[EnergyUnlimited]

OF2,

You should note that most if not all of additional NG produced by this technique will be directed to NG turbines for electricity production, not for running CGV.

So few coal and nuclear projects will be scrapped and new NG based electric capacity installed (or few aging electricity generating plants replaced with new NG turbines).

[copious.abundance]

$this->bbcode_second_pass_quote('', 'O')F2,

You should note that most if not all of additional NG produced by this technique will be directed to NG turbines for electricity production, not for running CGV.

[Carlhole]

I keep asking for comment from Julian Darley or someone else at GlobalPublicMedia about North American NG production from shale formations. But so far, no reply:

$this->bbcode_second_pass_quote('My Email', 'D')ear Julian Darley,

I was hoping to contact you or someone else (like Chris Skrebowski) for comment on the recent (apparent) flurry of natural gas discoveries in shale formations in North America. These are the formations such as the Marcellus or Barnett that companies such as Chesapeake Energy have been exploiting. This apparent new abundance of NG is the basis for T. Boone Pickens energy plan which is garnering pretty good publicity.

By some accounts there seems to be trillions upon trillions of newly discovered cubic metres of NG. So far the shale gas formations have been making mostly stock market news in the US, but the implication is that these shale formations may be found throughout the world and that NG has a much less gloomy future than what had been forecasted by the peak oil community just a few years ago. Back then, you had forecasted a NG "cliff" arriving in the 2015 - 2020 timeframe. You described North American NG drillers as increasingly active just to maintain current production levels. Now, it looks like those production levels have been raised substantially.

Of course, the recent developments in shale NG has created questions that, as far as I know, have not been addressed by you or anyone in the the peak oil community. I haven't seen any authoritative articles on this subject at GPM or on TheOilDrum, for instance. How far do these discoveries push back the peak for North American NG? Have you had to revise your thesis put forth in "High Noon"? Will there be any detailed analysis of the North American NG situation forthcoming?

Thank you,

[ROCKMAN]

Carl,

I can’t blame some of the PO folks for being way behind the curve regarding the unc NG resource plays. I’m hip deep in it and it’s difficult for me to keep up. THE big factor has been the advances in completion/fracing science. I’m working with one well right now that had someone recommended completing it just 3 years ago they would have been branded as a nut. And now we’re planning to have 14 rigs drilling in the play next year. I look at the character of this shale and it’s difficult to imagine it producing 1 cubic foot of gas let alone 4 or 5 million cubic feet. And every day I read about new shale plays being evaluated. I’ve never even heard of some of these new shale plays. And the technology gains are being spread like wild fire. About 30 years or so ago such research would have been done by the Big Oils with little or no sharing. Now all the advances are done by the service industry.

While there are some pretty smart folks at Chesapeake et al, it’s the service companies driving the learning curve. If you hade acreage in the Marcellus right now you could drill the same well as any of the big players: just hire the same service company and tell them to write up the procedure. They won’t tell you how they drilled/completed a Chesapeake well, lets say, but you can bet your procedure will be identical. Additionally, there are different service companies offering the technology so they are competing with each every day to improve the process. Given current NG prices and drilling cost I’m not sure anyone can predict how many viable locations there are right now let alone years down the road. The effort is just moving that fast.

[copious.abundance]

Interesting chart showing US natural gas inventories.


source

[copious.abundance]

--> LINK <--
$this->bbcode_second_pass_quote('', '[')b]Study: EIA annual gas outlook needs revising
Warren R. True
Chief Technology Editor-LNG/Gas Processing

HOUSTON, Nov. 10 -- The US Energy Information Administration has largely underestimated near-term US natural gas production in its Annual Energy Outlook, released early this year, according to a study by FACTS Global Energy, Singapore, released earlier this month.

EIA's own data in its October 2008 Short-Term Energy Outlook documented the annual forecast's gap. Actual production for 2007 grew by 4.3%, rather than the originally forecast 2.7%. Forecast production for 2008 and 2009 will rise by 6.8% and 4.3%, respectively, according to the Short-Term Energy Outlook—well ahead of the originally forecast 0.9% and 0.5%.

Unconventional gas
Responsible for the rapid and unpredicted growth are the massive investments in drilling in unconventional basins, mainly shale gas, coalbed methane, and tight sandstones. Especially important in the production growth is the Barnett shale in Texas. Predictions for two other shale plays, Haynesville in Louisiana and Texas and Marcellus in the US Northeast, are for equally large increases.

