Monday, May 25, 2009

Optimism Over The Marcellus Shale

In these difficult times, it is encouraging to read some positive economic news. Here we have an example of people doing what Americans do best, using creativity, new technology, and persistance to produce a valuable product where none existed before.

In this case, people are producing large amounts of natural gas from a thick and widespread layer of rock called the Marcellus Shale in the northeastern United States. The Marcellus Shale has been known for over 100 years to contain gas, but it is only recently that operators have found a way to coax this gas out of the ground in enough volume to be of interest. And it is attracting a lot of interest. Search this blog for many more articles about the Marcellus Shale and how it is being developed.
Peter

Marcellus Shale results have National Fuel happy

NEWS BUSINESS REPORTER (source)

National Fuel Gas Co. executives said they are encouraged by the early results from a new well that the company and its joint venture partner drilled in a potentially lucrative region of Pennsylvania.

The new well, drilled as part of its joint venture with EOG Resources, is producing more than 3 million cubic feet of natural gas a day in its early days of production, National Fuel executives said.

That production rate is nearly nine times the initial production rate of the joint venture’s first well, which was drilled last year and yielded a disappointing gas flow because of an inefficient job fracturing the rock to release the gas.

In all, the joint venture has drilled and completed initial tests on four wells on land it controls in the Marcellus Shale in Pennsylvania. The latest well’s initial production is double the highest initial yield of any of the three other wells the joint venture has drilled.

“This flow test confirms our expectations for the potential of our Marcellus Shale position,” said Matthew D. Cabell, who runs National Fuel’s oil and natural gas drilling business.

National Fuel has drilling rights on 720,000 acres of land in northwestern Pennsylvania that covers the Marcellus Shale, a geological formation that many experts believe holds vast amounts of natural gas. That gas previously went untapped, until the launch of new drilling techniques that allow the well to be drilled vertically and then horizontally, unlike a traditional well that goes straight down.

Within two years, National Fuel believes the high-yielding Marcellus wells could produce between 30 million and 40 million cubic feet of gas per day. The joint venture is completing work on two other wells. National Fuel’s own drilling program in the region calls for 10 vertical wells and two to three horizontal wells to be drilled this year.

National Fuel also spending up to $30 million build a small-scale pipeline system that will run for about 30 miles through in Tioga and Lycoming counties in Pennsylvania to gather the gas produced at the new Marcellus wells and bring it to nearby higher-capacity pipelines that can access major U. S. markets.

Tuesday, May 19, 2009

Shale Gas Play In North Carolina?

(source)

Although North Carolina has no current oil or natural gas production, drilling methods developed in other states might be used to tap natural gas reservoirs beneath several North Carolina counties.

The U.S. Unconventional Shales Gas Rush

New methods of natural gas production are turning previously unproductive rock units across the United States into some of the largest natural gas reservoirs in North America. The Barnett Shale of Texas, the Marcellus Shale of the northeast, and the Haynesville Shale of Louisiana all went from relatively unproductive rock units to reservoirs hosting wells capable of yielding several million cubic feet of gas per day.

Natural gas companies are paying landowners above these reservoirs thousands of dollars per acre for temporary drilling rights. If gas is produced from their property they will also receive royalty payments - which could be thousands of dollars per year per acre for as long as the well is productive.

These successful gas plays have a few things in common: they are developed in deeply-buried, organic, low-permeability shales that were once marginal producers or unproductive. Today these shales are producing abundant quantities of natural gas through horizontal drilling and hydraulic fracturing.

Horizontal Wells and Fractured Reservoirs

Normal wells are drilled vertically down through the reservoir rock unit. If the reservoir is 100 feet thick then the well has a “pay zone” of 100 feet. However, if the well is drilled straight down, turned horizontal within the rock unit and drilled several thousand feet horizontally then the well has a pay zone of several thousand feet (see diagram at right). In other parts of the United States this drilling method is turning low-yield rock units into attractive reservoirs.

A well enhancement technique known as hydraulic fracturing is also being used in other states. It increases the permeability of the reservoir rock. After a horizontal well is drilled, water is pumped down the well to produce a very high pressure within the reservoir rock unit. This high pressure can fracture the rock, producing a fracture network drain natural gas from a large volume of rock and allow it to seep into the well.

Organic Shale In North Carolina

Rock units in the Dan River Basin and Deep River Basin of central North Carolina are potential candidates for the drilling methods used in other states (see location map at right). Each of these basins contains a sequence of sedimentary rock several thousand feet thick. The potential natural gas reservoirs in these basins are gray and black organic shales that are thought represent ancient lake sediments, deposited over 200 million years ago. The Cumnock Formation of the Deep River Basin and the Cow Branch Formation of the Dan River Basin both contain organic-rich shales that might yield commercial quantities of natural gas.

