Replies to This Discussion

Permalink Reply by Resourceplaya on September 15, 2011 at 17:06

I see your point Joe. You are correct, but you are not thinking with a multi billion dollar mentality. Why develop somthing that is HBP, when there is a land grab going on. Skip is obviously very experenced in the overall development of the HSVLS. I would have to agree with him, I was also heavily involved. These large independents are on a 50 year time frame. They are gambling that if they can tie up as much acreage as they can early on, they will have development opportunities for the future. Since most of them are publicly traded they are wanting to book as many reserves as they can to make their stock more valuable.

Simply put: why drill it now when you can drill and hold alot more acreage that you can drill later. Not much left to drill after you drain all the source rocks.

Permalink Reply by Resourceplaya on September 15, 2011 at 17:31

I should have said 50+ years Skip. I'm slacking.

Permalink Reply by Joe Aldridge on September 16, 2011 at 2:26

I don't want my lease commingled in a 2000 acre unit and the company holding it with 2 barrels of production per day. That's one royalty payment per year. And its to their benefit according to you guys to do that. What I don't understand is there has been little to no development drilling in the trend for all these years even at $90-100 per barrel. They have not even tried to expand the play. They have basically sat on this area. My position is I have to anticipate these kinds of situations when I lease.  The only way I see to combat this is to put a minimum royalty payment in the lease and make it high enough to make it worth my while to lease and be sat on.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2011 at 2:43

Joe, I don't see anyone saying that here.  I'm certainly not.  You over exaggerate the incidence and probability of your scenario occurring IMO.  First of all the state will determine the size of units and spacing of wells.  We may not fully agree but there is little to no chance we can change it.  As to operators drilling one well and maintaining marginal production to hold leases, I only see that in stripper fields.  It is irrational to think that any company making the investment required in the plays we are discussing would intentionally not develop a profitable asset.  The economic and production variables that determine how a resource is exploited can and will vary over time.  And plays such as the AC can and will come and go based on those variables.  Ask Chesapeake.  The AC came close to bankrupting them in the past.

Permalink Reply by Joe Aldridge on September 16, 2011 at 3:21

The operator proposes the size units and the State (DNR) usually goes along with that size. You only have to look at the AC in the current trend to see that the leases have been held on very low production with no development drilling until now. If you look at well production histories you can see that these 20 year old wells are basically strippers and only now are there alt wells being drilled in the existing units. It does not make sense to me for the DNR to allow large units and not require development drilling. 

As far as CHK is concerned: They had poor geologic information. Their geophisists and geologists dropped the ball. They put together sites in areas that had very few fractures. and a lot of the sites were above the shelf. As we now see the true area to drill for Chalk production is on or below the shelf. 

As an additional note. The price of oil at that time fell  to about $10 a barrel. That was because the Majors and the Arabs brought the price of oil down so low to put the independents out of business and in a lot of cases they did. Aubrey saved the company be selling junk bonds. If it weren't for him and his moxie CHK would have folded. That's my conspiracy theory.

Permalink Reply by Resourceplaya on September 16, 2011 at 3:44

What you want is not relavant. The operator will simply force pool you. That is the RISK involved when someone does speculative leasing.

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2011 at 17:23

Joe, my response is not about mineral owners.  They are along for the ride.  The scenario that I am describing is my opinion of how operators will develop their leasehold in an unconventional play based on horizontal wells and usual lease terms.  Unit orders are effective indefinitely.  There is no time line requirement for drilling in the mineral codes.  There are numerous HA units formed in the first year of the play that have not and, quite possibly, will not ever see a Haynesville well.  The market will drive the play.  An advantageous market will lead operators to drill more wells.  A depressed market will slow development.  It is a simple equation.  And one that we all must live with regardless of our prospective.

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2011 at 17:39

It could easily be that long for the life of the Haynesville Play, R.  The other emerging plays will have to generate some production data and define a prospective area before we can start forming opinions of their time line.  If the TMS, the AC and the LSBD all turn out to be economic, it will be a new golden age for the energy business in LA.  And will create unprecedented wealth for mineral owners and stock holders.  Not to mention good jobs for a couple of generations of workers.  My fingers are crossed.

Permalink Reply by Abington on September 15, 2011 at 23:48

Thanks for your great responses from the two perspectives Skip and Joe. It is always enlightening to read both of your posts. Please keep educating us and inspiring us with both hopes and reality. A lot of Beverly Cajunbilly wannabees are also keeping their fingers crossed in St. Landry. 

 

Now, a question. I can't seem to find known established units on Sonris, only Township and Range. Are there any maps out there, besides on individual applications?

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2011 at 1:51

Commissioner's Public Hearing Schedule:

http://dnr.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&...

 

The GIS map of the HA Play has a layer for units.  When the other plays are confirmed viable maybe the SONRIS staff will provide additional maps.

http://dnr.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&...

Permalink Reply by Joe Aldridge on September 16, 2011 at 1:52

"Beverly Cajunbilly wannabees" .......... LOL........................ I love it. You made my day. A little levity in the morning. Oh, by the way Donna Douglas - "Ellie May" does live in Zachary. Wouldn't it be ironic if this turns out really big and she is in the middle of it.

 

Yes, there are field wide unitization maps but I don't know where to even start looking for them on Sonris. You'll have to get the answer to your last question from Skip or someone else or call DNR. 

Permalink Reply by Geologist on November 4, 2011 at 4:03

In order to find unit boundaries you have to go to Document Access on Sonris.  (http://ucmwww.dnr.state.la.us/ucmsearch/busfunctions.aspx)

 

Once there select Regulatory -> UIC Order 

To the right side a bunch of search criteria show up.  Use Ref Num: and put in the order number.  This is going to, probably, be found in the electronic data available from the State.  If you don't know how to find that email me.

*** Be sure to select "Get associated documents"

**** This doesn't work when I use Firefox, I have only been able to use IE.

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