Replies to This Discussion

Permalink Reply by P.G. on January 31, 2011 at 10:06

Maybe Exxon will put in some CNG pumps at some of their gas stations...

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Permalink Reply by Skip Peel - Mineral Consultant on January 31, 2011 at 10:38

The economics of natural gas E&P has caused most of the independents to divert capex to "wetter" plays.  With a small number of exceptions the main HS players have ceased to pursue leases except where they need to finish up a unit in preparation to drill.  The HS Play has basically stopped expanding.  For those on the fringe that's not a good development.  Pro:  Majors such as XOM can afford to continue leasing in areas with no proximal development activity and to drill step out wells to "prove up" shale prospects.  In other words, they can afford to follow the shale to its economic limits.  Con:  The majors will likely drill one horizontal unit well to HBP their leasehold and then drill additional wells only when the economics suit them.  For those who would consider a bigger picture as it relates to national energy policy and incentives to use natural gas for whatever reasons strike your fancy, the following:  The political reality is that the Coal Lobby is an 800 lb. gorilla and the independents are ...... well let's say chimps.  The Coal Lobby is not just mining interests such as corporations and mineral owners, it's transportation (railroads and inland waterway) and electric utilities not to mention proponents of syn fuels.  The Coal Lobby has groomed their Congressional protectors for decades.  Those members of Congress represent a number of states and include members of both parties.   If the major oil companies believe that natural gas will play a large roll in our energy future, and there are many reasons to believe that they do, they can and will, IMO, exert the political force necessary to make natural gas the preferred source at the expense of the coal industry.  One of the best quotes I have ever heard in regard to lobbying for political largess was made by a Congressional staffer working on national energy policy last year.  When asked about the various interests involved in discussions regarding future national energy policy and the absence of the independent gas producers he said, If you're not at the table, you're probably on the menu.

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Permalink Reply by Stevew on January 31, 2011 at 11:06

Excellent post Skip, but can you put in paragraphs? I have reposed it below, with what I think are the best places for the paragraph spaces. Did you write it in the new Word and paste it directly in?  I don't want to offend you, but just help other GHS folks read the good ideas you have. I agree with everything you've said. .... Logger

 

      SKIP'S POST - VERY GOOD INFO ...

The economics of natural gas E&P has caused most of the independents to divert capex to "wetter" plays.  With a small number of exceptions the main HS players have ceased to pursue leases except where they need to finish up a unit in preparation to drill.  The HS Play has basically stopped expanding.  For those on the fringe that's not a good development.

 

Pro:  Majors such as XOM can afford to continue leasing in areas with no proximal development activity and to drill step out wells to "prove up" shale prospects.  In other words, they can afford to follow the shale to its economic limits. 

 

Con:  The majors will likely drill one horizontal unit well to HBP their leasehold and then drill additional wells only when the economics suit them. 

 

For those who would consider a bigger picture as it relates to national energy policy and incentives to use natural gas for whatever reasons strike your fancy, the following:  The political reality is that the Coal Lobby is an 800 lb. gorilla and the independents are ...... well let's say chimps. 

 

The Coal Lobby is not just mining interests such as corporations and mineral owners, it's transportation (railroads and inland waterway) and electric utilities not to mention proponents of syn fuels.  The Coal Lobby has groomed their Congressional protectors for decades.  Those members of Congress represent a number of states and include members of both parties.  

 

If the major oil companies believe that natural gas will play a large roll in our energy future, and there are many reasons to believe that they do, they can and will, IMO, exert the political force necessary to make natural gas the preferred source at the expense of the coal industry. 

 

One of the best quotes I have ever heard in regard to lobbying for political largess was made by a Congressional staffer working on national energy policy last year.  When asked about the various interests involved in discussions regarding future national energy policy and the absence of the independent gas producers he said, If you're not at the table, you're probably on the menu.

 

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Permalink Reply by Skip Peel - Mineral Consultant on January 31, 2011 at 11:15

Logger, nice work. No, I don't mind.  :-)  It's composed on the site, not a cut and paste.

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Permalink Reply by Parkdota on February 1, 2011 at 5:54

Skip, on your con that follows: 

 

Con:  The majors will likely drill one horizontal unit well to HBP their leasehold and then drill additional wells only when the economics suit them. 

 

I have been thinking quite a bit about this as well.  I'm assuming this, the current economy, other shale plays, etc., will slow the full growth of the HA and of course there's no telling when the BO will be developed.  What do you estimate with regards to growth for both the HA and BO?

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Permalink Reply by Skip Peel - Mineral Consultant on February 1, 2011 at 6:19

Depends on price, which to some extent depends on national energy policy (politics).  And a healthy domestic and global economy.  Actually time may prove my con comment less than accurate in the sense that instead of coming back to drill a second well in a number of drilling units, operators may choose to adjust future supply by drilling out entire sections with gas factory concepts.  Under either scenario some mineral owners will get multiple wells soon and some will wait a long time.

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Permalink Reply by jffree1 on February 1, 2011 at 5:08

Here are a couple of comments from the transcript, of the XOM call (yesterday),  on Seeking Alpha:

In the Haynesville, we are progressing our joint venture with EnCana across our 108,000-gross acre joint venture area.

In both the EnCana joint venture and legacy XTO acreage, we are also drilling and testing the prospective Bossier reservoir in selected wells.

 

http://seekingalpha.com/article/249827-exxonmobil-management-discus...

 

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