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Permalink Reply by Two Dogs, Pirate on October 23, 2008 at 14:15

The NG bomb will hit when we get the circus clowns get out of our way. This country has had enough of the Barney Franks, lets get on the road to energy independence. To bomb Washington DC with letters stating that our NG reserves are there and we want to drill them and we want cars that run on NG would be the first thing to do. Most in this country have no clue as to what we are sitting on.

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Permalink Reply by Snake Stewart on October 23, 2008 at 14:42

Randy ,
I truely feel that you have stated the most ominous of reasons why " Un-Natural Gas" prices have fallen. Every time it becomes a real reasonable idea to seek alternative sources of energy, OPEC finds a way to make gas more affordable and the alternatives less attractive. Fortunately for us , they are on the downhill side of production and there isnt as much that they can do long term to affect us like that anymore.Oil has reached its peak and started the other way. That is one of the reasons that Russia is positioning herself with Iran and Qtar to start trying to control this market. If we dont move quickly, we will lose in the long run.Our continent may be o.k. for a while, until China starts cashing in her tickets for our natural gas, but our friends and allies overseas will suffer a much tremendously.

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Permalink Reply by Ouiser on October 22, 2008 at 11:26

Interesting. XTO leased some family land back in June. All paperwork has been signed but they have yet to see a check. This is in the Wallace/pelican area.

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Permalink Reply by SharonB T18N R15W S8 on October 23, 2008 at 10:21

Yep Dena - I think you're right. The letters are a good scare tactic.

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Permalink Reply by Ginger Fife on October 23, 2008 at 10:58

This whole shale thing has been nothing but an emotional roller coaster ride for some people. You have the rumors of the shale, then its for real, the feeding freenzy, people lease, people waiting to lease, now leases on hold, deals being cancelled so what is next? I have land that has never been leased, i can deal with that right now because i know probably in the future sometime maybe its going to come back. Look at all those people who have dealt with this and waited and finally got a deal on their land only to have the gas companys back out on the deal. What a let down for those people, i really feel sorry for them who went thru all that & now not going to get nothing & not knowing when it will of if it will ever come back. For some it could have meant college for their children, paying off their debts, being able to take a vacation they never was able to do. Just knowing their financial future would be secured & maybe planning an early retirement---what a let down! I am glad i am in a place where i am right now and don't get me wrong, i too wished i had of been one of the lucky ones to lease my land, but it is better to never have something, then to have it and it be taken away.
I am just going to forget all about the shale and not let it consume so much of my time anymore, if it happens, it happens.

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Permalink Reply by Snake Stewart on October 23, 2008 at 11:32

Good post Ms. Ginger. It will be back soon.The ones that can sit back and relax will benefit the greatest. Good luck to you and yours.

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Permalink Reply by Charles Bowman on October 23, 2008 at 15:59

I happen to be a land owner in northeast louisiana and have been reading about the problems associated with companies backing out of deals after signing contracts while the title search is being performed. In my humble opinion I beleive I would have been negotiating these transactions and signing the contracts in my attorneys presence. I think it would be worth a few thousand dollars to have my own title search performed and be represented by an oil and gas attorney in this situation. Every time I have sold property I have provided the buyer with a guarantee of clear title and left the closing with a certified check. If you had an attorney it would seem to me that he did not fully represent you as his client and you may want to consider civil action against him for your losses and his malpractice. That should get the unqualified attorneys out of the mineral leasing business.

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Permalink Reply by Henry on October 23, 2008 at 22:52

In retrospect, you are obviously right. Hindsight is 20/20. However, leases have been done this way forever, and companies had, in the past, honored their commitments. None of us saw this coming.

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Permalink Reply by Sue on October 27, 2008 at 9:51

As the Barnett Shale's production peaks, economic factors weigh heavily on its future

10:47 PM CDT on Saturday, October 25, 2008

By ELIZABETH SOUDER and MARICE RICHTER / The Dallas Morning News
esouder@dallasnews.com
mrichter@dallasnews.com

The party in the Barnett Shale is winding down.

