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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: THE Natural Gas Thread (merged)

Unread postby coffeeguyzz » Sun 08 Jan 2017, 15:49:12

RM
A somewhat similar story, with some interesting twists, involved Shell losing their ass in the"Shale World" a few years back.
Guy named Terry Pegula - longtime, small operator in Pennsylvania - made a couple of multibillion dollar sales of Marcellus leases he had worked for decades. Almost $5 billion to Shell.
Bought some professional sports teams including Buffalo Bills.
Shell acted like a bull in a China shop and lost a ton ... selling out much of their acquisitions.

But, here is where it gets interesting.
Shell kept a few hundred thousand acres in Tioga county and quietly persevered with a small, entrepreneureally minded team targeting the Utica.
They are successfully developing this area and have leased a lot more acreage.
Pegula? He got back in the game by forming JKLM as a private company, leased a chunk of land next county over - Potter - and drilled a Utica well, the Sweden Valley, that has produced 3 Bcf in less than 10 months online.
This successful areal expansion of the Utica is one of the more unheralded stories in this Shale World today, IMHO.
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Re: THE Natural Gas Thread (merged)

Unread postby ROCKMAN » Sun 08 Jan 2017, 23:22:27

coffeeguy - Yep...Shell wins and loses big. They paid $1 billion for a single EFS lease in far south Texas. Drilled more than 160 wells very fast. Last time I looked initial production for the average well they had completed was less than 85 bopd. I estimated the sunk $2.5 billion and the ran like a scalded dog.
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Re: THE Natural Gas Thread (merged)

Unread postby AdamB » Mon 09 Jan 2017, 19:46:43

coffeeguyzz wrote:This successful areal expansion of the Utica is one of the more unheralded stories in this Shale World today, IMHO.


Shell was discussing their success in the Utica in NE Pennsylvania at the national AAPG conference, in 2015 I believe. They made the statement during their presentation session that the main gas play in the Appalachian basin will, ultimately, not be the Marcellus.

This seemed to be backed up the local experts right about the time Shell was discussing this.

http://wvutoday.wvu.edu/n/2015/07/14/ut ... -wvu-study
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Re: THE Natural Gas Thread (merged)

Unread postby pstarr » Mon 09 Jan 2017, 19:58:50

AdamB wrote:
coffeeguyzz wrote:This successful areal expansion of the Utica is one of the more unheralded stories in this Shale World today, IMHO.


Shell was discussing their success in the Utica in NE Pennsylvania at the national AAPG conference, in 2015 I believe. They made the statement during their presentation session that the main gas play in the Appalachian basin will, ultimately, not be the Marcellus.

This seemed to be backed up the local experts right about the time Shell was discussing this.

http://wvutoday.wvu.edu/n/2015/07/14/ut ... -wvu-study

Did this post subsequently read . . . "A billion here, a billion there, pretty soon, you're talking real money. - Everett Dirksen" . . .

at precisely Mon Jan 09, 2017 4:46 pm?
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“Bitterness is like cancer. It eats upon the host. But anger is like fire. It burns it all clean.”
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Re: THE Natural Gas Thread (merged)

Unread postby coffeeguyzz » Mon 09 Jan 2017, 23:26:32

The past several months have seen numerous Marcellus wells come online flowing 15/20/25 MMcfd for a few months, but nothing can compare with the few successful Deep Utica wells in SWPA.
The casing pressure on some have approached or exceeded 10,000 psi.
Only a few, the Scotts Run being most noteworthy, have maintained long-term (10 month +/-) high flow rate, but the production is extremely high.
The SR flowed 29 MMcfd for 9 months, has cumulative over 11 Bcf in 15 months online, all with a lateral 3,200' long.

This calendar year, both the Deep Utica potential and the Upper Devonian formations will have several wells drilled and should provide more clarity on future prospects.
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Re: THE Natural Gas Thread (merged)

Unread postby AdamB » Wed 11 Jan 2017, 09:59:51

coffeeguyzz wrote:The past several months have seen numerous Marcellus wells come online flowing 15/20/25 MMcfd for a few months, but nothing can compare with the few successful Deep Utica wells in SWPA.
The casing pressure on some have approached or exceeded 10,000 psi.


I know. The BOP pressure ratings look like something you would see in the Gulf, seeing pieces of them being trucked to location is an amazing thing.

