In this depressed industry environment and rumors of unexplained shut ins around, I was curious about those who have experienced shut in activity (or I guess INactivity) on their producing units such as the process, duration, causes, communication (if any), and any other information. I thought I'd kept up on all of the important factors regarding being a land owner working with a producing gas company but somehow overlooked the entire possibility of being shut in. I suppose, at the time, the idea wasn't even a factor in mind, with the natural gas industry booming before politics and environmentalists put the stress on operations blocking transmission lines and adding regulations and costs that created an over-supply, de-valuing the commodity within our region. Now, it appears that the possibility - and even probability - of being shut in has been brought to the forefront and I'd like to get some information and education on it besides the obvious "no royalty payments". Thanks to all and hope that everyone will survive this slump.
Adding to all of the valid points raised in this discussion, I have recollection of conversations alluding to the Shut-in provision and how that adversely affects the total EUR of some/most shale wells. IIRC, once a shut-in well is brought back online, the production numbers do not resume where they left off; a significant drop in the 'new' IP of a returned-to- production well, thereby lowering the EUR of these wells.
Hopefully, others on this site can reinforce or dispel this line of thinking...inquiring minds want to know...LOL
I guess the producers are "damned if they do, damned if they don't". Not an environment being enjoyed by anyone in the shale patch.
Bullfrex -- depending upon the length of shut-in, the production numbers typically spike once the well is turned back on due to the pressure build up. This really shouldn't have an effect on the EUR since the well should quickly get back to its decline curve after that initial blip and back towards the more predictable, flattened production down the line.
Shut-in could have an effect on IP rates, depending upon when in the well's life shut-in is happening obviously, but IP rate has become less of a focus as investors realized it is not indicative of anything.
I'm glad you brought that up because it's something that I've been wondering about, particularly since the market decline and producers dialing back production and, of course, shut ins. The basics of shale gas extraction as I understand it is that there is natural gas trapped inside the black shale layer of the earth (Marcellus in our region) and in order to reach it drillers drill into the layer and "frack" it, cracking open the shale rock and releasing the gas to be pumped out and transported to market via pipelines. Probably a VERY simplified description, but I think essentially the process. So, what I have wondered is, where does that released gas go if it isn't trapped and pumped out of the ground? If the shale rock encasing it is fracked (cracked) and the gas is free to escape, how is it saving anything to stop or decrease pumping it out? It isn't sealed down there, in the rock, so could obviously dissipate outside of the range of the well pipe(s) if not kept under pressure and pumped out. My thoughts have been on the lines of losing gas by decreasing output or shutting in rather than saving by waiting for higher market prices. I read BW_Appalachia's explanation on production output of shut in wells put back into production BUT how can we TRULY know how much gas has actually dissipated while backed off or shut in? It's not a solid product. Gaseous elements can seep through just about anything not air tight. It's been a question I've had for a long time and wonder if anyone has truly been able to answer it with certainty? I don't see less long term production as a fair trade off for waiting for higher market prices. It's a gamble.
Does anyone know if a well is considered shut in if one hole is drilled and fracked but only a Christmas tree is showing on the pad?? There is no pipeline to and fro.
Well then how can the state of Ohio consider it shut in along with drilling company?
On the bright side EQT just signed a long term midstream deal promising a higher volume of gas to flow and lowering their production costs.
Maybe other outfits will take a hint and follow EQT. Seems like every endeavor is somehow connected to the rest. Somehow someone needs to forge ahead and the chance of not doing as well as expected. Pipelines need to be built and equipment needs to be maintained to be ready to GO whenever it is called upon to be put into service.