Replies to This Discussion

Permalink Reply by Joseph-Ohio on October 26, 2014 at 2:49am

Very interesting to me as well.

What's up with that one Jack ?

Permalink Reply by Jack Straw on October 26, 2014 at 5:14pm

RE: “how much information is gleaned from seismic testing? Can oil be differentiated from methane from ngl's,etc.?

 In other words, can a seismic test tell what specifically lies below?

 

What you are referencing to is called Direct Hydrocarbon Indicators (DHIs).

 

As someone retired and long removed from direct involvement in the industry, I am not ‘up to date’ on the current state of the art.

With dated knowledge and experience, I would welcome the comments of any current practitioner.

That said, I will offer that dated knowledge, and opinions based upon that dated understanding.

 

The Seismic method succeeds by ‘illuminating’ the subsurface with sound waves.

We are all familiar with (and dependent upon) sound (as hearing along with sight are the two most critical of the physical senses).

On the surface of the Earth, we experience only one form of sound waves, compressional waves; as air and water (as gases and liquids) only allow transmission of compressional waves. In solids (like the rocks beneath out feet), both compressional and shear waves are transmitted.

 

One way we can ‘visualize’ the two types of sound waves in solids is through a though exercise: recall that childhood toy; the SLINKY.

If one stretches a slinky and plucks on it in the direction of the stretched slinky, a waves travels forward in the direction of the stretched slinky; this is an analog for the compressional wave.

If one stretches a slinky and plucks on it at right angles to the direction of the stretched slinky, a waves travels forward in the direction of the stretched slinky; but he motion of the slinky is snake like as the waves moves forward, this is an analog for the shear wave.

With a compressional wave, the particle motion is in the same direction as that of the traveling wave; with a shear wave, the particle motion is at right angles to the direction of the traveling wave.

A further complications arises in that shear waves travel more slowly through solids than do compressional waves (about 2/3rds of the speed). As these (seismic) waves (both compressional and shear) encounter rock layers in the Earth which have different physical properties, some of the energy is reflected back towards the surface and some of the energy continues downward. And to make complex matter, more complex; at interfaces there are ‘conversions’ from compressional waves to shear waves and from shear waves to compressional waves.

 

The proportion of energy that is transmitted and the proportion of energy that is reflected at an interface are functions of the rock properties; and, what is present in the pore spaces (natural gas, oil or water) affects the proportion that are reflected or transmitted (importantly  the strength of the recorded reflected energy is affected by what is present in the rock pores).

 

The above is a very simplistic description of what is occurring in the subsurface.

 

Direct Hydrocarbon Indicators are a complex subject, influenced by many factors; for more see below:

http://www.ihs.com/pdfs/IHS_Post_Stack_Data_White_Paper.pdf

 

With that long introduction,:

DHI’s work best when the rocks have higher porosities (such as in young porous sandstones).

DHI’s do not work as well when the porosities are low (such as in the old tight shales of the Marcellus and Utica).

DHI’s work best when free gas is present.

DHI’s do not work as well when the pores are filled with fluids (NGLs and oil are difficult to distinguish from that other fluid, water).

When natural gas, NGLs and oil are all present in the pores of shale, the natural gas and NGLs are typically in solution within the oil; difficult to distinguish from water.

 

The Marcellus and Utica shales are NOT, by their nature, good candidates for detecting DHIs.

That does not mean that as technology advances and seismic resolution increases with the technological advances that DHI’s will not contribute in the future.

 

Can a seismic test tell what specifically lies below?

In some places and in some circumstances, the answer is yes.

For the Marcellus and Utica shales, (with the current state of technology) I believe that the answer is NO.

Again, with dated knowledge and experience, I would welcome the comments of any current practitioner; as I know that there will be continuing attempts to

 

All IMHO,

                   JS

Permalink Reply by Trapper on October 26, 2014 at 8:17pm

Thank you Jack!

Permalink Reply by Joseph-Ohio on October 26, 2014 at 11:45pm

I also thank you Jack.

From what I've read / been told they did 2 sets of seismic tests the length of route 7 - from practically Youngstown to Lake Erie.

Based on what you've written guessing they were testing for pools as opposed to trying to read Utica / Marcellus gas / oil content.

Thanks again.

Permalink Reply by Nancy LeNau on October 27, 2014 at 2:58pm

Great Information !   Thank you, Jack !   

Permalink Reply by Jack Straw on October 27, 2014 at 6:12am

It will be interesting to see how Dominion's Cove Point, MD LNG export terminal will change the dynamics of Marcellus/Utica Natural Gas; particularly for those whose gas is sold through 'orphaned' hubs such as Leidy. By Dominion's current schedule, we will have to wait until late 2017 (at the earliest) to find out ("Second half of 2017 — In-service date for the liquefaction facilities").

