Thursday, July 5, 2012

Fast Pay-Out For Shale Wells

It looks like these wells have a fast pay-out, with the majority of revenue coming within the first five years of production.  That may not make everyone happy, but I think investors like it.  However, with such low current natural gas prices, most operators are just leaving the gas in the ground for the time being.
Peter

Production Profiles: Shale Play WellsJuly 2, 2012 | Energy Information Administration
The EIA Annual Energy Outlook 2012 report includes information about projected average production profiles for shale gas wells in major United States shale plays by years of operation.


Thanks to geology.com for the link.

Friday, June 29, 2012

Huge Economic Impact Of Eagle Ford Shale, Largely Unknown Outside Of Texas

Much of this development and its significant economic impact is due to the combination of the relatively new technologies of horizontal drilling and hydraulic fracturing.  Amazingly, the oil and gas industry derives very little positive recognition from these feats, including equally important oil and gas development plays like the Marcellus Shale in the northeastern U.S., the Barnett Shale in north central Texas, the Haynesville Shale in northwestern Louisiana, and the Bakken Formation development in North Dakota.

The environmental lobbyists and global warming scare-mongers have been so effective with their propaganda they have managed to effectively squelch these great achievments and largely hide them from the American public.  As some might say, "go figure", are they with America or against her?
Peter

Eagle Ford Shale Generated More Than $25 Billion in Revenue for South Texas in 2011

UTSA projects the shale to create 117,000 jobs by 2021

Source: http://ccbr.iedtexas.org/

Eagle Ford Shale Report Download
Click to Downlaod the Eagle Ford Shale Impact Report
Written by Christi Fish
Associate Director of Media Relations, The University of Texas at San Antonio

SAN ANTONIO, May 9, 2012 – Development of oil and natural gas in the Eagle Ford Shale contributed $25 billion in total economic output to the region in 2011, according to a study released today by the Center for Community and Business Research at The University of Texas at San Antonio Institute for Economic Development (UTSA).
"The Eagle Ford Shale has proven to be one of the most important economic engines in the state," said Dr. Thomas Tunstall, director of the UTSA Center for Community & Business Research, and the study’s principal investigator. "In 2011 alone, the play generated over $25 billion in revenue, supported 47,000 full-time jobs in the area, and provided $257 million in local government revenue."
The study also concluded that in 2011 shale development:
  • Paid $3.1 billion in salaries and benefits to workers;
  • Provided more than $12.6 billion in gross regional product;
  • Added more than $358 million in state revenues, including $120.4 million in severance taxes;
  • And spurred a triple-digit sales tax revenue increase in various local counties.
    Download the Eagle Ford Shale Impact Presentation
    Download the Eagle Ford Shale Impact Presentation
"We view the Eagle Ford activity as an economic opportunity of a lifetime," said Mario Hernandez, president of the San Antonio Economic Development Foundation. "The key goal is the increase in investment and jobs. And if the communities will partner with the private companies that are creating these jobs, it can be a win-win for everybody."
The increased revenue from the Eagle Ford Shale is rebuilding local communities. New schools and new hospitals are being built, and new training programs have been launched to maximize hiring from the local workforce. The study projects the creation of approximately 117,000 full-time jobs by 2021.
View the video recording of the Eagle Ford Shale Impact Presentation and Study Release from May 9, 2012

Thursday, June 14, 2012

HUGE Numbers For Apache..

67,000 drilling locations in Texas and Oklahoma alone!  That ought to keep a lot of people busy for a long time.  These so-called "resource plays", which are basically low porosity and permeability rocks containing oil and gas that become economic to produce because of the combined technologies of horizontal drilling and hydraulic fracturing. 

