Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 8, 2011 at 17:15

As much as we all would like to see an increase in price, there is potential benefit to a prolonged period of depressed price.  Major end users such as electrical utilities may become convinced that the days of wild price fluctuation are over due to a substantial increase in nat gas reserves.  Legislation favoring nat gas use is also more likely when a low price is added to the other advantages of energy security and reduced GHG emissions.

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Permalink Reply by Les Bamburg on March 8, 2011 at 16:58

BR, the rig count in the Haynesville Shale actually peaked in mid-June but remained high into August.  The count then began to drop but has remained rather constant for the last 5 weeks.  Almost a third of the drilling is not for HBP purposes and several operators that have most of their acreage held have continued to remain active in the play.

 

Rig efficiency has had a large impact over the last 1-2 years as operators have significantly reduced drilling times in the mature plays like the Barnett and Fayetteville Shale.  This has resulted in continued growth in those plays with fewer drilling rigs. You have to take into account that although the intial well rates are lower in these plays, a rig can drill 3-4 wells in the same time period as one Haynesville Shale well.  These areas also have less delays in completing wells and placing on production.  The initial well rates in the Marcellus Shale are beginning to rival the Haynesville Shale and require less drilling days.

 

The US will have to see a reduction in the gas rig count to see production begin to decline.  Otherwise we will continue to be oversupplied and experience low natural gas prices.

   

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Permalink Reply by Badfish Ranch on March 9, 2011 at 3:06

Les,

 

I should have clarified the Louisiana Haynseville rig count when I mentioned it peaking earlier; when adding Texas you are correct on a later peaking date.

 

On drill times, it still doesn't do much for the speed of bringing on new wells as the backlog of completion and hookup still creates a long wait. In Marcellus, the pipeline infrastructure is also lagging way behind; it will take some time to get more capacity built out for the play. Speaking of Marcellus, you mention IP's rivaling HS. The latest type curve I have is 2010, and has it at 4.1 IP and 63% 12 month decline, do you have something newer? I am always on the lookout for the latest information and it is sometimes hard to get. I have heard of a few huge wells in the play, but we must look at the average; same as some massive wells in HS, we have to use the average though.

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Permalink Reply by Les Bamburg on March 9, 2011 at 4:26

BR, type curve information for the Marcellus Shale is lacking but recent typical wells drilled by Cabot & Range are averaging ~ 15 MMcfd.  The initial declines are lower resulting in EUR's that are 70-80% of Haynesville Shale wells.  The initial rates are lower but drilling times are much shorter.  As you said, infrastructure will be an issue.

 

For the Barnett Shale & Fayetteville Shale, the completion and hookup should not be an issue as significant infrastructure and pipeline capacity already exists.  

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