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


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Commodities (3-30-2015)

 West Texas Intermediate Crude
 (Cushing Spot):     $48.65 per Bbl
 Natural Gas
(Henry Hub Spot):
 $2.61 per mmbtu
 Baker-Hughes Texas Rig Count:
 (as of 3-27-2015):     8 462 Rigs


   HEADLINES    

-- Current Texas Oil & Gas Industry Statistics
This past February there were 924 drilling permits issued statewide by the Texas Railroad Commission. By comparison there were 1,682 drilling permits issued by the Commission during February 2014. January 2015 crude oil production from Texas averaged 2.22 million barrels per day, up from the 1.92 million barrel per day average of January 2014 (these figures do not include condensate from gas wells). Gas well gas production  from Texas was 607.63 Billion cubic feet of gas in January 2015, that’s up from the January 2014 gas production total of 589.73 Bcf (these figures do not include casinghead gas). Over the last 12 months, total Texas reported production was 914 million barrels of oil and 8.2 trillion cubic feet of natural gas. Texas production in January 2015 came from 167,203 oil wells and 91,150 natural gas wells.

Texas natural gas storage reported to the Commission for February 2015 was 247,147,261 MCF compared to 175,071,124 MCF in February 2014. The March 2015 gas storage estimate is 228,116,449 MCF. The Texas Railroad Commission’s Oil and Gas Division set initial April 2015 natural gas production allowables for prorated fields in the state to meet market demand of 8,063,919 MCF. In setting the initial April 2015 allowables, the Commission used historical production figures from previous months, producers’ demand forecasts for the coming month, and adjusted the figures based on well capability. These initial allowables will be adjusted after actual production for April 2015 is reported.

-- Pipeline Planned for 'Eaglebine' Producion in Madisonville Area
Oklahoma City based Blueknight Energy Partners recently announced plans to construct a major oil pipeline project that would service Eagle Ford and Woodbine fields in Southeast Texas. The pipeline has a start up date in the second quarter of next year and would have an initial capacity to transport 100,000 barrels of oil per day from the growing production trend in the Madisonville Area to refineries in the Houston Area. The line would be 160 miles long and would have the potential to have its capacity expanded to 200,000 barrels per day.

-- EPA Sets Timeline for Emissions Rulemaking
The EPA recently announced plans to craft a proposed rule by this summer that would impose further air emission restrictions under the Clean Air Act. The goal would be to have a finalized rule in place by 2016. The target of the rulemaking is methane emissions and volatile organic compound releases from the oil and gas sector, such as releases from compressors, well completions, leaks, liquid unloading and pneumatic devices. The EPA reported that during 2012 about 30 percent of methane emissions came from the oil and gas industry. The EPA also pointed out that while methane emissions from the industry have declined 16 percent since 199ent over the next 10 years due to the overall growth of the industry. The rulemaking will be designed to cut methane emissions from oil and gas industry sources by up to 45 percent by 2025.

-- Commission to Pursue Rulemaking Regarding Metering Devices
The Texas Railroad Commission has proposed rule changes that would allow companies in the field to use turbine or coriolis meters without having to file paperwork seeking administrative exceptions. Such gas metering devices are common in the industry and in order to use them the Commission currently requires paperwork and an exception be obtained for each meter point. The issue first came before the Commission this past August when two of the state’s biggest well operators – Devon Energy and BHP Billiton – sought authority to use those metering devices for nearly a thousand of their wells in south Texas. In addition to this proposal to broaden the amount of permitted metering devices – the Commission is also proposing rule changes that would allow operators a 90 day period after a well is completed to file a completion report. The current rules require that the completion report be filed within 30 days.