These are truly revolutionary developments in the history of the oil and gas industry.  It amazes me how few people are aware of the significance of this.  Try to grasp the magnitude of the numbers Apache is throwing around in the following article.  To say the least, it looks like "Peak Oil" has been pushed into the future.  Make your plans accordingly.
Peter

Apache Details Liquids-Rich Identified Resource Inventory

9.2 billion net barrels of oil equivalent, 67,000 drilling locations in Permian and Anadarko
New U.S. resource plays: 580,000 acres in Mississippian Lime, 300,000 acres in Williston Basin
48 Tcf net sales gas in British Columbia's Liard Basin

RELATED QUOTES

SymbolPriceChange
APA85.42+2.45
HOUSTON, June 14, 2012 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today released new, detailed resource estimates of its oil- and liquids-rich portfolio, including substantial Permian and Anadarko basin holdings, recently acquired acreage in the liquids-rich Mississippian Lime and Williston Basin resource plays, and significant new plays and oil exploration prospects in Canada, Argentina, Alaska and Kenya.
"For Apache, this is the time to drill more wells: We have captured a vast, liquids-rich resource base and drilling costs are declining," said G. Steven Farris, Apache's chairman and chief executive officer. "By remaining committed to Apache's historical focus on returns and preserving our conservative financial structure – which means living within our cash flow – our portfolio is positioned to continue to deliver long-term growth and value for our shareholders."
Resource estimates released Thursday at the company's annual investor day include:
  • Apache, the second-largest producer and acreage owner in the Permian Basin of West Texas and eastern New Mexico, has identified approximately 34,500 drillable locations with an estimated net resource of 3.8 billion barrels of oil equivalent (Boe).
  • In the Anadarko Basin in western Oklahoma and the Texas Panhandle, Apache has identified approximately 32,500 drillable locations primarily in the Granite Wash, Cleveland, Tonkawa and Marmaton formations with an estimated net resource of 5.4 billion Boe.
  • In northern British Columbia, Canada, Apache has validated an outstanding new shale play in the Liard Basin with net estimated sales gas of 48 trillion cubic feet of natural gas (8 billion Boe) across 430,000 acres held with a 100-percent working interest.
    The resource estimate at Liard is based on recent drilling, test results and earlier well control points. "The D-34-K well is one of the best shale wells we've seen in any play," Farris said. "Our analysis indicates that the formation characteristics are remarkably consistent across this large basin."
  • In Argentina, Apache estimated that its 450,000-acre position in the Vaca Muerta oil shale has a net potential recoverable resource of 800 million Boe.
New exploratory oil prospects include:
  • Apache has built a 580,000-acre (net) position in the Mississippian Lime play in Kansas and Nebraska with an inventory of 7,200 potential locations and an estimated resource potential of 2 billion barrels of oil.
  • Apache assembled a 300,000-acre position (net) in the Williston Basin in Daniels County, Montana, with more than 1,900 potential locations and potential resource of 1 billion barrels of oil.
  • In Alaska – where this year Apache plans to drill its first well – the company has identified 1.3 billion barrels of oil of yet-to-be-found potential.
  • In Block L-8 offshore Kenya, Apache has identified eight prospects with net potential of 1.4 billion barrels of oil. Apache expects to commence drilling its first well in the deepwater block in the third quarter.
"Apache has captured the largest inventory of liquids-rich drillable locations in our history, including additional upside potential from exploration activities in the deepwater Gulf of Mexico, Egypt and Australia," Farris said. "We are well-positioned to deliver long-term profitable growth with our balanced portfolio, focus on rate of return, and prudent financial structure."
About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com.

Wednesday, June 6, 2012

D-Day

"During the Second World War, the Germans took four years to build the Atlantic Wall. On four beaches it held up the Allies for about an hour; at Omaha it held up the U.S. for less than one day. The Atlantic Wall must therefore be regarded as one of the greatest blunders in military history." - Stephen Ambrose, D-Day, page 577

D-Day, Of Sand, Beaches, Rocks, Geology, And Men And Women Who Love Them

Such bittersweet memories.  On this day in 1944 the ground invasion of France and the long-awaited liberation of Europe began.  France would be freed of Nazi (socialist) domination forever, right?

