Joined: Mar 26, 2008 Posts: 1140 Location: Seattle
Posted: Fri May 02, 2008 9:08 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
joewp wrote:
OilFinder2 wrote:
Don't worry joe, there will be plenty of energy for my kids and grandkids, natural gas included.
Don't bet on that, OF
The last two "finds" you listed wouldn't even make 2 months of current US use, since we use around 2 tcf a month or so. These are drops in the bucket and will be played out not long after they're first drilled.
Is it really that exciting they're finding a fields that aren't even big enough for a month of use? I find it pretty depressing, actually.
Dude, in case you didn't notice, those last two are hardly the only ones - these things are popping up, like, one or two a month lately.
The Barnett shale, which was the first one of these, already produces, like 5% or 7% of all US gas. And that's just one of them. There have already been several of these announced recently which are bigger than the Barnett. _________________ Abundance - what a concept!
Joined: Mar 26, 2008 Posts: 1140 Location: Seattle
Posted: Fri May 02, 2008 9:18 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
Also joe, these 2 tcf are not the recoverable amounts in the entire shale, they're the recoverable amounts in just one company's holdings in the shale. That's also true for a few others of these I've linked.
OilFinder2 wrote:
Ah, and still another big shale discovery I seem to have missed - 21 tcf, with at least 2 tcf recoverable.
Pioneer estimates original gas in place under its acreage in the Pierre Shale, in the Raton Basin, at approximately 21 trillion cubic feet or Tcf with a total net gas resource potential in excess of 2 Tcf. Proved reserves were recorded at 18 billion cubic feet or Bcf as of December 31, 2007, and anticipates proved reserves from the Pierre Shale to go up to 70 Bcf end 2008 and over 200 Bcf end 2010.
Pioneer indicates approximately 1,200 risk-adjusted potential drilling locations in the Pierre Shale on 80-acre well spacing. Wells would be linked to the company's extensive existing coal bed methane or CBM infrastructure and drilled from both existing and new pads, utilizing Pioneer's integrated well service model and benefiting from related drilling efficiencies. Finding and development costs are expected to average $10 to $15 per BOE with an average before tax internal rate of return of approximately 40% at an average gas price of $8 per thousand cubic feet or Mcf.
From the lowest Pierre Shale interval, initial production is expected to average 750 Mcf per day per well. Pioneer plans to drill 175 wells in the Raton Basin, including 15 Pierre Shale wells in 2008, while activities are expected to accelerate in 2009, indicating a compounded average annual production growth rate from the Raton Basin of 10% to 15%.
The Raton Basin is in southern Colorado and northern New Mexico.
Joined: Oct 17, 2005 Posts: 131 Location: Saratoga County, NY
Posted: Tue May 20, 2008 10:25 am Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
Well I for one am finding this to be good news.
Of course the doomer in me has several questions, but I will start with this one. It appears from the EIA stats that motor vehicle use of NG has consistently risen over the years. With the price of gasoline and diesel so high, and the "potential" (I stress the word "potential) of these new NG finds to keep the price of NG stable in the US, wouldn't we expect to see much larger numbers of vehicles, especially fleet vehicles, being converted to NG propulsion? And if this is going to be the case, would that not put a severe strain on NG demand which would negate the overall significance of this thread?
I guess my question is whether or not vehicle use of NG is that significant compared to say power plants and if it would even have an impact.
Posted: Tue May 20, 2008 10:35 am Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
Indeed it is good news.
DarkDawg,
You ask how long this will last as a REASONABLY priced energy source, given the dynamics of liquid petroleum use and it having to make up for declines....
No one has that ability to forecast the future...their will be a lot of guessing, and a lot of consternation...but in the end you will just have to match up the find with a MODEL of VIABLE Liquid depletion you find acceptable and mate it with the NEW NG bonanza.
If I had to guestimate out a thesis on this I'd say we have at least 10 years of civilization left before things go super ugly. Before this find I would have figured we would have a global war in less time than that.
