Thursday, June 30, 2011
Wednesday, June 29, 2011
Lawmakers urge probes into estimates for gas drilling | Star-Gazette | stargazette.com
Lawmakers urge probes into estimates for gas drilling | Star-Gazette | stargazette.com Just when I think the rhetoric out of NY can't get any sillier.
Insiders Sound an Alarm Amid a Natural Gas Rush - NYTimes.com
Insiders Sound an Alarm Amid a Natural Gas Rush - NYTimes.com Wow. Hats off to the Times for their online source material and links to the actual emails & reports in question. Too bad that anyone reading them with a moderate knowledge of the shale gas boom would have to conclude Urbina is way off base. The article relies on a lot of dated material. Many of the quotes and skepticism are from 2009 or 2010 source material. I was a shale gas skeptic in early 2009. Today, following the Marcellus closely, it is absurd to think that the industry's 2009 well and potential reserve estimates were overly optimistic. To the contrary, wells have proved to be bigger with flatter initial declines than anticipated. Clearly, only time will tell us how wells ultimately perform, but the evidence so far is really compelling. For reference, in March of 2009 Chesapeake suggested they had 4,100 risked net undrilled wells and expected avg. reserves per well of 3.75 BCF over their 1.3 million net acre position. I assumed they were pushing the envelope a bit, but by October 2010 their actual well results indicated average EUR over 5 BCF. PA production data at year end 2010 suggested that 5 BCF might be low for their Pennsylvania wells. At a minimum, Chesapeake publicly underestimated the potential in Bradford and Susquehanna counties by a significant factor.
Today there is a strong case to be made that shale gas has been the opposite of a Ponzi scheme. The operators that may have gotten into trouble are the ones that have underestimated the scope of the shale gas impact on gas price. The Barnett and Haynesville have not disappointed, they just have to compete with each other as well as the Marcellus and the Eagle Ford. Again with Chesapeake, on March 2009 they predicted per well EUR to average 6.5 in the Haynesville and by October 2010, their wells were averaging production consistent with 6.5 BCF. The disappointing part was that the price of gas in fall of 2010 was closer to $4.00 than the $6.00 + price that Chesapeake and nearly everyone else anticipated. Arguably the abundance of shale gas reserves is the major factor in the historically low price of gas.
For further more lucid reading I suggest Christopher Helman, Forbes and Michael Levi, Council on Foreign Relations.
Today there is a strong case to be made that shale gas has been the opposite of a Ponzi scheme. The operators that may have gotten into trouble are the ones that have underestimated the scope of the shale gas impact on gas price. The Barnett and Haynesville have not disappointed, they just have to compete with each other as well as the Marcellus and the Eagle Ford. Again with Chesapeake, on March 2009 they predicted per well EUR to average 6.5 in the Haynesville and by October 2010, their wells were averaging production consistent with 6.5 BCF. The disappointing part was that the price of gas in fall of 2010 was closer to $4.00 than the $6.00 + price that Chesapeake and nearly everyone else anticipated. Arguably the abundance of shale gas reserves is the major factor in the historically low price of gas.
For further more lucid reading I suggest Christopher Helman, Forbes and Michael Levi, Council on Foreign Relations.
Tuesday, June 28, 2011
Sunday, June 26, 2011
Leading Marcellus geologist advocates forced pooling of gas over property rights | PennLive.com
Unitization and forced pooling are really big issues that unfortunately most people are not thinking about. Right now there is no concept of equity for landowners and I don't think people understand the distinction in owning land and owning oil & gas rights. Issues such as well / property line set backs and whether fracturing might be trespassing as well as compelled pooling and unitization are all important and in my opinion not getting nearly enough discussion. In addition, the current pooling in PA is being done under lease provisions controlled by the gas companies and at this time are almost entirely driven by intent to hold acreage which often little to no regard for the land owner's interest, environmental impact and geology.
I found the comments to this Penn Live piece to be more interesting than the story. Really shows the ignorance of even those citizens most actively involved in understanding gas development and its impact. Particularly upsetting to see people label Terry Engelder an industry hack just for speaking the truth. He is an academic illuminating problems with the current legal framework in PA and indicating a more ideal approach. Unitization and forced pooling are not really land grabs, but may be ways to improve equity in the development that is going to occur anyway while dramatically lessening the impact of that development on the land. You would think environmentally conscious citizens would take to a call for more regulation to protect the public which would create the opportunity to improve individual landowner rights for individuals concerned about surface development.
I found the comments to this Penn Live piece to be more interesting than the story. Really shows the ignorance of even those citizens most actively involved in understanding gas development and its impact. Particularly upsetting to see people label Terry Engelder an industry hack just for speaking the truth. He is an academic illuminating problems with the current legal framework in PA and indicating a more ideal approach. Unitization and forced pooling are not really land grabs, but may be ways to improve equity in the development that is going to occur anyway while dramatically lessening the impact of that development on the land. You would think environmentally conscious citizens would take to a call for more regulation to protect the public which would create the opportunity to improve individual landowner rights for individuals concerned about surface development.
Tuesday, June 14, 2011
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