But this is a tribute to those who sacrificed.  My own father Andy Smith, came across Omaha beach, not on D-Day, but later, as a young infantry Lieutenant with the 41st Armored Infantry Regiment, part of  the 2nd Armored Division.  His unit was the first to enter liberated Paris but a short time later, in August of 1944, the first into Germany, and stopped the German advance during the Battle of the Bulge.

And then there are bittersweet memories of (for me) beaches and sand, from Lake Michigan, to the Pacific, the Atlantic, the Gulf of Mexico, the Florida Keys, the Mediterranean.......so many beaches, so much sand, so little time.  But then there is geology, and the study of sand, and rocks.  No living sedimentary, stratigraphic, or sedimentology geologist will not have known, read, or studied with Dr. Earle McBride of the University of Texas, wonderfully highlighted in the following article.  Every geologist who has looked at sand grains under a microscope will appreciate and relate to the following story.

I owe so much to my father, Mr. McBride, sand, and geology.  As with the Earth, what goes around comes around, and life goes on.  The sun rises and the sun sets, the tide goes out and the tide comes in, and rocks tell the story to those who learn to listen.  Today let's say a quiet "thank you" and remember.
Peter

Tiny remnants of war found in Omaha Beach sand

 
2nd Armored Infantry Division Patch


Andy Smith, athlete, soldier, coach, teacher.... Redstone, Colorado, 1986


AUSTIN, Texas (Reuters) - When Texas geologist Earle McBride visited Omaha Beach in Normandy, France, in 1988, four decades after D-Day, the visible remnants of the Allied Forces' invasion there had long ago vanished.

But he and a colleague would later discover the history of the June 6, 1944, invasion of Normandy's beaches - which marked a turning point in World War Two - lingered in the sand in the form of tiny pieces of shrapnel only visible under a microscope.

It wasn't a discovery that McBride and colleague Dane Picard of Utah set out to make during their tourist visit to Omaha Beach, where U.S. forces suffered their greatest casualties in the assault against heavily fortified German defenses.

"We didn't think about, ‘Hey, there should be shrapnel here?'" said McBride, 80, a professor emeritus at the University of Texas who retired in 2005 but still goes to his office five hours a day to study rocks.

But the geologists did what long ago became their habit when they visit a beach anywhere in the world: they put a bit of sand in a plastic bag and took it home.

McBride didn't fully analyze the sample for more than two decades. Finally, in retirement, he made a slide of the sand by using blue-dyed epoxy to bind the grains together.

On a recent day in his tiny office at the Austin university where he taught for 46 years, McBride showed a visitor what he found. Under a microscope, rounded grains - quartz, feldspar, clam and oyster shells - were visible, along with jagged-edged grains.

"You see how angular that grain is?" he asked. "It's an anomaly - if it had the same origin and history, it should have been well-rounded, too."

A different light source on the microscope revealed that the jagged-edged grains had a metallic sheen and a rust-colored coating, and when McBride held a magnet to some of the sand, the angular grains proved to be magnetic.

McBride suspected the jagged grains were shrapnel, and he used a scanning electron microscope to verify his hunch. It showed the grains were iron with a bit of oxygen from rust.

He also found the sand included small spherical iron and glass beads, which he and Picard believe were formed by munitions explosions in the air and sand.
"It's a detective story," McBride said. "Sand has an exciting history."

He said it's not surprising that shrapnel was left on the beach. Rather the surprise is that it remained there decades later, long after the wrecked ships, tanks and aircraft were gone.

But the shrapnel won't be in the sand forever, he and Picard wrote in Earth Magazine last year.
"The combination of chemical corrosion and abrasion will likely destroy the grains in a century or so, leaving only the memorials and people's memories to recall the extent of devastation suffered by those directly engaged in World War II," they wrote.


