Replies to This Discussion

Permalink Reply by JHH on February 16, 2011 at 14:58

Skip,

Excellent information!  It's way above my knowledge level.  Could you provide a glimpse or insight of the basin limits in NW Louisiana Parishes and NE Texas Counties?  "Sweet spots"... fringe areas?  Thanks, jhh

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Permalink Reply by little ole 1st grade teacher on February 16, 2011 at 17:49

Can you give any insight to those who have expired Natural GAs leases in Shelby County, Texas?  Is there any companies coming in to lease unleased properties?  Or, does it seem as though the companies are just stepping up in the production of the properties that are HBP now? 

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Permalink Reply by Susie Brown on February 16, 2011 at 18:59

Skip, great info. That took a lot of planning and a lot of time. Thank you

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Permalink Reply by Stevew on February 16, 2011 at 19:13

Thanks Skip. I appreciate you sharing your knowledge and research.  It sounds like the industry has stopped expanding and will just hbp sections - only the better producing sections. 

 

Sooooo ... if they haven't gotten to you yet it's likely to be awhile?  Is there anything in the near term (1-2 years) that you could see changing that?

 

Logger (it's just starting to get cold where i live. snow is deep about 30 miles from me in the mountains, but we are getting our first snowfall tonight)

 

 

 

 

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2011 at 2:41

In addition to the statement in the EnCana webcast regarding the transition from retention drilling to pad drilling, the company announced that as part of that shift in focus they were allowing 12,500 leased acres to expire.  Without attempting to post the entire except here, I will paraphrase. 

An EnCana VP stated that over 30 months between themselves and their partner, Shell, they had delineated the entire basin.  The two companies concluded that there were high quality reservoir areas and challenging reservoir areas.  The VP made the statement that in general clay content increases as you move north and west in the basin.  And that as you move east and deeper into the basin (south) they tend to be challenged by high pressures and high temperatures which the industry is working on from a technological standpoint as well as faulting ans structural issues.  We have been able to evaluate some of our lands and we have allowed 12,500 acres to expire in some of those more challenging environments.

Those statements IMO tend to be supported by the increasing frequency of EnCana and SWEPI applying for alternate unit wells.  And fewer initial unit wells.  I think the majority of operators also feel that the high quality reservoir areas have been defined and that in a depressed price market it is not wise to continue to spend money to "step out" from the margins of the Play as it is currently defined by drilling.  I believe that expansion of the Play by area has been slowing over the last 2 to 3 quarters and will basically become static or shrink slightly over the next two.  The shrinkage is occurring where leases are being allowed to expire.  I believe that this is a Play-wide trend but that there will be some minor exceptions by area and operator.

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Permalink Reply by ALongview on February 17, 2011 at 4:29

Skip,  Do you think that the Mid-Bossier is still in the earlier delineation phase in areas like San Augustine, Nacogdoches, and Sabine Counties?

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2011 at 4:41

Alongview, I haven't looked specifically at Mid-Bossier activity in those counties lately.  I am attempting to describe a general trend that may not be applicable at this time in all areas of the Play.  What is true for EnCana may not be for say Chesapeake depending on the locale.  It is plausible to me that the shift from exploration to production drilling may be driven in some areas by economics and not reservoir characteristics or as ECA puts it "challenges".

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Permalink Reply by Terry L. Antee on February 17, 2011 at 5:10

$3.90 gas/well cost $10,000,000 when the gas price gets above $8.00 we may see some fringe drilling again.  Now all of the active plays include liquids. 

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Permalink Reply by Lerret on February 17, 2011 at 6:01

 think the majority of operators also feel that the high quality reservoir areas have been defined and that in a depressed price market it is not wise to continue to spend money to "step out" from the margins of the Play as it is currently defined by drilling. 

 

agree... the economics of Nat Gas is very poor now.  The cost of Horizontal drilling is very high. Only the best wells are profitable.  if I were holding acreage, I'd be inclined to hope  that production be held back for the next couple of years.  Prices will improve sooner or later.. .

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Permalink Reply by JHH on February 17, 2011 at 6:14

Can you give a ball park where the margins begin?  Through Northwest La. and Northeast Tx?

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2011 at 6:27

I think the best way to define the Play at this time is by location of the majority of wells.  And those areas where there are none.   That's not 100% definitive but it's better than a "ball park" guesstimate.

 

http://dnr.louisiana.gov/assets/OC/haynesville_shale/Haynesville_20...

 

Of course this just covers the LA. portion of the Play.  Maybe one of our Texas members has a map of current wells for that side of the Play.

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Permalink Reply by JHH on February 17, 2011 at 6:55

Thanks, great map...wow!

 

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