Replies to This Discussion

Permalink Reply by wyalusing jim on January 29, 2014 at 1:37pm

I wanted to post this in reply to jacks answer to Josie about toe frac'ing, but I can't reply there.

jack, respectfully, you are incorrect in that statement about toe frac'ing.

it is being done fairly routinely here in Bradford county by Chesapeake, and it gives an accurate estimate of performance since a wells performance is dependent on the number of stages.

it is also considerably cheaper to toe frac than it is to fully frac, since the cost of frac'ing is dependent on the amount of time spent on the job to a great extent, and additionally less proppant and water is required.

it is more costly to do 2 frac jobs than one, since they have an additional setup, but it isn't that much more.

I do agree with your statement about leaving water in contact with the formation for extended periods of time. I hesitated to believe that shell would employ the practice, but they have. after ip, some wells have had remaining plugs drilled out around 6 months later. this was in tioga county on some of the early shell wells.

I'm sure one could argue about the merits of using these techniques to control production vs. choking, but a toe frac'd well has a pretty fast decline compared to a fully frac'd well, and it takes alot of gas out of the market quickly.

and it isn't difficult at all to go back in and finish the frac job. they simply reset the last plug and continue.

wj

Permalink Reply by Jack Young on January 29, 2014 at 2:32pm

All I can say is that I've never heard of it, and no well we have a stake in has ever been "toe fraced". I also know from experience that bringing the frac crews back for a second attempt is much more expensive since you pay the mobilization costs each time. (All well completions are a mix of fixed and variable costs, and the fixed costs for these big fracs are substantial.) In addition, you can't leave pits etc open and sites unclaimed that long, so much of that work would have to be done a second time too.

If Chesapeake really does this, it may help explain how they got into the financial hole they were in. If you don't need much gas, just frac fewer wells and leave the rest shut-in. Estimates of production are interesting to outsiders, but to the operator themselves it's the cash flow that counts. I can't disprove either of you on this, but I can say that I have never heard of this being done or seen it done on the wells we're involved with. I never even heard the term before, and when I googled it absolutely nothing came up. To be honest, I think this is an urban myth, but since I can't disprove the idea, we'll just have to leave it there. If anyone is doing this routinely, you don't want them operating on your property because they won't make the most of it and clearly don't know how to make money in the business.  

Permalink Reply by Ann Ticopa on January 29, 2014 at 3:28pm

"I never even heard the term before, and when I googled it absolutely nothing came up."

Try:

gaswell "toe frac"

Permalink Reply by Jack Young on January 29, 2014 at 3:40pm

I did that before I wrote my comment and there's nothing there. Yes, a part of the well is called the "toe" and people "frac" wells, but the process "toe fracing" you're suggesting is being done commonly where only a tiny part of the wellbore is completed and the company comes back later to do the rest for some mysterious reason isn't anywhere to be found. As I said, I've never heard the term, and it's not clear it even is one.

It's also not clear to me why anyone would do this "routinely" as it's expensive and accomplishes nothing that couldn't be done cheaper and better some other way. If there's no business reason to do something, why would anyone do it? Can you come up with reasons why a company might spend a quarter million dollars extra "routinely" to delay the cash flow from an already expensive well?

Permalink Reply by Ann Ticopa on January 29, 2014 at 4:24pm

I did not suggest that toe fracturng is being done, commonly or otherwise.  But I had Googled it prior to reading the comment of yours I quoted from.  Just because I had never heard of a toe frac (either), it doesn't follow that they don't exist.  

Permalink Reply by wyalusing jim on January 29, 2014 at 3:42pm

once again jack, I have to disagree with you on several points.

while the 2nd mobilization costs are a factor as i stated in my last post as well, they aren't a consideration when a crew is already there frac'ing other newly drilled wells. I believe that is what will be done. these wells were drilled and completed to hbp, and when development wells are drilled, these wells will be fully frac'd along with them.

you said, "In addition, you can't leave pits etc open and sites unclaimed that long, so much of that work would have to be done a second time too."

here in Bradford county, with chk, there are no pits and there is no reclamation to be done post frac'ing. they simply remove the equipment, remove the pad liner and leave. they leave frac tanks for a while to recover the heavy initial flowback, and then those leave too. no extensive cleanup necessary, and no pits...ever.

you said, " If you don't need much gas, just frac fewer wells and leave the rest shut-in. Estimates of production are interesting to outsiders, but to the operator themselves it's the cash flow that counts"

many of us here in Bradford county have leases that do not allow this. we have shut in clauses that only allow it for lack of pipeline, and then there are short term limits. it only takes one of us with such a provision to preclude it in the unit.

and chk is already shipping over 2 bcf/d from Bradford county, how much more can they market effectively?