The Gas is Just One Piece of the Puzzle

If these rock units are able to yield abundant quantities of gas two more things will be needed to make them commercial: 1) nearby customers who are ready to buy a steady flow of gas; and, 2) a gas pipeline system that will collect the gas from the wells and transport it to consumers.

Although natural gas companies are normally the ones who drill wells, Universities, local governments and gas-consuming companies sometimes drill wells on their own property, consume the gas on-site or use it to generate electricity. They spend a few million dollars on the well and have a steady flow of gas that will last for years.

Will It Happen in North Carolina?

The new drilling methods could make North Carolina the newest gas-producing area in the United States. The United States Geological Survey and the North Carolina Geological Survey have done preliminary research that makes these shales look promising (see “Information Sources” box at right). Now it’s up to the gas companies and North Carolina entrepreneurs to investigate.

Last update of this article: May 15, 2009.






Information Sources

Friday, May 8, 2009

More Horizontal Drilling In South Texas

Some (for example Petrohawk) think the Cretaceous Eagle Ford Shale may be Texas' next big shale gas play. In typical fashion, a vertical well is first drilled, cored, logged and tested. The vertical well is used for control, or as a standard by which to evaluate horizontal wells drilled nearby. The vertical well can be re-entered, or offset and then a new well bore is "kicked-off" and drilled laterally, or horizontally into the most prospective-looking layers of shale, often as far as 4-5,000 feet.

"Horizontal" is actually an over-simplification. What the operators try to do is drill parallel to bedding so the well bore stays in the preferred stratigraphic interval. That may not always be as simple as it sounds. The trick is steering the drill bit while the well is drilling. And this is where the services the Dallas-based consulting company Horizontal Solutions International come in.

Once the well has been drilled, the well is cased and cemented. The data is evaluated and a frac treatment (hydraulic fracturing) is planned. The horizontal section is then perforated and selectively "fraced", usually in stages. Then the well is opened up tested and often produced at exceptionally high rates of gas flow. Imagine having 4,000 feet of perforations in your pay zone! "Old-time" geologists and engineers can only dream with envy at modern technology.

If you would like more information on steering a horizontal well, contact me at geo-pete@live.com.


Texas-South

By OGJ editors
HOUSTON, May 5 -- St. Mary Land & Exploration Co., Denver, is drilling the horizontal section of its first operated well targeting Cretaceous Eagle Ford shale.

The company cored the Eagle Ford in a vertical hole in the Maverick County well before plugging back and kicking off the lateral. It will run a microseismic study as it fracs the well.

The company plans to drill three more horizontal Eagle Ford wells later in 2009 and will continue participating with TXCO Resources Inc. and Anadarko Petroleum Corp. in the joint venture that targets the Pearsall and Eagle Ford shales.

Search For New Shale Gas Plays Continues

This is good news for the industry. It seems there are many, many places where gas-containing shales like this one in Utah can, and should be tested. I hope this is successful. I wonder how many geologists are going back through old mud logs and looking at gas shows detected while drilling through shales? I wonder how many of these old mud logs are preserved and accessible?
Peter


Barrett probing two eastern Utah gas shales
By OGJ editors
HOUSTON, May 6 -- Bill Barrett Corp., Denver, expects to learn the outcome by mid-2009 at a horizontal well spud late in the first quarter of 2009 seeking gas in Upper Mississippian Manning Canyon shale at 8,000 ft true vertical depth.

The prospect lies in northern Emery County southeast of Price, Utah, along the San Rafael Swell on the Uinta basin southwestern flank. Numerous wells as far west as Drunkards Wash coalbed methane field in Carbon County have had gas shows in Manning Canyon.

The horizontal well offsets an initial vertical well drilled in 2008 that indicated good gas shows and high gas content in core. Bill Barrett holds 50% working interest in the deep prospect.

The company has also drilled two vertical wells to 3,900 ft in the fractured Juana Lopez shale member of the Upper Cretaceous Mancos formation, in which it has 100% working interest. It plans to complete testing those wells in 2010.

Wednesday, May 6, 2009

Abundant New Reserves Of Natural Gas

Surely, this can only be good for America and our economy. The challenge is to get it out of the ground in the most efficient way possible.
Peter

Discovered: 200 trillion cubic feet of natural gas

James Lewis
Good news for America undermines the green energy agenda. The Wall Street Journal reports a huge new discovery of natural gas --- a fossil fuel so clean even liberals can stand it.

