Have any groups considered drilling your own well?

Accepting the risk of sounding completely green or ignorant, I just have to ponder why no one has decided to  pool together and hire a driller for fee.  Having observed payouts of $90K per month and doing the simple math, a small group of landowners should be able to contract a driller.  I don't know the cost of drilling and fracking but have heard it is in the neighborhood of a 1/2 to 3/4 $million.  Another in the industry told me more like 7-8 $million.  I believe the 3/4, not the 8 because I don't see how it would pay back at a cost of 8.  Of course, transmission lines are another factor but what if, a line is close to the properties.

So, am I the un-informed new guy, drilling rigs for hire not available, industry just has it all tied up, too much dreaming......

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0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 24, 2013 at 8:30am

Drilling a well into the Utica/Point Pleasant costs around $10,000,000.  Those costs drop when companies drill high volumes but that takes time.  A group of landowners drilling a well on their own would be risky and very, very difficult to coordinate.  Add to that the struggles of getting your product into a pipeline system and you see why this isn't done much.

Permalink Reply by Trapper on March 24, 2013 at 9:45am

I would venture a guess that it would be feasible for a larger concern to hire someone to drill and complete a gas well for there own use. Say , a forging or heat treating company. If Henry Ford were alive he would show you how. And he wouldn't pay ten million for it either. He was 'da man where vertical integration was concerned.

Permalink Reply by Jim Litwinowicz on March 24, 2013 at 10:36am

There are an estimated 300 different companies involved in getting a well into production. Imagine the complexity of getting bids, organizing, managing, over seeing, and coordinating that many companies. Worse, consider this; You drill one well, CHK or RRC drills 20/yr.  Who do you think the driller, fracker, or other sub will go to first?  Who would you keep happy?

And how will you get Pa DEP or Oh DNR approvals when you have no experience or track record? How will you get any type of liability, workmens comp or other insurance and at what rate? And what midstream will contract with you and allow a connection from a well done by a wildcatter?

Permalink Reply by p umpjack on March 24, 2013 at 2:47pm

I would not be suprised to see units derisked (hedge fund money) with the thoughts of a major assumming the ownership at a later date ie wildcatting

essiantially unproven areas developed

 

 

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on March 29, 2013 at 1:52am

Nothing ventured - Nothing GAINED (or 'lost', but THAT comes with 'hindsight - coulda', shoulda', woulda's...). Where there's a WiLL - there's a WAY...YES, there are 'obstacles' to overcome, there are. BUT a determined individual CAN ENDEAVOR to undertake such a Herculean mission such as this...it CAN be done ('AmeriCAN'...remember?).

AmeriCAN's are a 'breed apart - we ARE like the 'wild Mustang'...'imported' from 'somewhere else', but when 'here' - adapt, change, & survive...and THEN there are the 'individual 'DOERS'-accomplishers who DO 'overcome' (FORTITUDE, ENDURANCE, DETERMINATION). Remember Getty? J. Paul Getty? - WHAT a character HE was! - of 'good, upstanding character' - he 'fell FAR from the tree'...BUT when it came to WHEELIN' & DEALIN' - HE 'had it down'...

There WILL BE another such individual - they AREN'T going to 'focus' & undermine/feter their mind with all the 'CAN'Ts & REASON's (presented here is quite 'logical/truly make sense fashion') WHY it 'just won't work. THEY (whomever 'they may be - whether an individual - or a group...) will simply FORGE AHEAD -- that's it! They 'will' - because they HAVE 'the will'.

Where there is a WILL there is a WAY. -Look at just what's being done - WITH the 'fracking'!!! ***No one thought it was possible - but it's 'being done'. THINK about THAT - and then you'll understand....

As one light lights another, nor grows less - so nobleness enkindles nobleness. They will just DO IT!...it'll be done - sometime. There's just TOO much 'gold' there to 'take off the table...and THIS is AmeriCAN soil (still...).

Permalink Reply by Jack Straw on March 24, 2013 at 1:22pm

Before undertaking something as complicated as drilling and completing a long offset deep horizontal well with multi-stage frac ... I would suggest that you start out with a simple project, perhaps a nuclear power plant or an intercontinental ballistic missile (even Kim Jung Un can do that).

 

All IMHO,

                  JS

Permalink Reply by p umpjack on March 24, 2013 at 2:50pm

or you could sign with c-x

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on April 13, 2013 at 10:35am

Yes, p umpjack - yes, we could 'sign' with CX, get THEM to 'put up the cash'/pay...then keep all the money (*split up accordingly among landowners - expenses & such, you know...) & then shrug our shoulders at THEM, smile and say lol?