The research by McBride and Picard - a professor emeritus at the University of Utah - was published in the September 2011 edition of The Sedimentary Record, a scholarly journal.
"It was a great approach," said Xavier Janson, a research scientist at the University of Texas and an editor of the Record. "It was using a geological tool that you usually use to understand where sand grains come from, but instead, it was used to understand what happened on this beach."

For McBride, the discovery is an example of why he still finds passion in his lifelong work studying sedimentary rocks, the ones most commonly found on the earth's surface.
The latest project on his desk is a 450-million-year-old rock from Utah roughly the size of a softball; he's trying to reconstruct the history of how it formed and where its grains originated.
The earth is old, McBride said, and "all I can do is work on one little chunk of the history of sandstones. As we say, so many rocks, so little time."

(Reporting By Corrie MacLaggan; Editing by Paul Thomasch and Eric Walsh)

Tuesday, June 5, 2012

Get In The Oil Business: Making Money From A Distance With The Bakken

I've been following Michael Filloon for a couple of years and he provides some very good, and I think accurate information.  I think that if you want to learn about the oil and gas business it helps to have "some skin in the game".......in other words, invest in the stock of some of these companies.  You WILL follow their ups and downs, and you will read the news, and pay more attention to political issues. 

Then if you're smart and get lucky, you might make some money.  For example, Brigham turned a nice profit when it was bought out by Statoil, and likewise when Petrohawk was acquired by BHP Billiton (?).

This is all a learning experience, for almost everyone.  I appreciate Mr. Filloon's analysis and commentary.
Peter

To read all of the following article, go here: http://seekingalpha.com/article/632641-bakken-update-continental-resources-well-results-are-getting-better?goback=%2Egde_156898_member_121215590

Michael Filloon picture
About the author: Michael Filloon
 
 
 

I have done a series of articles covering recent well results by Bakken operators. Information garnered from this shows improvements in 90-day IP rates. The main reasons are stimulation improvements from increase stages and proppant, but these companies are doing a better job in all phases of production. It wasn't long ago we were seeing 10 stage short laterals, and now long laterals with 30+ stages are common place. In my opinion, the two best operators are Kodiak (KOG) and Brigham (STO). It should be noted both have very good acreage positions as well. Kodiak's Polar and Koala prospects are its best, while Brigham's Alger Field acreage is thought by some to be the best in the Bakken. Whiting (WLL) has had some very good completions in Sanish Field, and has been the first to work the Pronghorn. Oasis (OAS) is getting much better, with significant upside in the Camp Field area.
Continental (CLR) may be the best way to follow the Bakken. It has a large acreage that covers a significant area in North Dakota and Montana. Because of this, it has well results in virtually every area of the Williston Basin. Here are its 4Q 2011 and 1Q 2012 well results.

Oil And Gas, The Kind Of Hope And Change America Needs Now

Jobs being created, money being earned, taxes being paid instead of tax dollars being spent, royalties and taxes filling state coffers, the entire emotional mood of the country becoming positive.......yes, all of those things are happening.  I believe American creativity (combining horizontal drilling and hydraulic fracturing of petroleum-bearing rocks), combined with industriousness and ambition, are proving America and its economy will not stay down.  That's who we are, what we are: fighters, survivors, competitors.

Ok, enough cheer leading, but what is happening in the oil and gas industry excites and pleases me.  The following articles just refer to the Marcellus Shale Play in the Appalachian Basin in the northeastern U.S.  There are many other such plays, some being developed, some not thought of yet.  I think things are looking up.  Let's keep it going.
Peter


June 4, 2012 | PERMALINK | @MarcellusGas

What They’re Saying: American Natural Gas
“Offers Hope in Hard Times”
 

Pittsburgh, Pa. – There is no question that the U.S., and global, economy continue to face historic challenges. In spite of the many ongoing economic recovery and job creation hurdles impacting countless families and businesses across the nation, the responsible development of clean-burning American natural gas remains a silver lining. Indeed, American natural gas is offering “hope in hard times” and is Building a Stronger, More Secure America. Here’s what they’re saying:

