Replies to This Discussion

Permalink Reply by Tom on January 17, 2013 at 6:52am

I'm in NE Bradford and my well volume dropped considerably, all of a sudden, after one year.  I called the company and they told me there was plenty of gas but no room in the pipeline.  With every new well coming on line there was less room.  Recently it has been going back up again. 

Why will new TGP capacity change the price structure.  I don't understand how the prices are determined.  My neighbor told me he is getting paid different prices for different wells all from the same pad.

Permalink Reply by melissa humphrey on January 17, 2013 at 7:17pm

Tom- what we understand (maybe wrong headed) is all this newfound gas flowing from the Marcellus in NE PA is plugging available take-out capacity. Value goes to he who owns capacity vs volume. Or put this way in order to gain travel ability, the operator must pay up for transpo whoch in reality becomes discounted gas.

 

Historically Appalachis gas has been .20 to even a 1$ over NYMEX. Nymex is based in the Henry Hub, a geographical point for nearly all US gas pricing. Gas in various locations is under of over HHub depending on localized supply demand.

If we get more interstate take out, local prices should make up the discount and even go back to a small premium, because the NE has a very high use rate. 

Sorry I can't say it any better. Cabot is shipping on the TGP, the Millinieum sp?, in NY and on the Transco out of Columbia County.

 

We need a doubling of the TGP, it will come but when?

Thx

Permalink Reply by Doug Duffield on January 18, 2013 at 5:55am

Unless i'm mistaken there aren't any wells under compression and are freeflowing into gathering in NEPA.  One thing could be pressure varience between new wells in the main gathering vs older wells coming into the main line from pad spurs. What i'm saying is pressure form a newer well or wells basically supressing (or holding back) earlier drilled wells, also could be choked back because of capacity issues.

Permalink Reply by melissa humphrey on January 22, 2013 at 6:49am

Mr Duffield- good theory, probably right.

If true it sure shows how misleading prod data plots may be in estimating EURs.

Next seeing funny #s that suggest the # of wells feeding into any one gathering line may be significant to prod rates. Obvioous I guess, but we think it is extra significant.

 

Upper Lycoming, just reading DEP@s, declines look normal, wells at 6-7 oover 6 months dropping to 3, next 6 months. Anadarko, who knows what it is doing.

Permalink Reply by Wayne Miller on January 22, 2013 at 11:41am

 Here are the prices paid from a single well. So you are saying that the reason  Statoil is paying more because they have more capacity so they don't have to discount as much???

                    Jun     Jul       Aug     Sep      Oct

CHK           2.30    2.56     2.79     2.39      2.79

Statoil        2.51     2.819   3.076   2.589   3.042

Anadarko  2.008   2.145   2.351   2.243    2.741

Mitsui        2.02     2.27     2.58     2.38      2.87

Permalink Reply by Doug Duffield on January 23, 2013 at 1:09am

Not sure capacity has anything to do with price varience, imo that would be each cos marketing share. Stat has been higher on price since our wells went into production,. Declines really never happened to any great extent till about month 20,and then only slight, now there is a nearby site recently fracked and online, be interesting to see if the theory is correct.

Permalink Reply by melissa humphrey on January 23, 2013 at 8:27am

Mr Miller, not to question your understanding, but various interstates have variance in how "tight" or scarce capacity is. Literally capacity is owned by various parties and can be traded, bought/sold. It is said the TGP is extra tight, Susquehanna output takes a bunch, Bradford needs that outlet as well.

The Millennium over the border in NY supposedly is less “tight”, and the Transco that transverses Lycoming, Columbia, Luzerne, appears to have some room. I have noted Lycoming wells pretty consistently get better prices.

Or any company with more pre-owned probably gains a better price and a co with outlet to the Mill or Transco, probably can get a better price.

We don’t have access to Southwestern prices, it would be interesting to know if they have consistently better rates, since much goes N to the Mill.

Cabot really seems smart, they are not shipping on 1 or 2 lines heading north to the Mill and have a line going south to the Transco so they have 3 interstate outlets.

Minor point, am told a lot of gas that used to come from that big OH hub, across the TGP, now goes through a interstate that transverses southern PA, leaving TGP for Marcellus gas.

Jan 2008, I had a TX “expert” on the line and asked what if,  we produce so much the interstates can handle it? He said, don’t worry, if the gas is there, the lines + pressure increases will be built.

These discounts to NYMEX really  stink,,,,it will be interesting to see if Cabot’s fresh new outlets (less pressure on the TGP) and some upgrade the TGP had, will reduce the discounts in SE Bradford.

Its really a game of arbitrage , and mostly royalty owners are on the side of the gasco, assuming they are not lying.

Why is Mitusi so consistently low? No idea but someone should notify their legal dept. in case it might stir things up – low odds but why not.

BTW We know of two parties in lease negotiations with Chesapeake, not a matter of lower bids but, they are being treated terribly. Ie phone bid is made, then in writing it comes back lowered, plus just constant outright lies.

Will Chief or  anyone bid for leases in producing Chesapeake units?

Thanks, 

Permalink Reply by melissa humphrey on January 23, 2013 at 8:30am

Mr Duffield- Am sure you know 20 months flat is very good, implies throttling back and bodes well for total lifetime. Have seen some similsr, even 24 months flat. But from every porfessional we interact with, decline are a norm, expected, the slower the better , but any wells without are saying thye could hav started with higher IPs.

Seneca raised EURs yesterday, by using longer laterals.

Permalink Reply by Tom on January 28, 2013 at 2:22pm

Southwestern paid:

Jun      Jul    Aug    Sep    Oct    Nov

2.12    2.46  2.58    2.26    2.58   3.10

Permalink Reply by melissa humphrey on January 29, 2013 at 9:20am

Tom Thanks, we don't see SWN prices as ofg yet.

I am guessing,  hoping those are after gathering deductions?

 

Oct is especially low vs NYMEX same with Chesapeake prices.

We will hope the deep discounts vs NYMEX are a thing of the past.