JS

Lithuania's first floating LNG terminal breaks Russian monopoly

Source: http://news.yahoo.com/lithuanias-first-floating-lng-terminal-breaks...

By Vaidotas Beniusis 30 minutes ago

The liquefied natural gas (LNG) terminal "Independence" is docked in the port of Klaipeda on …

Klaipeda (Lithuania) (AFP) - The "Independence", a huge floating liquefied natural gas (LNG) terminal docked in the Lithuanian port of Klaipeda on Monday, becoming the first such facility to sever Moscow's energy grip on the Baltic states.

Several hundred onlookers waving Lithuanian flags and an honour guard welcomed the massive white-and-blue vessel measuring three football fields in length, an AFP photographer said.

Lithuania, despite joining the EU and NATO in 2004, has been completely dependent upon Russia for natural gas, a legacy of five decades of Soviet domination which wound down in 1990.

The terminal gives Lithuania, with a population of three million, the capability to import up to four billion cubic metres of gas per year after 2015 from sources such as Norway's Statoil.

This is well above the 2.7 billion cubic metres it bought from Russia last year, and leaves plenty of extra capacity for its Baltic neighbours Latvia or Estonia, analysts note.

Lithuania will use the terminal to import 0.54 billion cubic metres of gas from Statoil next year, about one-fifth of annual demand, the first alternative to Russian energy giant Gazprom.

The EU's energy chief and a top US diplomat described the arrival, broadcast live on national TV, as a "milestone" in ensuring energy security for the Baltic states.

"The challenges that Europe faces today in terms of security of gas supply require a quick response, and Lithuania has shown how this can be delivered," Guenther Oettinger, the EU's energy commissioner, said in a statement.

"The opening of Klaipeda LNG terminal represents a historic milestone in the Baltic states' energy security," US Secretary of State John Kerry said in a letter to Lithuanian leaders, commending their "strategic vision".

Lithuania, which declared independence in 1990 after five decades of Kremlin rule, has repeatedly locked horns with Gazprom, accusing it of abusing its market clout to impose unfair pricing. Gazprom has denied the claims.

Baltic neighbours Latvia and Estonia, which are totally dependent on Russian gas, said they were also considering to use the terminal for LNG imports in the future.

Lithuania's President Dalia Grybauskaite said the floating 294-metre (964-foot) terminal owned by Norway's Hoegh LNG "will be a security guarantee for the whole region" as it will be able to cover 90 percent of the three Baltic states' gas supply needs.

"From now on, nobody will dictate us the price for gas - or buy our political will," she told in a solemn ceremony in Klaipeda.

Amid Europe's worst standoff with Russia since the Cold War over Ukraine, there is real fear that Moscow could attempt to destabilise its Soviet-era Baltic backyard.

In a survey released on Monday, 55 percent of Lithuanians said they believed Russia posed a threat to the Baltic states.

To connect to other EU gas markets, Lithuania also plans to build a gas pipeline to neighbouring Poland by 2019.

Permalink Reply by farmgas on October 27, 2014 at 7:09am

 Jack...the Dominion news is really encouraging for those property owners waiting for gas wells in central PA.  I think we can all be comfortable knowing there will be a greater demand for NG once the Cove Point LNG plant goes on-line.   How do you see the E&P gas production companies preparing for this demand?   Will they need to drill more wells in advance of this demand surge plus install more pipelines for transmission into the DTI pipelines?  We are only talking about two years plus for this need.  It would seem to me that these gas companies are planning schedules now to meet the 2017 demand based upon the time required for pad construction, drilling and pipeline installation.   What do you think?

Permalink Reply by Jack Straw on October 27, 2014 at 9:12am

The fact that it will be Dominion pipelines feeding into a Dominion LNG Export Terminal is encouraging in of itself.

Regarding a late 2017 startup; "on time and on budget" are the five rarest words heard with respect to LNG projects .... I would not be surprised to find it to be a "year late and over budget".

We will need to watch for Dominion (D) press releases.

RE: "How do you see the E&P gas production companies preparing for this demand?   Will they need to drill more wells in advance of this demand surge plus install more pipelines for transmission into the DTI pipelines?"

Likely someone out there has a better feel for the longer term supply/demand situation; the only crystal ball I own has clouded over.

