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THE Natural Gas Thread (merged)

General discussions of the systemic, societal and civilisational effects of depletion.

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Re: natural gas production

Unread postby ROCKMAN » Wed 19 Oct 2016, 14:25:19

Doc - "Hopefully I didn't confuse the issue further." Confused all our civilians here? Hell no....many had slipped into a coma half way through your post. LOL. Just teasing of course. I could even cloud their thoughts even more by picking some of the minutia in your post.

But it doesn't serve the sites goals IMHO. I don't dumb my answers down per se. But often going into the details correctly can be counter productive. Consider how we still won't see lifting cost, LOE, finding cost, etc used in a number of future posts here.
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Re: natural gas production

Unread postby coffeeguyzz » Wed 19 Oct 2016, 15:32:53

Regardless how one might precisely define these metrics, the costs going forward to bring natgas online in Susquehanna, Bradford, Washington, and Greene counties, PA, is exceptionally low.
Cabot now regularly brings new wells online that flow 300/400 MMcf per month for the first few months online. This is taking place in the northeast area.

In the southwest, the Burket, Genesee, and Rhinestreet formations, all shallower than the Marcellus, are - in the past twelve months - producing one to two Bcf first year online with very flat decline curves.
As all these new wells are drilled from established pads and delivering into existing gathering lines, the costs are down a lot from three to five years ago.
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Re: natural gas production

Unread postby sparky » Wed 19 Oct 2016, 15:44:39

.
That's a point of interest , the fracking industry has now some solid historical data
how does the depletion rate of wells for gas , oil , condensates and gas compare ?

I appreciate that there is not a simple common answer but there should be some "envelope "
to describe the most common cases , if only by looking at the extreme cases .
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Re: natural gas production

Unread postby shortonoil » Wed 19 Oct 2016, 16:10:04

"I appreciate that there is not a simple common answer but there should be some "envelope" to describe the most common cases , if only by looking at the extreme cases.

By and large the best data, and presentation on that subject can be found with David Hughes. His Drill Baby Drill is a classic. We used some of his data in later developments of the Etp Model. He is definitely a must read for anyone claiming knowledge in that area.

http://www.thehillsgroup.org/
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Re: natural gas production

Unread postby Yoshua » Wed 19 Oct 2016, 16:22:41

In round numbers

6 Mcf = 1 BOE

Shale Gas

Break Even $2.50 / Mcf * 6 = $15.00 / BOE
Price $3.00 / Mcf * 6 = $18.00 / BOE
Net Back $0.50 / Mcf * 6 = $3.00 / BOE
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Re: natural gas production

Unread postby ROCKMAN » Wed 19 Oct 2016, 18:03:22

yoshua - I think I see the point you're trying too make. But you do understand that 6 MCF aren't worth 1 bbl of oil, right? Today, depending on the local NG market, 16 MCF are worth about 1 bbl of oil.

Does that change you're perspective? I'm not sure since I didn't quit get your point. The 1:6 ratio is just the SEC rule for calculating a boe number. It has nothing to do with the actual economics of any aspect of the dynamic.
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Re: natural gas production

Unread postby Yoshua » Thu 20 Oct 2016, 05:15:21

Rockman - Yes, the paper I linked above talks about the energy price spread between Oil vs. Natural Gas.

The energy ratio between NG & Oil is 6 Mcf : 1 BOE. The paper speculated that the price ratio should be equal to the energy ratio... or at least closer. They believed that the moment NG starts to compete with Oil over the transportation sector, that this would start to close the energy price spread.

In other words the paper suggests that it is the low NG price that is the cause behind the oil price crash. NG is now the primary energy that dominates the energy market. If true then this will have enormous consequences for the global oil industry and for the global geopolitical scene. The geopolitical focus will shift from Saudi Arabia and Kuwait to Russia and Iran... The world is in a transformation process that most likely will be violent.
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Re: natural gas production

Unread postby ROCKMAN » Thu 20 Oct 2016, 08:50:20

Y - "They believed that the moment NG starts to compete with Oil over the transportation sector, that this would start to close the energy price spread." It isn't competing at anywhere close to a meaningful degree today. In the future? Time will tell but it will probably take many decades if ever. And perhaps so long that PNG dominates the conversation as PO has in the past. I avoid long term predictions but I would bet on coal sourced electricity pushing EV's having a bigger impact then NG pushing CNG's.

"In other words the paper suggests that it is the low NG price that is the cause behind the oil price crash." I don't see the link. There very little competition between oil and NG. Last time I looked oil produced 1% of electricity with NG et al the other 99%. And folks heating with fuel oil would use NG if they had lines to their homes. But they don't and probably never will. New homes have been getting NG...not existing homes.

Historically the ratio peaked at 54:1 in April 2012 and bottomed out at 3:1 in December 2000. But that low ratio was for a very short period: for 2000 it still averaged about 8:1 and 6:1 in 2001. Ratio changes have been dominated by changes in the price of oil...not NG. Consider the highest annual NG price in history in 2008: $8/MCF. Oil that same year averaged $100/bbl. So at the highest NG price ever seen the ratio was still about 12:1. At the lowest annual oil price in the last 30 years ($14.50/bbl in 1998) NG was $2/MCF...a ratio of more then 7:1.

