wet gas versus "oil only"

Fairly near Neighbors in southern Tuscarawas County (a couple miles from Harrison and Guernsey Counties) were turned down by McClendon and another Big Guy Company this past week, both for the same reason: You are just a little west of the wet gas window and are viewed as "oil only." So, tell me, when did oil become less valuable than wet gas? Aren't we going to be flooded with all that gas soon, lowering its value even further? What should I advise my elderly neighbors to do - they were looking for a lease or sale of % of their mineral interests in over 100 acre unleased  farm...telling gramma and granpa to "sit tight" for a couple more decades seems cruel - but is it realistic? Will oil be of value here again? Or are the investors clamoring for fast gas riches first then come back and go for the oil?  Plus, anybody know if it's light oil, thick stuff or do we have to wait and see? 

Where's Ron D Jockefeller posting when we need him? Any other professional opinions out there? Thanks for all opinions!

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Permalink Reply by al raptoria on October 8, 2013 at 2:52am

Makes sense. Thanks Area Man. Would still like to know exactly what tests were done in that area to verify the claims of "oil only" as it all seems to me to be a big crap shoot led by hearsay and a few regional tests and who knows what kind of skillset doing the drilling....

Permalink Reply by Craig Cooper on October 8, 2013 at 4:33am

al,

A fair amount of effort is put into collection, analysis & interpretation of existing well, seismic et al data throughout a basin or region in order to determine fundamental characteristics of the rocks & associated petroleum systems prior to leasing and drilling. 

Results of the studies will yield good general characteristics of the systems; e.g. original gross depositional environments; stratigraphy; identification of major structural elements (e.g. faults & fault systems, relative structural highs & lows, etc); source identification, quality & maturity; likely hydrocarbon migration pathways; identification of potential reservoirs & their properties; delineation of hydrocarbon types & zones / fairways (e.g. gas, wet gas, oil trends); etc., etc.

So, there is a lot that can be & is done prior to drilling to pinpoint the most likely 'good' areas to drill.

All of those things are used to guide leasing & initial drilling efforts. All of those things are refined, modified, perhaps even completely changed, with the collection & interpretation of new data during drilling and acquisition of additional seismic data. 

The updated interpretations are used to determine whether it is worthwhile to continue E&P efforts and, if so, where and how to design or modify operational plans.

IMO, it is important to realize that there will almost certainly be multiple sweet-spots in these unconventional reservoirs. The most obvious will be pursued first, but others will follow as more drilling & new data collection take place. Sweet-spots will also grow / shrink with long-term commodity prices and technology advances. Shale / unconventional reservoirs are much more complex than conventional reservoirs so it will take (even the best) operators longer to figure things out. Progress has occurred and will continue to do so, however, a bit of patience is required.

Permalink Reply by al raptoria on October 7, 2013 at 3:10pm

Thank you for the encouragement James.

Permalink Reply by JR on October 8, 2013 at 3:38am
I read on here awhile back that it seven years to "crack the code" in the oil window of the Bakken. And that drillers think the "code" is more like 2-3 years away for the Utica.
Permalink Reply by Madd man on October 8, 2013 at 6:30am

Seems clear as day to me.  Oil and Gas companies are all businesses.  The "wet gas" has a much greater demand than oil.  It's simple economics.  If you do some research, you will find where the highest production numbers are in the utica  in terms of BOE/d.  In turn you can pick out the "sweet spots" from this data.  Although there will always be another "sweet spot" out there, I think that the next 5-10 years will focus mostly on the wet gas region of the utica.  The dry gas and oil plays cannot compete with the wet gas regions financially.  There is a simple solution why a huge number of oil and gas companies are moving all their resources to the utica wet gas; money.  Why in the world would these companies be wasting their time and money if they thought they could be more efficient somewhere else?  Pure logistics.

Permalink Reply by Paul Martinelli on October 8, 2013 at 7:22am

Madd Man.....

 

 

You have to factor in the cost of production into the equation.

