Tag Archives: Eagle Ford

Gauges, Manufacturing, Oil and Gas Industry, Petrochemical, petrochemical sector, Petroleum

Diving Back Through 2016

Leave a comment

As we look back over the past 12 months, the year was full of ups and downs in the oil and gas industry and the global markets. For us, business was brisk as our products support a wide range of processes and applications. We’ve used our blog to share with you important topics and look forward to sharing the year’s highlights.

Since the oil and gas industry is subject to internal and external forces, we shared with you the latest industry concerns, trends, and updates. The industry is complicated. As a commodity crude oil is complex and understanding how the markets set oil prices is an important factor. Differentiating Crude Prices: Brent and WTI, The Future of a Benchmark, and The Economic Effects of Falling Oil Prices explain the variables. The crude industry also struggles with storing and delivering crude oil. This capacity and storage issue is ongoing.

Because of the volatility in the oil markets, many of the oil producing regions of the country saw a shift in production throughout the year. In response, we kept you up-to-date on the workings at Eagle Ford, the Permian Basin, and the Delaware Basin. Global concerns also affect the industry and just as we were starting to see a recovery and rise in prices, the UK voted to leave the EU. This was the topic of our July blog and it remains to be seen if Brexit has lasting effect on global oil prices.

Highlighting the potential of environmentally friendly compressed natural gas was coincided with April’s celebration of Earth Day. And as of recent, reviewing the petrochemical industry helped us to expand on an integral part of the petroleum industry.

We’d like to thank all of you for a very successful 2016 and are looking forward to continuing to serve you in 2017. From all of us at Southwest Process Control, we wish you Happy Holidays and a Healthy New Year!

Interested in learning more? Follow the Southwest Process Controls’ team on Twitter and LinkedIn!

Manufacturing, Oil and Gas Industry

Slowdown at Eagle Ford

Leave a comment

Oil Price Decline Shows Strong Effect

While low oil prices have been a strong concern in the drilling industry recently, the most recent peak in the price of oil wasn’t that long ago. In June of 2014, the average price of a barrel of crude was $108.37. However, those prices were fairly short-lived. By the end of the following January, the cost had fallen to $47.11, and while prices were briefly over $60 a barrel in May and June, they have recently stagnated at or below the $50 mark. When this price drop first occurred, analysts pointed to many factors as having contributed to it. Bloomberg Business published an article that credited slowing demand from Europe and China, less violence than expected in the Middle East, and the boom in U.S. production.

High tech drilling methods in regions such as Eagle Ford played an important role in revitalizing the production of U.S. oil. First drilled in 2008, this region has been one of the most prolific in the country. However, the lower prices of oil that came partially as a result of this new oil boom are starting to heavily impact productivity. Output at Eagle Ford is decreasing, causing serious production cuts in the South Texas region.

Significant Production Cuts

A recent article in the Wall Street Journal demonstrated the impact of the current situation. Production in Eagle Ford had decreased by 13%, or nearly 227,000 barrels per day, from April through September. According to the Texas Railroad Commission, this is down from a peak of 1.5 million barrels a day in January. A number of operators in the area have begun to decrease their production. The Journal article quotes NavPort LLC as indicating that major companies in the area have completed 40% fewer wells when compared to the previous year. A number of companies, including EOG and Exco Resources Inc., have stated that they intend to decrease or suspend drilling programs in Eagle Ford.

The Good News

While these numbers may seem grim, the news may not be all bad. The most important thing to keep in mind in Eagle Ford is that production is not decreasing because the resources are depleted; these decisions are being made due to current economic conditions. Unfinished wells still have plenty of oil in them, and can quickly be tapped if and when prices rebound. Furthermore, the climate of South Texas eliminates weather concerns that can stop wells from being tapped during the cold weather months. As long as they retain access to the land, oil companies can resume any time of the year.

So how much oil is actually left in Eagle Ford? No one knows for sure, but recent reports indicate that its life expectancy could be as long as 30 years, outlasting a number of similar shale wells. When prices become more favorable, Eagle Ford will still be a significant player in the industry.

Quality Fluid System Control For All Seasons

Since 2002, our experts at Southwest Process Control have supplied the best quality products for our customers in the oil industry. In good times and bad, customers can count on us to provide the finest quality valves, gauges, regulators, filters, and more. For further information about how our products can fulfill your applications, please contact us today.

 

Manufacturing, Oil and Gas Industry

Permian Basin: A Boom That Keeps On Going

Leave a comment

Hard Times for Many Domestic Oil Producers

The American oil boom that has garnered so much attention, in recent years, has fallen on some hard times. Oil prices that continue to hover below $50 a barrel have slowed down production for many drill sites across the U.S. In a recent article in the Wall Street Journal, the numbers speak for themselves. Oil output from America’s most prolific drilling regions has been falling since reaching a peak in April. Studies published by the U.S. Energy Information Administration estimate that production has fallen by over 250,000 barrels a day since reaching its peak. This includes regions that have been among the most important domestic sources of oil.

