Phase 1 of Largest Water Gathering System in South Texas Completed

EVX Midstream Partners, a Houston-based pipeline operator has completed the first phase of construction of oilfield wastewater gathering system in the Eagle Ford Shale of South Texas. It is touted as the largest wastewater gathering system in South Texas shale play.

"EVX is positioned to be the largest gatherer of produced water in the Eagle Ford basin," CEO Herb Chambers IV said in the statement. "We have recently completed over 300 miles of large diameter water gathering systems and have pipe connected many of our 20-plus saltwater disposal wells to provide our producer customers and trucking companies unprecedented operational flexibility”.

Oilfield wastewater, also known as produced water, is treated to be used again in drilling or hydraulic fracturing operations but most of it is pumped into deep underground reservoirs known as saltwater disposal wells.

The company owns and operates 26 saltwater disposal wells throughout the Eagle Ford Shale that are permitted to inject up to 600,000 barrels of water per day. Produced water was traditionally hauled by 18-wheelers to disposal sites, though the trucks are increasingly replaced by pipelines.


Longhorn Midstream Partnering with Old Ironsides Energy for Future Midstream Ventures

Longhorn Midstream Holdings LLC. has announced that it has partnered with Old Ironsides Energy LLC., a private oil and gas investment firm investing in private equity and drilling joint ventures. 

Longhorn Midstream Holdings is a newly formed Dallas based midstream oil and gas company and has been successfully developing and acquiring midstream assets in many regions including the Midland Basin, Ark-La-Tex, the Mid-Continent, and most recently the Denver-Julesburg and Delaware Basins, across all commodities.

Mike Davis, the Managing Partner & President of Longhorn Midstream Holdings said, "The extended team has proven our ability to cost-effectively and reliably provide integrated midstream services to our producer clients."

"Old Ironsides has successfully partnered with members of the Longhorn team across multiple ventures since 2009. We are thrilled to form another company around this impressive group to continue pursuing their proven midstream strategy," said Sean O'Neill, a Managing Partner at Old Ironsides Energy.


Permian Basin Sees Another Big Rig Count Jump

The overall rig count in West Texas' Permian Basin increased by eight rigs last week, which single-handedly accounted for a significant rise in the number of rigs actively drilling for petroleum in the U.S.

The total overall rise of rigs in the U.S. last week was five after small declines were seen in Colorado, North Dakota, and Oklahoma.

Of the 1,013 current total rigs in the U.S. 820 account for oil drilling while the rest are for natural gas.

The Permian Basin accounts for 55 percent of all of the oil rigs in the U.S. with the most active area being Eagle Ford in South Texas, which has 76 rigs. Texas alone has 509 rigs overall.

Although companies are now producing more oil after a plummet in the market a few years ago, they are doing it with fewer rigs than the U.S. oil rig count peak in 2014 by drilling deeper wells and more frequently.

Fuel Fix

Mariner East 2 Pipeline Spills Fluid in Creek Again, Pennsylvania Regulators Issue Notice of Violation

Pennsylvania state regulators on Friday issued a notice of violation to Energy Transfer Partners' Sunoco Mariner East 2 natural gas liquids pipeline after the company notified the department that it had released drilling fluids into a stream.

Energy Transfer Partners told the Pennsylvania Department of Environmental Protection that it released about 50 gallons of fluid into the Snitz Creek on Thursday while drilling underneath it in West Cornwall Township.

This incident marks the pipeline company's third inadvertent release of fluid into the Snitz Creek after one spill in August 2017 and another in September 2017.

The DEP said it would need to give Energy Transfer Partners its approval before drilling could begin again at the site.

The Mariner East 2 is designed to expand the total capacity of the Mariner East project to 345,000 barrels per day. Mariner East 2 is expected to be complete by the end of Q2 2018.


U.S. Shale Players Look to Technology to Open Up New Fields

With U.S. shale growth at an all-time high, companies are using latest technology techniques to figure out how to squeeze more oil from each well.

Some producers are now putting sensors on drill bits to better access oil deposits. Some companies are also using artificial intelligence and remote operators to get the most out of equipment and trained engineers.

Advanced technology will help producers add wells in less productive regions and still make those plays profitable, according to CEO of Warwick Energy Group Kate Richard.

Higher oil prices are also allowing suppliers to buy new equipment in anticipation of new work, like Keane Group and Liberty Oilfield Services that provides hydraulic fracturing services.

