Utica's production decline rate

Has anyone heard anything about the rate of production declining abnormally fast?  It was brought to my attention that there is some concern that production might fall off in Utica wells faster than in other shales.  Does anyone know if this is the case?

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Permalink Reply by Dan on October 24, 2012 at 2:48am

Joseph,

I could never be a politician, even if I had the desire not many would like what I had to say.

I too enjoy your posts and discussions.  It is nice when folks agree but is completly OK when they don't. 

Better to argue over a topic then for it never to come to the table. 

 

Permalink Reply by Bluflame on October 24, 2012 at 2:03am

Joseph,

  I'm involved with a coalition of Ohio organizations supported at least partially by the State of Ohio. This group is charged with using the Utica Shale Bounty combined with Ohio's long history in manufacturing to grow current Ohio manufacturers, attract new ones and to promote re-shoring of manufacturing businesses that matriculated to lower labor cost markets.

  The driver of all this is very attractive NG prices influencing manufacturers both through reduced energy and feedstock costs. This effort can create a win-win-win-win scenario for Ohio residents (more jobs), the State of Ohio (more tax revenue), manufacturers (more profits) and the O&G companies (expanded market).  So efforts are underway. Patience will be required as this will not happen overnight. 

   This addresses your suggestion of a larger "market".

BluFlame

Permalink Reply by Joseph-Ohio on October 24, 2012 at 2:12am

What you've written reads to me like we're on the same page.

Our opinion here is:

'Put the pedal to the metal' and 'full speed ahead'.

Permalink Reply by Bluflame on October 24, 2012 at 2:55am

Our opinion also. Challenge is that all projects under consideration are capital-intensive. Therefore, the "gestation period" is very long. Contrarily, once in place, the large, complex, expensive capital items are not readily transferred to other locations!

BluFlame

Permalink Reply by Joseph-Ohio on October 24, 2012 at 3:14am

No time for excuses.

Excuses are not acceptable.

We need positive action.

Permalink Reply by Joseph-Ohio on October 24, 2012 at 4:42am

BlueFlame,

 

We're reading alot about 'Expanding Markets' overseas - Corporations selling our 'Shale Gas Bounty' to enhance their bottom line and in the process throwing the 'Domestic Market' and 'Domestic Market Building Incentives' under the bus.

That behavior ought to stop like a year ago. 

Permalink Reply by Bluflame on October 24, 2012 at 5:28am

Joseph,

    Selling Shale gas (or any natural gas for that matter) in the export market requires conversion from the gaseous state to Liquid (LNG) at very low temperatures, transfer on special LNG ships and re-conversion to the gaseous state at the receiving port. Ships and receiving facilities are available, since LNG is already available from mideast sources. Australia is constructing several LNG export facilities.

    Several years ago when US NG production was dismal and the hz drilling technology was not yet available, LNG receiving facilities were constructed at several US ports by private companies. This was in anticipation of expanded mideast LNG imports. They are now sitting idle, supporting my earlier comment about letting private industry take the risks. "What makes sense today doesn't necessarily make sense tomorrow."

   Anyway, exporting NG requires an expensive facility to convert NG to LNG. One is underway in Louisiana and at least two others are on the drawing board. These babies cost in the $B's. The final hurdle is govt approval of exports, which as you can imagine is a political hot potato.

  Bottom line: It's technically feasible, incredibly expensive and a few years away at best. Apparently, the mothballed US LNG receiving facilities can be converted to export, but I've read that conversion to export is also an expensive and lengthy endeavor. (this is beyond my meager technical expertise!) Whether it will pass political muster is anybody's guess. The economics for NG producers are attractive (at least, today), considering NG on the global market is ~4X current US prices.

  The first four paragraphs are purely factual, and I reserve judgement about the wisdom of exporting the "Shale Gas Bounty". It becomes a supply and demand issue, and we don't know yet how those elements will stack up when the export possibility becomes reality.

BluFlame

  

Permalink Reply by Joseph-Ohio on October 24, 2012 at 5:55am

BlueFlame,

Thank you for your description.

And I find it very thought provoking.

These $B's. apparently now being spent on converting import facilities to export facilities plus any new money being spent by these major O&G Companies to build new export facilities (one actually under construction and at least two on the drawing board) really strike a sour note with me.

Since I've been thinking and writing about subsidies most recently I'm wondering if there is any Federal money being thrown in the pot for those endeavors.  If so to me (and probably many others like me as Domestic Consumers and Landowners) that would be really adding insult to injury.

I can envision it reality as it would be argued as a Deficit Reducer.

Can you enlighten further ?

 

  

 

Permalink Reply by Bluflame on October 24, 2012 at 6:05am

Joseph,

  Fortunately, it's all being done with private money. One would think they've done their homework on the political side.

  BTW, only one facility is underway (as far as I know) and it is new and located in Louisiana. No conversions are yet underway, and none are in the planning stages, again to the best of my information.

  Really, all I know is what I've read. I have no "insider" information.

BluFlame

Permalink Reply by Bluflame on October 24, 2012 at 6:13am

Joseph,

  Final thought on this. IMHO, I think NG will inevitably become a global  commodity where the only price differential will be conversion costs (to & from LNG) and transportation costs. Anything else will require govt intervention in some manner. 

   "Govt intervention" would require an OPEC-like organization for NG. It might be poetic justice on our part, but not good business.

BluFlame

Permalink Reply by Joseph-Ohio on October 24, 2012 at 6:25am

Thank you once again.

Bottom line is the Consumer pays for it all one way or another whether it's in the form of $4.00 a gallon gasoline, or heating fuel cost, or taxes, and / or all of the preceding.

I'm just stumping for Domestic Use, Domestically Economical fuel prices, and an end to funding war making, enemies or potential enemies with foreign purchases of fuel and/or safeguarding the so called 'new world order's' energy; especially considering it's all within our reach and at our fingertips with the Shale Boom.

More power and prosperity to the U.S.A. and we the people.

Permalink Reply by Jim Litwinowicz on October 24, 2012 at 6:36am

Dominion has an export LNG terminal on the Virginia coast that has been given permission to be converted to an import facility.  I don't know how far along they are but I think they said it would be online next year or the year after.

We have huge reserves and can export a fair mount without having a large impact on domestic prices. In fact, exporting may give the profit incentive to increase drilling and production. Current prices are so low that wells are shut in and drilling has dropped significantly.

Exporting will help grow jobs, increase royalties to landowners, increase tax revenue, help our balance of payments, boost the dollar.

One great impact of us being a major source of energy for the world would be that foreign money will come here instead of going to the radicals throughout the ME. Perhaps this will cut off some the funding of terrorists and radical Islam. If so, that will save lives of our military and reduce our military costs.

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