Texas Drilling Observer
Current Texas Oil & Gas Industry Statistics
» This past March there were 511 drilling permits issued statewide by the Texas Railroad Commission. By comparison there were 923 drilling permits issued by the Commission during March 2015. February 2016 crude oil production from Texas averaged 2.42 million barrels per day, up from the 2.34 million barrel per day average of February 2015 (these figures do not include condensate from gas wells). Natural gas production from Texas wells averaged 20.02 Billion cubic feet per day in February 2016. That’s down from the February 2015 gas production average of 20.13 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 1.023 billion barrels of oil and 8.4 trillion cubic feet of natural gas. Texas production in February 2016 came from 184,117 oil wells and 89,379 natural gas wells.
Pioneer Suspends Drilling in Eagle Ford
Pioneer Natural Resources has announced that is pulling
its remaining fleet of drilling rigs out of the Eagle Ford Shale
producing trend in South Texas. Pioneer had been one of the most active
drillers in the Eagle Ford trend over the past several years. The
announcement was made recently when the company reported that it will
reduce its drilling activity by 50 percent. Pioneer will remain active
in the Permian Basin of West Texas with 12 active rigs operating in that
region by the summer of this year.
RRC Adopts New Rules for Unconventional Fields
» The Texas Railroad Commission has adopted new rules regarding unconventional oil and gas fields that become effective in February. The revisions will codify many of the special well spacing regulations for horizontal wells that operators have been enacting over the decade - but have been doing so on a field by field basis. The proposed rule changes will allow complex special provisions to be approved for fields that are designated as unconventional fracture treated fields – which are oil and gas reservoirs that require horizontal drilling and fracing in order for oil or gas to be produced in paying quantities. The provisions are designed to increase the amount of horizontal laterals that can legally be drilled within thick shale formations and allow longer horizontal wells to be drilled on leases while still being in compliance with spacing and density rules.
Interim Charges Assigned to Natural Resources Committee
Lt. Governor Dan Patrick recently issued an interim charge
for the state Senate’s Natural Resources Committee – to study new
mandates from the EPA and their impacts on the Texas Economy. The
Committee will also investigates the state’s permitting processes with
respect to the energy and environmental side and determine if those
processes could be made more competitive and business friendly. Lastly,
the issue of theft in the oil field, an issue that was addressed in the
most recent legislative session with harsher criminal penalties proposed, will also be investigated. Any recommendations
arising from these interim charges could not be acted upon until 2017,
the next time that the legislature is in session.
Craddick Meets with Energy Delegation from Mexico
» Texas Railroad Commissioner Christi Craddick met with a delegation of energy officials from Mexico recently to discuss regulatory issues concerning development of oil and gas shale formations. Craddick stated that the Railroad Commission is a ready source of expertise on the oversight of shale development and is a natural partner for Mexico to coordinate with since the state’s most active shale play – the Eagle Ford – extends well into Mexico. According to Rigzone News, The Eagle Ford Shale in Mexico’s Burgos Basin contains an estimated 343 trillion cubic feet of recoverable natural gas, which is about two thirds of Mexico’s recoverable shale gas resources. Mexico’s energy agencies are currently working on contractual terms for an upcoming auction of contracts to sell to the private sector for development of the country’s shale resources. The sale is expected to include some of Mexico’s Eagle Ford Assets.
RRC Adopts New Fee for GAU Letter Filings
» In January the Texas Railroad Commission approved a new filing fee for groundwater protection determination letters, also commonly known as water-board letters. These letters are issued by the Commission to show for each well where the base of usable quality water lies and where companies must set surface casing while drilling a new well. Operators must obtain waterboard letters for new drills, mechanical integrity or fluid level testing, well plugging and for injection and disposal well applications. The new fee will be $250 per application, which based on current activity – will generate about $300,000 of additional revenue per month for the agency.