With natural gas prices half what they were earlier this year, production companies called a cease-fire in the bidding war for land leases, and some are rolling their drilling rigs to newer, hotter fields elsewhere.

"We had an unprecedented and phenomenal run-up in gas prices, which I think led to a lot of exuberance, particularly in the Barnett Shale," said Roy Patton, senior vice president of commercial operations for the pipeline company Energy Transfer Partners.

"Is it winding down from the exuberant place it was last year? Yes."

For North Texas, this means one of the region's important buffers against a national recession has thinned. Lower natural gas prices mean smaller royalty checks, shrunken leasing bonuses and fewer rigs, leading to smaller tax receipts and fewer jobs.

The tight credit market, ugly economy and reduced fuel prices come just as the Barnett Shale approaches its production peak. Even if the economy hadn't tanked, the field probably only has a couple of more years of production growth before the flow of fuel begins to peter out.

"I think perhaps by the first quarter of 2009, if oil and gas prices continue at the current level, or certainly if they decline, I think companies are going to pull back a bit," said Texas Railroad Commissioner Victor Carrillo. "But that doesn't mean they're going to abandon the Barnett."

The rich natural gas field will continue producing for many years, only at lower rates.

And growth could return. A cold winter might boost natural gas prices high enough to reignite the leasing frenzy.
Engineers could invent new technology to significantly boost the amount of natural gas that producers can squeeze from the hard underground shale rock, lengthening the life of the Barnett field.

"I don't think the party is over," said University of North Texas economist Bud Weinstein.

The bidding war to lease land for drilling has collapsed.
On Oct. 14, Vantage Energy sent a stunning letter to homeowners in southwest Fort Worth. The company halted its record bonus offer of $27,500 per acre. Those who already signed the deal still get the cash. Everybody else is out of luck.

"It really is a function of just the current energy market, the current credit market, equity market," said Vantage vice president John Wehrle.

Representatives of the Southwest Fort Worth Alliance, a coalition of 25 neighborhood groups representing more than 8,000 acres and 24,000 property owners, had spent more than a year negotiating the deal with Vantage. About 4,000 property owners had signed before Vantage nuked it.
"There are a lot of unhappy, disappointed people," said Tolli Thomas, chairwoman of the alliance.


Yanked offers

Suddenly, producers across the Barnett were yanking their generous offers.

"The procrastinators and stragglers lost out," said Bryan Wang, a resident of the Timarron neighborhood in Southlake. The group had negotiated a $24,000 per acre signing bonus with XTO Energy Inc. That deal is also dead.
Chesapeake Energy Corp., the second-largest producer in North Texas, called a truce earlier this month. The Oklahoma City company backed off its strategy to aggressively gobble up land leases.

Chesapeake had boosted its bonus offers above $25,000 an acre. Now "$5,000 would probably be a maximum," said Julie Wilson, vice president of corporate development in Texas.
"Those upfront payments got so out of hand because of the competitive pressure between the companies to sign leases and the high price of natural gas," said Ed Ireland, executive director of the Barnett Shale Energy Education Council, an organizat

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Permalink Reply by Dorcheated A1 on October 27, 2008 at 10:07

Thanks Sue for the informative post.

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Permalink Reply by Sue on October 27, 2008 at 10:49

an organization founded by eight gas companies to provide public information about natural gas drilling in the Barnett Shale.

Chesapeake, a member of the council, leases aggressively because, as chief executive Aubrey McClendon has said, leasing is cheap compared with the millions it costs to drill a well.

But the company had been relying on loans to pay for some of its leasing. No more. Earlier this month, Chesapeake tightened its budget and will live within its means.

On top of the global economic troubles, Chesapeake faces neighborhood protests and new restrictions on urban drilling. The company chose to retreat to the areas that have already welcomed its rigs.

