[kiwichick]

est.gas wells decline at 30 % per year

Keith Hutton XTO Energy

comments anyone?????

[ROCKMAN]

A meaningless statement IMO. What wells are declining at 30%? I know of thousand of wells declining at less than 4%. I know of other wells declining at 70%. Maybe he's talking about all wells combined. If so, for how long? We did see recordng breaking increases in US NG production starting n 1/1/07 due to the rapid increase in unconventional NG driling and, to a lesser extent, Deep Water GOM NG. But the previous decline rate of the old fields was relatively low. The new wells have had rapid decline rates. Perhaps collectively a 30% decline rate TODAY. But as the new wells decline the overall decline rate with become less. We'll end up back at the fairly predictable and lower decline rate we had before we saw the boom in UNG drilling.

IMO (based on 33 years working with NG production) we are not going to see such a high decline rate for an extended period. But the UNG drilling boom is over for the moment. We're dropping 15 of the 18 rigs we had running. And no plans to increase that number for at least a year. No more NG rate records will be broken for many years.

[copious.abundance]

The December US natural gas production numbers came out today, and in spite of a crashing economy coupled with crashing natural gas prices, the US not only produced a record amount of NG for the month of December, it produced an all-time record amount of NG for any month ever!

>>> US natural gas gross withdrawals, monthly <<<
Chart:


And since December is out, we now have a total for the year - a new record of over 26 Tcf.

>>> Yearly stats <<<
Chart


So far, Aubrey's lookin' pretty good with his prediction about the US being awash in natural gas.

[ROCKMAN]

OF2.

Your charts do a great job of highlighting what so many can't seem to grasp: time lag. Perthaps it's the 24 hour news cycle or the desire to be the first to sound an alarm. As the chart shows December numbers still show the positive results of the drilling boom. It will also carry over for the first part of 09. The run up in NG rates will obvious stop. I think I already mentioned a rough model I threw together. Even if the UNG play drilling falls 60% or 70% we're not going to see the cliff I once expected. The new wells will deliver good rates while the older wells go through their rapid decline phase for 2 or 3 years. I see more of a level rate from the UNG for 18 months or so and then steady but not so rapid decline rate. Several years down the road the UNG rate will be dominated by the many thousands of older wells which will then be declining at a relative low %. Individual well rates will be very low but collectively they represent a large stable base.

[copious.abundance]

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

Your charts do a great job of highlighting what so many can't seem to grasp: time lag. Perthaps it's the 24 hour news cycle or the desire to be the first to sound an alarm. As the chart shows December numbers still show the positive results of the drilling boom. It will also carry over for the first part of 09. The run up in NG rates will obvious stop. I think I already mentioned a rough model I threw together. Even if the UNG play drilling falls 60% or 70% we're not going to see the cliff I once expected. The new wells will deliver good rates while the older wells go through their rapid decline phase for 2 or 3 years. I see more of a level rate from the UNG for 18 months or so and then steady but not so rapid decline rate. Several years down the road the UNG rate will be dominated by the many thousands of older wells which will then be declining at a relative low %. Individual well rates will be very low but collectively they represent a large stable base.

[ROCKMAN]

OF2,

Not that every cycle repeats itself exactly I've lived through a few of these busts. and they just take longer then many think it will take. On top of that, we've just taken perhaps an unprecedented economic hit. Demand could recover in 18 months or 48 months...I won't even offer a guess.

[copious.abundance]

Here's my brilliant idea which will cause NG prices and drilling to go back up real fast: As part of his new energy policy, Obama should institute a what I've called a "20/20 by 2020" policy. The thrust of this policy would be to mandate that 20% of all gas stations nationwide have at least 1 NG filling pump, and a goal that 20% of all new vehicles sold are powered by CNG, all by the year 2020. That would give industry 11 years to do this, which I think is quite do-able.

Plus it makes a nice slogan.

[Maddog78]

Could $4 be the bottom?
I know many who think it could go to $3 or less, so we'll see.

$this->bbcode_second_pass_quote('', 'N')atural Gas Gains as Price at 6 Year-Year Low Attracts Buyers

By Reg Curren

Feb. 27 (Bloomberg) -- Natural gas rose for a second day in New York as the lowest prices in more than six years prompted speculators and utilities to make purchases.

Declining futures this year may be giving consumers and investors the chance to profit from storing gas now and selling it next winter. Gas fell to its lowest price since November 2002 after a Commerce Department report showed the U.S. economy contracted 6.2 percent in the fourth quarter, the biggest drop since 1982.

