Comment

Comment by Bob Jenness on April 13, 2012 at 4:15am

Jim,

I couldn't find enough information to answer your detailed value questions.  Perhaps some other reader of this forum has seen it???  I know that a driller would need a big separator rig, and probably some extra wellhead plumbing to allow it to be used, then moved to the next well.  I also know that for completion of any new well, the driller's tradeoff is that the gas is free (cause it's still mine, not theirs), and the separator is not free.

I also know that in addition to the wasted $$$, it produces a very big (relative to other non-productive uses) carbon footprint, and puts a big "ash" plume into the wind to be deposited downwind from the well.  This environmental aspect makes us unpopular with the environmentalists, and is much more egregious than anything else that's intrinsic to hydrofracturing.  In some formations (not Crawford Co, I think), the plume can even be radioactive.  Big producing countries in the middle east have outlawed it to protect both their $$$ and their environments, which I can't imagine can be more protectworthy than NWPA.  That only proves that if the law or lease terms required it, the technology is there to do zero flaring.

As to water in the formation, that's another whole question to understand.  I don't yet.

As to solid reasons, I'm sure BP had solid reasons to use a poorly engineered BOP and cut corners on the installation of it on the Deepwater Horizon, too, but I don't want that kind of drilling practice in NWPA.  I want my lease to solidly require best industry practices.  From what I read in annual reports, XOM does the best, but that, too is another whole thread, isn't it?  Perhaps the expedient answer is to let them flare, but add a lease term that requires 100% payment to the landowner for the gas burned, since it's lost to us and the market forever, not just for the royalty.  Negotiators?  Want to join in here???

Comment by Jim Litwinowicz on April 13, 2012 at 3:40am

Bob; I have always wondered about flaring and the lost value. If a well is producing 8MMCF/day and they flare for 10 days, thats a lot of mullah burned up. 

I am sure they calculate the lost value of a flare vs completing the well by other means and have decided that flaring is cheaper and/or better in the long run at producing maximum value. And considering that they flared when prices were over $7-8/MCF,  at today's depressed prices flaring must be much cheaper.

And what are the alternatives?  Do they just have to pump out much larger volumes of flow back? If they don't flare, does the gas come out with so much water vapor that it takes a large amount of separation?  Does not flaring damage the well by leaving too much water in the formation? I am sure they have solid reasons to burn off so much value.

Comment by Bob Jenness on April 13, 2012 at 3:24am

OK, I apologize for starting something that went completely political.  Let's drop it.  All I wanted to do was to get landowners thinking about the value to us of higher energy prices at the wellhead.  I hoped we could stay technical, but I guess I knew in my heart that I was touching the third rail.  I hope our lease negotiators are more immune to this kind of interference between belief system and landowner economic and environmental interests.

Comment by gary smith on April 13, 2012 at 2:52am

and cabot oil owns the deep in crawford under a portion of range.

Comment by warjr on April 13, 2012 at 2:47am

According to the Range Resources website they are planning test wells in Crawford County this summer.  So we shall soon see what real interest there will be in Crawford County.  In looking at maps showing current wells in PENNA you can see that once they determine what they want the rigs will come in.  Suppl and demand will control prices but they also know that more than one company and even countries have big interest ion shale gas deposits.  Canada, China, and even European investors are looking and making plays within PENNA.  They know what is under PENNA just not sure how much.  Easiest access will go first I would think but the thirst for oil and LNG will make our state a major player for many, many years.   Plants for LPG in Balt. and pipeline is in the process of getting the W.A NG to that seaport.  The plant to be built near Pittsburgh is another major indication of the importance of NG under WVA , Ohio and PENNA.

Comment by warjr on April 13, 2012 at 2:42am

man here we go again.    onservatgives liberals, etc.  who cares.  All I care about is infoon natural gas in the areas around Crawford County.   Contracts are always very complex, and yes, I would agree thatr those who know the most, those who really know the terms make it much better in negotiations period.  I sell Real Estate and as an Associate Broker I can tell you if you do not understand your contract and only look at the dollr signs you are not going to have the advantage in any negotiations as those with only $$ signs in their heads are the easiest to negotiate with.   Make sure whatever any of yiu decide that youi do consult someone who has the knowledge in the wording of the leases / contracts. 

Comment by gary smith on April 13, 2012 at 2:14am

and opec has brought benefits to dictators and islamic extremists, not the population of their countries. and murder and mayhem to the rest of us.

Comment by gary smith on April 13, 2012 at 2:13am

there are other reasons behind the administration/liberals wanting high energy prices. and they aren't to benefit leaseholders or the american worker. they are about fundamentally changing the unted states. the stated objective.

Comment by Bob Jenness on April 13, 2012 at 2:07am

"Left the Reservation"???  Isn't buy low and sell high a fundamental tenet of the conservative belief system?  Where's the racism in low or high energy prices?  Where's the idiocy in selling our energy at high prices to an energy-hungry planet?  ( I would certainly agree that our neighbors should receive most favored pricing, or even tax supported discounting, as that would enhance American Business Growth (another key conservative tenet - right?)  Is it smarter to sell it cheaply?  Sam's Poker analogy and CX sales pitch is nothing but a metaphor for selling at the highest price the market will support.  Let's let math, business acumen, and science guide our actions, not a restrictive belief system:-).  Finally, in support of high prices, I would suggest that the single organization that brought the most benefits to it's member landowners is OPEC, the world's best advocate for high prices. 

Comment by gary smith on April 13, 2012 at 12:48am

bob, now you've left the reservation. high energy prices are not in america's interests. as far as i'm concerned they are of the same worth as the racial division and economic idiocy being  perped on us by the current administration.  i would trust the counsel of sam douglas to save nwpa more money than would be supposedly lost in a flare. 

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