Top U.S. oil majors like Exxon Mobil and Chevron are also focusing more of their investment in U.S. shale as production hits an all-time record, which is driving up costs for labor and drillable land in the region and boosting wages.


Study: Permian Output Could Peak by 2021 if Technology Doesn't Overcome Geology

Oil production could peak in the booming Permian Basin by 2021 if shale drillers do not overcome geological constraints, according to a study by energy research firm Wood Mackenzie.

As oil companies continue to rapidly drill in what is the most prolific areas of the West Texas play, these companies could see wells pumping 30 percent less crude in the next five years than what they did when the region's boom began.

Wood Mac said in its study that the Permian Basin could peak around 3.5 million barrels a day in 2021 unless drillers can continue to develop technologies that keep up with production.

The research firm also laid out a scenario where drilling and fracking technology outpaced the Permian's geological constraints, which in turn would peak the region's output at 5 million barrels a day in 2025.

Drillers have to keep pushing on technology to keep up with the booming production, said Robert Clarke, a research director at Wood Mackenzie. Although he also mentioned that the Permian Basin is estimated to continue outputting a little less than 3 million barrels a day out to 2030.

Fuel Fix

Sunoco Logistics to Resume Drilling for Mariner East 2 Pipeline Under New Settlement Agreements

Sunoco Logistics has been given the green light to resume drilling for the Mariner East 2 pipeline after the company reached a settlement with state officials and environmental groups in Pennsylvania.

Sunoco has agreed to re-evaluate high-risk sites associated with its 350-mile pipeline project, according to the agreement.

The company plans to re-evaluate 47 high-risk sites and submit the drilling plans of those sites to the Pennsylvania Department of Environmental Protection for approval. The re-evaluations will also be posted online.

Sunoco said it will also send the plans to homeowners who have private wells near the drilling sites and will offer opportunities to have their water tested.

Drilling for the pipeline had tainted the wells of close to 30 residences in West Whiteland Township, Pennsylvania back in July.

The settlement came one day before a scheduled hearing with Pennsylvania's Environmental Hearing Board on a petition to halt all drilling. The hearing was postponed to a future date pending a review by the environmental board.

The $2.5 billion Mariner East 2 pipeline would carry propane, butane, and ethane from the Marcellus Shale natural gas formation to an export terminal near Philadelphia.

Houston Chronicle

OPEC in Talks of Further Production Cuts, Says Iran Oil Chief

Iran and other members of the Organization of Petroleum Exporting Countries (OPEC) are considering making further cuts in oil production as crude continues to decline.

Despite the need to extend cuts, Iran's Oil Minister Bijan Namdar Zanganeh said OPEC would most likely have a hard time reaching a consensus.

"We are consulting with OPEC member states to have them prepared to make a decision. Decision-making would mean for OPEC to make further cuts," Zanganeh said on state radio. He also added that reaching an agreement with the group would be difficult.

Russia and Saudi Arabia, along with other OPEC members and allies agreed to extend cuts through March 2018, but Iran won an exemption from the cuts as it claims the need to recover from economic sanctions.

The U.S. is pumping an additional 900,000 barrels a day, contributing to crude's decline as it produces more than OPEC expected, according to Zanganeh, and inclining OPEC to cut production even further.

Fuel Fix

Trump Administration Seeks to Increase Oil, Gas Development in Alaska

The Trump administration is seeking to increase oil and natural gas development in Alaska, including aiming to assess the amount of crude that could be under the Arctic National Wildlife Refuge.

The U.S. Interior Secretary Ryan Zinke issued a directive that would rewrite a 2013 plan that limits oil and natural gas development in the National Petroleum Reserve in Alaska. Opponents of the 2013 plan say former President Obama was too restrictive and blocked the promising area for drilling, which also restricted the building of pipelines across the reserve.

Zinke said in a statement that the reserve was meant solely for oil and gas production and should not be off limits for such development.

Trump's administration is also considering rewriting law that would open parts of the Arctic National Wildlife Refuge up for oil and gas development, a refuge that was established by Congress in 1980 to protect the 19-million-acre territory.

Zinke's directive aims to strike a balance between promoting development in the refuge while also protecting other resources. He said his effort would not override required environmental reviews.

Environmentalists who oppose Zinke's directive have been blocking drilling plans in the refuge for decades saying it would risk the habitats of polar bears, caribou, and other animals that live or travel through the area.


FERC Rejects Company's Request to Continue Drilling for Rover Pipeline

The Federal Energy Regulatory Commission has refused to allow Energy Transfer Partners to continue drilling along some Rover pipeline construction sites.

