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Permalink Reply by jim weyland on March 25, 2014 at 4:56

doe's ok of the proposed coos bay lng facility is good news.

in a related note, the save the squid people are going all out to block dominion's cove point lng project.

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Permalink Reply by cocodrie man on March 27, 2014 at 1:05

Has anyone insight/speculation about why the market price for Natural Gas seems stuck in $4.40 (give or take a bit) range?  Continuing cold across the north, a forecast of a cooler than average beginning for the month of April, an apparent decline in the number of rigs drilling for natural gas, the fact of a much lower volume of gas in storage as compared to the five year average at the near conclusion of this withdrawal season, and political uncertainty on the international front seem to have little impact on gas prices.  Are you confident that the coming injection season will bring the amount of gas in storage up to what the market considers an acceptable level?  Should it become apparent that the gas in storage will not reach reach such an acceptable level, will that have a positive impact on gas prices?  When might such a deficit become apparent? 

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Permalink Reply by Joe Aldridge on March 27, 2014 at 2:54

CM,

You hit  the nail on the head. I agree 100%. I just don't understand what's going on with the pricing in the futures market. I would have expected the price to be much closer to $5.00 at this point.The only thing I can rationalize is we had a drastic fall back because of the high speculative runup that we saw earlier. If anyone has any ideas I'm listening.

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Permalink Reply by Skip Peel - Mineral Consultant on March 27, 2014 at 3:07

I'm beginning to wonder if the number of rigs running is no longer a meaningful indicator without some additional information.  What is more important than the number of rigs drilling is, how many linear feet of perforated (producing) lateral is being drilled?  As Haynesville Shale development transitions to longer laterals - Cross Unit Laterals in LA and Production Sharing Agreements in TX - is the same thing occurring in other unconventional plays?  Theoretically speaking the current standard LA CUL perforated lateral is roughly equal to 1.6 of the previous well designs for one section units.  Now 5 rigs are capable of drilling the same lateral footage as 8 previous.

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Permalink Reply by tc on March 27, 2014 at 3:23

Also with development/pad drilling you just skid rigs, saving moving time, the number of linear feet drilled per rig each year has to increase.  Plus as drillers get more familiar with the geology in different plays they can drill faster, in the Eagle Ford the number of days to drill a well have decreased by 50% over the last few years.

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Permalink Reply by ATLGator on March 27, 2014 at 3:54

Guys, we are almost 1Tcf! below last year's storage levels.

I here everyone talking about how much more efficient the rigs are and pontificating about how much gas is out there and how easy we can hook up shut-in wells and produce the necessary energy...

Not trying to be argumentative, but I would suggest reading the latest presentations of all of the major gas producers in the country, start with XOM, CHK, ECA, APC, DVN. I would add UPL also just because I like their CEO and they're the low cost producer.

I'll give you a hint, they are not expecting nor guiding to their shareholders/bankers/employees increased natural gas production for 2014...Capex plans are already set for this year so no new rigs are coming for dry gas

 

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Permalink Reply by Skip Peel - Mineral Consultant on March 27, 2014 at 4:02

Ah, go ahead and be argumentative we won't take it personally.  LOL!  I generally limit my pontification to the Haynesville Shale so I'm unsure of the facts in most other major NG plays.  Here are the most recent facts for LA Haynesville production from the state:

135 wells drilled to TD and Waiting On Completion (not yet Turned To Sales)

36 wells being drilled (some are those CULs)

72 wells permitted, not spud

In the Haynesville it is possible for production to go up per rig even if no new rigs are added. 

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Permalink Reply by tc on March 27, 2014 at 4:23

You also just happen to pick all the companies, except CHK, that don't have operations in the Marcellus shale, one of the biggest fastest growing NG producers in the US. 

Also did all those companies you listed, say they were cutting production of oil, which usually has 20-25% associated NG or liquids which has an even higher dry NG percentage.

Finally all those companies have been saying this for the last few years, yet NG production is increasing every year.  An increase of 3.3 TCF between 2010 & 2013.

Until we see actual storage shortfalls, nobody is going to believe that the industry won't find a way to fill the tanks with cheap NG. 

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Permalink Reply by Joe Aldridge on March 27, 2014 at 4:36

TC,

I guess that's it. We've all seen the industry able to as you put it "fill the tanks" and I guess that is the feeling in the market at this time. Come July to Sept I think it may get interesting. 

For the past week we are seeing a steady move up in price. Maybe there are others that are seeing what we are looking at. Maybe the reality of what is ahead is starting to be seen.

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Permalink Reply by ATLGator on March 27, 2014 at 4:42

My whole point to the post was to point out that if we are going to add an extra 1TCF of production this year to get back to last year's high, then it will have to come from somewhere other than the top producers...And CHK along with UPL both have Marcellus properties.

So, who is going to add the additional production?

Oh, and I'm going to go out on a limb and say that the big boys know how to add in associated gas into their total production figures.

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Permalink Reply by ATLGator on March 27, 2014 at 4:44

Let me also say that my tone here is a happy debater tone, not a disgruntled argumentative one :)

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Permalink Reply by Joe Aldridge on March 27, 2014 at 6:03

Hey ATL,

I like "Happy Debate". It keeps  thing interesting.

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