But as with all continuous or resource type plays, not all wells are created equal, and what the E&Ps find in SWPA they might not find anywhere else. Then again, an even higher overpressured area might just be 3 counties over.

One of the reasons that the WVU Utica study is just another piece in the puzzle.

coffeeguyzz wrote:Only a few, the Scotts Run being most noteworthy, have maintained long-term (10 month +/-) high flow rate, but the production is extremely high.
The SR flowed 29 MMcfd for 9 months, has cumulative over 11 Bcf in 15 months online, all with a lateral 3,200' long.

This calendar year, both the Deep Utica potential and the Upper Devonian formations will have several wells drilled and should provide more clarity on future prospects.


The economics of the oil and gas fields of America don't run on singular wells, they run on the average, or more specifically the distribution, and which part of it your leasehold allows you access to. The USGS has been quantifying this type of uncertainty for decades now, for example here are their distributions for the continuous plays they have assessed in the US.

https://pubs.usgs.gov/of/2012/1118/OF12-1118.pdf
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Re: THE Natural Gas Thread (merged)

Unread postby GoghGoner » Thu 12 Jan 2017, 06:55:17

The latest numbers from the STEO. EIA was forecasting a 0.7% rise in 2016 at this time last year -- they were only off by 3.1% (that is a bit of sarcasm). Since NG rig count hit a low in August, it makes sense that we should see at least a plateau for the beginning of 2017. New production per rig in the Marcellus and overall rig count will be worth watching. Total gas-directed rig counts were over 900 in 2011 and currently stand at 135. Drilling is more efficient but there is no comparison in the activity levels from 6 years ago.

Dry natural gas production is estimated to have averaged 72.4 billion cubic feet per day (Bcf/d) in 2016, a decline of 1.8 Bcf/d (2.4%) from 2015, which would be the first time annual average natural gas production has fallen since 2005. Forecast dry natural gas production increases by an average of 1.4 Bcf/d in 2017 and by 2.8 Bcf/d in 2018.
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Re: THE Natural Gas Thread (merged)

Unread postby AdamB » Thu 12 Jan 2017, 12:05:06

GoghGoner wrote:The latest numbers from the STEO. EIA was forecasting a 0.7% rise in 2016 at this time last year -- they were only off by 3.1% (that is a bit of sarcasm).


Do you have any examples of folks who do it better? Then we could take those estimates, call up the EIA, and ask them why other folks are doing better? One of the interesting things about the EIA that I discovered a few years back is they are one of, if not the only, organization that provides their forward looking long and short term price paths as well as matching volume projections. As Rockman has pointed out before, you can't do one without the other (as everyone from peak oilers to the IEA have demonstrated beyond a reasonable doubt), and yet these are the only folks I can find who are even attempting to do it right.

And if everyone else is providing these kinds of projections, closer to target than 3.1%, it would be nice to inform the EIA. I would be more than happy to volunteer to do just that, being on a first name basis with a few of their subject matter experts just as I am with the Texas BEG and the USGS.
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Re: THE Natural Gas Thread (merged)

Unread postby GoghGoner » Thu 12 Jan 2017, 12:43:42

Well, I knew they were wrong 12 months ago. They will also be wrong about 2017 and 2018. The thing you can tell them is this --> look at CHK and RRC financials. These two are top producers in the basins they think are going to make up for the other declining basins. Ask them to tell you what they see. I give you a hint it is DEBT, DEBT, DEBT. These companies shouldn't be given another dime and, at some point this year, they may have to file bankruptcy. How do the top producers grow production when restructuring? The scam is up, Adam. Long live coal.
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Re: THE Natural Gas Thread (merged)

Unread postby GoghGoner » Wed 18 Jan 2017, 09:46:05

I haven't posted on the Drilling productivity report in some time because the forecasted numbers never meet actual production numbers. Well, since the EIA is now forecasting a 300 mcf/day gain in natural gas supplies for February in this report, it caught my attention.

Monthly additions from one average rig represent EIA’s estimate of an average rig’s
contribution to production of oil and natural gas from new wells.

http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

The estimation of new well production per rig uses several months of recent historical data on total production from new wells for each field divided by the region's monthly rig count, lagged by two months.