"CADDO PARISH, La. -- A massive natural-gas discovery here in northern Louisiana heralds a big shift in the nation's energy landscape. After an era of declining production, the U.S. is now swimming in natural gas."

"Even conservative estimates suggest the Louisiana discovery -- known as the Haynesville Shale, for the dense rock formation that contains the gas -- could hold some 200 trillion cubic feet of natural gas. That's the equivalent of 33 billion barrels of oil, or 18 years' worth of current U.S. oil production. Some industry executives think the field could be several times that size.

... Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand."

Good news, right? It's good for consumers, it's good for the country and the economy, and it's good for the world's resources. It's a great compliment to those who have worked hard for the technical advances that made this discovery possible. It shows (again!) that better exploration techniques pay off in huge new discoveries. A dollar invested in natural gas exploration pays off a heck of a lot more than the same dollar in Green Fantasyland.

But ... it's bad for the Fear Industry ... it's bad for our media airheads, who have to think of whole new scare headlines ... it's bad for the Green Doom Brigade ... it's bad for that brilliant new all-electrical vehicle ... it's terrible for Governor Arnie's vision of a Hydrogen Economy for California ... and it's very upsetting to all the suckers who have fallen for the global warming scam.

Bottom line: Good for real people, bad for Greenophobiacs.

I'll take that tradeoff.

Page Printed from: http://www.americanthinker.com/blog/2009/05/discovered_200_trillion_cubic.html at May 07, 2009 - 02:32:09 AM EDT

Tuesday, May 5, 2009

The Numbers On Coal And Natural Gas

If the use of coal for electrical power generation is banned or heavily taxed, companies will have to use increasingly more "clean-burning" natural gas. More demand for gas will inevitably drive up the price of gas and hence the cost of electricity. This may drive energy hungry industry overseas. The same researchers say the demand for energy will increase, no matter what we do. They also say the obvious, that reducing the use of coal can not have much of an effect on global warming. They also can not see the electrical energy shortfall being made-up by solar and wind energy.
So my question is, what are we doing? Limiting coal derived energy will be good for natural gas producers, but will it be good for America? See the following article published in Science Magazine and found (Here online).

Peter


"Although coal-fired plants produce a lot of carbon dioxide, banning them alone won't curb climate change". Photo credit USGS.





Friday, May 1, 2009

Haynesville Shale Makes The Wall Street Journal

Articles like this about the Haynesville Shale Gas Play and others like it around the country ought to attract investor's interest. Natural gas is "clean" energy we can use right now. The technology is proven and most of the infrastructure is in place.

It takes a decade or more to build a nuclear power plant. It will take millions of acres and irrationaly large investments to install wind turbines and solar arrays to generate the energy we need; and the sun doesn't always shine and the wind doesn't always blow. However, now we're learning we have an abundant supply of a proven source of energy right here in America in the form of shale gas. Let's go get it now.

Peter

U.S. Gas Fields Go From Bust to Boom

CADDO PARISH, La. -- A massive natural-gas discovery here in northern Louisiana heralds a big shift in the nation's energy landscape. After an era of declining production, the U.S. is now swimming in natural gas.

Even conservative estimates suggest the Louisiana discovery -- known as the Haynesville Shale, for the dense rock formation that contains the gas -- could hold some 200 trillion cubic feet of natural gas. That's the equivalent of 33 billion barrels of oil, or 18 years' worth of current U.S. oil production. Some industry executives think the field could be several times that size.

"There's no dry hole here," says Joan Dunlap, vice president of Petrohawk Energy Corp., standing beside a drilling rig near a former Shreveport amusement park.

From Rock to Gas

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Jared Moossy/Redux

Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.

The discoveries have spurred energy experts and policy makers to start looking to natural gas in their pursuit of a wide range of goals: easing the impact of energy-price spikes, reducing dependence on foreign oil, lowering "greenhouse gas" emissions and speeding the transition to renewable fuels.

A climate-change bill being pushed by President Barack Obama could boost reliance on natural gas. The bill, which could emerge from the House Energy and Commerce Committee in May, is expected to set aggressive targets for reducing emissions of carbon dioxide, the most prevalent man-made greenhouse gas.

