested an acreage block containing 3,336 gross (2,709 net) acres located in Atascosa County, Texas. The Eagle Ford acreage was undeveloped and outside the Company’s core development project area. Sundance received cash proceeds of $7.1 million for the acreage.

Sundance Highlights:

  • The company operates on 46,000 net acres in McMullen, Live Oak, Atascosa and Dimmit Counties
  • 430 gross (353 net) total undrilled locations
  • Q3 2016 total cash costs(1) of $16.64/boe compared to Q2 2016 of $19.69/boe
  • Q3 2016 total cash operating costs of $11.40/boe compared to Q2 2016 of $12.32/boe
  • Q4 2016 estimated production of 9,300 – 9,900 boepd
  • Current McMullen Eagle Ford well cost of ~$5.7 million(2) for wells with avg lateral length of 7,100’

Read more at sundanceenergy.com

Eagle Ford Rig Count Stalls Over Holiday

Eagle Ford Operators Put Rigs Back Online

Eagle Ford Operators Put Rigs Back Online

The Eagle Ford Shale rig count remained flat this week, with our data showing 53 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, the Texas Railroad Commission announced it issued 673 original drilling permits in November 2016 compared, a drop from the 687 issued in November 2015.

Read more: Texas Drilling Permits Down

A total of 652 oil and gas rigs were running across the United States this week, a gain of 15 over last week. 129 rigs targeted natural gas (three more than the previous week) and 523 were targeting oil in the U.S. (13 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 321 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table below.

Eagle Ford Oil & Gas Rigs

Seven rigs in the Eagle Ford region targeted natural gas this week with the commodity increasing to $3.66/mmbtu.

46 Eagle Ford rigs were targeting oil with WTI oil prices gaining slightly to $53.02. 

A total of 47 rigs are drilling horizontal wells, zero are drilling directional wells and six are vertical.

Karnes County leads this week with 12 rigs in production. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

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Eagle Ford Shale News

Eagle Ford Counties Win Award for Legislative Initiatives

Texas Drilling Permits Down

Baytex Energy to Spend 70% of 2017 Capex in Eagle Ford

Halcón to Resume Eagle Ford Drilling

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Read more at bakerhughes.com

Halcón to Resume Eagle Ford Drilling

Halcón to Resume Eagle Ford Drilling

Halcón to Resume Eagle Ford Drilling

Halcón Resources Corporation announced this week it will resume its Eagle Ford drilling program in early 2017.

Related: Halcón Waiting for Crude Prices to Improve

Halcón maintains its El Halcón in the Eagle Ford, which is comprised of 80,000 net acres in Brazos and Burleson counties. Low crude prices have slowed growth in the area and the company has not operated a drilling rig in El Halcón for almost a year.

In November, the company announced it was still waiting for crude prices to improve before increasing Eagle Ford activity, but after reviewing results of 18 recent offset operator wells, the company has decided to resume drilling. The company plans to drill five wells in El Halcón in the first half of 2017.

Due to low commodity prices, the Company has not operated a rig on its El Halcón acreage in nearly a year.  Halcón’s decision to resume drilling in this area is driven by the recent improvement in oil prices, in addition to the Company’s technical review of recent offset operator activity in the play.”

Q4 and beyond:

  • Q4: Company operated rig in the Fort Berthold Indian Reservation area of the Williston Basin and plans to continue to keep this rig in the FBIR area through 2017.
  • Q4 production should average between 38,000 and 39,000 boe/d
  • 2017: Company expects to spend approximately $200 MM on drilling and completion costs
  • 2017: Company expects to generate 39,000 to 41,000 boe/d of production
  • 2017: Company expects to be cash flow neutral in 2017

Earlier this fall, Halcón emerged from bankruptcy, where it was able to eliminate approximately $1.8 billion in debt.

Read more at halconresources.com