Shell Article about poor shale gas results

from Rigzone E&P news, an admission by the soon to be retiring Shell CEO that their shale gas results are poor and that god results in some places are going to be more difficult to replicate elsewhere. This also gives a good excuse for a tax write down

article link:

http://www.rigzone.com/news/oil_gas/a/129591/Shell_CEO_Says_Shale_G...

Brian

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Permalink Reply by Philip Brutz on October 16, 2013 at 3:53am

Will this have an impact on the cracker plant?

Permalink Reply by Jim Litwinowicz on October 16, 2013 at 4:27am

Wish the article and/or his statements were more precise.......Was he talking about all shale results of all companies or just Shell's results on its leases? And was he talking about all of its shale results or were some disappointing and others positive? After all they just sold a lot of their Ohio lease holdings.  But they also just picked up some of Halcon's leases in Mercer Co, Pa which is contradictory. When they sold out the Ohio leases, their statement said they were going to concentrate on their W Pa holdings which indicates that area has been more successful.

 I have heard that the shale is China is so different that it doesn't frac very well.  Same in Europe. So maybe that is a major part of the disappointment of shale drilling.

Permalink Reply by Craig Cooper on October 16, 2013 at 7:55am

He was talking about Shell results. Clearly many of US Independents have been very successful in the shale plays. The US onshore is and has for ~ the past 25 years been a very challenging place for the majors / super-majors to operate; they generally cannot compete with the Independents. 

It will be much more difficult to replicate the US shale story in other parts of the world for a number of reasons. The US is relatively unique in that individual citizens are allowed to own mineral rights and benefit directly from the discovery & sale of hydrocarbons whereas this isn't the situation in most other countries. There is no personal-incentive / broad-based driver or sense of urgency to pursue unconventional plays.

Geology is geology. Shales with properties & hydrocarbon potential similar to those in the US exist outside the US.

Permalink Reply by Brian Powers on October 17, 2013 at 8:46am

Jim-

I share your opinion on the lack of specifics in this article. It could be that Shell is signaling its investors in a veiled manner about further divestments or changes to plans/priorities. We are also in the fourth quarter of the calendar year where many integrated E&P companies review and re-allocate budgets from under performing or overspending assets to others who play more nice by the production/accounting rules.

I also agree with Craig's comments about onshore US being a tough place to compete for the Super Majors compared with the more lean and mean independents. Shell has some great people and technologies and formerly had some great plays both in the U.S. and abroad, but maybe they are starting to wane now and they maybe are becoming ripe for a merger.

Just my opinion,

 

Brian

 

I retired from a Supermajor(BP) and they seem to try to outdo one another in the press and on Wall Street all the time

Permalink Reply by Kyle Nuttall on October 18, 2013 at 4:40am

I've heard through the grapevine that Shell is moving in to Wetzel County, WV.  

Permalink Reply by Lance Nimmo on October 16, 2013 at 4:58am

I wouldn't be surprised if one of the main factors is they have zero infrastructure to bring the product to market...

Permalink Reply by James Foster on October 16, 2013 at 9:20am

Does Shell have any wells or permits in PA?  They have one permit in Ohio in Columbiana County and have not drilled any wells.

 

Permalink Reply by Jed Clampett on October 16, 2013 at 9:51am

Shell/SWEPI is drilling test holes in Warren, Elk, Forest and Mckean counties in PA.

Permalink Reply by Trapper on October 16, 2013 at 10:21am

James,

I believe Shell has a much bigger presence in N.E. Pa. They bought East Resources a couple of years ago and have alot of wells in Tioga County,Pa. This area of our state is dry gas.

They have a few wells here in western Pa. that are selling gas and many acres yet undeveloped. I hope that these holdings are not what the CEO was referring to in his press release. The fact that they are considering a cracker plant here leads me to believe we are in the wet zone. They recently opened up a bidding process for producers interested in selling ethane to them , so , to me at least , the statements published appear contradictory to what is actually happening.

I will rest easier if I see them building infrastructure to tie in potential well sites and do more drilling here in Western Pa. There does appear to be a lull in their activity here as of late though.

All we can do is wait and see and remain hopeful.

Permalink Reply by Janice L. Hancharick on October 17, 2013 at 6:00am

Shell/SWEPI does have an active presence in the counties listed above by "Jed".  Its spuds in McKean for July and August only show one as being for an unconventional well.  Seneca also has spuds  across this same area ... one unconventional.  The hold up throughout Jed's listing is multi-fold.  More pipelines ARE needed ,  expanded capacity is needed in existing ones, plus turning the major ones into bi-directional lines.  The gas has to be able to move.

In Marcellus Drilling News today an article that also reflects on drilling in these counties is a case that has undergone 3 appeals since 2009. The Allegheny National Forest located in this region has seen new drilling halted much to the chagrin of private landowners holding the OGMs  in and the drillers.  The case just heard by the federal U.S. Court of Appeals Third Circuit ruled again in favor of private landowners. If this is the government's final appeal, and pipelines continue to grow as they have been  THEN landowners will be able to reap the rewards of their own resources. High drilling interest and sound leases can allow this region to thrive.  Cross your fingers for western and north central PA counties.

Permalink Reply by Janice L. Hancharick on October 18, 2013 at 7:12am

I don't know the answer Chip.  I have the same question for my county.  The answers aren't being given out till the boards of these mystery companies come back with responses.  A lot of back and forth dialogue goes on before  Company Names are provided.  When it comes to "playing the cards close to the vest" O&G firms excelled first.  Getting a good deal doesn't have anything to do with laying all the cards on the table @ the front end of the game.  That's a "closing" move.

I'm just as eager to learn Names as you are, but  I've learned Patience and it  has served me well.

Permalink Reply by paleface on October 19, 2013 at 3:19am

 I think the big major oil and gas company's didn't react to the shale discovery's immediately,they waited for the smaller independent's to prove the play and by doing so they lost out on the best areas.

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