The Permian Basin Remains Strong

Of all the drilling regions in the United States, only the Permian Basin in West Texas remains pumping at high levels of productivity. When compared to the Eagle Ford, Bakken, Niobrara, Utica, Haynesville, and Marcellus regions, West Texas endures as a pillar of strength in domestic drilling. While the number of oil rigs in the Permian have decreased, the level of oil production is still robust. Federal estimates have indicated that this region has shown an increase of 64,000 barrels per day since April—and with no signs of a slowdown anywhere in the near future.

Profits Remain Solid

The Permian Basin owes its success to unique geology and highly efficient drilling methods. Depending on drilling location, it can contain up to four layers of rock that are rich with oil and gas. These layers can be drilled vertically and horizontally as well, using high tech methods such as hydraulic fracturing (fracking) that maximize productivity. The growth and productivity of this region has not gone unnoticed by some of the industry’s biggest players. Exxon and Chevron are both intending to expand their operations in the region. And the senior vice president of Anadarko Petroleum was quoted in the Financial Times as saying, “The Permian is, in my humble opinion, the basin that keeps on giving.”

Serving Texas Oil Since Our Inception

At Southwest Process Controls, we have provided the oil industry with best quality fluid system control products since our company was founded in 2002. Our selection of products includes fittings, tubing, gauges, instrumentation valves, regulators, filters, and more. We have long supported our clients in the Permian Basin and beyond, helping to ensure efficiency and profitability with the best products available on the market. To learn more about our services, please contact us directly today.

Oil and Gas Industry

Time to Lift the U.S. Oil Exports Ban?

Leave a comment

In 1975, the United States enacted a ban on the exportation of crude oil.  The Energy Policy and Conservation Act (EPCA) was legislated in response to the energy crisis that ensued as part of the Organization of Arab Petroleum Exporting Countries’ (OAPEC) 1973 oil embargo, which had quadrupled the cost of oil.  At the time, many countries throughout the world were seeing their domestic oil production drying up, and the U.S. was no exception.  Then, as now, domestic and world economies were heavily dependent on fossil fuels.  The U.S. Congress sought to enact policies to protect domestic oil supplies by increasing and conserving energy production, particularly crude oil.

The ban on exporting U.S. crude was part of a multi-pronged strategy to try to insulate the domestic economy from volatile global crude markets.  It included numerous conservation measures, as well as fuel standards for motor vehicles.  A reserve of petroleum known as the Strategic Petroleum Reserve (SPR) was officially created to keep a supply of emergency fuel for the United States (the SPR is still with us, and currently holds 691.3 billion barrels of oil).  The crude oil export ban played an important role in this overall strategy, with the goal to keep as much oil at home as possible to cut reliance on international imports.

A Changing Energy Landscape

Oil-LandscapeWhile the crude oil export ban may have made sense in the context of the energy crisis of the 1970s, the domestic oil production landscape is far different today.  There are certain conditions under which oil can be exported, such as if in the form of gasoline as well as when exported to Canada and Mexico under certain circumstances.  However, the vast majority of crude oil exports remain banned under the provisions of the EPCA.

There is a growing constituency who believe that it’s time to lift this oil export ban.  While energy production remains an important concern, circumstances have changed drastically since the ban was put into effect.  In the 1970s, U.S. domestic oil production was slowly disappearing.  The landscape is much different today, with innovative techniques such as hydraulic fracturing and horizontal drilling creating a new oil boom in recent years.  Shale formations such as Eagle Ford in Texas and Bakken in North Dakota are seeing some of their highest levels of productivity in their existence.  Given these new circumstances, many see the EPCA oil export ban as a hindrance—not only to the producers of American crude, but to the overall domestic economy.

Potential Benefits of Lifting the Ban

A recent paper published by the Council on Foreign Relations reports that crude exports could provide an important boost for the economy with an estimated $15 billion per year in revenue possible by 2017.  While oil that has been refined into gasoline can be exported, much of the crude that is coming from U.S. shale formations is lighter and sweeter than what Gulf Coast refiners are designed to handle.  This creates a bottleneck of unrefined light crude that depresses prices, ultimately constraining production and hampering a major domestic source of energy.  The whole world still relies on crude oil, and many willing buyers abroad would be able to work with the lighter, sweeter crude being produced in the U.S. with their existing refineries.

The exportation of crude oil has a number of other potential advantages as well.  The slowing of domestic production that occurs as a result of the ban increases America’s reliance on imported energy.  By lifting the ban, the United States’  leverage as an oil trade partner could increase significantly, especially if the U.S. became a major crude exporter.  It would also demonstrate a commitment to free and fair trade, and provide America’s allies with a stable source of crude.  It also has the potential to further catalyze domestic oil production, increasing employment and local service economies.

Where the Ban Lift Stands Now

There are a number of methods that could be employed to lift the oil ban.  The law allows for crude exports to occur if the Commerce Department determines that there are economic or technological reasons that certain types of crude oil can’t be marketed domestically.  The president could also effectively reverse the law by declaring it counter to the national interest, but many experts believe that the current administration is unlikely to act on its own to lift the oil ban at this time.  Perhaps the most effective method would be for Congress to change the law, and two senators are attempting to do just that.  Senators Lisa Murkowski (R-AK) and Heidi Heitkamp (D-ND) have introduced a bill to lift the EPCA export ban.  They hope to build bipartisan support on the logic that expanding exports will help the U.S. become a global energy leader while bolstering the economy at home.

