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June 22, 2011


i'm no expert here but this is because there are fewer BTUs in a unit of natural gas than an equal unit of oil, right? so NG can make up the difference in total energy production if NG output is way higher in 2015 than 1971 or whenever.

Jody, I think you are on the right track in your comments. The chart is hydrocarbon production represented on a BTU basis, so, in effect, hydrocarbon energy production. It has not been normalized for price, which would yield a hydrocarbon value production. That would be interesting as well. The chart also shows that NG thus far is the primary contributor to the increase, but oil has had an unprecedented rise in the ast 4 years.

so is oil production increasing mainly due to north dakota at this point? the overall oil production increase probably won't continue at a steady rate now though, due to obama administration limits on drilling in the gulf of mexico. the increase of the previous 4 years are probably due to having lots of new fields to work on. but now the US is 1 year into having various water fields not available, while at the same time still experiencing steady improvement in production from the bakken.

from what i can see US black liquid production is slightly higher today than it was when GW left office, though no thanks to anything obama has done.

The Bakken is certainly part of the crude uptick, but so is the West Texas Wolfberry, and the movement in the Barnett and Eagleford to more liquids rich zones, due to the low price of gas/high price of liquids, and attendant breakthroughs in recovering the liquids. The liquids component is a lagging indicator but I think it will follow the gas curve upwards... at least so long as the price differential remains.



Yes, but...
1. Ignores emerging "marginal operators", ie good operators get more from the same ground as lesser operators;
2. Does the old average of everything analysis, not the what are the latest wells from hue better operators doing approach (ie the correct analytical approach),
3. compares everything to today's gas price and regulatory environment where we cannot export natural gas ( which has changed in one instance, for Chenier, who will be exporting in late 2012 early 2013), while gas was 3.90 here, it was 12 on mainland Europe, with a 1.12 liquification and transportation cost. In an olen market, price would have been higher, thus more economic,
4. Certainly companies are drilling to hold acreage. It didn't mention this at all, just inferred it was ffraud.

I was a skeptic in all of this until I did the analysis. Now I am not. Will very well be economic? Of course not. Would you make a decision to not exploit these based on these bs analyses? Some might, but the door should be wide open to those that think they can. In the end, Royal, would it make you happy if it was uneconomic? Would it make you sad? Where are you emotionally invetested and why?

Not emotionally invested. The first lesson I learned in this business is "dont fall in love with an oil well".

I am concerned about the perception of these plays, as at my level, that is really all that matters. This NYT piece is not good for those who rely on perception. I am not trying to engage in a perpetual discussion of unconventional shale gas economics. We have run that course three or four times. Time will tell. The “insiders” emails seem to fall in line with a popular news culture, like wikileaks. I think this article may resonate or at least cause doubt in the investment community.

The internal emails from Chesapeake insiders were especially interesting.

Berman and NYT


Choke, I read the NYT piece yesterday and immediately wondered how you would respond. Are these fracked nat gas wells undergoing depletion at accelerated rates?

Sorry to change the subject, but here is a tidbit concerning an important new well. Leor Energy just set pipe @ 18,789' on a well in northeastern Trinity Co. This appears to be a Jurassic (Bossier/CV) test. The subject well is a twin of an old Shell test with an interesting sand package in the Jurassic. Could this well kick off a new deep Bossier play? Hats off to Leor for a bold move, and best wishes for a successful frac job!!


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