Many of the Utica and Marcellus wells referred to as "wet gas" and oil wells produce either a large percentage (or a majority) of Natural Gas; that drilling will continue (as currently economic with $80 oil and $60/bbl Condensate and $30/bbl LNG). I do not see a resurgence in drilling in much of the dry gas areas until $6/mcf Natural Gas (2018/2019 +/-).

I do foresee a build out of pipeline tied to progress towards completion of the export facility.

Taking the time value of money into consideration (and just-in-time engineering) the pipelines will not be completed very far in advance of the guaranteed market.  

I foresee efforts commencing to tie up any needed ROW (preferably via options or locking up agreements, with little or no upfront money).

RE: " It would seem to me that these gas companies are planning schedules now to meet the 2017 demand based upon the time required for pad construction, drilling and pipeline installation."

Late 2017 start is three years away .... a lifetime in the O&G industry.

In much of PA, WV and Ohio, millions of acres  are tied up HBP.

Existing wells are shut-in, waiting completion or throttled back.

Wells will continue to be drilled (with no good market for the product) in order to hold the more attractive leases.

New, more efficient land drilling rigs are being built expressly designed for the horizontal shale wells. O&G operators not only have the acreage, they have loads of maps rolled up, ready to take to the State to obtain drilling permits. If (optimistically) excess demand appears late 2017 ... the O&G Operators will put more wells in their budget late 2016. 

Personally, I am looking further out before a healthy supply/demand situation reasserts.

One thing to take into consideration is that Politicians have a lot of time and opportunity to screw things up. Lobbyists for organizations and groups which benefit from cheap Natural Gas have a lot of time to bend the ears of the politicians. Never underestimate the ability of the Government and influential special interests to screw things up.

More candy: http://www.thestreet.com/story/12916299/1/dominion-resources-sees-f...

Dominion Resources Sees Future Tied to Foreign Liquified Gas Buyers

BY Sarfaraz A. Khan

EW YORK (TheStreet) -- Dominion Resources (D)  is working to sell more liquefied natural gas to foreign buyers as a way of expanding into the export business.

The Virginia-based power and energy company is competing against several U.S. companies that want to expand exports, including Cheniere Energy (LNG) . So it's in Dominion's interest to increase exports by signing long-term agreements with buyers to use the LNG facility it's building in the Maryland even if those buyers later resell some or all of that product. Those foreign buyers include Japan's Tokyo Gas (TKGSY) and India's GAIL (GAILF) .
 
Dominion shares have gained 4.6% this year to $67.50 compared to a 0.7% advance for the S&P 500.

Last month, Dominion received final approval from U.S. regulators for the construction of its Cove Point terminal in Lusby, Maryland, which will be used to ship 5.25 million tons of LNG each year to other countries, particularly in Asia and Europe. Dominion intends to fund the $3.8 billion project through the initial public offering of the spinoff of Cove Point into a master limited partnership called Dominion Midstream Partners.

In an email to TheStreet, Karl Neddenien, Dominion's spokesperson, said that "construction activities have begun" and the company expects "the export facility to be operational in late 2017."

Cove Point is located near the Marcellus Shale, the home of the largest natural gas reserves in the U.S., stretching from New York to West Virginia. Cove Point is the first project to capitalize on the booming Marcellus gas production that rose to record levels of 15 billion cubic feet per day in July, up from just 2 billion cubic feet per day in 2010. Chris Turnure, analyst at JPMorgan, said in a research report emailed to TheStreet that Cove Point is one of Dominion's "major future growth drivers."

Tokyo Gas, which has committed to purchase 1.4 million tons of LNG each year from the Cove Point terminal, has put more than half of this capacity up for sale, because of a drop in demand. Similarly, GAIL has contracted to purchase LNG from Dominion as well as Cheniere Energy, offering some of Cheniere's LNG to buyers.

This drop in LNG demand is, in part, due to the weakness in oil prices, said Tim Winter, analyst at the financial services company Gabelli, in a phone interview with TheStreet.

However, it does not pose a threat to the future prospects of Dominion's LNG export project. On the contrary, this is "encouraging for the long-term future" because the Asian companies will likely resell the gas they bought at a higher price, which reflects "even greater demand for the product," Winter explained.

Dominion, on the other hand, believes the future of its LNG export project is secured by long-term agreements with buyers. "Dominion has fully subscribed the marketed capacity of the project with 20-year service agreements" with GAIL and Tokyo Gas, Neddenien said. "So global demands and volumes will not have an impact on Cove Point."

Cheniere Energy has also signed a 20-year agreement to ship LNG to GAIL. Cheniere's spokesperson said in an email to TheStreet that GAIL's decision shows the Indian natural gas company is becoming a stronger LNG portfolio buyer. This also shows that trading on future cargoes has already started, which is a positive sign since this will bring much needed liquidity to the LNG market, the spokesperson said.

