WET UTICA Worth $35k PER ACRE ??

Since the New Production #'s Are Out From The Wet Utica Wells..The Trend Is Showing That The Utica Acerage Is Headed Upwards Of 25k-35k Per Acre! It is being compared to the Eagle Ford In Texas. What Are your Thoughts And Opinions??  Some Texas Leases Were $30k Per Acre!

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0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 23, 2012 at 4:00am

More homes will eventually switch to NG, I agree.  But cars?  The amount of infrastructure needed to convert US drivers to CNG is astronomical.  And the manufacturers are not going to start rolling CNG cars off the line until that infrastructure is there.  Nobody is going to build thousands of CNG fueling stations until they know what the market will look like.  This will probably happen eventually, but it seems like it's decades away.

Permalink Reply by craig on May 23, 2012 at 6:55am

I believe you are going to see CNG express itself a lot sooner than a decade or more. Your statement about the cost of infrastructure to convert drivers to CNG is not astronomical if taken into perspective.

The cost of gov't red tape to convert current cars IS astronomical along with the cost to the car companies to certify proven gasoline engines for CNG in the future. 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 23, 2012 at 8:24am

The cost of anything government does is astronomical.  Maybe you end up being right about CNG conversion.  For now I remain skeptical.  It looks like a good idea at $2.72 MCF gas, but what happens if it becomes $11 like it was in 2008?  All of the sudden it becomes just as expensive to fill up a CNG car as it is to use gasoline.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 23, 2012 at 4:28am

Paloma's deal with Marathon was in the Eagle Ford, Karnes & Live Oaks Counties. And it was for $44,000/acre, which included 7,000 bbld of production.  The production inflates the value of the acreage vastly.  

Permalink Reply by familyman on May 24, 2012 at 5:01am

Marcus,

 I appreciate your skepticism but i am in the industry and i believe you will find out you are wrong. First, the price of natural gas is extremely stable compared to gasoline, its low because of our abundance. Nat gas used to trade in a ratio to gasoline of 8:1 now its about 45:1 and is not expected to be less than 40:1. Secondly, for every thousand cubic feet of gas we compress, it yields 8 gallons of CNG. Now, if the price of nat gas would go up by $1/1000 cu ft the cost of CNG increases by less than 15 cents per gallon. If i extrapolate the increase at wholesale to $11 from $2.20 then it still only increases by $1.35/gallon, and i am opening a station in W Pa at a price of $1.60/gallon. That brings it up to $2.95/gallon, but lets multiply the increase in gasoline maintaining the 40:1 ratio, or even a paltry 20:1 ratio , and gasoline will bankrupt this country.

 

The Government has made the conversion approval process expensive, and so only reliable companies have gone for certificaation of systems, but it has caused those companies to maintain safety, which is more important to me than even air emmissions. Last month a gentleman that i know died as a result of dealing with a corrupted sytem. I don't want to get into further details till the law and lawsuits are complete, but its essential that safety rules be followed, and though EPA only certifies on the basis of air emmissions, the companies that only operate legally appear to maintain a higher standard than those that install uncertified, read illegal systems.  I am sure i just made some people angry, but i will happily challenge the systems, as i am also an NFPA member, and on numerous committees in the industry.

These are exciting times in our country, and people are only now learning about cng, and i am sure that the Big 3 will take it over when they can reach critical mass. And for those of you that state FORD and GM are building the systems, not quite,. You order your vehicle, they build it, send it to an upfitter, like my company, and then the vehicle goes to the dealership, and then the customer receives the vehicle. Its in anticipation of this growth that we are now building a new bigger facility both in Pa and in NY

VIVA CNG

Permalink Reply by Joseph-Ohio on May 24, 2012 at 5:07am

VIVA CNG right back atcha !

VIVA Federal Subsidy of Gasoline To CNG Conversions up and down within the various facets of that hopefully soon to burgeon industry.

Down with foreign oil, OPEC, etc.

T. Boone Pickens for President.

Permalink Reply by james nardulli on May 24, 2012 at 7:03am

VIVA CNG

I have 2 CNG cars in the Pittsburgh area.  Where will your new station be and when will it be open?

Permalink Reply by Joseph-Ohio on May 24, 2012 at 7:21am

@ james nardulli

We're still waiting to hear about filling stations here in Ohio.

We still roll on stone wheels.

Clovis points for weapons.

We got a lot of catching up to do - and leadership is still dragging it's feet.

Help ! 

Permalink Reply by Finnbear on May 24, 2012 at 7:37am

There is a CNG fueling station in Orrville OH at Smith dairy who has converted part of their fleet to CNG.

Quasar Energy has a couple in Ohio and is building more.

I know there are also sites in Columbus, Coshocton, and Newark.

Permalink Reply by Joseph-Ohio on May 24, 2012 at 8:43am

@ Finnbear :

Too bad by the time we drove from NE Ohio to Orville, Columbus, Coshocton or Newark that we'd need more fuel to get back and then be once again empty upon our return !

I'm right in the middle of sharpening my Clovis Points for deer season.

I'll check back with you guys a little later.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 24, 2012 at 1:29pm

Thank you for the very informative reply.  I'm not particularly well versed in the conversion numbers and I appreciate the data.  As I have said before, I hope my skepticism proves wrong eventually, but for now I'm following the numbers.  

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 22, 2012 at 4:35pm

Fort Worth isn't in the Eagle Ford.  The Barnett was way over paid for and it's killing the companies that got in late and paid such outrageous prices.  CHK's average EUR in the Barnett is now .9bcf per well.  The break even point for them is 2 bcf.  Every well that they drilled in the Barnett over the last three years has been either flat or uneconomical (due to hedging they having collapsed completely).  They paid $20,000/acre because they thought nat gas would never really drop this low.  The shale mythology is staring to be replaced by real, tangible numbers that give all of us--landowners, E&P companies and investors--a more realistic expectation.  It's great to dream big and I have faith that my Ohio brothers and sisters will come out of this richer, but let's not stoke the flames of hope beyond what the science allows.  Best to leave that sort of thing up to our Dear Leader.

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