Bottom line: the utility of oil and NG are so different that the ratio stat, while easy to track, isn't really meaningful IMHO: almost no competition between NG and oil Btu's.
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Re: natural gas production

Unread postby tita » Thu 20 Oct 2016, 09:04:30

Yoshua - NG storage and transport is a bit more difficult than with liquids such oil. This is the reason why we have such differences in price from various marketplaces (North America, Europe, Asia). This is also the reason why the use of NG was linked to the deployment of gas pipelines network. Heating, electricity generation, domestic use. Transport is also possible, but it represents 1% (22 million) of the total cars in the world (and almost nothing in US)

Oil and NG doesn't compete on the same markets. Cheaper NG (for the same BTU) may replace some oil usage where it is possible, but has never much eroded the main market of oil, transportation (although it was much cheaper than oil). Look at KSA, who produce electricity from oil (50%).

So, the price can't be compared just on an equivalent BTU base.
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Re: natural gas production

Unread postby Yoshua » Thu 20 Oct 2016, 11:23:28

Rockman & tita - thanks for the responses. NG is perhaps not the answer to the oil price collapse after all, at least not at this point in time. Well... it was worth a try. Perhaps in the future...

NG has on the other hand taken over a large market share from coal in electricity production in the US, (as mentioned by Roccosaurus). The coal price has tanked... but then again all commodity prices have tanked in last years.
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Re: natural gas production

Unread postby StarvingLion » Thu 20 Oct 2016, 14:05:28

There is only one word you need to know while listening to the oil and gas retards: BANKRUPT.

They have no idea what is going on.
EV's are fuel-less automobiles and Thorium Reactors are fuel-less reactors. Perfect.
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Re: natural gas production

Unread postby ROCKMAN » Thu 20 Oct 2016, 15:29:41

Y - "The coal price has tanked...". Hmm...I guess you haven't noticed coal prices have doubled in less the a year. From the Financial Times:

"Australian thermal coal, the benchmark for the vast Asian market, has hit $100 a tonne for the first time since 2012, cementing its status as the best performing commodity of the year. A 25,000 tonne cargo of high grade material for November delivery changed hands on GlobalCoal, a physical trading platform, for $100 a tonne on Tuesday. The deal means benchmark prices in Asia have now doubled since June, a move that has wrong-footed analysts and traders as China has moved to curb its domestic output of the fuel.

Thermal coal is used to generate electricity in power stations and traders have been forced to scramble to find cargoes. This year’s rally has ended a five-year bear market that saw prices fall to around $40 a tonne and boosted the share prices of big producers such as Glencore and Whitehaven."

It would appear the "King Coal is dead" gang are current being chased by coal zombies. LOL.
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Re: natural gas production

Unread postby ROCKMAN » Thu 20 Oct 2016, 15:40:33

Y - "NG has...taken over a large market share from coal in electricity production in the US..." Yes: good news but coal still generates as much e- as NG. The not so good news: GHG production from burning NG has increased 20% in the last 10 years while the decline in US coal consumption has stopped and hit a plateau the last few years with a very slight increase in the latest 12 month stat from the EIA.
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Re: natural gas production

Unread postby Yoshua » Thu 20 Oct 2016, 16:54:05

Rockman - The commodity index might have reached the bottom and is now perhaps rising again, or at least stabilizing. The commodity index from 2000 to 2016 looks like a bubble though. So I doubt it will reach those level again (but what do I know, I have bought or sold a commodity). The rise of China and its hunger for commodities was behind the bubble ? China has now started a new round of economic stimulus and is again behind the rise of the commodity prices. The Chinese economy is a bubble ? The Chinese economy seems to confuse every expert... so who knows ?
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Re: natural gas production

Unread postby Yoshua » Thu 20 Oct 2016, 16:56:24

Correction : So I doubt it will reach those levels again (but what do I know, I have never bought or sold a commodity).
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Re: natural gas production

Unread postby sparky » Thu 20 Oct 2016, 17:13:37

.
If one observe the "conventional " crude peak production ,
it become evident extraction will slide toward the lighter , heavier and further production

-lighter is the condensates up to natural gas
-heavier are the extra heavy sour fields up to bituminous deposits
-further are the far offshore , polar and very deep drilling

all of those are already used and have been to some degree for a good while
it should be noted some interaction between the lights and heavies
the former being used as dillutant for the later .

for the further , the deeper one drill the bigger the probability of finding gas rather than oil
there is some boundary of which I would like to know more ,
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Re: natural gas production

Unread postby AdamB » Thu 20 Oct 2016, 19:42:48

sparky wrote:.
for the further , the deeper one drill the bigger the probability of finding gas rather than oil
there is some boundary of which I would like to know more ,


http://www.dcnr.state.pa.us/topogeo/eco ... /index.htm
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Re: natural gas production

Unread postby ROCKMAN » Thu 20 Oct 2016, 19:58:58

Y - "The commodity index might have reached the bottom and is now perhaps rising again, or at least stabilizing." Are you talking about some general all inclusive "commodity index" or are you referring to coal?
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Re: natural gas production

Unread postby coffeeguyzz » Thu 20 Oct 2016, 20:21:27

As far as depth providing more gas probability versus oil, I believe the Tiber field in the GOM is at 35,000'?
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Re: natural gas production

Unread postby ROCKMAN » Thu 20 Oct 2016, 20:42:16

Sparky - As far as the "oil generation window" it isn't so much depth dependent but temperature dependent. And while the stability of oil in a reservoir decrease as depth/temperature increases it really isn't that straight forward. Other factors contribute to oil degradation. The good news: once enough wells are drilled in an area the relationship holds steady. I'm drilling wells in Mississippi where I produce oil at 17,000'. And areas in S Texas where not only no oil below 9,000, the NG is as dry (no condensate) as a "popcorn fart". Yes...that's an accepted oil patch characterisation...popcorn fart.
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