Comment

Comment by gary smith on March 2, 2013 at 3:00am

yep.plenty of 1.3 wells in texas.

Comment by Bob Jenness on March 2, 2013 at 2:49am

To all,

Apologies for being away from this forum for a couple days, although from a few of the posts, y'all probably didn't miss me much:-)

I assure all I wasn't whining.  I was trying to start just the kind of deep Q and A that followed, but I suspect it would have happened with or without my slightly sarcastic post.

There does seem to be some evidence here that the drillers were not as competent as, for example the folks at REXX, and Halcon, who seem to be pushing the technology forward faster.  This discussion would benefit greatly from some scoreboard info on horizontal well success rate by company.  It's critical to all Crawford landowners that our geology not be deprecated by negative information from drilling mistakes in the first test well in a line that the geologists drew across a predicted fairway.  Any scientist will tell you that if you do a test with bad procedure or bad luck the results are questionable and should be thrown out.  On the other hand, if you're really good, you might be able to salvage a few shreds of useful information.  Obviously, they need to "average" any such data with results from the whole series of test wells to produce any viable conclusions on what's there and the best way to extract it.  We shouldn't jump hastily to any more depressing conclusion than that.

In defense of RRC, I know they have some fairly complex constraints in Crawford.  They've got to stay on HBP land to minimize costs, and they have to stay away from all the existing wells, most of which they drilled.  I suppose if they'd capped them perfectly they'd present less of a risk to future tracking - right?  I also suppose they keep perfect records of where they are so they can avoid them - or maybe they have to rely on the PA data, like the rest of us landowners, so I hope their record keeping and regulatory submissions were higher quality than their drilling.

This is not whining, just righteous criticism of management errors which are already in evidence here.  I'm sure RRC, et al, are at least as hard on their own employees and partners when they make mistakes.  I'm also sure I could not do better myself, but then I'm not being paid big bucks to do perfect work on the first try.  To the credit of the whole E&P team, the well has some net positive value - it's not a dry hole, environmental catastrophe, or accident site.  I've talked to some folks familiar with the early Ohio Marcellus work who say that's a really good outcome if it's the worst we'll see.  I've also got a dry hole on my own property which was drilled when that was about 15% of the outcomes, which has improved to about 1% today, based on what little data the state of PA can provide to this measurement.

Comment by petej on March 1, 2013 at 2:34pm

Jack, I thank you for your posts. However, the last few days is the first I remember seeing your name on the Crawford County group. With so much for so many riding on this information I have a question that I think we all need to know the answer to. Your profile lists you as a landowner / gas professional. The question is; As a gas professional, who do you work for?

Comment by Samuel J. Orr on March 1, 2013 at 12:11pm

Jack: I totally agree with you! The market is the market! I also agree with T. Boone Pickens who says there cannot be long term  differences  in the prices of alternative forms of energy. The problem with natural gas as a substitute for diesel in large trucks is the lack of infrastructure. The lack of infrastructure ie refueling stations discourages the conversion of trucks to natural gas, while the absence of trucks that can run on natural gas discourages the capital expenditure to build the refueling stations. I don't know how this plays out but demand for natural gas needs to go up. Natural gas is priced much higher in various parts of the world. In fact it is high enough to justify compression of gas to LNG and transportation by ship to some of these places. Obama is big on electric vehicles and or hybrids. I envision electric / cng hybrid vehicles which are refueled from home. The batteries are recharged by plugging in to the car-owner's home electric system. The compressed natural gas tank is filled by a home compressor unit that is fed from the natural gas line of the owner's home. Of course there is a separate meter connected in series to the natural gas compressor so that necessary taxes can be collected to fund highway construction and maintenance. We need the equivalent of a Manhattan Project to do this in the U.S. This vision is entirely viable and requires the invention of no substantial new technology. Just my thoughts to get you all thinking. Any of you readers have a direct line to the Obama administration. My vision would stimulate the economy and stimulate millions of jobs!

Comment by sldouglass on March 1, 2013 at 12:00pm

Multi-billion dollar gas producers do think ahead. Note that natural gas has already captured part of the coal energy market which has been denied because of former high priced gas. More and more vehicle fleets are converting to cheap natural gas. LNG projects to ship gas overseas are underway. In Europe it is said that gas costs 5 times as much and for India and China 7 times the current US price. The producers know how to shut down drilling to meet demand and keep prices up. The positive thing is that shale technology has effected a virtual revolution assuring an energy supply into the indefinite future. And then there is the Balken shale oil development. Our not long ago energy starved nation now seems to have an unlimited supply of fuel for the future.

Comment by Jack Young on March 1, 2013 at 11:47am

Prices are "deliberately low" to "capture markets" - first time I ever heard that. Think I'll sit this discussion out. There's no secret plan here, and nobody is thinking 30 years ahead, let alone 500! The gas companies are all hurting badly - the shale gas boom has caused revenues to crash, costs to climb and regulations to get tighter. Everyone in the business was better off before it started. Let's be positive, but rational. What will happen in the long run in Crawford County isn't something any of us can know right now. Industry or otherwise.

Comment by sldouglass on March 1, 2013 at 11:35am

I am not trying to sell the conference described at the web site below [it is priced for folks in the oil and gas patch], but the description and agenda offer some perspective.
http://www.utica-marcellus-ngl-markets-2013.com/

Comment by gary smith on March 1, 2013 at 11:26am

frburary 2013. sorry

Comment by gary smith on March 1, 2013 at 11:20am

good article on whats coming. from february 2012   southeastern ohio oil and gas  association. scrool down to marcellus and utica news   sooga.org

Comment by sldouglass on March 1, 2013 at 11:13am

Folks are sounding a little bit negative about the current deliberately low prices for most of what is coming out of the shales. Prices are deliberately low to capture markets for the enormous bonanza to come - with the added benefit of allowing for the psychology of low lease costs.
And everything one reads tells about the lack of infrastructure to carry production to these developing markets. All this will be measured in years - not months. And I can not help but notice things are moving faster in southern Ohio where huge investments are being made.
Eventually, I would expect that to move up to the more northern areas. Meanwhile, additional leases will be taken and enough drilling will be done to keep the leases alive. There does not appear to be any reason to believe that Crawford County will not be very productive in time.
Meanwhile the producers are putting down a few test wells to more clearly define what they have so they can plan for the future - whether it be dry gas, oil or the various panes like propane, ethane etc. to be processed, sold and consumed over a very long future. It is all very valuable.
30, 70, 100 or 500 years worth of drilling into the several shales under the land.

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