Mmarrkk

Natural Gas Extraction May Be More Expensive Than It Seems

Plenty of water for use in most of the areas where the shale gas exists. Fracing uses a fraction of golf course maintenance does.

The water goes down into the ground and the volumes pumped out are put in retention ponds, treated, and re-used for frac'ing future wells.

BTW, many of the shale plays use plain old sand, not ceramic proppant.

The chemicals used in fracing make up less than 1 % and most are found in your home right now. Look at the contents in a bottle of Formula 409 or Windex!

Look at the "back-end" costs for building a freaking Toyota Prius. Those batteries contain some pretty nasty crud too, you know. As does the plastices/fiberglass that makes up the body. And did you know that NATURAL GAS is used as a raw material for making many of those parts? Get a grip you NIMBY!

Natural Gas Extraction May Be More Expensive Than It Seems

The fact that wells decline quickly off their initial rates is no secret. In fact, if you will go through all of the technical and investor presentations, all of the companies accused of "promoting" the shales will readily tell you that first year declines are enormous. Most quote numbers like 70-85% decline in the first year. Yes, that comes from the companies that supposedly "hype" the plays. So, this rapid decline is ALREADY BUILT INTO the economic and production forecasts. Wells that come on at 10 MMCF/day are down to 1.5 MMCF/day by the end of the first year. Who cares? Its all about a) the total reserves produced in the first few years and b) the number of wells lined up in the cue to replace those that are declining. Estimates of total well counts are in the tens of thousands, hence the term manufacturing. By the way, that term was used a long time ago when folks were (and still are) drilling coalbed methane gas wells in San Juan Basin.

The price of gas will probably be driven by the rate at which companies will be able to access these resources, the ability to get experienced rig and frac crews and the overall macro economic conditions. If demand stays low, gas will be plentiful, prices will stay low and drilling will be slow. But if demand picks up, there will be a temporary shortfall that drives prices up. As prices go up, drilling will rapidly increase since the shale developments can be turned "on and off" with somewhat relative ease. As drilling ramps up, supply will outstrip demand and prices will fall a bit. Then drilling will slow down and production will go down, falling below demand, and the whole supply/demand pricing cycle will start over again. Watch for prices bouncing along between $4 and $8 for a while!

Prices can't stay low forever, since new drilling won't occur below $3-4/mcf. That will cause shortfalls, rising prices and, well, you know the cycles!

ConocoPhilips: Time to Embrace Natural Gas Transportation

Fitz: not surprised with the lack of response. BOD's, unfortunately, just like to get along!

Yes, $145/BO was a disaster in general. Yes, it helped me out a lot as an investor in oils and an employee of oil/gas co'. But on a macro level, given the state of the economy, it was bad. Now, layer on that oil price on top of the ever increasing debt, the soon to be increasing taxation, the anti-business legislation we seem to see everyday, and the precarious condition of the stock market, I think it could be the straw that breaks the camel's back! The stimulous money only stimulated a lot of government pocket books and executive salaries and union chief's savings. It isn't going to what needs stimulating. My wife's small business is doing well, but will probably not make it through healthcare reform due to the taxes and requirements that will be placed on them. Based on what she's read of the bills so far, she'll just shut it down and lay off the employees and let them go as contractors. Fine with me...I get my full-time wife back! But the employees will probably not be too happy!

I'm still pushing nat gas as a transport fuel and I'm fighting with all of my energy and money the cap/tax/trade bills. Those will drive costs way too high at the wrong time. Its too much, too soon, at the wrong time, for the wrong reasons and needs to be put on the back burner (nat gas burner BTW) until our economy is out of ICU.


