Texas Drilling Observer
the oil and gas regulatory report  --  Patrick C. Forbis - Editor & Publisher

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Commodities on 2-16-2018

West Texas Intermediate Crude
Cushing Spot:     $61.75 per Bbl
Natural Gas
Henry Hub Spot: 
$2.48 per mmbtu
Baker-Hughes Texas Rig Count
as of 2-16-2018:         479 Rigs

 We Also Offer a Database of Active Disposal/Injection Well Applications & RRC Docket Applications - Updated Weekly - SAMPLE HERE

What We Cover:
Industry Headlines
Notice of New & Approved Disposal Well Applications
(Lease & Commercial)
Notice of New & Approved Enhanced Oil Recovery Applications (New Projects
& Expanded Projects)
New Field Discovery Approvals & New 'Wildcat' Well Completion Summaries
Summaries of Railroad Commission Hearings, New Notices of Hearing and Summaries of New Cases Awaiting Issuance of 
Notice of Hearing
Summaries of Proposals
for Decision Issued by the Railroad Commission in Protested Oil & Gas Cases
Summaries of Issued Notices of Application for Well Spacing and Well Density Exception Permits
» We List the Entities, Individuals, Trusts and Operators Affected by New Regulatory Applications
» Plus Summaries of New
Oil & Gas Well Completions, Recompletions & Re-Entries
» We Also Provide a "You're On Notice" Companion Report with each Newsletter that Alerts those Impacted
by New Applications

 Current Texas Oil & Gas Industry Statistics

» This past December there were 885 drilling permits issued statewide by the Texas Railroad Commission. By comparison there were 1,009 drilling permits issued by the Commission during December 2016. November 2017 crude oil production from Texas averaged 2.51 million barrels per day, up from the 2.41 million barrel per day average of November 2016 (these figures do not include condensate from gas wells). Natural gas production from Texas wells averaged 18.10 Billion cubic feet per day in November 2017. That’s down from the November 2016 gas production average of 19.04 Bcf per day (these figures include casinghead gas production volumes). These preliminary figures are based on oil and gas production volumes reported by operators and will be updated by the Texas Railroad Commission as late and corrected production reports are filed. Over the last 12 months, total Texas reported production was 1.012 billion barrels of oil and 7.6 trillion cubic feet of natural gas. Texas production in November 2017 came from 180,060 oil wells and 92,177 natural gas wells.

 RRC Proposing New Pipeline Permitting Fees

» The Texas Railroad Commission is taking public and industry comments on a proposed pipeline safety and regulatory fee that is set to go into effect during 2018. The funding generated by the fees will replace about $5 million per year that was previously provided through general state revenue. The total budget of the program is about $14 million per year. During the 2017 legislative session changes were enacted to make the Railroad Commission’s pipeline permitting and inspection program self funded. Currently the Railroad Commission carries out about 3,000 pipeline inspections per year over about 300,000 miles of intrastate pipelines and oil and gas gathering systems. Under the Commission’s rule proposal, pipeline and gathering line operating companies would pay an annual fee based on either a flat rate of $17 per mile of pipe or a rate structure of between 15 and 25 dollars per mile dependent on the diameter of the pipe. These fees and permits would apply only to regulated pipelines and not internal gathering lines that do not cross lease lines. The deadline for companies and the public to comment on the proposal is January 2, 2018. The full text of the proposed rule and forum to submit comments can be found at the Railroad Commission’s website.

  Carrizo Selling Eagle Ford Acreage; Oasis Makes Deal in Delaware Basin

» Carrizo Oil & Gas is selling over 24,000 acres in the Eagle Ford Shale, leaving the company with its 78,000 acre core position in the South Texas Eagle Ford. The acreage being sold by Carrizo accounts for only 10 percent of its third quarter production in the Eagle Ford Shale. Oasis Petroleum is buying over 20,000 acres in the Delaware Basin of West Texas from Forge Energy is a $946 million transaction. This acreage, which contains over 600 potential drilling locations, is located in Loving, Ward, Winkler and Reeves Counties.

  Kinder Morgan & Partners Investing in Major New Pipeline

» Kinder Morgan, DCP Midstream and Targa Resources have agreed to invest $1.7 billion in a west Texas to Corpus Christi pipeline that will be designed to transport over 1.9 billion cubic feet of natural gas per day. The deal was put in place after the pipeline companies received a commitment from Apache Corporation and Pioneer Natural Resources, which are developing major oil and gas fields in the region around Fort Stockton. This Gulf Coast Express Pipeline Project will originate at the Waha hub in Pecos County and will be 365 miles in length. This new major pipeline is expected to be in service by October of 2019.

