Replies to This Discussion

Permalink Reply by Dan Warner on February 22, 2015 at 3:44am

Joseph-Ohio,

To clarify my position, I am in no way defending any sort of actual wasting of minerals.

In case you may have misconstrued my assertion that we "shouldn't" expect the industry to regulate itself, I mean to say that it would be a mistake to expect it, not improper to expect it. 

However, there is a bottom line.  If the cost of transporting the gas would be higher than the value of that gas, who would make up the difference?  Would it come out of the profit margin of the oil being produced?  Wouldn't that only serve to curtail that production?

The only alternative would be tax dollars, which would tend to cancel out the benefit to the collective.

The Texas gas that I wrote about is the same Texas gas that you wrote about, that being the same gas that the article which Mr. Drang posted was written about.

Being mainly an oil play, while ours is chiefly a gas play, the economics are obviously going to differ.

We can’t expect to overlay our standards onto an area so different from ours.  With ongoing drought conditions in an already arid region, water for fracking may be more valuable than the landlocked gas there, while here, water tends to be free for the taking.

By the same token, I can understand that what is happening in WV may not be a concern for those who don’t live here.

Some may even consider it fair for the goose as it is for the gander.

I do feel, though, that the Texas situation has context here, and in all shale plays.  The waste and pollution of flaring is just one of a spectrum of negative effects on local economies and quality of life (see links below), and a glaring example of a need for real regulatory bodies, rather than the figureheads that the industry has managed to install.

I think that this article says it all:

http://www.huffingtonpost.com/2014/02/21/exxon-ceo-rex-tillerson-la...

 

As to the Trumbull Co. flaring, if I had an opinion, I'd be guessing, just like the rest.

With a pipeline in place, I can think of no reason for it except that the gas must be too impure.  Common sense says that they did not spend millions to drill a well just so they could waste the gas.

 

One other item that I will mention here:

The company that I am leased to, Jay-Bee Production, does not, to the best of my knowledge, flare at all.  They seem to have a process wherein the purge gas is piped into the front of a specialized trailer.  Some gas can be observed escaping the rear of this trailer.  This continued for  ~ a week at the well that I observed close-up, but they have drilled several others that are either in, or just out of sight, with no sign of flaring.

This does not mean that they are not 'wasting' gas.  In fact, it may be more harmful.  I do know that the family living near the well that I observed up-close (it's ~50 feet from the road) was evacuated at one point, post-completion, and the first responders also complained of noxious effects from the gas:

http://www.frackcheckwv.net/2014/03/31/11389/

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Permalink Reply by Dan Warner on February 22, 2015 at 7:37am

There is no question in my mind that stronger industry regulation is needed.

Unfortunately, as the proposed WV forced pooling bill shows, deregulation is the order of the day.

Wouldn't it make more sense to plug the Trumbull Co. well temporarily, while they wait out the theoretical rise in price?

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Permalink Reply by Joseph-Ohio on February 22, 2015 at 10:56am

I'm no forced pooling advocate to be most clear.

I would like to see it repealed here in Ohio.

But I see no way that will happen most unfortunately.

That would be a miracle.

Good luck fighting it in WV.

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Permalink Reply by Joseph-Ohio on February 22, 2015 at 2:08pm

Plugging or curtailing flow somehow short of wasting the resources is what also occurs to me to be better as opposed to wasting it by burning it off / venting it to the atmosphere (as I wrote earlier). But, if they don't want to do it simply because it would cost more than wasting it; and it is even legal to waste it, I fear that is what they'll do (and I think they're probably doing already) anyway.

This theory agrees with your point about not expecting 'the industry to regulate itself' doesn't it ?

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Permalink Reply by Dan Warner on February 22, 2015 at 3:59pm

It does, but in a case like this, it seems to me that gas lost is lost forever.

I still suspect a quality issue; perhaps a little of each, with the quality being below the break even point at current prices.

This goes well beyond my knowledge of the industry, but it does bring to mind a simpler time, when I was a boy.

There was a network of free gas from some shallow oil wells that fed some homes in the rural area where my father worked.

For whatever reason, the excess pressure had to be bled off, and rather than being allowed to accumulate in a cloud, it was fed through a standpipe about 6' high, and burned off.

It was the proverbial 'eternal flame'.

Anyway, the entire network only carried a few ounces of pressure, and the flame was so small that a hard rain would extinguish it, so an old tin can would be perforated on the side, and placed upside down over the pipe as an 'umbrella'.

One day my brother remarked to an old timer who lived nearby, that it seemed a waste of gas that someone might find useful.

The old guy was quick to agree, but then added, in all seriousness, that it was a waste of a good can, as well.

True story.

I appreciate the moral support, regarding the bill. 

A House Judiciary Committee vote is scheduled for tomorrow morning.

Permalink Reply by Joseph-Ohio on February 23, 2015 at 12:43pm

I would think that if regulation were in place (and enforced) that made wasting natural gas and associated products (such as NGLs) illegal, that more infrastructure would be developed and the price of the resources sold would rise.

Regarding common sense and impurities as the reason for extended flaring without production sales, I'm inclined to believe that it's more about waiting for better prices and choosing to throw it away / burn it off as cheaper than creating the infrastructure required to sell it at these current lows.

They probably think once the prices rise that making up lost money will be easy. Seems to me that they sell to a captive market and when overstock dwindles they will simply raise the price and it will either be buy it or shut-off the lights as far as choices go for their clients. And I also think that the lion's share of their clients will buy it.

Only IMHO.

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Permalink Reply by paleface on February 23, 2015 at 12:57pm

 Our Government should have helped in the funding for the infrastructure rather than fund the alternative energy failures,Salindra and others.

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Permalink Reply by Joseph-Ohio on February 23, 2015 at 2:52pm

Agreed; and beyond just the infrastructure, also fund / subsidize conversion programs to natural gas from gasoline and diesel; and find the money for it by stopping funding / subsidy of the middle east oil wars and the protection of middle east and OPEC production.

Only IMHO.

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Permalink Reply by Joseph-Ohio on February 24, 2015 at 1:50am

Radical Islam Fundamentalist Jihadist Terrorists are another matter entirely however.

Those need to be rooted out and destroyed, as they are simply criminals.

No argument from me on that part of it.

That's a tough row to hoe, however.

Especially considering those OPEC countries (or any countries) supporting them with real estate, weapons, money and trade so that they can wage their terrorist campaign against us.

To me those are also our enemies.

If they are not with us against them they are against us.

Peace (if possible) / out.

J-O

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