FERC sent a letter Thursday to the pipeline company rejecting its request to resume horizontal drilling at Captina Creek and Middle Island Creek.

After several incidents have been reported in multiple Ohio counties over the last eight weeks, including an incident where millions of gallons of mud spilled into a wetland near Tuscarawas River in April, FERC has also ordered the company to hire a third-party contractor to look into drilling activity near that site.

Regardless of the temporary halts on drilling, Energy Transfer Partners says it remains on schedule for constructing its $4.2 billion natural gas pipeline across Ohio.

The Ohio Environmental Protection Agency has also ordered Energy Transfer Partners to pay $714,000 in civil penalties connected to various pipeline violations.

The Columbus Dispatch
Houston Chronicle

Market Rebound Increases Activity in "Dead" Shale Play

A nearly abandoned natural gas basin is about to reach its highest production output in more than two years now that the market is recovering, according to government data.

The Haynesville reservoir, located in Louisiana and east Texas, will see an increase in production for seven months straight come June, hitting its highest output since October of 2014. Output in Haynesville was at its all-time low in March of 2016 when the gas prices plummeted and other gas wells in the northeast were flourishing.

Due to redesigned wells, outputs in the Haynesville Shale have significantly risen, expanding the shale's untapped potential, according to Bloomberg Intelligence analyst William Foiles.

A gas market rebound has also caused incentive to drill in Haynesville, as gas futures on the New York Mercantile Exchange have jumped 61 percent over the past year.

The severe need for more pipelines and processing plants in the north but lack thereof has also restricted drillers from opportunities in the shale plays in Pennsylvania and Virginia, sending them down to the South.


Permian Activity May Overwhelm Pipeline Capacity by Next Year

The ever-growing drilling activity in the Permian Basin could overwhelm pipeline capacity by early next year, says Morningstar Commodities Research.

Billions of dollars are being spent on expanding the midstream infrastructure in the Permian Basin to keep up with the crude that needs to be moved to market, but crude output in the Permian is moving faster than originally estimated, according to Sandy Fielden, Morningstar's director of oil and gas research.

Permian Basin crude output is increasing an average of 60,000 barrels a day according to a report by the Energy Information Administration. If that trend continues, Fielden argues that it will overwhelm efforts to expand takeaway capacity in 2018.

There are some pipelines that are expected to come online within the remainder of the year to help expand the takeaway capacity, including Sunoco's Permian Express pipeline expansion, and the BridgeTex Pipeline owned by Magellan Midstream and Plains All American Pipeline. Plains also has in the works its Cactus Pipeline in the Permian.

Houston Chronicle

Eagle Ford Growing as Permian Becomes Increasingly Saturated

The Eagle Ford shale in southern Texas is seeing a return in rigs as drilling activity becomes more saturated in the West Texas' Permian Basin.

Of the 13 rigs added this week in the U.S. for oil and gas drilling, 11 of them were added in Texas, with five of them being in the Eagle Ford and just two being in the Permian.

The total count of rigs in the U.S. is now at 870, a large increase from the low 404 rig count last May, according to weekly data compiled by Baker Hughes. Of the 870 rigs, 697 of them are drilling for oil.

The Permian Basin has 342 rigs, accounting for 50 percent of the nation's total oil rigs. The Eagle Ford shale has 83. Texas is the leading state for oil rig count, with 437 rigs overall. Oklahoma has the second highest count at 127, and Louisiana leads in third with 58 rigs.

Fuel Fix

NAmerico Announces Plans to Build 468-Mile NatGas Pipeline in Booming Permian

Newly-founded pipeline company NAmerico Partners is proposing its first pipeline to move natural gas from the growing Permian to the Gulf Coast.

The multibillion-dollar Pecos Trail Pipeline would run for 468 miles and transport roughly 1.85 billion cubic feet per day of natural gas to a refining and petrochemical hub in Corpus Christi.

The pipeline would also connect to existing lines that export gas to Mexico and to one of Cheniere Energy's LNG export facilities that is currently under construction.

Assuming enough shippers commit to the line, it is expected to be operational by 2019, according to NAmerico Managing Partner Jeff Welch.

NAmerico's pipeline announcement comes amid pipeline giant Kinder Morgan's announcement to build a 430-mile natural gas pipeline that would run a similar route to the Pecos Trail Pipeline. KM's Gulf Coast Express Pipeline is also expected to come online by 2019 if it receives enough shipper commitments. 

