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THE Shale Gas Thread Pt 2 (merged)

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

Re: THE Shale Gas Thread (merged)

Unread postby copious.abundance » Sat 14 Feb 2015, 22:41:58

copious.abundance wrote:Abundance aplenty. Mass quantities of plenitude. Billowing founts of wholesome goodness. :)

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Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Tanada » Sun 15 Feb 2015, 09:46:05

The Sierra Club has weighed in on the issue, and got Edward James Olmos to narrate it for them.

http://youtu.be/FuQNqm6dk2g
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Sun 15 Feb 2015, 10:13:12

"Abundance aplenty". Yes indeed. According to the latest numbers the boom in the Marcellus has required us to import only a net 141 bcf in Nov 2014 (a 40% increase from the previous March). Maybe some day if this booming "abundance" continues the US will produce more NG then it consumes and we won't have to import the balance. USA! USA! USA! LOL.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Sun 15 Feb 2015, 18:35:48

Um, Rock, if you look at the actual data you'd notice imports have been going *down* since 2007:
http://www.eia.doe.gov/dnav/ng/hist/n9100us2m.htm
And 99.9% of those imports come from Canada ... which practically doesn't even count since it's basically just a proximity/convenience issue.

And we're even exporting more - though maybe that, too, topped off a couple years ago:
http://www.eia.doe.gov/dnav/ng/hist/n9130us2m.htm

And both those numbers are dwarfed by total consumption. Total consumption in November was 2,375,309 million cubic feet. http://www.eia.doe.gov/dnav/ng/hist/n9140us2m.htm

Imports were 227,536 million cubic feet (9.6% of consumption) and exports were 113,258 million cubic feet (4.8% of consumption). So the net imports represent a whopping 4.8% of total consumption. We're basically self-sufficient already.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Sun 15 Feb 2015, 18:57:03

copious - Mucho thanks for backing up my post. "So the net imports represent...4.8% of total consumption. We're basically self-sufficient already." Self-sufficient if you're not the 1 in 20 NG user who would be sitting in the cold right now if the US weren't a NG importer.

"...basically self-sufficient". A wonderful phrase...right up there with being "a little pregnant". SPINNNNNNNNNN. LOLLLLLLLLLLLLLLLLLL.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Sun 15 Feb 2015, 19:17:41

As I said, the only reason why we import anything all is a convenience factor from Canada. Some consumers happen to be closer to Canadian sources than US sources, so they import it from the Canucks instead of using domestic sources. We even had this discussion not too long ago, if I recall.

Do you have any doubt that if the northern border of the US were a sea instead of the landmass known as "Canada" that that 99.9% of our imports sourced from Canada would come from domestic sources instead?

SPINNNNNNNNNN. LOLLLLLLLLLLLLLLLLLL.

The spin here is coming from someone who refuses to acknowledge that importing a mere 4.8% of consumption, almost all of it from a neighbor whose imports exist only from mere convenience, constitutes defacto self-sufficience. I'm not even sure why you think net imports of 4.8%, almost all of it from a neighbor whose natgas gets imported out of sheer geographical convenience, represents some sort of failure of the entire US shale gas industry. :roll: :badgrin:
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Mon 16 Feb 2015, 11:56:56

Speaking of the Marcellus: the latest word from the EIA: http://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf

The MS rig count has been fairly flat for the last 2.5 years thru Feb 2015: about 105 rigs with a dip below 90 in early 2013. And during the last year the rate of increase in production from new wells per rig has improved a bit but nothing like the big gains between 2012 and the end of 2013. And that was after the rig count plunged from 140 to 110. That indicates probably longer laterals and better identification of the sweet spots.

The good news: production from new wells in the last year increased by 0.79 bcf/day. The bad news: production from older wells decreased 0.61 bcf/day. So despite some good drilling results in 2014 the net gain was only 0.17/bcf/day. That represents only a 1% increase in net production. So even if the rig count in the MS doesn’t drop it looks like the days of big production increases have passed. Now it looks like the drilling pace will have enough trouble just keeping the gross production from falling.

Time will tell but we may be at Peak MS…at least until NG prices increase significantly.


BTW: the US consuming more NG then it produces is not spin: it's a cold hard truth some refuse to address.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Mon 16 Feb 2015, 19:24:34

ROCKMAN wrote:BTW: the US consuming more NG then it produces is not spin: it's a cold hard truth some refuse to address.