On Oct 30 05:10 PM Michael Fitzsimmons wrote:

> long_on_oil: hey, i love BP and STO. of all the earnings released,
> i think you'd have to say that BP and CVX had the best quarters.
>
>
> Mmarrk: i have sent emails to Conoco's BOD. no reply, and obviously
> no success. in light of all their investments in natural gas plays,
> i just don't undertand COP management's aversion to natural gas transportation.
> what jim cramer tonite, he's in OK interviewing some natural gas
> heavyweights. i am sure they'll be talking about it. the U.S. will
> have to migrate to natural gas transportation at some point - we'll
> have no choice. the question is, will the government wait until there
> is rioting in the streets, or will we do it before a crisis. of course,
> i think last year's $145/barrel oil was a crisis...
>
> auto44: if you are compariing to the US dollar, it's a good question,
> but a better question maybe this: china, india, brazil, france, and
> germany have all said they are in favor of a new world reserve currency
> not based on a single country. so, the real long-term question is
> this: what will the U.S. dollar be valued to wrt a new world reserve
> currency based on a basket of currencies, gold, and silver? the answer
> to this question, i believe, is: "less than it is valued today".

Recycling U.S. Coins into Silver

Fitz: one thing to be concerned about with LNG is the overall low low cost of incremental production. Once the liquifaction plant, ships and re-gas plants are built and financed, the cost to run the Middle East plants and get the gas to the U.S. shore is dirt cheap. Think less than $3/mmBtu. Imports are down right now (thank goodness) due to there being other markets. If the Europe market dries up, then LNG will hit our shores and will displace some of the more expensive gas.

Now, overall, that won't kill off the general premise of using Nat Gas for transport; LNG will keep the price low for a while. But it does get us back into a dependency we'd rather not have. Going forward, big LNG exporters will be Qataris, Iranians, Russians and Australians. Only one of which I feel totally comfortable with!

ConocoPhilips: Time to Embrace Natural Gas Transportation

Increasing dividend? Good.

Borrowing money to pay dividend? Bad

Increasing dividend while increasing borrowing to pay for said increasing dividend? I just don't understand!

You are right about the natural gas transportation. Maybe we need to direct this line of thinking to the B.O.D.'s?

Shale Gas: Promises, Promises, Promises

Desert Fox: I believe the rapid decline in Total Texas Production is due to the decline in new wells being drilled. No one has masked the very high decline rates of shale wells. In fact, everyone admits and premises it! 70% in year one is a low end number but all are using this in their calc's. The key with the shale plays is continuing to drill in a manufacturing-type operation. I still think Dr. Berman's analysis is flawed. But confidentiality issues prevent from showing/discussing details.

Two Ways to Profit from New York's Uncertainty About Drilling for Natural Gas

makeitsafe: you are a fool. the only difference between horizontal well frac'ing and the frac'ing that's been done for decades is that the well is laying horizontal. BTW, these wells are 6000 to 13000 feet below the surface and several thousand feet below any known fresh water aquifer. And the chemicals used are very similar to those found in your home today...Formula 409, Windex, etc. Do you ever, ever, ever, get Formula 409 in your sink or bath tub? Where does it go when you rinse it? Answer: into the fresh water supply! These chemicals are used in very very very low percentages (think less than 1%).

This is just another Greenie Weenie attempt at ruining American Industry.

And the difference between "alleged" and "proved" is a huge one! Anyone can "allege" that someone killed another person, but you gotta prove it! Many of the cases I've seen of "alleged" pollution of ground water by frac jobs are just crappola! The science doesn't back up the claim, and by science I mean simple things like physics, geometry, fluid dynamics.

Shale Gas: Promises, Promises, Promises

Tudor Pickering Holt gave a point by point assessment of Berman's evaluation. They, in short, said Berman is Flat Out Wrong and way out of his league. We shall see.

Is Exxon Betting on $100 Oil?

Alan:

XOM invests for the long term. For those on Wall Street, "long term" means something more than 1 or 2 quarters out!! Just wanted to make sure you knew that. XOM is looking 5-10 years out. Oil >$100 in 2015-2020: almost a dead-certain cinch!

