Forbes: Maybe BHP Billiton's $20B Fracking Bet Wasn't A Blunder After All
He insists that he’s doing just that. Shale operations have ramped up to account for 40% of BHP Billiton Petroleum’s 670,000 barrels per day of oil (and equivalent gas) production. The focus of their efforts is clearly the Eagle Ford shale, where Skaufel says their position is “the best of the best.” Of 25 total rigs in operation, he has 17 of them in the Eagle Ford. The next most exciting area is the Permian basin, which has seen a riot of new activity in the past two years, and where BHP has 450,000 acres. Even the gassy Haynesville shale of Louisiana is “economically robust” now; with the trebling of gas prices in two years BHP is generating 35% returns on invested capital there. Fayetteville, however, remains a dud. It holds bounteous amounts of dry gas — but even at current prices the costs of getting it out can’t compete with other options. At the right price — he won’t say how much — “there’s an abundance of gas.”
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Permalink Reply by 1kw6x71km1v37 on
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A vertical pugh clause in a lease would be necessary to eliminate other depths being held by production. I don't recall Union Pacific Resources ever writing those into their AC leases unless a savvy lessor insisted it be done. Not a lot of folks around here know about VPCs, but the concept is gaining traction. I could be wrong, but I suspect a lot of acreage in west LA is held by production to all depths. There have been a lot of releases of property outside of producing units, but the operator will do almost anything to keep a chalk well in production. It stands to reason that with the TMS being the source rock for the AC, and the best place to find hydrocarbons being where they have been found before, these holdover AC wells are sitting on some potential acreage. You have to wonder, however, if they aren't also siting on some massive volume of salt water, given the fact up to 80% water cuts were produced along with the good stuff. Without a saltwater disposal well on each production pad, I'm not sure the AC in west LA was economic.
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