Wednesday, September 15, 2015

Headlines from sites you all visit that caught my eye:

• US poverty rate edged up in 2014 as median income fell
• oil rises 4% on US crude stockpile drop ahead of Fed
• low oil prices throw North Sea oil into a state of crisis (I do not particularly care for this source) 
• Apple has interesting new revenue stream; leasing iPhones directly at a very affordable monthly rate; remember when "we" all leased our ATT phones in our homes on a monthly basis? Analysts see this monthly lease with yearly upgrades as an incredibly clever move by Apple; Apple on pace to set new record with iPhone launch (but this launch includes China, which I have read, did not occur previously)
• UAW signs tentative four-year contract with Fiat Chrysler; will end two-tier wage system (over time); addresses health care costs; industry "ready to shift into high gear";

Active rigs:

	9/16/2015	09/16/2014	09/16/2013	09/16/2012	09/16/2011
Active Rigs	70	198	178	193	199

RBN Energy: will takeaway capacity in the Eaglebine boost production?

Blueknight Energy Partners’ 100 Mb/d Knight Warrior pipeline is currently under construction and due online in Q2 2016 to deliver crude from the developing Eaglebine play to the Houston Ship Channel. It complements the 60 Mb/d Sunoco Logistics Eaglebine Express pipeline to Nederland, TX that opened last December.

Today we discuss how the promising but relatively complex nature of Eaglebine drilling could scare off producers until prices move substantially higher than today’s levels.
It’s been a year since we took an in-depth look at the Eaglebine play (also known as Eagle Ford East and East Eagle Ford), and a lot’s happened.

For one thing, the price of West Texas Intermediate crude oil has fallen sharply (from about $90/Bbl then to less than $50/Bbl now); for another, the first oil pipeline out of the Eaglebine (Sunoco Logistics’ Eaglebine Express) has been completed and can now move up to 60 Mb/d to its Nederland crude terminal in Port Arthur, TX. As we said in our last update on the Eaglebine, the play is located on the northeastern trend of the Eagle Ford where the Eagle Ford Shale meets the Woodbine Sandstone.

Most of the drilling in the Eaglebine has taken place in these counties (in order of June 2015 oil production volumes, highest to lowest): Brazos, Madison, Leon, Grimes, Polk and Walker. The play got off to a slower start than the Eagle Ford, in part because the Eaglebine formation (up to 1,000 feet thick, and found at depths of between 6,500 and 15,000 feet) has been more complex for drillers to exploit.

The Eaglebine and Eagle Ford share similar geology--both are situated above the Buda Formation and below the Austin Chalk—but the Eagle Ford is a carbonate rich organic, while the Eaglebine contains a large percentage of silica-rich sands interlaced in the organic rich shale, and that makes Eaglebine completion and production complicated. Still, the Eaglebine has high hydrocarbon potential, including a mixture of oil and condensate liquids. In other words, it’s too promising a play to ignore, particularly given its proximity to Gulf Coast refineries.