While you talk about political risk in Ghana, the current U.S. Congress and Administration make investing in the U.S. much more risky. For example: at their whim, the Congress is talking about completely changing the tax rules for only the major oil companies. We have that blubbering idiot Sen. Markey wanting to re-write contracts with companies just because prices are high and Congress wants to! Thanks, Supreme Court, for reminding him that when you sign a contract, you adhere to the terms on that contract!! Investing in capital projects in the U.S. carries an ever increasing amount of risk due to a) overwhelming budget deficits, b) nothing on the horizon that shows our government will do anything about spending c) in fact, rapid rises in social giveaways and increased government control and spending d) the desire to change tax law to continue to soak the successful e) the desire to change tax law to discriminately tax single industries or companies deemed as not "politically correct".

Sorry, I vote with XOM over the next ten years! They have more money in the bank than most banks have in the banks! And have proven management, not like our political leaders who are only proven as failures.

How Much Natural Gas Remains in the USA?

To whomever ranted about environemental concerns: get over it! You are quoting alarmists who are blowing a lot of the frac danger completely out of proportion. 1st, the amount of water used in fracing wells in a given active county is less than 10% of the water used in watering golf courses. Gee, that's a lot of water.

Second, all these "nasty's" you talk about are found in your grocery store in things like Formula 409 cleaner.

The good folks of New York don't want anyone drilling for natural gas but will be the same people screaming when their natural gas costs them $15/mcf or when they are beholden to Middle Eastern Countries for the import of LNG. Oh, yeah, they won't allow that either. Maybe we should let them freeze in the winter a while.

How Much Natural Gas Remains in the USA?

Mark Anthony: While I salute your questioning the reserves/resources available, I give you failing marks for the actual execution of the questioning!

First: shale gas is economical at somewhere between $5 and $7 per mcf. There is an ever-decreasing amount of risk to these resource volumes in the shales. So discount the shale gas at your own peril. Even if only half of it is actually recoverable, then we still have a large volume of reserves to transition us to another source.

Second: someone earlier pointed out excatly that proven reserves are dependent on price. Push the price of gas up to $10 and you'll see an increase in proven reserves and you'll also find exploration activity picking up. Those "undiscovered" resources are based on past experience and geological studies of new basins. Start drilling and you will see these resources discovered.

Again, at today's prices, no there is not 75 years of reserves. But let the price rise a bit to that $7 range, and you'll see a bunch of new reserves. Get the goofy government off of our backs and you'll see even more.

One thing I do agree with you on: there is a "crisis" looming. But "crisis" needs to be defined: I view the crisis as gas prices rising to maybe $10 or more for a short period of time, but then drilling will rapidly increase, supply will outstrip demand and prices will decline. We'll constantly be in this up and down tug of war but at a reasonable price (less than $15/mmBtu) there is plenty of gas!

epex

Money68: really?? they are in bankruptcy and announced today liquidation of their assets for less than their debts.

Natural Gas Production Declines Are Becoming More Evident

Elliott: you may be right but not exactly for the reason stated. Could it be that storage was a bit higher due to lower demand...the other side of the story? Also, need to adjust storage additions to account for weather.

What's Driving Natural Gas?

bradiop: your "evidence" that there is an increase in gas supply is somewhat short sighted. The additional supply comes from shale gas plays, plays where the wells exhibit a 80% decline ratio in the first year!! At sub $3/mcf, no one will drill these wells for long and when you stop drilling new wells, the old wells are declining quickly and production drop rapidly!


On Sep 18 11:24 AM bradiop wrote:

> I find this part of the analysis hard to believe:
>
> Supply: Liquefied natural gas (seekingalpha.com/symbo...)
> flows may not flood the U.S. and domestic production could fall swiftly
> because it is not sustainable at current activity levels.
>
> There seems to be fair amount of evidence the supply of gas has increased
> and not going to decrease.

What's the U.S.'s Energy Policy?

Folks hated $4 gasoline and $140 oil. They are going to love what happens when our goofy POTUS puts his plans in place to increase taxation, further restrict access and drilling, then force people to use more expensive sources. Yeah. I hope he does all of this soon...soon enough for prices to be really high before the 2010 and 2012 elections. $4/gallon gasoline should do wonders for the Democrats' election plans!!!