While there is still some resistance to lifting the ban, supporters are hoping that the current bill (or one like it) will eventually succeed in reversing the 40 year old embargo.  Both sides of the political aisle believe that increasing U.S. exports is key for improving the domestic economy.  Supporters of lifting the ban argue that the current domestic abundance of oil is the perfect opportunity for opening trade doors.  Only time will tell if the current bill will succeed in reversing the ban, but one thing remains certain: the constituency of lawmakers and industry representatives that believe the law is outmoded is growing all the time.  If U.S. shale formations continue to contribute to the overall oil boom, the unrefined crude will eventually have to go somewhere.

Sources:

http://www.csmonitor.com/Environment/Energy/2015/0513/What-happens-if-we-scrap-the-US-oil-exports-ban

http://www.businessinsider.com/what-would-it-take-to-free-us-oil-exports-2015-5

http://thehill.com/policy/energy-environment/241906-senators-push-to-lift-crude-oil-export-ban

http://www.voanews.com/content/effort-to-allow-us-oil-exports-sparks-debate/2766900.html

http://www.wsj.com/articles/the-oil-export-ban-a-relic-of-the-1970s-1429913717

http://www.cfr.org/oil/case-allowing-us-crude-oil-exports/p31005

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/08/u-s-oil-exports-have-been-banned-for-40-years-is-it-time-for-that-to-change/

Oil and Gas Industry

Efficiency in Oil and Gas Operation: Drilling Techniques

Leave a comment

The surge of oil and gas from America’s shale rock regions has been big news for years.  Shale formations in North Dakota, Texas, and other locations have been a vital source for hydrocarbons, heavily influencing the economy and the price of oil worldwide.  Having a viable source of plentiful oil and natural gas is obviously an essential element in this; however, there are many other factors that also have made these wells so productive.  One of the most important of all is efficient operations.  Scientists and engineers are working all the time to discover the best ways to extract oil and gas at the highest levels of efficiency.  Using the most efficient techniques has played a significant role in the current oil boom, and promises to continue to increase productivity even more in the future.

Oil DrillingOne area that has seen major advances in recent years is the process of drilling.  Efficient drilling has made a great contribution to increased production of oil and natural gas.  A number of different drilling techniques have played a part in reinvigorating America’s reserves of petroleum, allowing the extraction of oil and gas that was previously considered inaccessible.  Some of the more advanced drilling techniques employed today include horizontal, multilateral, extended reach, and complex path drilling.  These techniques, along with increased speed and better technology, make advanced drilling an important tool for the most efficient retrieval of oil and gas.

In earlier times, drills needed to be extracted and adjusted above ground if any changes in drilling direction were needed.  Today, drill bits can actually change direction while underground, reducing the amount of time needed to drill by up to 40%.  Horizontal drilling, the basis of hydraulic fracturing, employs this technique.  Drills begin by creating vertical wells, and then turn horizontal within reservoir rock formations to access more oil.  Another technique is multilateral drilling.  This method allows for drilling to occur in multiple separate layers at different depths underground.  Multilateral drilling not only increases production from a single well, but also reduces the number of wells needed to be drilled from the surface.

Extended reach drilling is another technique that maximizes efficiency.  This allows producers to reach hydrocarbon deposits that are located far away from the drilling rig.  Deposits can be reached over 5 miles from the surface location of the well.  Drilling can occur in environmentally sensitive or under-developed areas by using this technique.  Surface drilling in these areas is minimized by the ability to drill dozens of underground wells from a single location.  Another similar method is complex path drilling.  This technique creates paths with multiple twists and turns underground, allowing wells to reach multiple hydrocarbon deposits from a single well location.  Extended reach and complex path drilling methods help provide the highest levels of efficiency by keeping surface impacts to a minimum and producing far less waste.

These drilling technologies and techniques have had a major impact on well productivity.  For example, drilling efficiency has been cited as a key factor in the boom of oil and natural gas production that has occurred in the Permian Basin and Eagle Ford regions in recent years.  The U.S. Energy Information Administration (EIA) regularly publishes the Drilling Productivity Report (DPR).  Throughout the past several years, analysis has found that efficient drilling practices have caused impressive increases in the production of both oil and natural gas.  The EIA estimates drilling efficiency by tracking the number of rigs in play as well as the new wells that have been started each month.  From 2007 to 2013 alone, Eagle Ford productivity increased from far below 100 barrels per day to over 300 for the first full month’s production per well.  It has continued to increase since then, with current new-well oil production per rig estimated at 680 barrels per day for April alone, up 20 barrels from the previous month.

Advanced drilling techniques have played a large part in turning regions that were considered tapped out into significant sources of oil and gas.  By employing these efficient methods, operators have increased productivity while helping to lessen the impact on the environment.  The subsequent increases in productivity have helped radically increase domestic oil supplies, making the USA a world leader in petroleum production.