Midstream companies see their need as large exploration companies are expected to invest in drilling in the booming Permian. Demand for natural gas in South Texas is also expected to rise in the coming years.


Trump Aims to Open More U.S. Federal Land for Energy Development

Black Canyon National Park in Gunnison, Colorado. CC BY-SA 3.0,

Black Canyon National Park in Gunnison, Colorado. CC BY-SA 3.0,

U.S. federal lands, such as national parks, may see more drilling and mining for energy development as President-elect Donald Trump aims to uncover the plentiful oil, natural gas, coal, and uranium that are hidden under hundreds of millions of acres of federal land across the country.

Energy companies are anticipating an increase in federal drilling and mining leases under Trump after a period of stagnation under President Barack Obama who Trump claims has denied "Americans access to the energy wealth sitting under our feet" through his restrictions.

The increased federal leases for energy exploration, however, could be hit with severe protests, lawsuits, and lobbying from environmental groups, residents, and aboriginal groups who value land and water over what lies beneath it.

Some residents in rural areas who are in dire need of jobs look forward to Trump's plan to ease restrictions for energy development on federal lands, saying they are hopeful for what Trump could do for them.

Arguments have been made, however, on whether undoing Obama's legacy on environmental conservation, such as his ban on coal, will be so easy.


Texas Drilling Company Predicts Oil to Reach $70 by 2018

Texas drilling company Pioneer Natural Resources says it thinks crude oil prices will increase to $70 a barrel in 2018 as the industry finally burns through its surplus of oil and drilling in the Permian basin expands.

According to Chief Operating Officer Tim Dove, the company has confirmed future sales through hedging contracts for about 85 percent of its output next year but has not hedged much for 2018 because it believes prices will surge beyond their recent increase.

Oil prices increased above $50 a barrel in recent weeks after OPEC agreed on a cut to production for the first time in eight years. Some fear this may cause U.S. explorers to increase their own pumping rates, but Pioneer says it will still plan to operate 17 rigs in the Permian shale basin and expects to raise output by 15 percent a year to the end of 2020.


Regulators Tighten Oil, Gas Rules for National Parks For First Time in Over Three Decades

After 37 years, The National Park Service (NPS) has updated its standards for oil and gas drilling in National Parks as part of its effort to better protect parks and more strictly regulate oil and gas operations on the land the service owns.

Director of the National Park Service Jonathan Jarvis said in a statement Friday that the five-year effort is a result of the services "fundamental responsibility to conserve park resources and the values for which these parks are created for the enjoyment of future generations."

The updated standards bring 319 wells under the service's regulations and strengthens enforcement powers. Drilling occurs only in 12 of the 413 national parks.

Under the update, national parks will be better protected, and oil and gas producers will be held liable for the potential impact their operations could have on the parks.

The Hill

Colorado Dodges Loss of $10-billion-a-year Oil and Gas Output

A proposal to significantly limit oil and gas drilling in Colorado failed to meet the required amount of signatures, freeing Colorado from what would have been a detrimental blow to the state’s oil and gas production

The proposal, called Initiative No. 78, called for the halt of drilling near Colorado homes but still needed 21,000 more signatures to qualify for a ballot vote.

According to a Bloomberg Intelligence analysis, Colorado is currently the sixth-largest gas producer state in the U.S. The proposal, if passed, had the potential to wipe out 90% of the state’s barred drilling.

Groups that helped gather signatures are calling the result an uphill battle and said they will continue to fight to protect fellow Coloradans’ health and the “natural beauty of [their] state."

Fuel Fix

Williams Partners Plans to Bring Drilling Back to Barnett Shale Region

Williams Partners has drafted a contract with Saddle Operating, a private equity-backed company that is taking over Chesapeake Energy’s Barnett shale holdings, as an aim to revitalize natural gas exploration to the play and make wells profitable once again.

The key to this pact is tying the monthly fees Williams charges for gathering and delivering fuel to the price of gas traded on the New York Mercantile Exchange.

“As a midstream service provider, we best serve our shareholders and our upstream partners by supporting the economics of key production areas," said Alan Armstrong, chief executive officer of Williams Partners’ general partner. "These conditional agreements will help re-position the Barnett as a competitive basin for our new Barnett producer customer as current drilling and completion technologies are implemented.”

Williams is rewriting contracts as Chesapeake Energy sells its Barnett holdings to Saddle. As part of its new Barnett agreements, Williams reported it will receive $754 million that it will use toward its company debt. It will also receive $66 million from its revised contract with Chesapeake.

Williams Partners
Fuel Fix