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Growth In Texas’s Oil and Gas Industry

The Texas oil and gas industry has had a busy year. In June 2013 Kinder Morgan Energy Partners announced it was expanding its pipeline system into the Eagle Ford shale in Karnes County, Texas. This new pipeline project is the result of a long term contract with ConocoPhillips and will extend the already existing 178 mile pipeline another 31 miles from DeWitt County to ConocoPhillips distribution facility in Karnes County. Kinder Morgan also plans to build holding tanks and a truck unloading facility at ConocoPhillip’s site in Karnes County. The project began construction in July 2013 and the new section is expected to be operational by the third quarter of 2014, with a capacity of 300,000 b/d of crude and condensates.This news follows on Kinder Morgan’s announcement in May 2013 that it was expanding another pipeline to its refinery in Brazoria County. The original pipeline, part of the same pipeline system described above, went into service in June 2012 and brings Eagle Ford oil to Houston. That pipeline expansion is expected to start service by the end of 2013 and will increase the capacity to 100,000 b/d. Kinder Morgan indicated that it plans, as part of this project announced in May, to add new pumps and a storage tank in Wharton County, Texas, and offloading capabilities for trucks in DeWitt County.

In July, Exco Resources Inc. announced it was buying undeveloped oil and gas assets in Eagle Ford and also in the Haynesville shale from Chesapeake Energy Corporation. The purchased assets are located in Zavala, Dimmit, La Salle, and Frio counties in Texas, as well as some in Louisiana. Exco paid Chesapeake a total of $1 billion for these oil and gas assets.

Also in July 2013, Forest Oil, a company from Denver, announced its intention to sell its assets in the Texas Panhandle so it could refocus on Eagle Ford oil projects in south Texas. The company hired JP Morgan Securities LLC to help market the sale of its Panhandle property. Patrick McDonald, the president and CEO of Forest Oil, said that this move would reduce the company’s debt and also allow it to speed up development plans in Eagle Ford, where the company has focused on Gonzales County. This year they plan to operate two rigs and intend to keep a core development position of 40,000 net acres in the next years.

In August 2013, at the announcement of the company’s second quarter results, Mr. McDonald said, “Our Eagle Ford Shale asset took a significant step forward during the quarter […]. We recently ramped up our drilling activity further […]. We are encouraged by recent well results as we implement ongoing technological refinements and enhancements to our drilling and completion process in an effort to optimize well results and costs. Gross production from the Eagle Ford continues to show robust growth, increasing 59% over first quarter sales volumes.”

These developments this year reflect the continuing health of the Texas energy industry.

See Our Related Blog Posts:

Huge Shale Well Expenditures in Texas and U.S.

New Texas Oil Company Plans to Drill in Texas Oil Shale