So the calculation for this month, would use "new rig production/rig" based on a lower rig count and lagging the rig count by two months isn't long enough. It is well-documented and logical that as rig count increases "new rig production/rig" decreases. I defer to drillers on how long it takes to get production from a new well, however, I thought the average was closer to six months.
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Re: THE Natural Gas Thread (merged)

Unread postby ROCKMAN » Wed 18 Jan 2017, 10:51:49

Goner - "I defer to drillers on how long it takes to get production from a new well, however, I thought the average was closer to six months." Averages are so difficult to come up with: it implies every well's time lag has been used to come up with a WEIGHTED AVERAGE. I prertty sure no one has out that data base together.

But here's a TYPICAL time line: production casing is run and rig is "released"...drops off rig tally. Now 1 to 3 weeks to move work over rig on to the well. First we run a " bond log" to confirm there's good cement across the pland productive zone. Critical that it's isolated. If a bad cmt then we perforate casing and pump cement into those holes. This can take a day or two. Also understand most of these are "daylight rigs"...they don't run 24hrs/day. Usually doing good to get 10 useful hours in.

Then production tubing" is run down the casing. The tubing is smaller diameter (2 3/8" or 2 7/8") and is what the oil/NG flows up and out of the well. It set with a "packer"...like a stopper in a bottle. And the a perforating gun is run down the tubing on wireline and fires dozens (or hundreds) of small shaped charges that create holes (about 1/3") thru the steel casing.

And now the average concept goes to sh*t. LOL. If a conventional well then once perforated the rig is moved off. By this point you could be 3 to 6 weeks post drill rig gone. Now you test the completed zone. Has gone done in order to design the production infrastructure. Usually less then a week. It might take a couple of weeks to a couple of months to line up equipment. In the meantime will "permatize" the location with more rock base. So now you're 2 to 3 months post end of drilling. For an oil well with no NG sales a couple of weeks to a month to tie in all the plumbing to the well head, tanks and any pumping equipment if needed.

So the quick time line 2 to 4 months. But if the well has to be frac'd...forget that. You might have to wait a month to several months just for the frac crew to show up. And then 2 to 4 weeks to frac depending on the job. It can take a week just to set up the frac plumbing. So a frac'd shale well: 4 to 6 months. And if the well begins producing during the last week of the month the first production report is small. and even the first full month we typically "bring a well on" slowly: maybe another month before max production rate. Now add 2 to 4 months delay before fist production numbers become public.

And if you need a NG sales line add a month...or maybe 3 months...or more.

So add up what scenario you want but the lag time typically is several months as minimum.
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Re: THE Natural Gas Thread (merged)

Unread postby GoghGoner » Wed 18 Jan 2017, 11:12:17

Thanks, Rock. Maybe you should offer consulting services to the EIA and help out all of those economists.
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Re: THE Natural Gas Thread (merged)

Unread postby rockdoc123 » Wed 18 Jan 2017, 12:26:49

So the quick time line 2 to 4 months. But if the well has to be frac'd...forget that. You might have to wait a month to several months just for the frac crew to show up. And then 2 to 4 weeks to frac depending on the job. It can take a week just to set up the frac plumbing. So a frac'd shale well: 4 to 6 months.


and I would add that sometimes it can be longer when a company is looking to streamline operations as a cost savings. Often when fracking companies look to only mob the frac crews when they have a number of wells to stimulate. Also companies are more and more moving to "zipper fracs" which entail alternating frac stages between adjacent horizontal well bores in order to take advantage of in-situ stresses and the inherent stress field created hence creating a larger integrated fracture network. As a consequence a company might drill 6 or more wells before bringing out the frac crews.
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Re: THE Natural Gas Thread (merged)

Unread postby coffeeguyzz » Wed 18 Jan 2017, 13:46:55

Rocdoc/Gone
That is exactly what has been happening in Pennsylvania this past year.
Range, Cabot, Chesapeake are bringing online 3 to 5 wells at a time with results way higher than previous years.
Shoot, one can go right to the PA DEP site for production data, punch in, say, Cabot, and quickly scroll through November's production numbers which are the most recent.
Updated just the other day.
There are scores of wells (500 total) with monthly production over 200/30O MMcf, ie., over 7/10 MMcfd.
The most recent wells (spud date is shown) are exceptionally strong.
For a few bucks a year, the site Marcellusgasdotorg does all the date compiling and much more for a great insight into Appalachian Basin production.
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Re: THE Natural Gas Thread (merged)

Unread postby ROCKMAN » Wed 18 Jan 2017, 14:26:05

Goner - "Maybe you should offer consulting services to the EIA and help out all of those economists." That would work for me...I've worked on a consulting basis much of my career. All the EIA need do is tell me the answer they are looking for and I can build a defendable construct to come as close as possible to what they desire.