·         Fmr. Pa. Gov., Phila. Mayor and DNC Chairman Ed Rendell: This influx of jobs and investment spurred an unprecedented economic boom for our state and, thanks to a resource found right here in Pennsylvania, this economic revitalization continues. Cheap, clean, and abundant energy is available to heat our homes, fuel our cars and trucks, and power our state’s economy. It’s not a campaign slogan, it’s reality. … While improved air quality and savings at the pump are key advantages of natural-gas vehicles (NGVs), the most critical benefit is our increased economic, energy, and national security. America’s dependence on foreign oil puts our citizens and our economy in jeopardy. Year after year, as OPEC continues to raise the price of oil, we cannot afford to continue relying on unstable, undemocratic regimes to provide our energy. Natural gas offers a solution, an American solution, produced right here in Pennsylvania. … Despite these overwhelming benefits, there is a misunderstanding that residents must make a choice between protecting the environment and ensuring the dependable production of sufficient energy for power generation and transportation. This is a false choice. Pennsylvania can have both. … Natural gas can foster an economic, environmental, and security revitalization for our country and our state. (Philadelphia Inquirer op-ed, 6/3/12)



·         Pa. DEP Secretary Michael Krancer: Our ability to unlock the huge clean burning energy source contained in unconventional shale formations has transformed Pennsylvania into an energy exporter and will ultimately move our nation toward energy self-sufficiency. In addition, we are looking at an economic and energy transformation. We have already seen tens of thousands of new jobs here in Pennsylvania from the industry itself as well as from new industries spawned to support it. These are good paying career jobs in many fields. And that is just the start. There will be hundreds of thousands more good paying skilled and unskilled jobs in a variety of sectors. (Congressional testimony, 5/31/12)

·         “America’s Shale-Gas Revolution Offers Hope in Hard Times”: The story of America’s shale-gas revolution offers hope in hard times. … America’s shale-gas industry has since drilled 20,000 wells, created hundreds of thousands of jobs, directly and indirectly, and provided lots of cheap gas. This is a huge advantage to American industry and a relief to those who fret about American energy security. … America’s emissions have fallen by 450m tonnes in the past five years, more than any other country’s. (The Economist, 6/2/12)



·         “Shale Gas Boom Could Bring Manufacturing Jobs Back to U.S., Economists Say”: The shale gas boom hitting Ohio, Pennsylvania and several other states could provide a major advantage to manufacturers in the United States -- cheap energy that could significantly cut the costs to produce goods here, a group of economists said Thursday. "By 2025, the manufacturing sector alone could save $11.5 billion in energy costs," Robert McCutcheon, an economist with consulting group PwC, said at a manufacturing summit hosted by the Federal Reserve Bank of Cleveland. McCutcheon's company, formerly called PriceWaterhouseCoopers, released a study late last year predicting that as many as 1 million new U.S. manufacturing jobs could come from lower-cost energy. (Cleveland Plain Dealer, 6/1/12)



·         American Natural Gas Has Had an “Astonishing” Economic Impact, “Continues to Amaze”: America’s “unconventional” gas boom continues to amaze. … America’s gas boom confers a huge economic advantage. It has created hundreds of thousands of jobs, directly and indirectly. And it has rejuvenated several industries, including petrochemicals, where ethane produced from natural gas is a feedstock. … This is astonishing. Barely five years ago America was expected to be a big gas importer. Between 2000 and 2010 it built infrastructure to regasify over 100 billion cubic metres (bcm) of imported liquefied natural gas (LNG). Yet in 2011 American LNG imports were less than 20 bcm. … So long as well-shafts are properly sealed, there is hardly any risk that fracking will poison groundwater. (The Economist, 6/2/12)