Please explain to me why US natural gas producers domestically producing 95.2% of US consumption represents a failure of said producers? And please explain to me why the chart below also represents a failure of US natural gas drilling companies? Thank you.

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Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Tanada » Wed 11 Oct 2017, 04:57:11

Lancashire For Shale yesterday held a very successful briefing to an audience of interested parties, on the benefits of how shale gas and manufacturing can grow together to create more jobs and secure our future.

The event, held at Burnley Football Club, included four speakers, a short Q and A session and highlighted that Lancashire has a very significant manufacturing sector, including being number 1 in the UK for aerospace and advanced manufacturing, as well as a growing energy and environment cluster, employing 41,000, supported by four Enterprise Zones (the only county in the UK to have four).

A major conclusion from the presentations was that a thriving shale gas industry in the county would help to boost Lancashire’s economy and position our energy industry companies as a new centre of excellence. Lancashire could be the focus of the next industrial revolution.

Furthermore, a successful Lancashire shale gas industry could create new supply chain opportunities for local manufacturing and engineering companies, as well as encouraging greater investment in these vital sectors.

Francis Egan, CEO of Cuadrilla welcomed guests and emphasised that: “We are making significant progress with the drilling of the two wells at our shale gas exploration site in Lancashire. Whilst the industry is still at an early stage, we continue to put local suppliers first wherever possible and are proud to be employing local people. The future opportunities for Lancashire manufacturing and engineering businesses are considerable as the shale gas industry grows”.

The meeting then watched a video featuring Katie Klaber, a leading energy consultant in the USA, and the former CEO of the Marcellus Shale Coalition, an organisation at the forefront of bringing together all the components of the shale gas value chain in America’s leading shale gas producing area.

She commented: “The shale gas industry and its supply chain really took off here in the Marcellus region in Pennsylvania after 2009. Before then, we produced around 25% of our own gas from conventional wells, now, after just about a decade, we produce 25% of our entire nation’s gas, so that gives you some idea of the scale of it here.

“There are a lot of opportunities for local manufacturing and engineering firms, for instance making tanks for water storage and other fabrication. And then there’s all the ongoing maintenance. It’s much more cost-effective to use local suppliers.

“Shale gas here has boosted the manufacturing economy more broadly by making energy more secure and affordable. It’s also encouraged the reshoring of some manufacturing capacity that had gone abroad, and that’s had a knock-on benefit. There’s no doubt it’s been responsible for billions of new investment.”

The next speaker, Miranda Barker, CEO East Lancashire Chamber of Commerce, added: “To date, over 500 companies have registered for the Shale Gas Supply Chain portal at www.shalegaslancashire.co.uk and contracts worth approximately £3 million have been tendered, giving plenty of opportunities for local suppliers to benefit from shale gas exploration.

“The revised online site is a major engagement tool for local businesses. This is because the new supply chain portal enables them to register their interest in the shale gas industry, specifying their areas of expertise and qualifications. The site also reflects the latest developments with the exploration programme and the quality and safety standards required.

“Business opportunities and invitations to tender will be updated on a regular basis and will ensure that millions of pounds of future spend remains in the county, supporting local jobs.”

Final speaker was John Baldwin, Managing Director, CNG Services Limited, who informed the audience that: “The biomethane sector is a great analogue for what UK shale gas could one day be.

“Britain has a growing biomethane industry, taking energy from crops, farm slurry, sewage sludge and food waste, and turning all that into natural gas through a process of anaerobic digestion. The gas can then be used to generate electricity on site or be injected into the gas grid.

“Delivering growth has only been possible with the development of an accompanying supply chain. The industry has been built on the support of UK manufacturing and engineering companies and it’s very easy to see how a successful shale gas industry will create similar opportunities for equipment manufacturers and engineering suppliers in Lancashire.”

A detailed questioning of the speakers then took place.


https://businesslancashire.co.uk/2017/1 ... -together/
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Newfie » Wed 11 Oct 2017, 06:39:09

Humm.

From what I observed in the shale fields of PA, the companies came in and brought much of their work force wth them. Motels did well, a few new. They hired local guys to drive water trucks and such. Quarries and excavators did well building pads. Roads got tore up, driving was dangerous with convoys of trucks running. Guys with leases got a shot of cash. So yes it helped he local economy.