“From a valuation standpoint, people are going to start biting at these levels,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “If you’re a speculator, natural gas at $4 is a good buy. If you need to hedge it’s a good opportunity for end users.”

Natural gas for April delivery rose 15.9 cents, or 3.9 percent, to $4.236 per million British thermal units at 1:07 p.m. on the New York Mercantile Exchange. It earlier touched $3.916, the lowest price since Nov. 15, 2002. Gas futures have declined 4.3 percent this month and 25 percent in 2009.

Gas for delivery in January is 45 percent more expensive than gas for April use. About 30 percent of U.S. demand for the heating and industrial fuel comes from power generators.

The fuel is down 69 percent from a 2008 high of $13.694 per million Btu reached on July 2.

[rdsaltpower]

Chesapeake energy just bailed out of WV dropping 220 jobs in the process. A driller told me that he heard they only had one rig active in Wv.

[rdsaltpower]

Just a follow-up. Nisource energy just announced layoffs in Wv to over 100 jobs.Hmm

[copious.abundance]

Here's an interesting twist - the folks in Alaska are worried that all this shale gas being discovered in the Lower 48 will jeopardize their pipeline!

>>> LINK <<<
$this->bbcode_second_pass_quote('', '[')b]Lawmakers concerned shale gas could mean AK gas pipeline financing problems
Matthew Simon
Updated: 03/09/2009 07:49:03 PM AKDT

Lawmakers are raising concerns shale gas's rising Lower 48 popularity could put Alaska's natural gas pipeline in financial jeopardy. All the anxiety comes from information some lawmakers received on their recent trip to the nation's capitol.

"Probably the tricky part to us will be do they (pipeline developers) get the pipeline built to move their gas economically from one point to the other," said Rep. John Coghill, R-North Pole.

The tricky part appears to come from the natural gas shale rocks produce.

"There's been over 100-trillion cubic feet just in shale gas that's been found in the Lower 48 and they've got a developed infrastructure in the Lower 48," says Rep. Mark Neuman, R- Big Lake.

A new resource some house majority leaders say could lower demand for Alaska's natural gas and bring our pipeline's financial stability into question..

[...]

[copious.abundance]

Still more evidence the Haynesville is the best thing since sliced bread.

>>> Haynesville Shale producing extraordinary numbers <<<
$this->bbcode_second_pass_quote('', 'S')ome natural gas companies have decided to scale back drilling to ride out the economic storm.

But well results from the Haynesville Shale natural gas deposit have some of the major players there, like Petrohawk Energy Corp. and Chesapeake Energy, investing more money in the play.

"We've scaled back our overall budget, but not in the Haynesville," said Joan Dunlap, vice president of investor relations for Petrohawk.

Of Petrohawk's approximately $1 billion budget for 2009, between $700 million and $800 million is dedicated to the Haynesville Shale natural gas deposit.

There's a good reason for that investment.

According to the latest data from the Louisiana Department of Natural Resources, the top producing well for the month of December belongs to Petrohawk. The well, in Red River Parish, produced about 713.4 million cubic feet of natural gas that month. That translates to about 23 million cubic feet of natural gas per day.

It's not the only well producing extraordinary numbers.

[...]

[copious.abundance]

In case Maddog loses his Woodford shale job, Schlumberger's hiring in the Haynesville.

LINK
$this->bbcode_second_pass_quote('', '[')b]Schlumberger adding 400 jobs in northwestern La

SHREVEPORT, La. -- Schlumberger Ltd., the world's largest oil field services company, said Friday that it is expanding its operation in Shreveport to handle a major new natural gas find, bringing in 400 jobs to northwestern Louisiana.

The $48 million project will involve the expansion of Schlumberger's current facilities in the area by 250,000 square feet. Officials said the project, which will create 250 construction jobs, also will ensure the existing Schlumberger payroll in Shreveport of 120 jobs.

[...]

[copious.abundance]

Now CERA is saying the US is going to be awash in natural gas.

>>> LINK <<<
$this->bbcode_second_pass_quote('', 'M')arch 23, 2009
Technology Drives North American Gas Renaissance: New CERA Analysis
”Rising to the Challenge” Study Examines North American Gas Supply Outlook

CAMBRIDGE, Mass.--(BUSINESS WIRE)--North American natural gas is entering a new era in which supply is no longer constrained, according to a new Cambridge Energy Research Associates (CERA) multiclient study, Rising to the Challenge: A Study of North American Gas Supply to 2018. A revolution in technology has unlocked “unconventional” gas resources, dramatically changing the prospects for the market. Demand, rather than supply, will be the challenge for the market going forward, accentuated currently by the economic crisis.

