Tag Archives: #TexasRailRoadCommission

Texas Fifth Straight Double-Digit Jump

The boom continues in The Permian Basin

Introduction: The US drilling rig count rose by double digits for the fifth consecutive week during the week ended Feb. 17.

Data from Baker Hughes Inc. shows the tally of active rigs gained 10 units to 751, an increase of 347 units since a modern era nadir of 404 touched last May 27 (OGJ Online, Feb. 10, 2017). In the last 2 months alone, the count has risen by 114 units.

Onshore rigs climbed by 13 to 730, with horizontal units up 7 to 614 and directional units up 6 to 72. The horizontal count has expanded by 300 since May 27.

The US offshore count dropped 3 units to 18 as it approaches lows not seen since the aftermath of the Macondo deepwater well blowout and crude oil spill. Three rigs remain drilling in inland waters.

Given the Permian’s overall increased drilling activity, the US Energy Information Administration forecasts Permian oil production to rise 70,000 b/d month-over-month in March to 2.25 million b/d (OGJ Online, Feb. 13, 2017). As of January, the basin boasted a suite of 1,757 drilled but uncompleted (DUC) wells, an increase of 84 from the December total.

EIA projects the Eagle Ford to record a 14,000-b/d month-over-month increase in March to 1.077 million b/d, marking the South Texas region’s first rise in Drilling Productivity Report data since late 2015. Its tally of DUC wells during January gained 11 month-over-month to 1,255.

In summary for Texas:  Texas is the only oil- and gas-producing state to record an increase with the exception Utah during the week, rising 1 unit to 6. The Permian Basin is driving much of the new drilling activity in Texas and the U.S.

Source: Matt Zborowski, “BHI: US rig count makes fifth straight double-digit jump, Oil & Gas Journal, 17 Feb. 2017

Why Saltwater Disposal Wells Attract Investors

Saltwater Disposal Wells

Introduction...Last October we discussed here The Surprising Discovery Of One Oil Executive.    Now we want to continue that discussion Why Saltwater Disposal Wells Attract Investors by enjoying the ATM of the oil patch as described by insiders.

  • Location – The proximity of the Saltwater Disposal Wells “CSWD” to producing fields is critical, as the cost of transporting produced water to a disposal facility is one of the larger recurring expenses that an operator incurs. Our next facility is one of three in this immediate area.  However, none of them will accept saltwater from outside truckers.  They use their wells for the water they produce only.  As a result, the truckers are driving by this property and driving as much as an additional 50 miles to dispose of their water.
  • Water Commitment – Our well currently under contract is being utilized for only 10% of its daily licensed disposal capacity.  With trucks driving past the property every day, it will be relatively easy to convert them to customers.  The good news is contract requires the grandson of the seller be allowed by dispose of his water which is the current 10% utilization.  By the way, this small utilization is profitable as is.
  • Commitment to the Customer – The management of our next facility also operates producing properties.  The management understands the other issues that concern an operator as it relates to choosing their disposal partner.  These Issues such include safety, ease and speed of off-loading.  Accurate and readily available reporting is important to the trucking company.

Conclusion: The steady cash flow that is not dependent on oil pricing or new discovery makes prime CSWD properties a valuable asset.  That is one reason these ATM’s of the oil patch rarely come up for sale.  However, we have found a seller who is retiring and wants to spend more time with his wife.  Does this intrigue you? Drop me an email if you desire additional information on this discovery.  We have a current property under contract that meets  these requirements.

This has been Bill Moist, MS, CPA reporting today Why Saltwater Disposal Wells Attract Investors.

Injection Versus Disposal Wells

Saltwater Disposal Well

Straightforward Operation- Saltwater Disposal Wells

Introduction…Due to our current opportunity in acquiring Saltwater disposal Wells, further discussion of the topic is appropriate.  So, what is the difference between injection wells and disposal wells?

Disposal wells may be used to inject mineralized water produced with oil and gas into underground zones for the purpose of safely and efficiently disposing of the fluid. Typically, the underground interval is one that is not productive of oil and gas. In some cases, however, the disposal interval is a productive zone from which oil or natural gas has been produced or is currently produced. In either case, the disposal interval must be sealed above and below by unbroken, impermeable rock layers.

Injection wells inject fluids into a reservoir for the purpose of enhanced oil recovery from the reservoir. The vast majority of wells in Texas are injection wells. Operators use injection wells to increase or maintain pressure in an oil field that has been depleted by oil production and also to displace or sweep more oil toward producing wells. This type of secondary recovery is sometimes referred to as waterflooding.

Why Texas is so great…Texas is the nation’s number one oil and gas producer with more than 294,543 active oil and gas wells statewide according to oil and gas well proration schedules (as of September 2016). Injection and disposal wells are also located throughout the state to improve oil and gas recovery and to safely dispose of the produced water and hydraulic fracturing flowback fluid from oil and gas wells.

Texas has more than 54,700 permitted oil and gas injection and disposal wells with approximately 35,915 currently active as of September 2016. Of these 35,915 active injection and disposal wells, about 7,482 are wells that are used for disposal, the remainder (about 28,433) are injection wells.

Operators requirements...Operators are required to follow the Texas Railroad Commission (Commission) disposal regulations administered by the agency’s Technical Permitting Section – Underground Injection Control (UIC) Program. Underground Injection Control is a program that is federally delegated by the U.S. Environmental Protection Agency (EPA) to Texas, and it follows national guidelines under the federal Safe Drinking Water Act for surface and groundwater protection. EPA awarded the Commission primary enforcement responsibility over oil and gas injection and disposal wells on April 23, 1982.

In conclusion…Disposal wells ( our current focus)  are not terribly complicated as compared to oil and gas exploration and development.  Nevertheless, certrain requirements of the Texas Railroad Commission are required.  The Commission is oneof the first agencies our team contacts during due dilegence on any future saltwater well purchase is the Commission.

Source: “Injection and Disposal Wells,” Texas Railroad Commission, rrc.state.tx.us