FGE says modifications of EIA's AEO 2008 are needed to reflect recent changes in the long-term supply and demand balance.

Production from unconventional resources will continue to add large volumes of natural gas to the US market, says FGE. These will "more than compensate" production decline that has been ongoing in conventional fields.

[...]

$this->bbcode_second_pass_quote('OilFinder2', 'L')ooks like someone else is agreeing with the Chesapeake Energy CEO. Plus they make an interesting prediction.

--> LINK <--
$this->bbcode_second_pass_quote('', '[')b]NGSA: No natural gas shortage in the US
By OGJ editors

HOUSTON, May 22 -- US natural gas supplies are strong and will remain that way for the foreseeable future, according to an association of gas producers and marketers.

The amount of gas in storage is on track to meet this year's expected winter demand, which should help lower prices, said Jenny Fordham, director of energy markets and government affairs for the Natural Gas Supply Association (NGSA).

Fordham said that while gas production from the Gulf of Mexico has been dropping in recent years, producers have met consumer demand by developing new gas finds in unconventional shale fields in Texas and in Marcellus shale field, which stretches from New York to West Virginia. NGSA also expects US LNG imports to strengthen in future years, although competition from world demand will continue to limit imports in the near term.

Separately, in a research report to clients this week, Raymond James & Associates analyst Marshall Adkins said the bank's gas model shows that the US will be on the verge of shutting in gas production—resulting in a gas price collapse—if it experiences normal summer weather, based on the recent 10-year average.

Raymond James expects domestic gas production growth to continue to grow at a 4-5 bcfd rate throughout 2008, as drilling activity ramps up, potentially offsetting production decline rates for several years.

"We put the odds of a natural gas price collapse at 50%," the report said. "If summer weather is warmer than normal, incremental cooling demand should eat away at storage levels, bolstering double-digit natural gas prices. If the weather is milder than normal (i.e., colder than the 10-year average), then natural gas storage could exceed 3.65 tcf, and late summer natural gas prices could fall to $6/Mcf," the report said.

[...]

[emeraldg40]

Didnt they just file for bankruptcy?

[ROCKMAN]

e,

I haven't heard about a bankr. filing but here's an interestng story about StatOil coming to their rescue...at least in part. I'm guessing the cash infusion will help them keep the Marcellus drilling program going forward.


http://news.yahoo.com/s/afp/20081111/ts ... OomzcS.MwF

[Maddog78]

$this->bbcode_second_pass_quote('', 'B')efore that money is paid out though, "Chesapeake is required to maintain a significant level of drilling activity," StatoilHydro said.

[ROCKMAN]

Maddog,

If I remember correctly those rig releases were in Oklahoma. Operators were taking a beating on NG prices there. I recall prices as low as $3.50/mcf.

[Maddog78]

Yes, I believe you're right.

Wow, I had no idea the price was so low in OK.


btw, 50 rigs drilling in the Appalachians for 20 yrs., that is got to be a huge boost to their local economy.
Is that not one of the poorer areas in the US?
They've got to be very pleased about this.

[copious.abundance]

--> LINK <--
$this->bbcode_second_pass_quote('', '[')b]U.S. shale could double natural gas output over next decade
From Herald News Services
Published: Saturday, November 22, 2008

Washington - U. S. natural gas production from shale could double in the next 10 years, a spokesman for the natural gas industry said on Friday.

"What we've seen so far from shale fields is just the tip of the iceberg," terry ruder, vice-chairman of the Natural gas Supply association, said at a conference sponsored by the Federal energy regulatory commission.

Ruder said U. S. shale reserves could provide one-quarter of the nation's natural gas supply in the next decade, up from about 10 to 12 per cent of U. S. gas demand in 2008.

He said U. S. shale production could grow to 15-billion to 20-billion cubic feet per day by 2018, from about 6-8 bcf per day now.

[...]

Found an interesting article on this. Aparrently the wells in this shale produce these enormous gangbuster amounts (I assume, as mentioned elsewhere, with the steep drop-off). Anyway . . .

--> It’s a Gas, Gas, Gas: The Paradigm Shift in the U.S. Natural Gas Business <--
$this->bbcode_second_pass_quote('', '[')...]

The bear market in gas will be exacerbated by recent announcements. Yesterday, Houston-based Petrohawk Energy announced that three of its new wells in the Haynesville Shale in Louisiana were each producing more than 20 million cubic feet of gas per day. Those are the biggest wells ever recorded in Petrohawk’s history. Also yesterday, Dallas-based Exco Resources announced its own Haynesville well, which was also flowing gas at more than 20 MMcf/d.