But now that construction is slowing down all those out of own trucks are gone. Roads returning to normal. The construction jobs were temporary. The pads not. Not everyone got a lease or extraction payments. Some folks did well, others not so much. I sense a fair bit of disappointment. Buyers remorse?
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby coffeeguyzz » Wed 11 Oct 2017, 08:44:35

The county of Susquehannah, PA, has about 44,000 population.
One company operating there, Cabot, has disbursed just over $1 billion in royalty payments over the decade timeframe that they've been producing there.
This is in addition to the $500 million paid for leasing rights.

Pittsburgh could be one of the wealthiest cities in the world if they would encourage development in their area like Allegheny county airport is doing.
The next wave of growth - led by Shell's cracker - will be followed by an even bigger resurgence as evidenced by Foxconn's multibillion dollar plant in Wisconsin.

The massive build out of huge CCGT power plants will provide dirt cheap electricity, further attracting a wide array of industry.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby rockdoc123 » Wed 11 Oct 2017, 11:26:50

It's probably worth anyone who is interested in this topic reading the Annual Energy Outlook report regarding gas.https://www.eia.gov/outlooks/aeo/pdf/0383(2017).pdf you may have to go to the main page to download the report.

Key points are US export of natural gas via LNG is projected to increase rapidly over the next few years with new terminals being set for commissioning starting in 2018. This will drive continued demand for US natural gas. Prices overseas currently are a lot higher and this allows companies to take advantage of relatively low operating costs and relatively high sales revenues. At the same time even though gas imports from Canada are seen to decline the US will end up being a net importer of natural gas until 2040. But this makes some sense if natural gas prices in North America don't rise due to abundance given Canadian gas can be imported at a lower price than that received for exported LNG. A number of years ago the company I was with did a global analysis of LNG markets (we were heavily involved in SE Asia where this was always a question regarding supply/demand and the price that could be achieved in Japan. The result of that study was that all countries with large natural gas endowments would eventually seek to tap markets overseas where natural gas was not in abundance via LNG exports. At some point, this would result in a global gas market not dissimilar to what we see with oil and the predicted price (taking into account estimates of recoverable gas from around the world) would be in the $6.50 range. This would, in turn, raise the price of natural gas in North America given companies would export more and more until they found the right price point differential in North America.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby coffeeguyzz » Wed 11 Oct 2017, 13:53:55

... and a brief follow up to rocdoc's post ... Historically, LNG plants would require decade - long contracts from prospective customers, with prices tied to Brent/WTI, before these hugely expensive liquification trains would be built.
Now, the US is flipping this model completely on its head with virtual spot pricing being offered tied to HH and flexibility to the point ships at sea are re-directed to other ports.

Reliance Industries, from India, has commissioned a brand new fleet of half dozen ships designed and built to ship liquefied ethane from Morgan's Point to their new cracker in India.
They say that using ethane, even though it is liquefied and shipped halfway around the world, will STILL produce $300 million per year profit over naptha based feedstock.

For the foreseeable future, the US is in an enormously favorable position with such an abundance of low cost feedstock for both manufacturing and power generation.

This is one reason competitors are pulling out all the stops to stymie these developments.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Wed 11 Oct 2017, 15:12:50

"...and built to ship liquefied ethane from Morgan's Point...". Just a bit of trivia: Morgan's Point is one of Rockman's favorite fishing spot on Galveston Bay. More important it also a very busy spot for container exports as well as cruise ships.

Building a multi $Billion LNG facility withing long term contracts with a fixed pricing schedule sounds rather risky to me. I suspect it would also seem so to the bankers. Investors, OTOH, with fantasies of huge returns might not. Chenier lost $billions by building an LNG IMPORT facility without long term purchase contracts. And has now invested more $billions converting into an export facility.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby coffeeguyzz » Wed 11 Oct 2017, 17:40:34

Most recent EIA ethane exports for July show record breaking 201,000 bbl/day. When Mariner East 2 is in service in a few weeks, exports should skyrocket out of Marcus Hook with ME 2 capacity being 275,000bbl/day.
Propane exports are 1 million bbl/day and should double in the very near future.

I don't think that the general public is aware of the size of these numbers as well as the speed with which it is all taking place.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby AdamB » Wed 11 Oct 2017, 19:23:18

coffeeguyzz wrote:I don't think that the general public is aware of the size of these numbers as well as the speed with which it is all taking place.