Must Read: ONEOK Is Laying Groundwork for Double-Digit Dividend Growth

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

---

TheStreet Ratings team rates DOMINION RESOURCES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate DOMINION RESOURCES INC (D) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Permalink Reply by farmgas on October 27, 2014 at 9:37am

  Jack...You mentioned it will be Dominion pipelines feeding the LNG plant.  Are there Dominion pipelines other then the ones heading south from the Leidy gas fields now?  I understand pipeline(s) at Leidy are already in place to send gas south to Cove Point.  Will the vast amount of gas originate from the Leidy Station for Cove Point?  If so, central PA will be a significant source for the Cove Point gas need.  I`m just trying to establish a positive future picture for central PA gas production!  :)

Permalink Reply by Jack Straw on October 27, 2014 at 5:08pm

RE: " I understand pipeline(s) at Leidy are already in place to send gas south to Cove Point. "

Leidy is not just a pipeline hub, it is (importantly) also a storage facility.

If I am a Cassandra, I do not believe that I am a False Cassandra .... and my prediction is that the Leidy Hub (with storage) will gain significance; if I am correct, we will (in the not too distant future) read of an expansion of the storage facilities at Leidy.

My crystal ball is telling me that the gas is there .... what is lacking is a sufficient market and the infrastructure necessary to tie the gas to a developing market.

All I try to do is use logic to anticipate what should logically happen in a World that does not necessarily act in a logical fashion .... I have the scars from when attempts to apply logic to this illogical World have resulted in my being bitten in the azz.

Treat anything and everything I state to be worth every penny you didn't pay for it; that way you will never be disappointed.

JS

 

Permalink Reply by Jack Straw on October 28, 2014 at 9:15am

Weatherbell Analytics have just released to the public their Forecast for the coming Winter.

Former Penn State'r and current State College resident Joe Bastardi (aka The Long Ranger) has an excellent track record in identifying long range weather trends ..... formerly with AccuWeather; currently co-founder of Weatherbell Analytics.

For the people of the Marcellus and Utica, Weatherbell's forecast can be summed up with just one word ..... Brrrrrrr! 

Good for Natural Gas prices; bad for Jack's Lumbago!

Source: http://www.weatherbell.com/public-winter-14-15-forecast

Public Winter 14-15 Forecast

October 2014

• Center of the worst cold will be in the nation's Heartland into the Ohio Valley
  • This is pulled northwestward a bit from the previous forecast
  • Intrusions of cold will occur in all areas of the nation, but the coldest air will be in the area outlined
• Large area of above normal snowfall for nation as a whole
• Forecast represents a compromise between a normal winter, and a very severe one in line with some of the winters of the late 1970s
• Still major worry about a faster start out of the gate for December
  • If so, winter goes to a top 5 cold one
• Eurasia snowfall off to a record fast start, which is historically a harbinger of cold winters
• The bottom line, snow fighting wise, is this year if it reaches its fullest potential, could be as bad or worse than last year.

Here is the 3-month temperature map:

Snowfall:

The old winter forecast also had a big ticket winter, but the core was farther to the Southeast than the new forecast.

The forecast is a blend of pre-existing ideas with new analogs coming to light along with the most recent seasonal runs of the ECMWF and JMA factored in.

As we saw last winter, there is a lot of counter-sentiment to our ideas. I cannot speak for other ideas, but I can let you know what we are looking at. Many of the things you will see us look at, you will find mentioned in other circles after the fact, like last year, if our cold idea comes out correct.

Bottom line

There is no change in the idea this is a big ticket winter, but as I have said in all the long range ideas, I need to home in on it like I did last year. If I went warmer, that is one thing, but to me the two big questions are (1) where will the core of the cold be? and (2) can this go to the type of extremes we saw in the late 1970s?

There are ducks on the pond: blocking, a more active southern branch, and the delivery of major cold into the U.S. Consequently, the forecast has changed to expand the center of the core in the nation's heartland and added more snow to the picture nationwide.

Permalink Reply by Nancy LeNau on October 28, 2014 at 2:45pm

Thanks Jack Straw !   Sorry about your Lumbago......  I will start working a bit harder on collecting my kindling and splitting our wood !  Have you noticed... ALL the fruit trees have produced double the fruit this year ?   Walnuts are double their size !  But, Those darn caterpillars have a thin black line but their hairs are longer.  I Love Winter !    Good thing my new hip is in Great working order !  HA HA    God Bless....

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