DISCLAIMER: Timing is everything, and my timing is horrendous. _________________ With Love to all, and Malice to none.
"A people is conquered not when they lose a war, but when they adopt the song and customs of the enemy"
-Chacham S
NGSA: No natural gas shortage in the US
By OGJ editors
HOUSTON, May 22 -- US natural gas supplies are strong and will remain that way for the foreseeable future, according to an association of gas producers and marketers.
The amount of gas in storage is on track to meet this year's expected winter demand, which should help lower prices, said Jenny Fordham, director of energy markets and government affairs for the Natural Gas Supply Association (NGSA).
Fordham said that while gas production from the Gulf of Mexico has been dropping in recent years, producers have met consumer demand by developing new gas finds in unconventional shale fields in Texas and in Marcellus shale field, which stretches from New York to West Virginia. NGSA also expects US LNG imports to strengthen in future years, although competition from world demand will continue to limit imports in the near term.
Separately, in a research report to clients this week, Raymond James & Associates analyst Marshall Adkins said the bank's gas model shows that the US will be on the verge of shutting in gas production—resulting in a gas price collapse—if it experiences normal summer weather, based on the recent 10-year average.
Raymond James expects domestic gas production growth to continue to grow at a 4-5 bcfd rate throughout 2008, as drilling activity ramps up, potentially offsetting production decline rates for several years.
"We put the odds of a natural gas price collapse at 50%," the report said. "If summer weather is warmer than normal, incremental cooling demand should eat away at storage levels, bolstering double-digit natural gas prices. If the weather is milder than normal (i.e., colder than the 10-year average), then natural gas storage could exceed 3.65 tcf, and late summer natural gas prices could fall to $6/Mcf," the report said.
Joined: Mar 26, 2008 Posts: 1140 Location: Seattle
Posted: Wed May 28, 2008 11:41 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
OilFinder2 wrote:
This article focuses on Oklahoma City where Chesapeake is located, but this paragraph was interesting:
--> LINK <--
Quote:
McClendon said the nation can now count on a 5-percent annual supply increases for the immediate future. That would not only negate forecast needs for increasing liquid natural gas imports, but provide enough surplus to begin serious commercial applications for our nation’s transportation sector.
If he's right, maybe all those plans for LNG terminals will be mothballed?
Only a month after Cheniere Energy inaugurated its $1.4 billion liquefied natural gas terminal here, an empty supertanker sat in its berth with no place to go while workers painted empty storage tanks.
The nearly idle terminal is a monument to a stalled experiment, one that was supposed to import so much L.N.G. from around the world that homes would be heated and factories humming at bargain prices.
But now L.N.G. shipments to the United States are slowing to a trickle, and Cheniere and other companies have dropped plans to build more terminals.
[...]
Just about the only place where demand for L.N.G. seems not to be growing is the United States, an abrupt shift from expectations as little as one year ago.
[...]
That was the thinking that spurred the L.N.G. expansion in the United States in the first place. At the beginning of the decade, government officials and energy experts predicted a decline in domestic natural gas production as conventional fields on-shore and in the Gulf of Mexico declined. Companies like Cheniere, Sempra Energy and Exxon Mobil began snapping up coastal land and requesting regulatory approval for scores of terminals. Several other terminals were taken out of mothballs and expanded.
But recently domestic natural gas production has been stronger than expected and events abroad have drawn L.N.G. from the United States to countries that needed it more.
Posted: Fri May 30, 2008 2:26 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
OF,
I posted the same article on the Olduvai Gorge thread. You suggest the article concludes that the US will not need LNG bc unconventional NG production in the US is rising. That's not the conclusion of the article. The article clearly concludes the US is making a mistake by not importing LNG now and by not doing so is setting itself up for a problem in the future. This quote is from the above article:
Quote:
With L.N.G. providing only about 3 percent of total American natural gas consumption in recent years, the fall in L.N.G. imports has made few headlines. But some experts say those responsible for importing gas are making a mistake by not buying more L.N.G. at current prices.