Right now the cost of production in the oil zone is too high ( no infrastructure in place).

 

When the cost comes down....and the ROI  is higher...they will come.

Permalink Reply by al raptoria on October 8, 2013 at 7:49am

Thanks Paul and everyone else for giving me a first class education on this and other threads.  I have not seen nor heard of a lot (as in any) testing in this area since the land grab a couple years ago. Most people here are sitting on old leased lands or were the first to sign two or so years ago and are now thumb twiddlers. If you're young and healthy enough to wait and see, guess that's the way to go." Gramma and Granpa" over the hill are just that - I would like to see them have some gold in their golden years. Any luck with any of the brokers around here - some flaunt they can get a lease, no problem, then they talk about selling a % of the rights then getting that easily gotten (to them) lease. Deep-pocketed speculators wanting to buy % of rights on unleased lands must know something - any idea what?

Permalink Reply by TM on October 8, 2013 at 7:52am
I agree MADD man. The Utica is turning into nothing but a giant dry and NGL play in my eyes. If you look at all the midstream investments so far they are all related to gas and NGL recovery. Most of the midstream and proposed processing plants have nothing to do with oil at all. I seen in Gulfports second quarter production was 70 percent gas and only 30 percent oil for the quarter.

The oil window may become profitable if new techniques are found and used for better results. I just do not see the Utica turning into an oil play but I may be wrong. Only time will tell what happens with the advances in technology and techniques.
Permalink Reply by al raptoria on October 8, 2013 at 8:15am

New technology for oil production? It's happening now/soon! Cheaply! Check out
"The eco-friendly technology 8 times more powerful than fracking - called The Octopus" poised to launch the US back into world oil dominance.

Oil and Gas Trader, http://www.angelnexus.com/o/web/49088  "one pad equals 4 to 18 wells drilled from one site" (on very few acres per unit)...if the link doesn't work then look up the Oil and Gas Trader and search Octopus and maybe the issue date of 8/14/2013.  If that doesn't work email me and I'll see what I can do to get a copy for you.

Permalink Reply by Craig Cooper on October 8, 2013 at 9:54am
al,

The linked article is garbage and this 'opportunity' is a scam. Best advice is to stay far, far away.

The linked article is insidious in that it contains some truthful information along with the garbage.

BEWARE!!!
Permalink Reply by al raptoria on October 8, 2013 at 11:19am

"some truthful information along with...garbage..." sounds like most of the internet, including most forums... I trust everyone here to believe what they are saying is if not "the whole truth" at least "the facts as they know them to be." That leaves a whole lot of room for...more facts to be introduced and opinions to  adjust thusly.

Thanks for adding yours Craig...and pg guy too! And r2d2 too while I am catching up on acknowledgements.

 

 

Permalink Reply by pg guy on October 8, 2013 at 8:58am

There are (at least) 2 distinct issues at play in this discussion:  1) Whether or not crude oil can be found and produced economically, and 2) the availability of a market and processing capacity.

Regarding 1):  There were hundreds of wells that penetrated the Utica on the way to conventional Rose Run/Beekmantown well completions.  Chk supposedly studied the rocks extensively from a large number of these wells before determining it worthwhile to enter into the play.  IMHO their science was perhaps a little bit on the optimistic side regarding whether the large, complex crude oil molecules (where the hydrocarbons are not cooked to NGL and NG states) can be coaxed out of the shale.

Regarding 2):  If the crude oil could be produced, there would be ready markets today.  Local refiners would consume some, and there is adequate infrastructure via truck, rail, pipeline, and barge to move an enormous volume to market.  Crude is very much easier to transport than NG and NGL, and capacity could ramp up in a hurry, much more readily than in the Bakken.  And note that OH/PA/WV are much closer to the refineries than ND, but even ND ships crude via rail to St Johns, Nova Scotia.  The point is that given the much higher relavtive value of crude oil, the producers would be drilling and completing crude oil wells if they could, and the crude would find a market readily.

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