[dorlomin]

$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('joewp', 'I')nteresting comment OF2, and perhaps quite revealing. It begs the question of how much your postings here are driven by optimism and how much by the prospect of personal gain. It would be interesting to see your investment portfolio compared to the companies you highlight here. Like how many shares of Chesapeake you own, for instance.

Just wonderin'.

[ROCKMAN]

dorlomin

Where do you most of the new oil coming from? There are some new big plays/fields about to pop up but what's your impression?

[ROCKMAN]

OF2,

I'm not sure I'd care to own too much Chesapeake stock if they should start sliding into negative cashflow growth. I doubt their dividends would be as good as a money market account...and that's if they had any at all. Most of these public companies big into the resource plays are taking on tremendous debt but with good reason: if you can borrow money at 8% or 10% and make a 30%+ return you would borrow as fast/much as you could.

On of my problems with jumping on any oil stock (despite being a petroleum geologist for over 30 years) is my technical background. It's difficult for me to swallow much of the hype on oil stocks these days while understanding the fundamentals. But the market is driven by the expectations of the general public. Their analysis of a stcok may be flawed but as long as they keep the buying pressure on then the stock values will grow,

[ROCKMAN]

joewp

Love the logo...Sinclare has always been my favorite.

Don't fret about OF2 hyping Chesapeake or any other oil stock on this site. There's so much expectation built into stock value now by the pros out there that we're not even a blip on the radar.

[dorlomin]

$this->bbcode_second_pass_quote('ROCKMAN', 'd')orlomin

Where do you most of the new oil coming from? There are some new big plays/fields about to pop up but what's your impression?

[ROCKMAN]

dorlomin

Ahhh...that subtle British sarcastic humor has caught me again. But I've worked with a few Brits overseas and learned how to enjoy it...just harder to pick up in the printed word.

I'll offer a bit of unasked for advice: when folks start throwing around the "billion of barrels of oil" here and there just accept it as fact. I've been a petroleum geologist for over 30 years. These reserves are out there and they will be produced...in time.

And time is the critical issue. I won't bore the thread with the tech info of oil field development but it's not the amount of oil left in the ground that's critical. It's how fast we can recover it. The Bakken does contains billions of BO but we knew that 30 years ago and didn't pursue it. We have better technology and price support to chase it now but that doesn't change the laws of physics. Bakken wells will have big initial flow rates and make us a handsome return. But they will drop off very quickly. There is not enough drilling rigs, personnel or equipment to develop any of the resource plays quick enough to change the fundamental dynamics of PO.

But that deson't mean the inductry wont chase these plays like a hungry lad going after a spotted dick. (My weak effort at Brit humor). I run oil drilling economics almost daily and can tell you that the ultimate recovery from a project is a minor consideration in the decision process. The key is (and always will be) the recovery rate of the investment. This fact determines the rate of return...not the total amount of oil eventually produced. And this is the captain steering the ship now.

[seahorse]

$this->bbcode_second_pass_quote('', 'A')nd time is the critical issue.

[copious.abundance]

$this->bbcode_second_pass_quote('dorlomin', 'B')ut there is so much oil about to come on to the market that it will crash the price of oil. When the price of oil goes down the airlines are gonna be able to get back to there 2006 level of operating and profitability. They are looking like absolute bargins in terms of share price if we are shortly headed back to $80 oil!!!!!!

Abundance what a concept! Make a killing from it, invest in those airlines and come back and gloat when there share prices rebound

[Starvid]

$this->bbcode_second_pass_quote('ROCKMAN', 'O')n of my problems with jumping on any oil stock (despite being a petroleum geologist for over 30 years) is my technical background. It's difficult for me to swallow much of the hype on oil stocks these days while understanding the fundamentals.

[copious.abundance]

More.

EDIT: Looks like I already covered the one in Nova Scotia. Damn, there's so many of these I can't keep track of them all.

This next one is next to another one reported earlier in this thread.