In Rising to the Challenge, CERA, an IHS Inc. (NYSE: IHS) company, has developed its supply outlook based upon detailed analysis of gas fields and then tested it using its North American gas market modeling capabilities to provide a supply analysis at the play level that is integrated with CERA’s market outlook. The study concludes that the North American natural gas market can now be largely supplied by North American gas production.

The main driver of supply growth in the years ahead will undoubtedly be unconventional gas production, which has benefited disproportionately from technology. Domestic gas producers explored a variety of technologies to exploit the known unconventional resource base. The success of these efforts became evident in 2007-2008 when production in the lower 48 United States grew rapidly - from a 2007 low of 49.8 billion cubic feet per day (Bcf/d) in February to 56.7 Bcf/d in July 2008, an increase of 6.9 Bcf/d and almost 14 percent in just 17 months.

This achievement has been realized even as a painful recession has taken hold. Rising to the Challenge concludes that future North American gas production will be limited primarily by demand, which is falling sharply due to the global economic crisis. The market is struggling to absorb existing production – as reflected in the current price trend – rendering new drilling in higher cost areas uneconomic.

[...]

Given the increased productivity of unconventional wells, the study concludes that it is not necessary to increase drilling activity to maintain – or increase – production. After years of developing unconventional gas with its long-lived production, in the aggregate, the average decline rate will fall. This means, the study says, that a smaller quantity of new production is required to offset natural production declines. CERA does expect production to increase, with dry gas productive capacity growing from an average of 53.5 Bcf/d in 2009 to 60.6 Bcf/d in 2018 in the lower 48 United States, and from 15.8 Bcf/d in 2009 to 19.6 Bcf/d in 2018 in Canada.

[...]

[AirlinePilot]

OF,

Using CERA to make some sort of prognostication about a supply boom here in the US is all but garaunteed to have that premise fail. Where have you been for the last 5 years?

CERA is the laughing stock of the agency world. I do believe they are still only in business because they are the only agency who can produce data to fit the cornucopian outlooks needed for investment and capital generation plans.

[copious.abundance]

Except that CERA is not the only one saying the US will be (or already is) awash in natural gas. I can find you probably a half dozen, or more.

[kiwichick]

i have been following a Oz company working in the US shale

from their 1/2 year report the list of problems doesn't make pretty reading

however their share price is at a alltime low

ill keep watching it but there are lots of interesting co's out there

[copious.abundance]

Better tech isn't just unlocking vast amounts of shale gas, it's also unlocking vast amounts of deep conventional gas.

What a gas!

>>> Ze Link <<<
$this->bbcode_second_pass_quote('', '[')b]McMoran chief touts deepwater oil projects in Gulf
ALAN SAYRE, AP Business Writer
Published: Wednesday, March 25, 2009 at 6:36 p.m.

NEW ORLEANS — Natural gas produced from deep in the earth from the shallow-water shelf of the Gulf of Mexico could get to market years before energy is available from drilling in the depths of the region, an energy company head said Wednesday.

McMoRan Exploration Co., which has become a major player in "deep gas," is looking at regions on the shelf that could eventually produce trillions of cubic feet of natural gas if exploratory wells pan out, McMoRan co-chairman James Moffett said.

"That's going to be a new hunting ground for all of us," Moffett told investment analysts at the Howard Weil Energy Conference.

Earlier this week, CEOs of several energy companies said they believed that deepwater drilling was the future trend of the industry, especially in times of low commodity prices and reduced exploration budgets pushing plans more to the long-range view — hopefully after the current recession has ended.

But Moffett's company is focusing on "deep gas" leases, many of which were drilled, produced and abandoned years ago before drilling technologies made it possible to go deep into the shelf.

[...]

[Maddog78]

Good news for that area.
We need some.
Just got word this month that we are dropping from 12 to 8 rigs by Aug/Sept.
Could be worse I suppose but that's a bunch more unemployed roughnecks etc.

[copious.abundance]

Another new monthly production record set in January, and the 2nd-highest ever after December:
http://tonto.eia.doe.gov/dnav/ng/hist/n9010us2m.htm

We're awash in gas!