·         Marcellus Shale Creating Blue-Collar Union Jobs in Western Pa.: Two skilled laborers toil around an automated pipe-cutting machine at Chapman Corp.’s new $6.6 million pipe fabrication shop, using laser precision technology that cuts the man-hours for a job from a full day to a half-hour. Nearby a custom-built “shake and bake” paint room allows the company to reduce the time it takes to paint pipelines for the Marcellus Shale natural gas industry from two days to eight hours or less, said Ron Delsandro, shop coordinator. “We can get that order out a day sooner,” Delsandro said Friday when the Washington-based company held an open house for the new shop, which is as long as two football fields. That’s how much of a demand there to meet the pipeline needs of the gas and oil industry, which is booming across Washington and Greene counties. (Washington Observer-Reporter, 6/1/12)



·         Clean-Burning Natural Gas Boosts Family Farmers: The oil and gas boom in western Pennsylvania has provided a much-needed infusion of capital to farmers in that area, members of the Tuscarawas County Farm Bureau learned during a trip to the Keystone State on Tuesday. “It’s had mostly a good impact,” said Steve Quillin, local Farm Bureau president. “Just driving around, we saw farmers making improvements and updates to their properties.” Money from oil and gas leases has allowed agriculture to expand, added Jerry Lahmers, chairman of the policy development committee for the organization. … The boom has benefited others beside farmers. Quillin said the owner of the restaurant where they ate lunch has seen his business triple in the past year.The oil and gas boom in western Pennsylvania has provided a much-needed infusion of capital to farmers in that area, members of the Tuscarawas County Farm Bureau learned during a trip to the Keystone State on Tuesday.“It’s had mostly a good impact,” said Steve Quillin, local Farm Bureau president. “Just driving around, we saw farmers making improvements and updates to their properties.” (New Philadelphia Times Reporter, 6/2/12)

·         American Natural Gas Creating Local Jobs: Low-cost natural gas also produces cheap fertilizer for farmers, thus lowering food prices, and feedstock for chemical plants, for cheaper plastics and other basic materials. Industries can now return to the United States and provide jobs locally. (Washington Times op-ed, 5/29/12)



·         “Phila. Gas Works Lowers Prices To Natural Gas Customers”: Good news for PGW natural gas customers: your monthly bill is going down. The Philadelphia Gas Works is lowering the price of natural gas by 2½ percent, and that should save the average customer more than $34 per year, according to spokesman Barry O’Sullivan. “Supply right now is abundant.” … O’Sullivan says this is the fifth quarter in a row without a rate increase, and compared to this time last year the average customer is paying $181 less for natural gas. (CBS Philly, 6/1/12)



·         More Natural Gas Jobs En Route to the Rust Belt: A natural-gas processing hub being developed in a partnership between Chesapeake Midstream Development, M3 Midstream and EV Energy Partners will be located on state Route 151 northwest of Scio, a North Township trustee has told Harrison County commissioners. ... The hub will receive and process natural-gas liquids, such as propane and butane, that are being extracted from Ohio’s Utica Shale. The facility is expected to be one of the largest of its kind in eastern Ohio and will create 50 to 125 jobs. (New Philadelphia Times Reporter, 6/1/12)



·         Building a Strong Local Workforce: Gas companies and the people who want to work for them packed the Wyoming County Fairgrounds Friday for the inaugural Business, Job and Gas Expo. The Wyoming County Chamber of Commerce has held annual job fairs for more than a decade and three years ago began hosting a yearly natural gas expo to connect local businesses and the emerging drilling industry, but this year’s fair was the first to unite the two concepts. … “When we’re looking for employees we are finding folks who are locals who have the skills,” said Helen Humphreys of gas-infrastructure company Williams. “As I look forward from two years ago there’s been a tremendous amount of collaboration between education and the industry.” (Times Leader, 6/2/12)


NOTE: Follow the Marcellus Shale Coalition (MSC) on Twitter (@MarcellusGas) and like us on Facebook for news about job-creating American natural gas development.