They aren't. Peakers aren't. They keep pretending that the difference between US production and total imports is consumption, and ignoring the kind of export powerhouse the US is becoming in refined products. Doing what we do as well as anyone...manufacturing!!
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby tita » Tue 24 Oct 2017, 04:21:15

I was looking at the Haynesville production profile here:
https://shaleprofile.com/index.php/2017 ... july-2017/

Haynesville is earlier than Marcellus. But in 2012, the play became less attractive... Although initial rates were higher, the depletion is stronger than in Marcellus, and so the average Ultimate Recovery from wells is lower. I'm not sure if it is related to geology or the technique of fracking used... Or maybe both.

Anyway, Haynesville activity slowed from 900 new wells/year in 2011 to 170 new wells/year in 2016... with a production being flat. But recently, activity picked up as operators got through a refracking operation of older wells. It's not a pilot over a few wells, but quite a large operation. The questions of UR and costs, thus profitability of refracking remain... I don't know how it is done, but I suppose you need a rig to do it, and probably have to drill longer laterals...

Anyway, something to look up. There was a lot of talk about re-fracking two years ago, but it wasn't deployed in large scale... This could change to apply recent techniques to vintage wells instead of drilling a new one.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Tanada » Tue 24 Oct 2017, 10:33:45

Newfie wrote:Humm.

From what I observed in the shale fields of PA, the companies came in and brought much of their work force wth them. Motels did well, a few new. They hired local guys to drive water trucks and such. Quarries and excavators did well building pads. Roads got tore up, driving was dangerous with convoys of trucks running. Guys with leases got a shot of cash. So yes it helped he local economy.

But now that construction is slowing down all those out of own trucks are gone. Roads returning to normal. The construction jobs were temporary. The pads not. Not everyone got a lease or extraction payments. Some folks did well, others not so much. I sense a fair bit of disappointment. Buyers remorse?


The article posted is about Lancashire Great Britain, not PA.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby rockdoc123 » Tue 24 Oct 2017, 12:49:54

Haynesville is earlier than Marcellus. But in 2012, the play became less attractive... Although initial rates were higher, the depletion is stronger than in Marcellus, and so the average Ultimate Recovery from wells is lower. I'm not sure if it is related to geology or the technique of fracking used... Or maybe both.


Activity shifted away from Haynesville mainly due to lower nat gas prices and the fact Haynesville is dry gas. Costs for extraction are also a bit higher than in the Marcellus but mainly it is the fact there are enough liquids in the Marcellus to make wells a bit more profitable with lower nat gas prices.
People have gone back to the Haynesville as of late I think mainly because it is well connected to gas pipelines and markets so if natural gas prices ever increase it would be a good place to be.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Subjectivist » Sun 03 Dec 2017, 20:36:50

A shale gas superstar utters the unmentionable: “sweet spot exhaustion”

November 27, 20177:43 AM Terry Etam

Those who are concerned the U.S. might run out of natural gas in the years ahead ignore estimates made by government and industry experts that this country has enough shale gas to meet domestic needs as well as export opportunities through the rest of this century and beyond. (The Washington Examiner, November 2017).

There’s a fine line, sometimes indistinguishable, between saying things no one wants to hear and being the crazy guy on the corner shouting at governments or mailboxes. The weird part, consistent with both roles, is that people don’t necessarily disagree; they just pretend they don’t hear anything.

So it’s been for anyone that doesn’t subscribe to the prevailing wisdom about the state of global petroleum production. There is a juggernaut of common opinion that shale resources, primarily US ones, are all that matters any more. Oil and natural gas prices are low, and they will stay low indefinitely, because any uptick in prices will see a flood of new product hit the market from the prolific US shale fields.

The opinion is as close to universal as you can get. It is shared and propagated by even the likes of the International Energy Agency (IEA) whose recent World Energy Outlook spawned headlines such as this on Bloomberg’s site: “U.S. To Dominate Oil Markets in Biggest Boom in World History.” I could find another dozen similar headlines in a minute, and so can you. These wacko stories morph into something else, like what happens in the children’s game of telephone, and out the other end come quotes like this from one of Bloomberg’s famous editorialists: “…the US now has the largest reserves on the planet.” Not quite. That erroneous statistic is a direct result of how the hyperbolic messaging gets adapted by the public. This latter commentator’s output goes to thousands of fund managers worldwide, who are getting this message in one ear and into the other comes news that pension and other huge funds are shunning oil and gas stocks. The message then is loud and clear: stay away from the industry, it has no future because prices can’t rise, and it has no future because green energy plans will render it valueless.

