Apache Corp., the second largest producer in the Permian, is laying down horizontal wells across all of its Permian holdings and producing economic results. But, surprisingly, it is hydraulically fracturing waterflooded properties on the Central Basin Platform employing horizontal laterals. 

Fields that have been producing for 90 years, such as TXL South, North McElroy and Shafter Lake, are experiencing reinvigorated production. “Vertical wells in McElroy Field were drilled just five acres apart and were producing a 1.5% oil cut. We’re now drilling horizontal wells with up to 5,000-foot laterals in a diagonal pattern to miss the vertical wells, and we’re bring them on at a 10% to 15% oil cut,” says Apache Permian regional vice president John Christmann. “They meet our rate-of-return hurdles.”

“We’re taking some of these fields back to levels they haven’t seen in 15 years,” says Christmann. “It tells us as an industry our waterfloods have not been as effective as we might have thought.”

Crude oil inventory in the U.S. has surged dramatically in the last two years, but has been constrained by bottlenecks in U.S. pipeline networks. Two major pipeline reversal projects mirror the reversal of fortune in U.S. energy production. 

Longhorn Pipeline

Magellan Midstream Partners has begun shipping crude oil in its reversed Longhorn Pipeline. Spokesman Bruce Heine said that the pipeline linefill from Crane, Texas to east Houston was completed so commercial operations could begin.

Crane, Texas is in the Midland area where Permian Basin oil production has been surging. The oil that had been flowing into the glutted U.S. crude futures hub at Cushing, Oklahoma will now be sent to Houston. This conversion will alleviate distortions in global oil markets stemming from depressed U.S. crude prices at landlocked Cushing.

The Crane-to-Houston segment of the line, which had carried refined products to El Paso from Houston, was converted and reversed to move crude. Magellan’s Houston distribution system is connected to refineries along the Houston Ship Channel and Texas City. In the first 45 days, the line will move 75,000 barrels per day, and ramp up to its full capacity of 225,000 BPD in the third quarter of 2013.

Seaway Pipeline

The Seaway Pipeline is a 50/50 joint venture between Enterprise Products Partners L.P. and Enbridge Inc. It is part of the Seaway system which includes a 500-mile, 30-inch diameter pipeline between Cushing, Oklahoma and the Freeport, Texas area. Also, a terminal and distribution crude oil network originating in Texas City that serves all of the refineries in the Greater Houston area.

The project to reverse the flow direction of the Seaway Pipeline was completed in May, 2012 and has a capacity of 150,000 BPD. Following pump station additions and modifications, the capacity of the Seaway Pipeline will increase to 400,000 BPD of crude oil.

Enterprise and Enbridge announced construction of a loop (twin) of the Seaway Pipeline. It will parallel the existing right-of-way from Cushing to the Gulf Coast, is expected to more than double Seaways’s capacity to 850,000 BPD by the first quarter of 2014.

Crude Oil Inventory Relief

Improvements in southbound capacity to the Gulf Coast from the oversupplied Cushing hub will unleash the U.S. crude oil inventory, reduce the need for imported supplies, and promote domestic energy security.

Eagle Ford Shale might never have been discovered if Gregg Robertson had followed his dream to become an investigative journalist. Fortunately, his investigative skills and attention to detail as an independent geologist from Corpus Christi led him to find an infinitesimal clue in a sprawling warehouse at the University of Texas research campus.

In 2008 Robertson teamed up with geoscientists at Petrohawk Energy Corp. to develop a shale play concept in South Texas. The team was convinced that their studies guaranteed success. Final approval for the project by Petrohawk’s CEO and COO was granted because Robertson produced cuttings from the 1952 dry well in La Salle County. The organic content  in the 60-year-old core sample confirmed their concept

Eagle Ford Economic Impact

Since the first well was drilled in 2008, the 50-mile-wide, 400-mile-long formation has been a hotbed of oil and natural gas drilling. The Eagle Ford Shale generated $61 billion in 20 South Texas counties in 2012. That is more than double the 2011 impact of $25 billion. And its impacts have spread beyond the oil field, generating $8.5 billion in Nueces County which includes Corpus Christi.

A University of Texas at San Antonio study predicts a steady shale play for another decade. Even as drilling gives way to production and maintenance, there is a “new normal” in the area. The economy is expected to continue at a higher level than before production. An $89 billion impact is predicted in 2022, supporting 127,000 jobs.

Eagle Ford Shale Honor

Discovering the bounty of the Eagle Ford Shale was a group effort. But it would have been impossible without Gregg Robertson’s attention to details that others overlooked. In honor of his crucial role in the discovery, Robertson, 55, was chosen as the Caller-Times 2012 Newsmaker of the Year. Click here to read the complete story.

Horizontal oil and gas well drilling has become one of the most valuable technologies ever introduced in the industry. Horizontal drilling offers many benefits, including increasing production by as much as 20-times more than vertical drilling. Understand this profitable enhanced oil and gas recovery method by viewing this animation.