Came across this while looking for the lease rate average posted by t.c.  I couldn't find anything without paying for the info about lease rates U.S. wide. 

I did find some rates from the State of Montana leasing state lands, river beds, etc., some as little as $1.50, but the average was higher.


Challenges Facing Industry in Future Shale Activity

Oil and gas companies face a number of challenges in developing U.S. shale plays, from technology and methods for successful production to U.S. public opinion and what Gilmer calls “fairly egregious charges” against the industry over environmental destruction.

Booking reserves also poses another challenge for the industry. From the point of view of the U.S. Securities and Exchange Commission (SEC), one company may be deemed as a company that really knows how to produce shale plays. But if that company sells the same assets to a second company, the second company might be getting 30 to 40 percent less production per unit area.

Previously, it didn’t matter which company drilled the East Texas field first, because the company that initially drilled and the companies that followed would recover the same resources.

“But now, people are recovering vastly different reserves,” Gilmer noted.

A company can buy reserves in a play where other companies have found success.

“But if they don’t know the other company did it, the results can turn out to be wildly different.”

Not only is the industry still trying to wrap its head around this difficulty, but the SEC has not recognized the different production results as an issue.  Gilmer describes understanding shale plays and how to successfully produce shale hydrocarbons as a “difficult onion to peel”.

Best practices are also still evolving, with 20 to 30 experiments in production taking place at the same time as the industry seeks to determine the best way to arrange information to get results.

“If a company drills a well and it produces 1,000 barrels of oil per day, people will say it’s because it’s good rock.” Gilmer noted. “But that’s not it, it’s something they did.”

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The Austin Chalk in west LA was having a lot of problems with drilling mud clogging the lateral fractures until somebody began "under-balanced drilling" using the formation brine under it's own pressure in place of mud.

Bingo-instant success.

This coincides with the general observation that the Nabors #19 rig working the Masters Creek Field consistently  drilled good wells, while other rigs working the area could not find oil at Wal Mart. And if they did find oil, they couldn't get it out due to downhole issues.


please excuse my ignorance, which concerning matters of drilling and completion, is total.

note: i used to see drilling 'underbalanced' in the offshore daily reports from time to time but never thought to ask why. i think, at least, now, thanks to you, i understand the 'why'; leaving me with the  unanswered 'how'

so, just how do they go about things? i can only assume that they drill with mud until they've finished kicking off and then they let the formation water displace the mud and then drill forward using the surface recovered brine in place of mud.

am i anywhere close? please advise. thanks,


You know, I really can't say just how it worked, whether they used recovered brine or brine as it came out of the fractures into the laterals. But the latter makes more sense, hence the term under-balanced, indicating mud weight/pressure downhole had to be slightly less than pressure in the laterals to keep it all flowing without mud migration into the formation. All I know for sure is that it was critical to keep drilling mud out of the laterals or they would eventually plug up to some degree, and there was no sure nor cheap fix to clean them out and restore flow. I remember some repeated acid treatments on a few wells to keep them going. Some good chalk wells fell off almost to nothing on account of this and the hydrocarbons remain in formation today awaiting the next operator with sufficient cajones to spud anew.

“If a company drills a well and it produces 1,000 barrels of oil per day, people will say it’s because it’s good rock.” Gilmer noted. “But that’s not it, it’s something they did.”

Mineral owners have to trust that the companies running the rigs are on top of the game and know all the "tricks" of producing shale formations.  I've always figured that if they're spending millions to drill, they know exactly how to drill the hole and make money come out of it.  Now I wonder how many wells are producing less than what could have been produced.

Just to clarify on this article.  The rock has to be 'good' to produce, that is it has to contain hydrocarbons and have properties that allow the completion practices to work.  But that is only half of the equation.  The other half is the drilling and completion practices.  The companies that tend to do the best are the ones that can use a repeatable process, which in turn produce similar results in a given area.  Hope this helps out...



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