Posted on 11/02/2013 5:19:17 AM PDT by thackney
Along a bay front dotted with sailboats and shrimp boats, the movement of crude oil has long been part of the background scenery.
Only now, most of the ships sit lower in the water when they leave — heavier and filled with Eagle Ford Shale crude oil bound for other U.S. ports and Canada — than when they arrive at the port.
Starting in July for the first time ever, more domestic oil left the Port of Corpus Christi than foreign oil arrived. It’s a startling trend, but just one of several effects of the Eagle Ford boom, which has created jobs and wealth in spades, but also turned South Texas upside down in many ways.
“No one really foresaw the massive changes in this industry,” said NuStar Energy LP CEO Curt Anastasio, who spoke Tuesday at the fall conference of the Eagle Ford Consortium, a group of officials from several counties impacted by drilling and production.
The Eagle Ford boom started five years ago this month with the announcement of a successful shale well in La Salle County.
But communities and companies continue grappling with the growth and change that’s come with an influx of oil and gas activity.
San Antonio-based NuStar is one company that used to receive African crude oil in Corpus Christi and ship it north. It already had pipelines in South Texas — which it reversed — and was the first to ship Eagle Ford crude a few years ago.
Anastasio told the audience during a keynote talk that shale drilling is here to stay, and that the Eagle Ford and North Dakota’s Bakken Shale remain economic for drilling even if oil prices drop to around $60 to $70 a barrel.
“You’re near the Gulf. You’re near refineries. You’re near this very extensive infrastructure,” Anastasio said.
NuStar has invested around $185 million in the Eagle Ford region so far, and expects to spend around that much in the next year.
Many South Texas operators, service companies and communities also have their eyes on Mexico, which is considering constitutional changes that would open its vast oil and gas fields to more foreign investment, allowing outside companies to share in profits.
The Eagle Ford in Texas arcs from East Texas to the border, but doesn’t stop there.
“What you’ve got in the shale play down there (in Mexico) is as extensive if not greater than what we’ve got here,” said Phil Wilson, executive director of the Texas Department of Transportation. “Geology does not respect borders.”
Eagle Ford operators and oil-field service companies are monitoring the Mexican policies with the thought that they would be among the best positioned to make the cross-border leap. Some operators, such as the privately held Lewis Energy Group, have been working in Mexico for years already.
And while the Mexican side of the shale field will bring business opportunity to Texas, it also means that the state’s transportation infrastructure — from roads to ports, rail and pipeline — will see more traffic, Wilson said.
Already in South Texas, heavy trucks carrying everything from crude oil to drilling rigs have torn apart infrastructure — one of the most visible problems for communities.
The roads in South Texas were largely built in the 1950s and 1960s, intended for 50 to 100 vehicles per day with maximum weights of 25,000 to 40,000 pounds.
“Today, every time you drill a well — one well — you have 1,300, 80,000-plus-pound trucks. That’s equivalent to 8 million cars,” Wilson said. “These roads start breaking. It is what it is. You start to have shearing on the side. You have concrete breaking, asphalt tearing up.”
The state lacks the money to fix the roads, and plans to turn 83 miles of South and West Texas roads to gravel. The agency says that safety is its priority, and graveling would slow trucks and save money.
But the gravel plans have created an outcry. Local officials have been scrambling to figure out a way to avoid downgrading key infrastructure.
Wilson said the state simply does not have the money to do all of the work needed.
“It’s a math problem,” Wilson said.
While county tax receipts are up, they don’t cover the hundreds of millions of dollars needed for repairs. And TxDOT gets funding from gas taxes, not the state’s severance taxes on oil and gas production. A constitutional amendment in 2014 would send a slice of money, if approved by voters, from the state’s severance taxes to road repairs, but that’s a year away.
Still, many in the region see the challenges as part of a historic opportunity.
“For those of us south of I-10, it seems we’ve always been left behind,” said John LaRueÖ, executive director at the Port of Corpus Christi, which has seen billions of dollars in recent investment. “This gives us a chance to rise to the top.”
Seems like they should impose a surtax on fracking production to cover wear-and-tear on the roads.
How about they deploy the gas taxes they already collect and fix the roads that need fixing. With that much local economic activity there’s no chance the oil section isn’t cross-subsidizing other sections.
That's a nice thought, but if they're counting on this, the area is gonna be downgrading to gravel roads.
Like thackney, I work in the Eagle Ford primarily in the mid-stream facilities arena and somewhat in the upstream drilling/production arena.
Many, many times, we’ve offered labor and equipment to repair county roads only to have it refused by the county for “liability reasons”. Some counties will let us do it and we’ve teamed up with other companies to keep those roads up as its obviously in all our best interests to do so over the long haul. Other counties will accept money strictly for road repair, and we try to work with them to ensure that the worst areas get addressed first. Then there are roads that we build across private land and we keep those in relatively decent shape for us, the land owners and hunting clubs. The crux of this article are the paved public TXDOT roads. We have seen them doing a lot of improvement in the last couple of years primarily in the NE end of the trend, but there is still a lot of areas that see heavy traffic that’s just not designed for it. In one area alone about 35 miles out of Cotulla, we had about a dozen new trucks assigned to there that ended up having the whole front ends rebuilt after only 30K miles. It’s a tough place to work and probably a good place to do heavy truck commericals...LOL, but it’s my personal vendetta (and I’m not alone) to stop every possible gallon of foreign oil, especially from odongo’s ME friends, that we possibly can from ever reaching our shores. Drill Baby Drill!!! And oh, on a scale of “1 to give a crap” on what the libs think etc., they rate somewhere about a 0.
Anastasio told the audience during a keynote talk that shale drilling is here to stay, and that the Eagle Ford and North Dakota’s Bakken Shale remain economic for drilling even if oil prices drop to around $60 to $70 a barrel.
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That’s the most interesting part of this. Costs of production have generally come down all over and not just in isolated cases.
Sure but staying in production and continuing on our current production growth rate to two very different things.
Sure but staying in production and continuing on our current production growth rate to two very different things.
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True they are two different things. I was just talking about production.
Production growth rate is a different topic. We went around once on that a month or two ago. I’m actually hoping that oil prices stay high to keep the maximum number of rigs in operation. But likely that’s not going to happen.
Almost all of the million barrel@day growth in oil production this year came from the baaken and eagle ford.
Even still, remember your post on gulf oil production. It looked like for both 2014 and 2015, gulf of Mexico oil production will grow in the 200k range. Say the woodford cana SCOOP the Niabrara and the Permian Basin and everywhere else tacks on another 100k in 2014—but 150k in 2015. That means that the baaken and eagle ford only have to grow by 700k in 2014 and 650k in 2015... in order for 2014 and 2015 growth rates to be 1 million barrrels @day.
Here is a Cramer Squawk Box talk with the CEO of Core Labs...
Core Labs does much of the core analysis for the oil industry.
Three key take aways.
1. The Permian basin has 50 billion barrels of commercially exploitable oil.
2. They’re getting much much better at doing much much more with much much less.
3. There may be another big oil field announcement to be made in northern Arizona. (Not mentioned ...I think there’s a 5 billion plus oil field in Nevada.)
http://www.cnbc.com/id/101118929
“..How about a hovercraft?...”
LOL...I wish.
There’s been a few times going down Cameron Lane Road (LaSalle/McMullen County Line road) between Fowlerton and Hwy. 624 that I wished I was in ANYTHING as long as it didn’t run on tires....LOL....talk about a treacherous piece of road...
Yes.....to everything you listed.
And the slightest bit of rain will turn it into a quagmire beyond your imagination.
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