Replies to This Discussion

Permalink Reply by Anna Mauck-Member Services on October 23, 2008 at 6:46

Earl, I'm with you. I can be patient and it will probably be a good while now with the economy like it is. This is $ from heaven I didn't count on anyway so if it comes, great; if it doesn't, that's great too. Money doesn't buy happiness - how true Earl.

• ▶ Reply

Permalink Reply by Taylor on October 20, 2008 at 11:11

Ya'll are probably sick of all noise in your area! Its messing up Bob's finshing! (he claims) LOL

• ▶ Reply

Permalink Reply by Spring Branch,mineral owner on October 21, 2008 at 2:57

Jay, are there any sections left with enough unleased acreage for a new operator to come into the play , buy leases for lower lease bonuses, higher royalty rates, and a hz well commitment and own enough acres to be the operator of the well. I'm just trying to figure out where that would be and stay in the "fairway" of the hz shale play.

• ▶ Reply

Permalink Reply by Bobi Carr ("parker") on October 21, 2008 at 4:55

Jay,

Can't a minority lease hold owner apply to be the operator?

• ▶ Reply

Permalink Reply by Bobi Carr ("parker") on October 21, 2008 at 5:09

Jay,

How much acreage would an operator need, in order for it to be worthwhile?

I would assume that if it is a minority owner, it would need to be at least pretty close to half.

• ▶ Reply

Permalink Reply by Spring Branch,mineral owner on October 21, 2008 at 18:07

That answers my question.

• ▶ Reply

Permalink Reply by Arthur Berman on October 23, 2008 at 23:47

Skip,

All shales are not equal. The Haynesville Shale is overpressured and, therefore, less brittle than the Barnett, so fracture stimulation is not as effective. It is also much deeper, so there are more problems reaching sufficient pressure with pumps, etc. to create a good fracture stimulation. Also because it is deeper, any fracture that is created is less likely to remain open.

For a fuller discussion of Haynesville vs. Barnett, see my September column in World Oil: http://worldoil.com/magazine/MAGAZINE_DETAIL.asp?ART_ID=3640&MO... .

The flatter "tail" of the decline curve is not something that I see much value in, since it is highly interpretive at this early stage in Haynesville production history. Also, monthly production volumes in the flat portions of hyperboloic decline curves rarely generate enough revenue to cover lease operating expenses, so much of the reserves from this phase of a decline curve are not commercial, though technically recoverable.

When I do a decline analysis, I usually figure something like $5,000-10,000 month are necessary for lease operating cost. Assuming that current gas prices are $7.00/Mcf and about $1.00/Mcf of that goes for midstream costs, and another $1.00 or more goes to pay G&A costs, that means that the economic limit of a well is between 1-2 MMcf/month. That doesn't include taxes and royalty which is perhaps another $2.00/Mcf, so really the economic limit of a well is 1.75-3 MMcf/month.

All the best,

AEB

• ▶ Reply

Permalink Reply by VSC DeSoto South on October 26, 2008 at 11:35

If I am reading this thread correctly, the Haynesville is over pressured. Also, the Haynesville is using a faster extraction process and extracting more gas in less time.
Assuming these 2 items are correct, would that mean that the Haynesville wells will produce more at the beginning and then have a shorter life than previous plays?
Say if common life of the average well is 20 years (or 30 not sure which), that a Haynesville well may only be 10-15?

I realize there are many variables like the choke, the field, and a myriad of other things, this is a general/ballpark question?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 26, 2008 at 12:05

VSC 'O'. Finally someone who understands why I have been seeking some reliable information on decline curves. Thanks. I believe your statements are all correct. I think I have enough information to make a general statement of well life with the possible exception of what will constitute a "commercial" well now and in the future. I'm not sure that anyone, including Mr. Berman who I consider to be a professional on the subject, can answer the "commercial" question short of having a crystal ball that will reveal to them the price of ng at the wellhead or the cost to produce over the next ten years. Based on the CHK decline curve data and the production from their 16 initial horizontal wells and Mr. Berman's definition of the point at which a well becomes "noncommercial" ............... 7 to 9 years. I'm still a little stunned and continuing to process that surprisingly short life span. It doesn't appear that it is of much interest to a majority of the members. I would have no regrets at anyone proving me wrong.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 26, 2008 at 13:09

Okay, is this better. Those planning financially for the prospect of royalty income should be aware that the income stream will last less than ten years and decline rapidly in the first year. As to "empirical data", the calculation of decline in horizontal gas wells is not a new or obscure science. The Barnett Shale has provided an accurate base model from hundreds of horizontal wells and six + years of horizontal well production utilizing the fracture stimulation methods being employed in the HS play. Chesapeake reservoir engineers are among the most qualified to make projections concerning the HS. Any thought that the decline percentages published by CHK are not accurate within a very small variance is wishful thinking. Any small variation will have no practical impact on the commercial life of a HS horizontal gas well. Now for those who believe that CHk is publishing deliberately misleading information, that's your prerogative. I wouldn't bet on it. I'm reading reports by industry reporters that the Barnett Shale play will peak sometime next year and that it will decline rapidly over the next few years. Now they are talking about overall production within the entire boundaries of the play so decline may last a number of years. Many wish to think that the movement of drilling rigs from the Barnett to the Haynesville is because our gas is better. I think it has more to do with the fact that Barnett is an old play in decline and that the Haynesville is where the new production will be for the next ten to fifteen years.

• ▶ Reply

Permalink Reply by BirdDawg, plain ole' idiot on October 26, 2008 at 13:24

Skip and KB,
I respectfully submit my opinion: As I stated early on this post, there is not enough data on long term Haynesville production to have any ability to calculate any kind of accurate decline curve data. We will not really know until we have several years of production data. Skip, I think that you believe that data that is now available is enough information to establish decline curves. I reapectfully disagree. Every sand and every shale responds differently to production, and the Haynesville Shale production over the next few years will tell us what it will do. Nothing else will, all else is speculation. Not meaning to step on anyones toes, just my opinion.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 26, 2008 at 13:25

81% decline in the first year. 34% in the second. 22% in the third. Decline in year four through ten slows. The curve is basically flat. My first thought was that the flat portion of the curve would last for 20 to 30 years. Like conventional gas wells that NW LA. is used to. Obviously the high formation pressures and the nature of fraced horizontal wells is very different from what we have known before. When Mr. Berman pointed out the point at which a well would no longer be profitable to produce and I looked at the decline curve, I thought that it was significant. Sufficiently significant to post for the members to consider. Yes, time may modify the early decline curve data. And I hope that I am missing something. That I am wrong. I hope to have responses from members who are pros. Not amateurs like me.

• ▶ Reply

• ‹ Previous
• 1
• …
• 3
• 4
• 5
• 6
• 7
• …
• 13
• Next ›
• Page