May 1, 2013

Central production facility slated for 30,000 b/d sweet crude in 2013

In March, Strategy Engineering & Consulting was awarded a contract by Chesapeake Energy for the design of a central production facility, San Pedro CPF, to serve the Eagle Ford shale. Strategy's scope includes project and construction management, engineering, design, commissioning, and start up. Plans call for the facility to begin processing 30,000 b/d of sweet crude in the third quarter of 2013. The new facility will assist the operator with the full field development of its Faith Ranch acquisition located in Dimmit, Maverick, and Webb counties.

Forest Oil announces accelerated development plan for Gonzales County

Forest Oil announced in April its plan to incorporate four rigs by the third quarter 2013 and drill 60 gross (30 net) wells this year, followed by 80 gross (40 net) wells in 2014. The operator holds an aggregate 55,000 gross acres (27,500 net) in South Texas' Gonzales County. This plan comes on the heels of the previous announcement that the company had signed a definitive agreement with oilfield services company Schlumberger to development its Eagle Ford shale acreage. The deal brings forth approximately $250 million in present value for the operator's Eagle Ford acreage.

Under the terms of the agreement, Schlumberger will pay a $90 million drilling carry in the form of future drilling and completion services and related development capital. The service company will earn a 50% working interest in Forest's Eagle Ford acreage position. Once the phased contribution is completed, the companies will participate in future drilling on a 50/50 basis. Forest Oil retains its interest in production from wells from spud prior to Nov. 28, 2012, none of which had been placed on production prior to April 1, 2013. Forest's average net sales volumes from the Eagle Ford are expected to reach 6,500 boe/d in 2014, up from 1,600 boe/d in 2012.

Crude oil takeaway capacity increased for Eagle Ford shale, Permian regions

Plains All American (PAA) has announced its Cactus Pipeline, which will extend from McCamey to the Gardendale area in La Salle County, Tex. The new 310-mile, 20-in. crude oil pipeline is expected to be placed into service in first-quarter 2015. The Cactus Pipeline will initially be designed to provide 200,000 b/d of capacity. The master-limited partnership has entered into a letter of intent with a third party regarding a long-term commitment for a majority of the pipeline's capacity. It is also in discussions with several potential shippers to occupy the remaining capacity. Total investment for the project is expected to range from $350 million to $375 million. Both sweet and sour crude oil will be transported from the Permian basin to the PAA/Enterprise Products Partners Eagle Ford Joint Venture (Eagle Ford JV) Pipeline, which directly serves the Three Rivers and Corpus Christi markets. Crude oil delivered via Cactus will also have access to rail loading capacity at PAA's Gardendale station.