"When you have so much opportunity and so much clamoring, it doesn't make sense to work in areas that are onerous to do business in," Ms. Wilson said.

Five thousand dollars might not do it for a lot of landowners.
"We will proceed very cautiously," said Ms. Thomas of the Southwest Fort Worth Alliance. "We are hoping that $5,000 is a starting point. If it isn't, a lot of people won't want drilling in their neighborhood for so little in return."

Rorie Cowden, who owns a 5.5-acre miniature golf course in the Lake Worth area, was counting on a $30,000 per acre signing bonus.
"When I went to sign, Chesapeake reduced the offer to $5,000 an acre," he said. "I didn't take it."
More factors
Natural gas prices have halved since early summer, triggering the leasing cool-off. Prices closed Friday down 3 percent at $6.21 per million British thermal units.
People use less fuel to run their factories and businesses when the economy weakens. Lower demand cuts prices.
Plus, since scientists figured out how to draw natural gas out of the Barnett Shale several years ago, production in shale plays across the country has boomed.
Total U.S. production was up 8 percent in July compared with last year, according to the most recent data from the Department of Energy.
The extra supply of natural gas also helped bring prices down.
When production companies fetch less money for their natural gas, they have less money to spend on new drilling.
If natural gas prices drop further, the market could hit levels that make new wells uneconomical.
Each Barnett Shale company has a different threshold.
For those that drill in urban areas or where the shale is thin, sustained prices below $6 or $7 per million British thermal units might trigger a halt.
In the core area of the play, where the shale is thick and rich with gas, a producer might not worry until prices hit $5 per million Btu.
"Most of the people talking about the Barnett Shale rolling over in the next while, I think that might reflect their own assets, their own acreage positions," said John Richels, president of Devon Energy Corp., the largest and one of the earliest producers of the Barnett Shale.

As an early pioneer, Devon leased land in the sweet spot of the play, in rural areas in Denton, Parker, Johnson, Tarrant and Wise counties.

Devon paid less for its leases than other companies and hasn't faced as much drilling protest as those companies working in urban areas.

Mr. Richels expects Devon to double its production in the next few years. He's more optimistic than some of his peers.

But even Mr. Richels agrees that lower natural gas prices will constrict drilling budgets in the industry.


'One more year'

"Our view is that the Barnett Shale, as an aggregate, probably has one more year of decent growth, and that's 2009," said Mark Papa, chief executive of EOG Resources, a Barnett Shale production company.

"By year-end 2009, we believe Johnson County is going to be pretty well drilled up by all operators," Mr. Papa told analysts in July.

"That's going to remove a lot of the thrust."

Other production company brass put the peak a year or two later, but most agree that the natural gas field may have only a few more years of growth.

Already data from the Railroad Commission show production has been declining nearly every month this year.

This can be explained partly by another set of data: rig count.

The number of rigs drilling wells in North Texas has been stable for months, around 255 rigs, according to data from oilfield services company Baker Hughes.

But producers must add rigs all the time to keep production volumes rising.

A Barnett Shale natural gas well gives up around 65 percent of its gas in the first year and around 80 percent in the first two years. The only way to replace that production is to drill more wells.

"I would guess you got maybe two or three more years of growth," XTO Energy president Keith Hutton said in the summer. "And it will slow, because people have to pick up rigs in order to make it keep growing. You've got to add rigs at least 10 percent or 15 percent every year to keep that kind of growth pace."
Instead, insiders say the rig count is more likely to go down.

Already, Chesapeake has said it will move 10 of its 43 Barnett Shale rigs to the Haynesville Shale, a budding natural gas field in northern Louisiana.

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Permalink Reply by kyle fuller on October 27, 2008 at 5:52

Ginger,

I have several requests throughout the site. My name is Kyle Fuller and I am a filmmaker working on a feature documentary about the Haynesville Shale. Can I get in touch with you and discuss your comments above, if so, please let me know. thanks-
kyle
(512)560-0670
www.souththirdproductions.com

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