Replies to This Discussion

Permalink Reply by Robert Duke on June 24, 2011 at 5:35

So, I think there was an earlier conversation on CNG vehicles (roughly 6 months ago) in which someone said that they had a truck rigged to be essentially instantaneously switched back and forth from gasoline to CNG.  This seems the no-brainer solution to me, if it is technically easy.  Why isn't someone in Detroit, or somewhere, thinking of offering something like that?  If it were part of a production car, and the actual production costs are low, seems it could be a relatively cheap add-on that would give a competitive edge to whoever manufactured the car, and ease the transition to more use of CNG (I would choose that option in a heartbeat myself, say in an F-150).  It would also be nice though, if home refueling stations didn't cost thousands of $...

• ▶ Reply

Permalink Reply by Les Bamburg on June 24, 2011 at 12:57

PG, the cost of NGV's are not substantially more than gasoline vehicles and can payout with the cheaper fuel price.  Of course price difference may decrease if the public begins buying in larger numbers. 

 

Some companies are already building CNG fueling stations but the growth of these stations will only increase at a rate to match the sales of NGV's to the buying public.  That is the nature of a free market economy - the consumer controls and dictates what gets built.  Gasoline stations didn't spring up over night and only got built as the public began buying automobiles.

• ▶ Reply

Permalink Reply by dbob on June 22, 2011 at 3:10

I would guess $6/mcf to develop much of the current area HBP, and signs of stable or increasing prices to prompt step-out drilling and new leasing. Cotton Valley is more attractive right now due to condensate and wetter gas, so I think you might see some step-out drilling that targets Cotton valley but also gets at the Haynesville Bossier when there is a vertical Pugh clause.

• ▶ Reply

Permalink Reply by w.r. frank on June 22, 2011 at 16:58

I think you mean when there is NOT a vertical Pugh clause. If there is a typical Pugh (100' below deepest production), a CV will not hold Haynesville or Bossier.

• ▶ Reply

Permalink Reply by DJG on June 24, 2011 at 2:37

Hey Frank,

 

There are actually 2 Cotton Valley formations.    Upper Cotton Valley is above HA/BO, but the Lower Cotton Valley (Limestone) is directly below the Haynesville.    By drilling the Lower CVL, the Haynesville and Bossier would also be held whether or not there is a typical Pugh clause as those formations lay above the CVL.

 

• ▶ Reply

Permalink Reply by Cliff Billingsley on June 22, 2011 at 9:06

My experience working in the industry for quite a few years is that wet gas is usually not sold that way at the well head.  It is usually "flashed" or if it is wet enough run through a gas plant where the liquids are removed.  These are sold separately and reported separately from the dry gas sale on the operating statement.  Removal of liquids usually does affect the BTU value of the gas but wet gas is valuable only if you have a means of stripping out the liquids.  I do not believe pipelines want to move wet gas as it really messes up the pipeline and requires them to run pigs quite often to keep it clean.

• ▶ Reply

Permalink Reply by king john on June 23, 2011 at 2:16

cliff,

upon first read, i interpreted the excerpt the same way and was thinking my monthly statements seperate the liqueds from the gas.

however, this article is talking about  liquids other than oil, namely butane and propane. i don't have any experience with royalty being paid on these components. if memory serves me correctly, there is a separate code on the pay stub indicating the pay from the different products such as these.

BTW- good morning everyone !

kj

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on June 23, 2011 at 2:21

Morning, kj.  The fact that "wet" gas was of greater value than the "dry" variety has come up often in discussions of the economic dynamics that drive development activity.  This was the first article that I have run across that stated an actual price difference.  Even though the article is using the prices for the  Woodford Shale Play (Oklahoma), I thought it would help some of the members better understand why their "dry" Haynesville/Bossier Shale gas was now in less demand. 

• ▶ Reply

Permalink Reply by Clyde T. Williams on June 24, 2011 at 12:39

Been following this thread and others for a while...thought I would drop in on this one...

Earlier discussion regarding gas prices - why so low??- LA/TX gas has to compete with PA/NY, etc. gas for the power companies at points of delivery...check the cost of piping 1Tcuft of gas to NY vs getting it from Penn.

If fact, the PA/NY shale gas is wet enough that some of the Majors are planning petrochem plants to use the condensates/LPG as feedstocks in PA.

TX/LA probably have enough oil associated gas for their petrochem so the fenceline prices of condensate from gas prodcution can't compete with the oil-assoc condensates...also plants and pipelines are already in place for oil-assoc gas...

Sorry, I would think that as the article said the only way to get LA/TX gas prices up is to do LNG and get the LPG/Condensates out and maybe ship them out..

 

If the LA/TX gas prices go up to $6+mmbtu then for sure that would simulate alot of gas drilling in PA/NY/OH, NSDK, CA, and several other locations which are close to users and peipline hubs

 

In CA, some E&P people are moving on the Monterey/Puente and Cretaceous shales because of the same factors that drove the NY/PA drillers...cost of gas, cost/availability of transmission pipelines, and location of big power plants - even NMx/Ariz I start drilling at $7and displacing their caol fuelled at Navajo CFPP.

 

Welcome to O&G economics...keep looking for LNG liquefaction plants and get the PChem plants going - $$$$$$$

Tom Wms., retired geologist, work in Dubai/UAE/Iran

• ▶ Reply

Permalink Reply by Aubrey C. Sanders, Jr. on June 23, 2011 at 12:25

king john,

The statments I recieve list 3 products: Condensate (C), Liquids (L),, and Residue (R) which is natural

gas.  Prices i recieved today were  C @ $107, L@ $1.57, R @ $3.96. interestingly about 41% of check was for liquids.

• ▶ Reply

Permalink Reply by Les Bamburg on June 23, 2011 at 15:17

KJ, the value of natural gas liquids (NGL's) is generally incorporated into the natural gas price if included in the royalty calculation. 

• ▶ Reply

Permalink Reply by dbob on June 24, 2011 at 15:34

To all:

 

A point of clarification - when I referenced the pugh clause it was simply to suggest that the operator will choose whatever option holds the lease with the least expense.  With a verticak pugh clause, as noted, you gotta go deeper.  

 

That said, I'm more optimistic long term than many of the folks here.  Natural gas has several things going for it but it takes time to develop.

 

 First, low prices right now help companies build out their fleet fueling infrastructure.  Although not directly applicable to either home fill, or rapid fill gas stations, the build out of this infrastructure helps give car designers real NG fueled vehicles to work with, mechanics some background in how the systems differ from gasoline powered, and engineers a chance to work out the bugs in refueling systems.  Natural gas prices need to stay low relative to diesel and gasoline to keep this progress moving.  Although not specifically mentioned, beyond price, NG has one important characteristic over gas and diesel - It doesn't require investment in new refineries to bring it to market. 

 

Next up is the export market - Here we need compression to liquify the gas, and federal approval to do it.  This will be an important market in the coming years, but certainly won't help drilling/leasing activity right now.  I think the projection is exporting upto 3% of NG production, which would be meaningful in terms of price support, and in helping some of our allies be less dependent on hostile sources of hydrocarbons  

 

The next leg is power generation.  More specifically, the regulations for the near term are going to favor retiring coal fire power plants and building new NG capacity.  The push for renewables helps this even more due to the need for baseload support of wind and solar.  Add the potential for carbon taxes, which strongly favor NG over coal, and I think the future is bright.

 

 

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page