I actually think that they are doing the responsible thing, shipping less gas while prices are low. and though I am in a unit with such a well, I'm not complaining. I now know that twice as many wells will eventually be drilled in that unit since it is in a second interval of the Marcellus, and that more gas will flow later from this well when prices are higher.

and chk really isn't in all that much trouble. people like to say that, because chk is the poster child for bad gasco behavior. honestly, I am quite happy with chk and how they have prosecuted operations here jn Bradford county.

they'll be around a while longer, and i'll be happy being leased and in production with them. now with shell, I'm not so confident that things will go as well.

wj

Permalink Reply by Tom on January 30, 2014 at 2:16am

In my experience toe fracing is done mainly to hold leases that have some sort of a production clause.

 

Anadarko has done this about 5-10 times in Lycoming County.  You can clearly see on the completion reports that they just complere 2 or 3 stages to say the well is in production or capable of production and hold the leases.

 

My understanding is that Chesapeake does this in Bradford County too just to hold leases.  Drill 1 well in a unit and frac 2 stages.  When prices justtify, you come back and drill the other wells on the pad and when you frac those, you just finish the job on the orginal well too.

 

You can get away with holding 600 - 1000+ acres for just 2-3 million bucks.

 

I am very familiar with Tioga County and cannot come up with any examples of toe fracing being done there.

Permalink Reply by wyalusing jim on January 30, 2014 at 2:54am

there ya go, you stated it better than I did.

and it dovetails nicely for me at least, with the current pricing situation. good royalties now, with the guarantee of better production later in a hopefully better pricing environment.

many of us in Bradford county also have development clauses, which requires subsequent drilling in the next year or 2.

I never suggested that shell has toe frac'd in tioga county, they have a different development strategy. but there were some wells which had additional plugs drilled out later in the wells life. (roughly 6 months).

and when I said that the toe frac'ing in Bradford was "fairly routine", I did not mean to suggest that it was ubiquitous, just that there are a bunch of those wells which were put into production in 2013. how many I'm not sure, but there's a bunch.

wj

Permalink Reply by Jack Young on January 30, 2014 at 3:04am

If this practice really is common and actually saves the operator money by holding leases inexpensively, surely one of the companies doing it would have highlighted that in an investor presentation or conference call. If anyone can find an example of that, I hope they will let us know. The fact that the practice isn't mentioned anywhere on the web gives me a strong sense that what you're seeing in Lycoming County are wells that aren't fully completed for other reasons. I wrote a long explanation of why the arguments being made for this aren't logical last night, but after sleeping on it just don't want to get stuck spending time on what I see as a blind alley. I've paid hundreds of frac bills over the years, and I guess that gives me a different perspective. You have to understand the whole situation to know why doing a partial frac like this would be unlikely to be a preferred option for an operator under any normal conditions. But I'm fine with it if you all want to think otherwise. One thing I've noticed over time on all landowner forums is that people want to believe that their wells would make more gas if only the operator hadn't done something they won't admit to keep the production down. Trying to argue against that is never any fun because people really want to believe it even when the advantage to the operator is hard to identify and/or less expensive alternatives are available. So I'm going to leave it at that.

Permalink Reply by Jack Young on January 30, 2014 at 2:46am

This article talks about fracing, but not the concept you're suggesting is common in your area.

Permalink Reply by wyalusing jim on January 30, 2014 at 3:23am

I think we should leave it too jack, and I don't expect you to accept it just on my say so. this is really a side issue.

I also agree with you that landowners are slow to accept bad news, but in this case (Bradford county), the reports are probably accurate, and with adjacent or toe to toe wells performing so differently, I am confident that what I have posted is true.

one other thing. the reason I posted that in the Bradford county forum, is that some mineral owners, having seen  poor performance from their wells and disappointing royalty checks, have sold their mineral rights thinking that they might as well cash out and be done with it. in some cases, they may have been somewhat justified in their thinking, but in others, there may be some bitter disappointment down the road. it's best to know exactly what it is you're selling, before signing off.

wj

Permalink Reply by Jack Young on January 30, 2014 at 5:11am

Can't argue with that, and we'll definitely know what the story is in the fullness of time. And I agree that selling a person's OGMs without knowing the full story isn't a good deal - there are enough uncertainties even to the fully informed!

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