British Columbia
--> Montney Shale - 50 trillion cubic feet <--
$this->bbcode_second_pass_quote('', '[')...]

It is estimated that the Montney Shale holds up to 50 trillion cubic feet of natural gas while the Horn River Shale has the potential to be much greater.

[...]

[copious.abundance]

Oh, and BTW . . .

US natural gas production set a record for the month of May.

In fact, every month this year has set a record for that month! In addition, the last 3 months of last year set monthly records as well. So, we've had 8 monthly records in a row.

[Starvid]

Damn it.

My Exelon (nuclear power) shares have been hurting a bit recently. Maybe this sudden improvement in the future of North American gas is the reason. Probably not.

Still, nuclear is a great play with gas at $10, or even at $5. What could kill nuclear is $2 gas, something we won't see as it would drive the shale plays out of business.

[ROCKMAN]

OF2,

It is amazing how the chase has heated up. I don't even try to follow plays outside my area. I imagine every shale in the US is currently being evaluated to some degree. Besides the high current price support, the tech advances in completing these shales jumps almost monthly. I don't think anyone can make a good estimate of how long the shale gas drilling boom will run. But it's safe to assume that as long as prices stay above $5 or $6/mcf and there are more drill sites it will go on. At the current drilling rate the plays may run 10 years or 50 years...I wouldn't even try to guess right now. We'll see a wide range of productivity even in the same play. But if enough good wells are completed folks will keep chasing them.

[copious.abundance]

^
The other thing I wonder is, how many of these shales are found elsewhere in the world? Aside from the US and Canada, the only other place I've read anything about someone producing gas from shale is a brief mention of something in Australia. But I don't believe for one second that North America is the only place with a lot of shales, so I wonder what will happen when the Russians, Europeans, Chinese and others catch on to this.

[joewp]

Sure OF, let's extract every single bit of every possible fossil fuel we can.

And then what?

Finite, what a reality.

[mos6507]

Maybe T Boone Pickens is onto something after all. But not that long ago Oil Drum was talking about, for instance, how New England is in trouble with its electrical plants in the short term due to natural gas shortages. What gives?

[ROCKMAN]

Same old story mos. Just like PO there are periodic PG moments due to transport bottle necks. Also, a lot of NG is stored underground to supply peak demand periods but that system has been nearly maxed out for sometime. The average winter demand per day exceeds the deliverability of all gas wells in the US and has for many decades. Off season storage was the only way to offset this deficit. During the summer when gas is normally cheaper they fill the gas storage system. But this summer NG prices have been significantly higher than last winter. Much of that cost increase will hit a lot of folks right between the eyes this winter even w//o above average demand. And if we have a much colder winter than normal it could be devastating for millions.

[f2tornado]

$this->bbcode_second_pass_quote('joewp', 'S')ure OF, let's extract every single bit of every possible fossil fuel we can.

And then what?

Finite, what a reality.

[copious.abundance]

Now the NY Times has caught on to the phenomenon.

--> NY Times <--
$this->bbcode_second_pass_quote('', '[')b]Drilling Boom Revives Hopes for Natural Gas
By CLIFFORD KRAUSS
Published: August 24, 2008

HOUSTON — American natural gas production is rising at a clip not seen in half a century, pushing down prices of the fuel and reversing conventional wisdom that domestic gas fields were in irreversible decline.

The new drilling boom uses advanced technology to release gas trapped in huge shale beds found throughout North America — gas long believed to be out of reach. Natural gas is the cleanest fossil fuel, releasing less of the emissions that cause global warming than coal or oil.

Rising production of natural gas has significant long-range implications for American consumers and businesses. A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive.

[...]

[copious.abundance]

^
And finally, someone in an article has said what I've been long suspecting:
$this->bbcode_second_pass_quote('', 'S')hale gas could ultimately be important beyond North America. The rest of the world has shale formations on an immense scale. Many of them are known to contain gas, but exploration and assessment of those fields with the new production techniques have barely started.