Replies to This Discussion

Permalink Reply by Rock Man on July 14, 2020 at 6:26

I don't have any rig activity services but I do have DrillingInfo/Enverus subscription. Attached is info on four wells that Aethon is drilling north of San Augustine. Looks like they were using a smaller rig to spud and set surface casing in these cases.

This was the only activity in the county in the past 90 days as per this site.

No idea if and when a big rig is coming in.

Skip posts rig activity for area weekly - do you see those postings????

Attachments:

• San Augustine Co Activity.pdf, 3 KB

Permalink Reply by GoRicky on July 14, 2020 at 6:38

Thanks, Rock Man.  I also just saw a SWDW being drilled in that area, but that's all.

Permalink Reply by Rock Man on July 14, 2020 at 6:54

That is a good sign (SWD well) - should mean that an operator is needing it to get rid of produced water following frac'ing these long laterals.

Permalink Reply by Skip Peel - Mineral Consultant on July 14, 2020 at 8:06

The Haynesville and Bossier shales are dry gas, they shouldn't require a SWD well.  In other words, there is no "produced water, only "frac water" that must be disposed of or treated for reuse.  That frac water should "clean up" in a few weeks.  Are we sure the SWD well is for Aethon's use?

Permalink Reply by Rock Man on July 14, 2020 at 8:08

No idea where the SWD is versus the four Aethon wells. 

Permalink Reply by Skip Peel - Mineral Consultant on July 14, 2020 at 8:13

Sorry for any confusion, that question was directed to Mr. GoRicky, Rock Man.  Maybe he knows the location.  That SWD well could be meant to serve one or more wells, producing or planned, for formations that do produce significant quantities of SW. 

Permalink Reply by GoRicky on July 14, 2020 at 8:48

Yes - it's called the:

KUDU MIDSTREAM LLC - BLAND LAKE AGI #1 (TD = 7,339').  Northern S.A. Co.  Apparently going to put water into the Rodessa.

Permalink Reply by Skip Peel - Mineral Consultant on July 14, 2020 at 10:00

Any idea if it is in close proximity to the Aethon wells Rock Man mentions?

Permalink Reply by Rock Man on July 14, 2020 at 10:04

Found that permit on DrillingInfo - appears to be located between the two aforementioned Aethon pads that I mentioned earlier. 1.7 to 2.3 miles from each. Could be for injection of produced frac fluid instead of trucking it out (i.e. lay surface flowlines from drilling pads to the injector)

Permalink Reply by Skip Peel - Mineral Consultant on July 14, 2020 at 10:20

If these are long laterals, that would equate to a greater volume of frac water.  And if these are the first unit wells of a number to be drilled, it might make sense.  Hard to tell as the Louisiana Haynesville operators have very, very few SWD wells.  However in a good bit of the fairway, there are existing SWD wells and multiple companies that specialize in injection and make for a competitve environment.

In the early play I worked with a NYC financial analyst who was covering Heckman Water Resources.  The company was trumpeting a deal with Chesapeake.  The analyst had spoken with the CEO of Comstock and was surprised to hear from him that there was very little water volume needing disposal.  I confirmed that opinion and help show the analyst how to source relevant data from the state database.  His analyst was ultimately not very supportive of the Heckman/CHK deal.

Permalink Reply by Rock Man on July 14, 2020 at 10:30

Attached is PDF map from DI showing the SWD (30723) and the two Aethon pads I mentioned (30722 and 30719). All north of San Augustine. Note scale.

Attachments:

• San Augustine Co Activity.pdf, 616 KB

Permalink Reply by Chad Ellis on July 14, 2020 at 14:05

A few years ago when I was working for one of the major gathers in the Haynesville, the lack of adequate SWD was a limiting factor in our development plans around San Augustine.  This was not as critical in the Holly and Carthage fields, as the legacy Cotton Valley injection infrastructure was mostly sufficent.  True, the Haynesville is dry gas, but the roughly 1.2 million barrels of frack water has to be disposed of.  In addition, it flows rather quickly at first.  If you have to truck it out, that is roughly 12,000 truckloads (100bbls/truck).  Doable, but expensive.  Especially when there is little competition in the trucking/disposal service sector.  The longer visioned producers built water gathering infrastructure and injected at central SWD injection facilities.  Even with this, we had to stagger the completions to not overwhelm the injection capacity.  In the heyday, we actually explored the option of building a large (10 to 20 acre) holding pond to handle the surge.  The price drop and resultant cessation of drilling shelved these ideas.  

As an addendum to Skip’s Heckman experience, I was part of a group that proposed to provide one of the major producers a water gathering and disposal infrastructure service.    Our price per barrel proposal was beat when one of the local SWD services saw the upcoming collapse (circa 2016) and lowered their price to slightly over break even.  As with most economic variables, supply and demand can rule supreme.  If there is an abundance of produced water, and a limited supply of disposal, then the Heckman(commercial) water gathering model may work.  Very little drilling(produced water) then the local trucking companies can survive and handle the volumes.  

All this being said, when a producer drills a SWD, it is normally to support a drilling program that cannot be economically supported by the existing takeaway capacity.

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