-- RRC Will Not Study Irving Area Quakes
The staff seismologist at the Texas Railroad Commission responded publicly in early January over the latest group of seismic events in north Texas - a major natural gas producing basin within the state – The agency’s seismologist stated that it was his opinion that oil and gas industry activity cannot be linked to the dozen minor earthquakes that occurred in the Irving area. The quakes ranged in magnitude between 1.6 and 3.6 and rattled the ground in the area between Dallas and Fort Worth. The Railroad Commission will not be conducting a study on the earthquakes, but Southern Methodist University announced it would install over 20 additional seismic monitoring devices in the area. In recent years many have raised the possibility of a direct link between disposal well activity and minor earthquakes and the topic remains the subject of study and debate. The nearest disposal well to the January slew of earthquakes in the Irving was just over 10 miles away.

-- PBPA Files Lawsuit Over Lesser Prairie Chicken Status
The Permian Basin Petroleum Association has filed a lawsuit regarding the U.S. Fish & Wildlife Services recent listing of the Lesser Prairie Chicken as a threatened species. Four Counties in eastern New Mexico are listed as Co-Plaintiffs in the Law Suit. The suit alleges that the government violated the Administrative Procedure Act and failed to take into account conservation efforts that local government and businesses had initiated in response to the Fish & Wildlife Service’s rulemaking. The Lawsuit was filed in the U.S. District Court for the Western District of Texas in Midland.

-- RRC Finds No Industry Link to Gas Present in North Texas Water Wells
The Texas Railroad Commission has released a report that for the second time in three years refutes the position that natural gas contamination in certain water wells in a North Texas Neighborhood was caused by oil and natural gas industry activity. In connection with a January 2011 hearing called by the Railroad Commission, the operator of the wells, Range Resources was found not to be responsible for the presence of natural gas in the neighborhood water wells. In the new report issued within the past week by the Commission – the agency once again concluded that all new technical data collected since 2011 does not point to fracing of the natural gas reservoir over a mile below the ground as being the cause of the gas being present in the fresh water aquifer. In the report the Commission concluded as it did in 2011 that the gas in the aquifer is likely naturally occurring and migrated from very shallow natural gas bearing zones present in the area.

-- Azle Citizens Concerned About Seismic Activity Confront Regulators
In January a group of concerned citizens traveled from Azle Texas to voice their concerns before the Texas Railroad Commission regarding recent seismic activity in the area –events that the Azle residents believe could be linked to fracing in the area or high volume disposal wells. Commissioners told the concerned citizens and the Azle mayor, that the agency was doing its part to investigate the seismic events, but that so far they had no evidence that could link oil and gas industry activities to the minor earthquakes. Earlier in the month the Commission announced plans to hire a staff seismologist to gather evidence and data regarding any possible link between oil and gas activities and seismic events. Also in January a State Legislative Committee announced plans to appoint a subcommittee to study any connection between earthquake activity in North Texas and natural gas production.

-- Texas Segment of Keystone Pipeline Open for Business
TransCanada is reporting that as of January 22nd, the company is shipping crude oil through the Texas portion of the controversial Keystone Pipeline – The Texas segment of the line cost 2.3 billion dollars and is now being used to transport crude from the Cushing hub in Oklahoma to refineries near Beaumont. Construction of this 487 mile 36-inch segment of pipeline involved 4,844 workers. The pipeline has the potential to transport up to 830,000 barrels of oil per day to the Texas coast.


-- RRC Issues Decision on Allocation Wells
The Texas Railroad Commission has deferred to the courts the future of its policies regarding horizontal wells drilled across multiple leases that do not provide for authority to pool. As part of a contested Railroad Commission hearing held in December of last year, a group of landowners protested the drilling permit for a planned horizontal well that would cross multiple leases, despite the absence of pooling authority in the leases or a production sharing agreement between the mineral owners. The Hearings Examiners sided with the protestants and recommended that the drilling permit be denied due to the lack of pooling authority, a decision which cast serious doubts regarding the future of the Commission permitting such horizontal wells. With the Commissioners rejecting the Examiners’ recommendation, the issue will likely be decided by the courts.

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

   Editor & Publisher
  
Texas Drilling Observer

 
   Texas Drilling Observer
   P.O. Box 11648
   Capitol Station
   Austin, Texas
   78711-1648
   
    patrick@drillingobserver.com
    (512) - 826-3732 - CELL
    (512) - 372-9772 - OFFICE

 

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