Meeting such goals would require quickly moving away from coal-fired power plants, which account for substantial carbon emissions. President Obama wants the U.S. to rely more on renewable energy such as wind and solar power, but those technologies aren't ready to shoulder more than a fraction of the nation's energy burden. Advocates for natural gas argue that the fuel, which is cleaner than coal, would be a logical quick fix. In addition, billionaire energy investor T. Boone Pickens has been touting natural gas as an alternative to gasoline and diesel for cars and trucks.

"The availability of natural-gas generation enables us to be much more courageous in charting a transition to a low-carbon economy," says Jason Grumet, executive director of the National Commission on Energy Policy, who was a senior adviser to President Obama during the campaign.

Just three years ago, the conventional wisdom was that U.S. natural-gas production was facing permanent decline. U.S. policy makers were resigned to the idea that the country would have to rely more on foreign imports to supply the fuel that heats half of American homes, generates one-fifth of the nation's electricity, and is a key component in plastics, chemicals and fertilizer.

[U.S. Gas Fields Go From Bust to Boom]

But new technologies and a drilling boom have helped production rise 11% in the past two years. Now there's a glut, which has driven prices down to a six-year low and prompted producers to temporarily cut back drilling and search for new demand.

The natural-gas discoveries come as oil has become harder to find and more expensive to produce. The U.S. is increasingly reliant on supplies imported from the Middle East and other politically unstable regions. In contrast, 98% of the natural gas consumed in the U.S. is produced in North America.

Coal remains plentiful in the U.S., but is likely to face new restrictions. To produce the same amount of energy, burning gas emits about half as much carbon dioxide as burning coal.

Natural gas has never played more than a supporting role in the nation's energy supply. Crude oil, refined into gasoline or diesel, fuels nearly all U.S. cars or trucks. Coal is the dominant fuel for generating electricity.

Natural-gas production in the U.S. peaked in the early 1970s, then fell for a decade due to weak prices and declining gas fields in Texas, Louisiana and elsewhere. Production bounced back in the 1990s with the discovery of new fields in New Mexico and Wyoming, but by 2002, output was falling again -- this time, most experts thought, for good. Believing the U.S. would soon need to import liquefied natural gas from overseas, companies such as ConocoPhillips, El Paso Corp. and Cheniere Energy Inc. spent billions on terminals, pipelines and storage facilities.

The supply fears drove up prices, which spurred innovation. Oil-and-gas companies had known for decades that there was gas trapped in shale, a nonporous rock common in much of the U.S. but considered too dense to produce much gas.

In the 1980s, Texas oilman George Mitchell began trying to produce gas from a formation near Fort Worth, Texas, known as the Barnett Shale. He pumped millions of gallons of water at high pressure down the well, cracking open the rock and allowing gas to flow to the surface.

Oklahoma City-based Devon Energy Corp. bought Mr. Mitchell's company in 2002. It combined his methods with a technique for drilling straight down to gas-bearing rock, then turning horizontally to stay within the formation. Devon's first horizontal wells produced about three times as much gas as traditional vertical wells.

The development of the Barnett Shale almost single-handedly reversed the decline in U.S. natural-gas production. Last year, the Barnett produced four billion cubic feet of gas a day, making it the largest field in the U.S. Other companies such as Newfield Exploration Co., Southwestern Energy Co. and Range Resources Corp. found shale fields across the U.S.

One of the most aggressive companies was Oklahoma City-based Chesapeake Energy Corp., which got into the Barnett a couple of years behind cross-town rival Devon, and was an early entrant into the second big U.S. field, the Fayetteville Shale in Arkansas. In 2005, Chesapeake Chief Executive Aubrey McClendon sent teams of geologists across the country with a mission: Find the next Barnett. Less than two years later, they told him they had it, in Louisiana.

[U.S. Gas Fields Go From Bust to Boom]

The Haynesville Shale is centered in northern Louisiana, one of the country's oldest oil- and gas-producing regions. Wildcatters had explored beneath the lush cow pastures and cotton fields as far back as the 1870s. Shreveport, the region's largest city, saw decades of booms and busts until the 1980s, when a glut of cheap oil from overseas all but killed the region's oil industry.

Oil companies knew about the Haynesville Shale, but it was considered a less viable prospect than the Barnett. The shale lies 10,000 or more feet below ground, where high pressure and 300-degree temperatures are enough to fry high-tech drilling equipment.

But in 2006, Chesapeake drilled an exploratory well and decided the results were promising enough to justify the higher cost of drilling in such harsh conditions. By late 2007, Mr. McClendon says, "we knew that we had a tiger by the tail."

In March 2008, as oil and gas prices were soaring, Chesapeake went public with its findings. The rush was on: Dozens of companies dispatched agents to the area to lease land for drilling, turning farmers and ranchers into millionaires overnight.

