Karnes City Changed By The Eagle Ford

Karnes City - City Hall Building
Karnes City - City Hall Building

To say Karnes City has changed over the past few years is an understatement. The Houston Chronicle conducted an interview with a local farmer who owns the land where ConocoPhillips drilled its first Eagle Ford well.

Change started with the growth in oilfield jobs and booming royalty checks. Today, cash is being poured into the area.

"It's been good to me. I miss that pasture, but I could have ranched here for 300 years and not have the income we do now," he said. "Anyone who owns property should be benefiting."

A few takeaways:

  • Karnes City was once the poorest non-border town in the state
  • 1,200 permits have been issued in the county over the past four years
  • 2,000 miles of pipe have been laid
  • As much as $70 million/month is being paid to royalty owners in the county
  • Traffic counts are up as much as 300% on local roads
  • County's tax base has jumped from $562 million to $3.1 billion in 3 short years

"A kid can leave a $40,000 overtime job at the prison and make over $100,000 in the oil field. You've got kids coming home to work here who haven't lived here in a long time," he said.

Read the full article at chron.com

SM Energy Increases Eagle Ford Reserves Estimate - Downspacing

SM Energy Operated Eagle Ford Acreage Map
SM Energy Operated Eagle Ford Acreage Map

SM Energy has increased its estimate of net recoverable resources in the Eagle Ford by 500 bcfe to 5.8 Tcfe. SM still only has 2 years of drilling booked as proved reserves. The company attributes the increase in reserves to better EURs (4.5 Bcfe per well) and expectations for tighter well spacing in portions of the play. Briscoe Ranch will be developed on 52-acre spacing compared to guidance of 72-acres per well previously.

The company completed 77 operated wells in 2012. At year-end, SM had 154 wells producing and 29 wells waiting to be brought online. Operated production grew to 271.3 mmcfed in the fourth quarter and non-operated production grew to 15,500 boe/d (93 mmcfed). That's growth of more than 10% over the third quarter of 2012.

SM is currently running 5 rigs and 2 frac spreads in the play. In it's non-operated position, SM expects Anadarko will drop down to 8 rigs in 2013, but believes the number of well completions will hold steady due to efficiency gains in drilling.

SM Energy operates 145,000 net acres in the Eagle Ford. Leases on 4,000 acres prospective for dry gas at Apache Ranch were allowed to expire in 2012.

Read the full press release at sme.com

Net Midstream Plans Eagle Ford Pipeline To Mexico from Nueces County

Net Mexico Pipeline Map
Net Mexico Pipeline Map

Net Midstream announced plans for a 42-inch, 124 mile pipeline from Nueces County to Starr County in South Texas. The pipeline is backed by a 2.1 Bcfd transportation contract with MGI Supply ltd (PEMEX Subsidiary). If the pipeline runs at capacity, it will more than double current exports to Mexico.

The natural gas will be transported from the Agua Dulce hub in Nueces County to a point near Rio Grande City in Starr County.

If the Net Mexico Pipeline moves 2.1 Bcfd, it will more than double current natural gas exports to Mexico.

In the past two years, US natural gas flows into Mexico have increased to approximately 2 Bcf/d. That's up from less than 1 Bcf/d at the beginning of 2010. Demand for natural gas in Mexico is rising as natural gas production is falling. Compare US natural gas prices to LNG prices and you begin to see why Mexico is after US natural gas. It's cheap! An $8 billion pipeline expansion of Mexican infrastructure is already planned. More than $3 billion will be spent expanding pipelines in Northern Mexico where the Net Mexico Pipeline will connect.

“NET Mexico Pipeline will be an important source of supply to meet Mexico’s growing demand for natural gas” said Joe Gutierrez, Co-President of NET. “Welook forward to this exciting new partnership with MGI and PEMEX Gas. NET Mexico is a natural next step in our pipeline system, as we connect abundant gas supply from the Eagle Ford Shale to expanding power generation and industrial markets in Mexico."