...why hasn't anyone come up with nuclear propulsion drilling techniques yet? We COULD create that market - sell futures in IT...for all of you out there...NNG (Nuclear Nat'l Gas) - I AM just joking here, folks! Sometimes it's FuN to 'take things lightly'! Sometimes the STUPIDEST JOKES spurn the best ideas? One never knows...Bucky Balls? Higgs Boson?

As one light lights another, nor grows less - so nobleness enkindles nobleness. Mirth.

Permalink Reply by New Field Farm on March 24, 2013 at 3:08pm

So having observed the posts, driving by drilling operations and researching the inducstry, I certainly appreciate the technical challenge of drilling into the Marcellus, the horizontal and fracking phase but can hardly equate that with building a nuclear power plant or an intercontinental ballistic missile.  If the level of complexity, cost, coordination and so forth arrives at the $10M dollar mark then I would have to say there is a chance that landowners are paid quite well for their acreage and the little amount of risk they accept.

Given time, I may attempt some computations from well output data compared to market prices.  Quick math from producing wells paying out $90K cannot possibly meet $10M in capital requirements so, what type of revenue must a well bring in that they are capable of covering this type of expenditure yet still yield a profit.

Either the $10M is off or the revenue is off because the numbers don't add up. 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 24, 2013 at 3:21pm

"Either the $10M is off or the revenue is off because the numbers don't add up. "

Welcome to the shadowy world of shale economic accounting.  

Permalink Reply by Jack Straw on March 24, 2013 at 5:30pm

RE: "the horizontal and fracking phase but can hardly equate that with building a nuclear power plant or an intercontinental ballistic missile."

There you are wrong.

From E = MC2 to nuclear reactors was a rather rapid progression, measured in decades.

Robert Goddards playing around with toy rockets in the 1920’s and 1930’s very quickly lead to the intercontinental ballistic missile.

It took over 150 years of constant innovation to get from Drake’s Well to "the horizontal and fracking phase”. It took well more than a century’s research and experimentation.

Locating, drilling, fracing and completing a long offset horizontal well with multi-stage fracs depends upon the physics, material science and engineering associated with  intercontinental ballistic missiles and the physics associated with nuclear power generation, and much more.

The use of radioactive materials as a source (such as Plutonium Beryllium) in the Neutron Density logging tools led to advances in the evaluation of wells.

The directional drilling that is critical to horizontal drilling was made practical through an application of the technology developed in the inertial guidance system for the V-2 rocket during WWII. So, in a way modern drilling is Rocket Science and it does involve the nuclear industry.

The high pressures , high temperatures and harsh environments of a nuclear reactor and an intercontinental ballistic missile are mirrored in the situations encountered in drilling at depth.

The electronics utilized at the bottom of a deep well must withstand the rigors that similar electronics need tolerate in both space and a nuclear reactor.

As Jim pointed out “There are an estimated 300 different companies involved in getting a well into production.”. There is a remarkable amount of technology (both science and engineering) that is required to get us to the point at which we currently find ourselves in locating, drilling, fracing and completing a long offset horizontal well with multi-stage fracs.

Many scientific disciplines are not only involved, but they are at the razor’s edge of their respective technologies: Geologic, Geophysics, Electronics, Material Science, Metallurgy, Facilities Engineering, Nuclear Physics, Fluid Dynamics, Chemistry, Geochemistry, Reservoir Engineering as well as others that do not immediately come to mind.

Building a nuclear power plant or an intercontinental ballistic missile can hardly equate with the technology associated with the  drilling and fracing of a horizontal Marcellus or Utica well.

Intercontinental ballistic missiles and nuclear power plants are old science/technology -  Marcellus or Utica wells are at the forefront of current technology (requiring cutting edge contributions from a myriad number of scientific and engineering disciplines).

If Kim Jung Un (Korean for fat little kid with bad haircut) can come up with an intercontinental ballistic missile, anyone can.

Considerably more Science and Engineering go into the Marcellus/Utica wells than either a nuclear power plant or an intercontinental ballistic missile.  

You are forgiven for your ignorance.

 

All IMHO,

                   JS

Permalink Reply by james mcmeechan on March 25, 2013 at 12:55am

  Don't forget the part of the equation known as risk. In my area it would take approximately 10 landowners to come up with a 640 acre unit. That would work out to 1 million per landowner to fund the well. Even if the landowners could come up with the capital, and that is a very big if, I doubt they would be willing to risk their entire net worth on the performance of an oil well.

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