"There was excitement in the air," recalls Jeffrey Wellborn, a Shreveport resident who sits on the board of the local Sierra Club. "You thought everyone in the world had won the lottery."

The frenzy marked the peak of a nationwide drilling boom that was fueled by a combination of soaring energy prices and easy credit. It didn't last. Between July and October, oil and gas prices fell by more than 50%, and kept falling.

The weakening economy eroded demand for both oil and gas. Natural gas, unlike oil, suffered from a supply glut. U.S. gas production rose 7.2% last year, while oil production fell 1.9%. As a result, oil prices are up 12% since the start of 2009. Natural-gas prices have fallen 41% to their lowest since 2002.

Gas producers saw their profits evaporate and share prices slump. Liquefied-natural-gas imports plunged, leaving import terminals nearly idle. Worried about a glut, companies cut back sharply on drilling and formed a lobbying group to try to boost demand.

The growing supply created opportunities for policy makers and environmentalists, who saw natural gas as a possible solution to the nation's energy problems. Some groups suggested burning more gas and less coal for power generation. Others favor its use in vehicles.

Mr. Pickens has spent millions promoting an energy plan that aims to, among other things, convert thousands of big-rig trucks to run on natural gas. Mr. Pickens has large investments in natural gas and stands to benefit if his plan is adopted. In TV ads, Internet videos and speeches, he emphasizes a different goal: reducing U.S. dependence on foreign oil.

Mr. Pickens arrived for a recent speech in Dallas in a natural-gas-fueled Honda Civic with a bright blue "Pickens Plan" logo. He told a packed auditorium that the U.S. is importing two-thirds of its oil even as the country is "absolutely overwhelmed with natural gas." If the reverse were true, he said, he would favor burning oil.

Some environmentalists have embraced Mr. Pickens's plan as a way to fight climate change. Carl Pope, executive director of the Sierra Club, says he sees natural gas as a "bridge fuel" that could help the U.S. burn less coal and oil until renewable sources of energy are ready to take over.

The dual message of energy security and environmental responsibility has helped Mr. Pickens win powerful allies, including Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and dozens of elected officials from both parties. A bipartisan bill providing tax incentives for natural-gas cars looks likely to pass this year.

Not everyone shares Mr. Pickens's enthusiasm for natural-gas vehicles. Major users of natural gas, such as utilities and chemicals companies, are concerned the plan would drive up prices -- an outcome that would benefit producers.

Energy Secretary Steven Chu and some other policy makers have expressed doubts about the practicality of retrofitting hundreds of thousands of service stations to offer natural gas. Some environmental groups, including the Natural Resources Defense Council, have argued that natural gas is better used to replace coal for power generation, and that cars should run on electricity generated by the sun, wind and natural gas.

Market forces are already helping natural gas make inroads against coal and oil. Gas is now cheaper than coal in many parts of the country, leading utilities to burn more gas. Of the 372 power plants expected to be built in the U.S. over the next three years, 206 will be fired by gas and just 31 by coal, according to the Energy Information Administration.

Natural gas is gaining market share far more slowly in transportation. Earlier this year, AT&T announced it would convert up to 20% of its truck fleet to run on natural gas, largely because it has been cheaper than gasoline in recent years. Cities including New York, Los Angeles and Atlanta have converted part of their bus fleets to run on natural gas, for air-quality reasons.

Shreveport could be the next city to make the switch. In March, Mayor Cedric Glover announced that the oil capital turned natural-gas boomtown would abandon diesel and convert its bus fleet to natural gas.

BakerHughes Rig Count Map

The following link takes you to a BakerHughes web site where you can view an interactive map showing the location of all wells being drilled in North America, mainly the lower 48 United States. Apparently they don't track Canadian activity.

What is most interesting is the map allows a viewer to differentiate between vertical, directional, and horizontal wells. You can also see oil wells, gas wells, geothermal wells and many other parameters. At the moment 78% of all wells being drilled are looking for gas, 21% for oil, and only 1% for geothermal. Of all the wells being drilled, 40% are horizontal! 385 out of 955 wells being drilled are horizontal. Obviously horizontal drilling is not some kind of short-lived fad.

It seems to me there is a large need for the "steering" of these horizontal wells. Interpreting the data, or logs coming from a horizontally drilling well is very different from that of a traditional vertical well. That is where us few interpreters come in. Contact me if you want to learn more or if you have any comments.
Peter

Here is the BakerHughes link: http://gis.bakerhughesdirect.com/RigCounts/default2.aspx