Does Arthur Berman actually have something to say that we agree with?

http://lafayettegeologicalsociety.org/wp/?p=1440

The Barnett, Fayetteville and Haynesville shale gas plays are not profitable at $4/MMBtu Henry Hub gas prices. There are limited areas of the Marcellus Shale that are commercial at $4/MMBtu gas prices. The portions of shale gas plays that are potentially commercial at $6 gas prices represent less than 20% of the total drilled play areas accounting for price uplift from natural gas liquids. Commercial core areas of the Bakken and Eagle Ford shale oil plays similarly consist of less thatn 20% of the total drilled play areas; these are profitable at $95/barrel of oil equivalent West Texas Intermediate oil prices.

Shale plays have finite limits to commercial production that can be mapped as relatively discreet fields. Structural geology and correlative natural fracturing is an important factor in most plays. The life cycle of most shale plays is measured in years and not in decades.

While recent natural gas price spikes are clearly related to weather anomalies, they expose supply limits not generally recognized by industry analysts. Gas production as been essentially flat since February 2012 and production growth is now approaching zero. Gas production from conventional reservoirs accounts for approximately 57% of total gas supply and is declining at about 19% annually with few new wells being drilled. Barnett and Baynesville production is declining and Fayetteville and Eagle Ford production is flat. All gas growth is from the Marcellus Shale. Although the United States has abundant gas resources, supply constraints will become more frequent until prices increase and more gas-directed drilling ensues.

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Permalink Reply by Bobi Carr ("parker") on March 21, 2014 at 1:32

My thought was, a stopped watch is still right twice a day.

Permalink Reply by Dion Warr, CPL on March 26, 2014 at 6:45

Bobi:

I glanced at this comment again and was reminded that a "half-fast" watch is correct even less than twice a day.

Permalink Reply by Bobi Carr ("parker") on April 1, 2014 at 1:43

LOL

Permalink Reply by Dion Warr, CPL on March 25, 2014 at 15:23
But Jay, what E&P doesn't make in sales, they make up for in volume...
Permalink Reply by Craig Wascom on March 23, 2014 at 15:29

This guy has nothing good to say. At least he is away from West Texas for a while.You can keep him in Louisiana if you want we have heard all we care to here from him in the Permian.

Permalink Reply by Bobi Carr ("parker") on March 23, 2014 at 15:39

Nah, let's send him to Saudi and have him give them his opinions on what they have.  I'm thinking they will be as enamored of his opinions as we are in the States.

Permalink Reply by Bobi Carr ("parker") on March 25, 2014 at 5:03

It wouldn't hurt my feelings if my gas were never sold for under $4.00 again.

Permalink Reply by Craig Wascom on March 25, 2014 at 5:50

Anything below $4 is just too cheap and I think we can go higher without hurting the consumer, It has been too low for too long but I believe change is coming. Even with that said Berman's comments are irrelevant because he makes a living speaking against shale exploration and it is working for him. If you are looking for somone to go negative on shale Art is the guy you book for you speach. it is his niche.

Permalink Reply by Bobi Carr ("parker") on March 25, 2014 at 6:14

I don't believe he has a fan club on GHS

Permalink Reply by Dion Warr, CPL on March 25, 2014 at 15:25
Bobi:

Send him to Qatar. They'll string him up faster. They literally produce so much gas they could choke on it.
Permalink Reply by Doob on March 25, 2014 at 17:05

Do any of you have a particular assertion of Berman's that you would like to refute, or do you just not like him? I think most of what he presents is factual data, and much of what he projected early on has proven to be true. He was too negative on the Haynesville in the beginning because he used the Harrison County wells as a proxy for Texas. But he was and is correct...most companies were spinning a tale, and most Haynesville is not profitable below $5/mcf.

Permalink Reply by Skip Peel - Mineral Consultant on March 26, 2014 at 2:38

Doob, Berman got his label (well deserved) by cherry picking early well data that supported his analysis while ignoring the fact that the bulk of Haynesville Shale wells had nothing in common with his data set.  He used vertical completions and short lateral horizontals with lower total frac stages as just two examples.  His contention of profitability was a later addition that once again glosses over the meaningful specifics.  Most of the major HS operators are only drilling their core acreage, the best rock, and it is economic at current prices and was so for most below $4.  Although profitable those wells were not priorities for companies with other rock in other plays so capex for HS was cut to focus on more profitable plays. What has been lost in the equation is the cost to produce an mcf, F&D costs.  Operators have driven down that cost significantly but that is to be expected with almost 6 years of experience and ever advancing technology.  Of course it is important when parsing this subject to not lump all HS operators together as some have little or no core rock.  Some Tier One acreage may be profitable at $4.50 however wide spread drilling of Tier One and Tier Two will require prices above $5 and a perception by those operators that it will remain that high, at least, for some extended period of time.

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