American Oil and Gas Reporter - June 2014 - 166

ConventionCoverage: Texas Alliance of Energy Producers
2014. Nevertheless, Abraham pointed out
the Spears analysis showed wide variety
in the basins studied. Spending in the
Eagle Ford and Bakken remains flat while
the Permian Basin is experiencing significant growth as West Texas and New
Mexican operators convert from vertical
wells to horizontal field development.
Regional Activity
Texas drillers plateaued in 2013, as
they and their counterparts across the
United States took a breather, Abraham
said, with the number of wells drilled
nationwide declining 4 percent. "This
year, we expect Texas to gain back the 4
percent and essentially return to the 2012
level with more than 17,000 wells," he
said. "Texas activity continues to be
driven by the Permian Basin and the
Eagle Ford Shale."
Across the state, nine of the 12 Railroad
Commission districts will see an uptick
in activity in 2014, he projected. The
Permian Basin will see a 5 percent jump
this year, Abraham indicated, with West
Texas companies drilling more than 8,300

Tripple M. Oil Tool, Inc.
OILFIELD RUBBER PRODUCTS

Head Rubbers
Ram Packers
BOP Expendable Parts
Stripper Rubbers Seals & Packing
8317 Andrews Hwy,
Odessa, TX 79765
P.O. Box 13090,
Odessa, TX 79768
Phone: 432-337-1452
Toll Free: 800-234-3148
Fax: 432-367-1115
sales@tripplem.com

Consulting Petroleum Engineers
Water Flooding - Evaluations
Cost Estimates - Design - Installation
Reservoir Studies - Simulations

STEPHENS & JOHNSON OPERATING CO.
Drilling & Completion
Supervision - Lease Operations
811 6th Street - P.O. Box 2249
Wichita Falls, Texas 76307-2249
(940) 723-2166

wells. The Eagle Ford Shale is setting
activity records as operators take advantage
of the play's liquid side and increase
each well's average footage, Abraham
said.
"Another trend we have noticed is
that operators are pushing farther to the
east and northeast in the Eagle Ford. So
throughout the play, we expect a 3 percent
gain," he reported. "In the Barnett Shale,
where low gas prices have reduced drilling
the past several years, we expect another
reduction, but this will be smaller, maybe
about 2 percent. We think we actually
may be seeing a bottom, finally."
To the east, Abraham reported northern
Louisiana was weaning itself off the
natural gas portion of the Haynesville
Shale while gas prices remained low, although he said operators continued to
seek oil targets. The state Office of Conservation projected last year's 80/20 ratio
favoring oil would continue for 2014, he
said. The southern part of the state is
much the same story, Abraham offered.
State estimates put the increase in the
number of new wells at 1 percent.
Oklahoma drilled more than 3,200
wells last year, and Abraham said he expected producers to increase activity by
7.5 percent in 2014.
"There is some unconventional drilling
in the Woodford Shale, along with the
state's conventional oil and gas," he stated.
"Oklahoma has a nice, balanced mix of
activity, which has helped it maintain a
multiyear unbroken string of drilling increases."
According to Abraham, North Dakota's
oil production from the Bakken Shale is
receiving national attention and is likely
to continue. The state was producing
950,000 bbl/d in the last months of 2013,
and Abraham predicted North Dakota
would break the 1 million barrel a day
mark this year, making it the only state
aside from Texas to reach the sevenfigure level.
In 2013, North Dakota operators drilled
2,240 wells, similar to 2012 levels. Abraham said in 2014, state officials expected
drilled wells to hit 2,600, more than a 15
percent jump. Because of increased horizontal drilling activity and longer laterals,
average well footage exceeded 19,500
feet in 2013, he pointed out.
Looking at the offshore market, Abraham reported activity in the Gulf of
Mexico continued to recover from restrictions imposed after the 2010 Deepwater Horizon accident.

166 THE AMERICAN OIL & GAS REPORTER

"We estimate that wells drilled last
year were up 15 percent, and we expect
a 10 percent increase this year," he said.
"Last year, the Bureau of Safety and Environmental Enforcement approved permits for 280 new wells in shallow waters
and 394 new wells in the deepwater area.
There no longer is a permitting bottleneck,
and operators and the agency appear to
be in sync regarding the stringent permitting of the post-Macondo era. New
production platforms in the Gulf of Mexico
are expected to grow from 35 to 60 by
next year."
Petro Index
Early industry estimates projected a
decline in crude oil prices this year, and
while those predictions may prove true,
petroleum economist Karr Ingham said
so far 2014 looked like a good year for
oil producers. Prices have risen in the
first quarter, and he told the Alliance that
West Texas Intermediate prices at the end
of March were at $97.16. The natural gas
picture looks promising as well, he added,
with long-term averages above $4 an Mcf.
The state's production curve, which
had been in a consistent decline, began
to flatten in 2008-09 and picked up
positive gains beginning in 2010, Ingham
pointed out. "That production decline
curve had been in place for decades,
where it did not seem to matter what
crude oil prices were, what the rig count
was, or what industry employment was,"
he said. "The volume of crude oil production in Texas generally was thought
to be in irreversible decline."
As of March, the state's daily oil production was at levels not seen since 1980,
Ingham reported, and the industry now
expects output will continue to eclipse
historical records for years to come.
The rig count historically has been a
valued component of the Texas Petro Index, Ingham indicated, but multiwall pad
drilling is altering its meaning.
Nevertheless, Ingham said he was
going to continue to use the rig count because its trends continued to follow the
rise and fall of commodity prices. Therefore, he offered, the rig count represents
something more than simply an indicator
of exploration and production activity. It
also represents things attached to that
activity, namely the people that it takes
to run that rig and the crews needed to
run and service it.
Even though the Texas rig count is on
the rise, Ingham pointed out the number

American Oil and Gas Reporter - June 2014

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2014