Second Proposal for Decision Issued in Show Cause Hearings Over Quakes
The Texas Railroad Commission’s Hearings Division recently
released the second of two anticipated proposals for decision that
investigated any potential links between two salt water disposal wells
and earthquake activity that occurred near the north Texas town of Azle
during the fall of 2014 and spring of 2015. As expected this
second proposal for decision mirrors the first that was issued at the
end of August – stating that the disposal well operated by Enervest
Operating cannot be linked to the tremor activity. The two show cause
hearings were held in response to a published research study that
concluded that the quakes were likely caused by operations from the two
disposal wells. The Railroad Commissions hearings examiners in their
decisions identified several flaws in the study and concluded that
the agency should not revoke the disposal permits for the wells. In the
area where the seismic activity occurred UT’s Bureau of Economic Geology
is currently working to implement its TexNet Seismic Monitoring Program,
which will deploy additional resources to monitor and analyze any
relationship between disposal wells and tremors in the North Texas area.
RRC Welcomes New Executive Director
» The Texas Railroad Commission, which oversees the state’s oil and gas industry, has appointed a new executive director. Kim Corley, who retired from Shell Oil earlier this year and has over 30 years of experience in the energy industry, was given the position at an annual salary of $180,000 – that’s higher than the individual salaries of the agency’s three elected Commissioners. The Executive Director Position at the Railroad Commission oversees the agency’s various departments and many of the day to day operations of the Commission. Prior to her work at Shell, Corley held various positions at Kinder Morgan Energy, El Paso Corp and Tenneco Energy. Corley earned her undergraduate degree from Sam Houston State University and a Masters degree from Rice University.
RRC Joins Lawsuit Over EPA's Navigable Waters Proposal
» The Texas Railroad Commission, which is the state’s regulatory agency over the oil and gas industry, recently joined a multi-agency and multi state lawsuit against the EPA’s proposed new rule interpretation of its jurisdiction over navigable waters. Railroad Commission Chairman David Porter called the proposal as a threat to private property rights in the state. The proposal would redefine a navigable water under the Clean Wear Act as any course where water could conceivably flow, including dry and intermittent creeks that drain into perennial bodies of water. That redefinition would expand the EPA and Army Corp of Engineers oversight powers. The EPA contends that the rule would further protect wetlands and streams from pollution and degradation. The Railroad Commission pointed out that should the proposal be enacted some water used by the oil and gas industry for shale drilling operations could be put under federal jurisdiction.
UT-Arlington Study Raises Contamination Questions in Barnett Shale Trend
» A study conducted by UT-Arlington researchers has reported widespread groundwater contamination in the most prolific shale gas producing region of the state – the Barnett Shale trend in north Texas. This study comes on the heals of a comprehensive report from the EPA which found no widespread links between fracing operations and groundwater pollution. The UT Arlington study did not link the elevated levels of pollutants sampled from 550 water wells in the Barnett Shale trend to oil and gas industry activity, but did note that the chemicals that showed up at elevated levels in the water are the same chemicals used in oil & gas drilling and fracing operations. Industry advocates were quick to point out that study did not present any findings regarding the causation behind the presence of these chemicals -- and that the ground water was not sampled randomly - instead focusing on areas very close to certain oil & gas well sites. The study has been accepted by the American Chemical Society for publication in the Environmental Science and Technology Journal.
Record Level of Taxes & Royalties Paid by Industry in 2014
» According to the Texas Oil & Gas Association – the oil and gas industry in Texas paid a record 15.7 billion dollars in state and local taxes and royalties during last year. TxOGA’s numbers show that that figure is more than double the amount of taxes and royalties paid by the state’s oil and gas industry during 2010. Oil and gas royalties from State owned lands, also go towards the Permanent School Fund, which helps pay for education in the state. That Fund, worth $37.7 billion, recently became the largest education endowment in the country.
Patrick C. Forbis
Oil Industry Consultant on
Compliance & Regulatory Affairs
Editor & Publisher
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2016 Patrick C. Forbis
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