Those are sizable wells by any measure. Keep in mind that the U.S. produces about 19.2 billion cubic feet of gas per day from more than 448,000 wells. That means that the average U.S. gas well produces about 43,000 cubic feet per day. These new Haynesville wells are showing initial production rates that are three orders of magnitude larger than that. And those new wells are coming online at the same time that some gas producers in Oklahoma have shut in their wells rather than sell their gas at current prices. Furthermore, some 2 billion cubic feet of daily gas production in the Gulf of Mexico continues to be shut in due to lingering damage from this summer’s hurricanes.

On November 11, during a meeting of the Independent Petroleum Association of America held in Houston, Mark Papa, the chairman and CEO of EOG Resources said the U.S. gas industry was in the midst of a “total sea change unlike anything we’ve seen in our careers. Don’t underestimate the power of that sea change.” Papa said that the Haynesville Shale, which may contain 50 trillion cubic feet of gas, the equivalent of about 9 billion barrels of oil, is one of “the biggest fields found in the entire world over the last decade.” At that size, the Haynesville field would be bigger than the massive offshore Tupi discovery in Brazil that was announced by Petrobras in 2007. Papa said that the shale gas deposits provide a “huge amount of gas that can be mined. And I use the term ‘mined’ because the geologic risk has been minimized.”

[copious.abundance]

The more I read about this Haynesville Shale thingy, the more I'm beginning to think it's the best thing since sliced bread. It's even getting its own pipeline!

--> LINK <--
$this->bbcode_second_pass_quote('', '[')b]Major pipeline to be added at Haynesville Shale
01/27/2009
Associated Press

A 178-mile pipeline extending through Louisiana and servicing the Haynesville Shale, considered to be one of the largest domestic natural gas finds in years, will be built by two energy companies.

Energy Transfer Partners LP, which operates pipelines and storage facilities, said Tuesday that it had agreed with a subsidiary of Chesapeake Energy Corp., to build the pipeline for an estimated cost of $1 billion to $1.2 billion.

Dallas-based ETP said the 42-inch pipeline will connect the company's pipeline system near Carthage, in East Texas, extend through the shale and end near Delhi, La., at a point that connects to several interstate pipelines in Louisiana.

[...]

[ROCKMAN]

The increasing lack of pipeline capacity in the trend probably has a bearing on our cut back in drilling. Too bad it will take some years to complete the lay but at least it still got approval in today's environment

[copious.abundance]

'Bout time I updated this thread too.

Thanks to JD at POD for sniffing out this article.

Looks like those unneeded LNG terminals mentioned on the first page are gonna be forced to take LNG shipments they don't really need. And this, sympathies to ROCKMAN, could be at the expense of some of the shale plays.

--> Houston Chronicle <--
$this->bbcode_second_pass_quote('', '[')b]Natural gas glut could hit U.S.
By TOM FOWLER Copyright 2009 Houston Chronicle
Feb. 1, 2009, 1:58PM

As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Operators of these new facilities are unlikely to cut back production, however, so shipments of liquefied natural gas will most likely head to the deepest markets with the greatest amount of natural gas storage capacity — the United States.

‘Counterintuitive’

“It’s completely counterintuitive,” said Murray Douglas, a global LNG analyst with Wood Mackenzie in Houston, who is predicting U.S. LNG imports will grow 30 percent to 456 billion cubic feet this year and to more than 1.1 trillion cubic feet by 2013.

“We don’t believe Asia and Europe will be in a position to absorb this new production, and the U.S. is the only market that can take it, that has a large amount of storage.”

The wave of imports might even be strong enough to challenge growing domestic natural gas production from various shale formations, including the Barnett Shale near Fort Worth and Fayetteville Shale in Arkansas.

[...]

[ROCKMAN]

OF2,

This goes a long way to explaining the drop in shale gas drilling. I'm sure the boys on the top floor saw these numbers long ago. It will be interesting to see how the LNG exporters respond pricewise when they see US NG production start dropping fast. Back to the basics: if the US were producing another 10 mmbo/day OPEC would be toothless. we'll see if we let ourselves slide into that same trap with NG.

[copious.abundance]

BTW Rock, when you post a link you really should put it in a <url=http://www.somelink.com/somestory/>Click here</url> format so we don't get these really wide pages with long links. Just looks better that way. So if you could be so kind as to edit your post above, you'd improve the aesthetics of this page.

[ROCKMAN]

Thanks OF2. I'll try to figure out how to do that