  Cabot Selling Eagle Ford Acreage to Venado

» Houston based Cabot Oil & Gas has agreed to sell its Eagle Ford assets in South Texas to Venado Oil & Gas for $765 million. The properties cover over 74,000 acres in Frio and Atascosa Counties. Cabot also announced that it will sell its remaining producing assets in East Texas to an undisclosed buyer. The Eagle Ford properties being sold by Cabot produce an average of over 15,000 barrels of oil equivalent per day. This sale will close during the first quarter of 2018.

  U.S.G.S. Gives 20 Billion Barrel Reserve Estimate for Wolfcamp Shale

» The U.S. Geological Survey reported that the Wolfcamp Shale covering a large section of West Texas could hold up to 20 billion barrels of oil, which would make it the largest accumulation of oil ever discovered within the U.S. The finding was issued in the agency’s report regarding the nation’s unconventional oil reserves. In addition to the 20 billion barrels the report finds that the Wolfcamp shale also contains 16 trillion cubic feet of natural gas and 1.6 billion barrels of natural gas hydrocarbon liquids. While this report is not one that describes a discovery in the classical sense, it does skyrocket the reserve estimate and potential importance of the Wolfcamp Shale. So far more than 3,000 horizontal wells have been drilled into and produced from the Wolfcamp shale.

  Environmental Defense Fund Issues Report on Flaring in Texas

» The Environmental Defense Fund issued a study recently on the issue of gas flaring in the Permian Basin of West Texas and Eagle Ford Shale of South Texas. Over the past eight years as new drilling booms occurred in those regions, the lack of existing natural gas gathering pipeline infrastructure has led to vast amounts of oil wells having to continuously flare their gas production until the pipelines catch up. Between 2009 and 2016 the amount of gas flared annually in the Eagle Ford and West Texas has increased from less than 5 billion cubic feet per year up to 80 billion cubic feet per year. The report states that the amount of gas flared in the Permian Basin during 2015 could meet the household needs of all the residents living in those counties for a two and a half year period.

   RRC Announces Aggressive Plugging Goals

» The Texas Railroad Commission has set a goal to almost double the amount of orphaned wells it plugs annually over the next two fiscal years for 2018 and 2019. Orphaned wells are oil and gas wells that are left behind by defunct operating companies that-- if not take over by another operating company - are eventually left to the state to plug with money from the oil field cleanup fund. That program is funded by fees collected from the oil and gas industry. As of August there were over 8,700 orphaned wells located across the state. During 2017 the Commission set a goal of about 900 wells to plug from the orphan well list. For 2018 thru 2019 the Commission has set what its leaders call an “aggressive goal” to plug about 3,000 orphaned wells at a cost of $67 million from the oilfield cleanup fund and economic stabilization fund. That expenditure is nearly six times what has been spend from the oil field cleanup fund during the first eight months of 2017.

  Water Well Driller Makes Agreement with GLO to Sell Water to Oil Industry

Water well drilling company Layne Christensen announced recently that it has entered into an agreement with the Texas General Land Office that will allow the company to sell water to the oil and gas industry. Under the agreement the water well driller will develop non-potable brackish water resources within 88,000 acres of state land in far West Texas that will allow the company to market the water for oil and gas drilling and frac’ing operations in the region. Revenues from the water sales will be shared between the company and the state’s Permanent School Fund, which is managed by the General Land Office. The five year agreement, which contains renewal options, is the first of its kind allowing a private company to sell state owned water rights for use by the oil industry. The Houston Chronicle is reporting that the company plans to initially drill about 100 water wells on the 88,000 state mineral acres, which are located in Reeves and Culberson Counties. Layne estimate that the are currently 58 oil and gas drilling rigs within 3 miles of the 88,000 acres, which is about 15 percent of the drilling rigs active in the Permian Basin. These current drilling levels alone would need about 500 million barrels of water per year for just frac’ing operations. The General Land Office of Texas oversees more than 13 million acres of land and mineral rights within the state.

  BEG Completes Earthquake Monitoring Network

» The Bureau of Economic Geology at the University of Texas has completed the installation of all earthquake monitoring devices set up statewide as part of the TexNet program. The program was initiated to better monitor and study minor seismic events induced by human activity, most commonly being possibly linked to fluid withdrawal and injection from the oil and gas industry. The TexNet program was authorized by the Legislature back in 2015 along with $4.47 million in funding. The network includes 22 permanent monitoring stations along with 40 portable seismic stations. The data from these stations can be accessed and viewed in real time from the Bureau of Economic Geology’s website. Most of the portable stations have been deployed to areas around Dallas, Pecos Texas and areas of South Texas where increased levels of seismicity have been observed and linked to oil and gas waste disposal operations.

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2018 Patrick C. Forbis

 Patrick C. Forbis
   Oil Industry Consultant on Compliance &
Regulatory Affairs

   Editor & Publisher
   Texas Drilling Observer

   P.O. Box 11648
   Capitol Station
   Austin, Texas
    (512) - 826-3732 - CELL

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