That is what we consultants do, ya know. LOL.
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Re: THE Natural Gas Thread (merged)

Unread postby ROCKMAN » Wed 18 Jan 2017, 14:58:29

Espresso man - Yep. Can jump to the extreme: and offshore platform. Had one spent almost 3 years drilling 18 wells, then waited 8 months for a tender and completion rig. Then 1 1/2 year completing the 18 wells. And then almost 2 years putting production equipment on. Fortunately were confident enough on output to spend 14 months laying pipelines while putting in the facilities.

So production didn't start until about 5 years after the drilling rig was released. But what a surge: over 200 million cubic feet per day and 5,000 bopd came on in less than a montyh. Well worth the wait. LOL.

But I also saw a cohort's little 700 MCF/d well wait 14 months before producing. Pipeline was close but he got sloppy: didn't check on available capacity in the line: there was none so had to wait for other wells to decline.

And the sad/funny part: for a month when he didn't know about problem he maxed out his credit card partying. And then one night after the sh*t hit the fan he came home drunk. His wife got the credit card statement that morning. When he woke up on then entry way floor the next morning he guessed she was waiting behind the door and cold cocked him. A volatile couple from rural Mississippi.

True story. The take-away: don't party until the first run check clears the bank. LOL.
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Re: THE Natural Gas Thread (merged)

Unread postby kublikhan » Mon 23 Jan 2017, 20:40:40

Looks like US natural gas prices are starting to edge upwards. Projections for 2017 & 2018 are for around the $3.50 - $4 range. Still low by international standards but a step up from the $2 range we had in recent years.

Natural gas prices averaged a little more than $2.50 per mmBtu (million British Thermal Units) in 2016. Those days are over. Prices will average at least $3.50 to $4.00 in 2017.

Prices have more than doubled since March 2016 but gas is still under-valued. Supply is tight because demand and exports have grown and shale gas production has declined. In April of last year, I wrote that natural gas prices should double and they did. Henry Hub spot prices increased 2 1/2 times from $1.49 to $3.70 per mmBtu and NYMEX futures prices doubled from $1.64 to $3.30.

Nevertheless, gas prices are still too low. Storage was at record high levels throughout 2016 reaching 4.1 Bcf (billion cubic feet) and 84% of working capacity in mid-December. Storage has fallen 1.1 Bcf in the last month to 61% of capacity. That is below the 5-year average.
Why Cheap Natural Gas Is History

Henry Hub Spot Prices (dollars per thousand cubic feet)
2015 2016 2017 2018
2.72 2.60 3.67 3.85
EIA SHORT-TERM ENERGY OUTLOOK
The oil barrel is half-full.
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Re: THE Natural Gas Thread (merged)

Unread postby ROCKMAN » Mon 23 Jan 2017, 21:47:57

k - Yep, NG prices have been relatively stable for a while. Just as they were between 2002 and 2006. And then in the next 3 years yo-yo between $3 and $12 per MCF. As always oil/NG prices tend to be rather predictable. Until, of course, they aren't the least f*cking predictable. LOL.
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Re: THE Natural Gas Thread (merged)

Unread postby sparky » Tue 24 Jan 2017, 16:39:26

.
On "Zipper fracks" in Australia , the open cut mining industry does something equivalent .
when blasting a coalface , the location and timing of the blast holes are calculated to maximize and direct the stress
it make a big improvement in output .
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Re: THE Natural Gas Thread (merged)

Unread postby AdamB » Tue 24 Jan 2017, 20:26:47



That is just Art Berman doing the usual. Most famous for doing the boy who cried wolf routine for both LTO and shale gas, right in the middle of them creating either A) the fastest growing oil production in the countries history or B) creating yet another peak in natural gas in the US and currently accounting for 68% of national production. Art just seems to be happy claiming the end of things, always.
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