This whole commonly-accepted narrative rests on a key tenet as an overarching truth: that shale resources are so vast that not only will they provide production for a century, but that their production will grow rapidly in the current price environment.

It’s a circular load of rubbish that exists because almost no one understands petroleum reservoirs. Those that do are often employed by shale drillers, so they keep their mouth shut and let the IR departments do the talking – about thousands and thousands of homogenous locations, decades of drilling inventories, and superb economics regardless of commodity prices. Don’t take my word for it, check out any IR presentation from a leading shale producer. It will be evident that any one of them could supply the entire US market if they so chose, but, ah, they don’t feel like it.

The messaging has been so relentless that one almost sounds crazy to consider that it might not all be true, just like it sounded crazy when Warren Buffett sidestepped the dot-com boom. He sounded like a crank that had been left behind. I don’t know if he appreciated the irony as much as he should have.

I’m no Warren Buffett, and the only voices that can shed any sanity on this conversation have to come from someone inside the machine. Lo and behold, one finally showed up, and not any sort of peripheral entity – it was from one of the most prominent and successful shale players, one who’s own IR presentations and comments display the loopy enthusiasm that can only be afforded by well-crafted “Beware of Forward Looking Statements” advisories.

The pioneer of this new disclosure is Range Resources, a huge Marcellus producer. In the most recent quarterly conference call, the management team didn’t shy away from their claim to have thousands of locations capable of IP rates of more than 25 million cubic feet per day (or, as noted before, the equivalent of two-thirds of the nation’s total output), and how could they. But what they did do was utter a phrase that the whole world needs to hear: sweet spot exhaustion.

Why is that such a big deal? Well, consider the hopes that the whole world has now placed on US shale’s shoulders, as reflected in five-year forward prices that are flat or falling. The assumption is not just that the production is significant, but that it can grow at will, at ever lower prices. It’s all based on a lack of knowledge of petroleum reservoirs, and a blind faith in producers’ IR material.

It took decades to knock the notion out of people’s heads that oil doesn’t exist in vast underground swimming pools, although many still don’t know what exactly it resides in or how it gets out. A far smaller subset would then understand that the rock in question is far from homogenous and that results can and will vary wildly. This is where the sleight of hand of producers appears, where they drill a 4 well pad with great results and then announce that they “have thousands just like it.” What grounds does a Wall Street investment banker or Paris-based IEA analyst or a Bloomberg prophet have to doubt them, when the actual proof won’t be known for a decade, if ever?

The analysts who asked questions on the Range conference call did a masterful job of missing the point (the phrase was used 3 times), like Wile E. Coyote running straight past the “cliff ahead” sign. They rained down questions about lateral lengths, IP rates, and other key inputs for their nonsense machines. They offered congratulations on spectacular results, and were like kids at bedtime who wanted just one more story.

To be clear, none of the above is to imply that the US is in any sort of production trouble. Natural gas output may indeed climb further with a limited number of rigs in use. But those statistics have more to do with the fact that wells are now up to 3 miles in lateral length, which of course is going to impact productivity in a positive way.

Consider this from the US Energy Information Agency – Pennsylvania production has increased 80 percent in the past 5 years to over 15 billion cubic feet per day, which is most of the Marcellus production. However, in the past two years, half the drilling permits and three-quarters of rigs in use were in three counties – Washington, Greene and Susqehanna – which have a combined total area of 2,271 square miles. At aggressive 300 ft spacings, it would take 6 wells to develop each square mile. Even assuming all of that is developable, which it most likely is not, how long will it take to develop those counties when each well is 3 miles long? And is the zone as good across all this area? I don’t know, but I do know that at present rates there won’t be much in 10 years never mind a hundred. And in the US, there is nothing like the Marcellus. Once these prime sweet spots are developed, it’s downhill from there.

This isn’t really news; there are pictures that make this obvious that have been shown here before. What is new is to hear one of the shrillest proponents of the “shale gas is the whole story” story admit that the days of unbridled optimism will soon be behind us.

Hmm, the next time I hear the guy going off on the mailboxes, I’m going to pay attention. He might be on to something.


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