Net Midstream already operates a 30-inch, 150 mile pipeline that originates at the Brasada Processing Plant (operated by Western Gas) in La Salle County Texas. That is one Eagle Ford source and I bet we'll see others as gas production grows. Natural gas prices in Mexico are more favorable (higher), so producers will enjoy a transportation route that avoids Henry Hub.

Net Midstream also operates a pipeline that delivers gas to a 200 MW power plant in La Salle County and a 30-mile pipeline that serves the City of Corpus Christi.

Read the full press release here.

Eagle Ford Shale Regional Rig Count Rises 3 - Feb 22, 2013

Eagle Ford Shale Well Map February 2013
Eagle Ford Shale Well Map February 2013

The Eagle Ford Shale drilling rig count increased three to 247 running this past week. La Salle County still leads and has held the top position for all but two weeks since October of 2012.

Chesapeake announced earnings this week and it looks like the company is changing course a bit now that Aubrey McClendon is on his way out. The company is dropping more rigs than previously disclosed. Chesapeake exited 2012 with more than 20 rigs running and is running 18 as of this week. That number will fall throughout the year as plans call for an average of 16 rigs running in 2013. That is six rigs fewer than the company announced it planned to run during the year back in August of 2012. Read more in the article Chesapeake's Eagle Ford Activity Soaring - Rig Count Declining.

Eagle Ford Oil & Gas Rigs

[ic-r]The natural gas rig count fell further to 27 units running this past week. That's an Eagle Ford record low. Natural gas prices traded up during the week to $3.28/mmbtu on Friday afternoon.

The oil rig count increased seven to 219 running in the area. WTI crude futures traded down on the week to a little more than $93 per barrel to end the week. Eagle Ford crude prices traded at $102.37/bbl on the 22nd of February. Eagle Ford light crude and condensate in the area traded at $89.75 and $88.75, respectively.

There are 212 horizontal rigs running in the region. An injection well is being drilled in Karnes County.

La Salle County leads development with 36 rigs running. Karnes (26), DeWitt (25), Dimmit (24), McMullen (24), Gonzales (23), Webb (23), Live Oak (16), Atascosa (12), Leon (7), Lavaca (6), and Wilson (6) round out the top counties in the region.

South Texas Oil & Gas News:

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates.

Eagle Ford Rig Count by Operator

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 SmithBits 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 and/or Smith Service Co's (Schlumberger) Smith Rig Count.

Eagle Ford Shale Drilling by County

Cabot Oil & Gas More Confident in the Eagle Ford & Pearsall

Cabot Eagle Ford & Pearsall Shale Map
Cabot Eagle Ford & Pearsall Shale Map

Cabot Oil & Gas exited 2012 with more confidence in the Eagle Ford at 400 ft well spacing and more knowledge about the Pearsall Shale.

The Company has experienced continued success with the 400' down spacing program (Eagle Ford), maintaining a range of EURs between 350 and 500 Mboe per well, depending on lateral length.

Cabot Focused On Eagle Ford Well Design

Cabot is still working to develop the optimal well design in the Eagle Ford, but has driven down drilling times to an average of 13 days (9.5 day record). Average well costs are falling with increases in drilling and completion design.

It's still early in the life of Cabot's Eagle Ford properties, but 400 ft spacing will likely double recoverable reserves in the Buckhorn Area that straddles Frio, La Salle, Atascosa, and McMullen counties.

As of November 2012, Cabot shared the following Eagle Ford stats:

  • Drilled 39 wells
  • Completed 38
  • Average IP was 653 boe/d (24-hr) and 460 boe/d (30-day)
  • Average lateral length of 5,039
  • Average EUR expected to be 400,000 boe (380-550 mboe range)

Cabot Is Testing Best Well Placement in the Pearsall

Much of the same can be said about the Pearsall. It's early, but results seem positive. Cabot has 5 producing well, 4 waiting on completion, and 3 drilling related to its JV with Osaka.

"We continue to refine the process of determining the best place to land the laterals in the prospective interval," commented Dinges.

Read the full update at cabotog.com