Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2011 at 11:14

Sounds just like him, Ghawker.  I suspect he had a lot to do with it.

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Permalink Reply by dbob on June 28, 2011 at 8:18

Mark,

You are correct that at low prices, it isn't rational to drill certain wells. Thats why many acres have had their leases lapse, or are expected to lapse without drilling. The flip side is that once a leased area is held, the producing company can wait for price recovery/improved economics before drilling the next well. In many areas of the Haynesville play, there are multiple productive formations that can be held.

Also, certain other assests (gathering lines, gas plants, compression) have been built out and new wells in the futre will only add incrementally to this infrastruture cost.

Finally, you need to look at plays like Eagle Ford, where the rich liquids drive strong economics and therefore strong growth.

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Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2011 at 8:29

Good points, dbob.  And I will add that the economics vary by operator.  A couple of issues to consider are drilling carries and gas sales contracts/hedges.  Chesapeake has a Haynesville drilling carry from JV partner, Plains Exploration, and some of the better long term sales contracts and hedges.  The carry and the hedge opportunities are declining I believe but they have benefited CHK through much of their three years of development.  EXCO also stands out for their aggressive development of the HA/BO Play.  Their JV with British Gas not only provided the cash to be aggressive but also the very favorable long term supply contracts to bolster profits.  Lastly, as incremental improvements continue and development accelerates in the areas of proven quality, I think a projection of 3 to 4 BCF average per well will be found to be too conservative.

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Permalink Reply by Bob Nies on June 28, 2011 at 8:53

This is one of the most irresponsible articles I've ever read.... believe what you want but this liberal FUD is beyond comprehension.... shale gas is our way to energy independence.... some will do anything to impede the development of our our natural resources.... The NYT has become a shill for the far left and this once great paper is turning out to be no better than the National Enquirer when it comes to credibility.

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Permalink Reply by Bill Meaney on June 28, 2011 at 9:00

Here are some other interesting responses...

 

http://www.exxonmobilperspectives.com/2011/06/27/the-new-york-times...

 

http://www.energyindepth.org/2011/06/nyt%E2%80%99s-%E2%80%9Cdewey-d...

 

 

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Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2011 at 9:25

Good articles, Bill.  Thanks.  I understand the tendency of some to focus wholly on what they consider to be a liberal plot to defeat hydrocarbon based energy sources and policy.  That's their right.  However I wish to point out that if the industry had been as focused on getting their message out and nipping in the bud pseudo-science such as this NYT article is based on, we wouldn't be where we are now in the public debate.  The initiative was lost long ago and playing catch up is always hard.  These are the kinds of fact based articles that should have been widely disseminated long ago.  The industry should have foreseen the fact that this would become a major battle with the antis and prepared a comprehensive strategy three or more years ago.  There have been numerous GHS discussions over much of that time regarding this topic.  And this gives me the chance, once again, to post my favorite quote from the debate on Capital Hill over energy policy and the absence of natural gas advocates in that debate,  "when it comes to national energy policy, if you're not at the table, you're on the menu."

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Permalink Reply by adubu on June 28, 2011 at 10:33

Skip--- T. Boone Pickens has carried the message to DC for past 3 years with his NG Plan along with other energy plans recommendations from energy experts for decades after decades --- We have been out front but liberal press can start later in game and run you down very quickly with one demagoguery article because it "sells press" and all of the other media jump on it just like CNBC TV next day having Urbina on the show. The problem ---diffcult to get to "the table" One of problems is O&G was screwed in past by politics in past so they give less money to Candidates and lobby is not effective as others

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Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2011 at 11:09

adubu, I respectfully disagree for the following reasons:  T. Boone's initial lobbying focused on wind and natural gas.  He owned hundreds of thousands of W. TX. acres and wanted to create the nation's largest wind farm.  He stubbornly stuck to this message for half the three years you mention.  T. Boone is a pragmatist if nothing else and he finally jettisoned the wind farm part of his plan and focused on natural gas.  The Oil & Gas Lobby is one of the most powerful, entrenched and effective industry advocates in D.C.  Have been for a hundred years.  They are quite successful at influencing legislation.  Just not so good at out front PR.  They are quite late to the game as initially that had little or no shale gas production.  After T. Boone finally settled on natural gas as the key to his energy lobbying, the large nat gas companies, all independents until XOM acqired XTO, slowly begin to ramp up their lobbying efforts.  They were not accustomed to cooperating like the oil majors and were slow to get serious.  The quote about not being at the table but being on the menu was made about them and their sophomoric attempts at lobbying.  They finally organized a nat gas industry lobby.  In this vacuum, the antis have had the field mostly to themselves.

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Permalink Reply by adubu on June 28, 2011 at 11:30

Skip---I agree with your post--you are just better script writter with words than I. ---T. Boone it is true he  push wind for electric and NG for transportation 18 wheeler in begining then finally saw light to focus on NG. O& G lobby in past was once very powerful but slacked off for a time and now as you say finally have got organized again and I hope they are back to the table. THX for all your input.

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Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2011 at 11:47

You're welcome, adubu.  One thing I would like to make clear about my post and what I am trying to explain.  The natural gas independents that have been slow to realize the value of political activism and get serious about lobbying are Chesapeake, Devon, EnCana, EOG, EXCO, QEP, etc.  They have always been highly competitive and limited in their willingness to cooperate.  The O&G lobby are the seven sisters, the Oil Majors, Exxon/Mobil, Conoco-Phillips, British Petroleum, Shell, etc.  They have a powerful lobby and have never slacked off as far as I am aware.  They are just now entering the fray on the side of natural gas because they believe it is a big part of their future business and they have the cash to move in a scoop up a lot of shale reserves and prospective acreage from the nat gas independents who are stretched financially.  I have opined quite often on GHS that national energy policy favorable to natural gas will not take off until Big Oil makes a commitment to that end.  I think we may be there.  I hope so.

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Permalink Reply by adubu on June 28, 2011 at 13:16

Skip-- you point about NG independents slow to realize political activism is what I was referring to about years ago they got off track without any responds to their money given to candidates running for office (They got nothing in return- so stop giving)). Now that XOM purchased XTO I hope you are correct and NG may be there. One thing for sure they have the money to invest and drill (XTO drilling more than ever)so maybe in time all mineral owner in the area of play even on the margin will one day get their minerals out of the ground. :)  I like you hope so--again Skip THX----- One day we can be exporter of LNG to UK etc. good prices

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Permalink Reply by Joe Ring on June 28, 2011 at 9:17

Come on kids!  We all know that the NYT will publish anything to stir up crap.  Truth or fact has nothing to do with an article they put on paper.  You are all giving them just what they want, stired up bowels and going nuts over their article. 

 

NYT: Gotcha!!!

 

J.J. Ring III

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