They warn that the failure to import more L.N.G. is leaving natural gas reserves precariously low should the country be hit by a harsh hurricane season or cold winter. They say low L.N.G. imports have helped push American natural prices higher, just not high enough to match the prices of Europe and Asia whose ability to produce and store gas is far inferior to the United States.
Andrew D. Grams, head of North American power and gas trading at Deutsche Bank, said the United States may eventually pay dearly for not importing more L.N.G. now. He calculated that given the reduced L.N.G. imports and expected energy use through the summer, the country will have only 3.1 trillion cubic feet of gas in storage at the end of October — almost 1 trillion cubic feet below full storage.
“Under a normal scenario, that’s just barely enough to get through winter,” Mr. Grams said. “It doesn’t take a rocket scientist to figure out that we may not get enough L.N.G. supply in the United States unless our pricing structure becomes more competitive with the rest of the world.”
So, although unconventional gas production is growing, the numerous articles on the subject all say that at best, it has caused a plateau in US production and that the US will have to import LNG. But, as this article shows, we are not doing so and the risk remains that in the future other countries will outbid the US for the LNG available.
Last edited by seahorse2 on Fri May 30, 2008 3:43 pm; edited 1 time in total
Posted: Fri May 30, 2008 2:34 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
Oilfinder,
I would also ask you to read and consider a post, made by SSCbarber in the thread "Do you work in the oil industry. "
sscbarber wrote:
I have 25 years in drilling business. Degree in Mech Eng from cal poly. 20 years with Sedco/Schlumberger and 5 years as a consultant. I live in Calif.
When I asked ssc whether PO was a real issue and what were his thoughts on the natural gas situation in the US, here was his response (I emphasized his points about American gas production and his conclusion that LNG will be our only saving grace):
sscbarber wrote:
Peak oil -
It is for real and it is today. Every company worldwide (except Venezuela) is wide open pumping/drilling/developing everything they can. Saudi is injecting 10 million bbls/day of raw (unfiltered) seawater to maintain its 8.5 million oil output. Majority of their wells are heavy water cut and they have largest water seperators in world. This is a field in decline. In 90's they would shut in a well that cut 5% water. They would love that well today.
http://www.econbrowser.com/archives/2008/02/skys_eye_over_t.html
Natural gas - The US has Canadian gas, Gulf of Mexico gas and hopefully we will get that new super large LNG plant in northern Mexico.
March 2006 article
http://www.foreignpolicy.com/story/cms.php?story_id=3417
n a recent poll, Americans ranked “energy dependence” as their second greatest concern, after the Iraq war. That is hardly surprising. It is now a well-publicized fact that the United States imports 65 percent of the oil it consumes—much of it from unsavory, hostile countries. But the situation is even tougher than most people think. The United States is not only dependent on foreign oil, it is also increasingly dependent on foreign sources of natural gas—a fuel that provides 20 percent of America’s electricity and heats more than half of U.S. homes (including 70 percent of all new homes).
Natural gas is popular because it is the world’s cleanest-burning fossil fuel. It produces fewer emissions and pollutants than either coal or oil. Since the early 1970s, worldwide reserves of natural gas have increased steadily, at an annual rate of around 5 percent. The number of countries with known reserves has increased from around 40 in 1960 to more than 85 today.
There is virtually no overlap in the United States today between the uses for oil, almost all of which goes to transportation, and uses for natural gas, most of which goes to heating and electricity production. With oil supplies dwindling and production capacity strained, there will be an attempt by the world’s leading economies to use more natural gas for transportation, both directly, as some cities have done with their public transit systems, or indirectly by, for instance, electrifying cars. This will cause the demand for natural gas to skyrocket, creating what may be America’s largest future energy shock.
Why? The United States has historically relied on domestic sources of natural gas. Imports constitute a very small percentage of U.S. gas consumption: Thirteen percent comes from Canadian pipelines, and an additional 4 percent is imported as liquid natural gas (LNG) from other nations such as Qatar. That would hardly be concerning, were bad news not en route. Domestic gas production is in decline. Companies have scrambled to drill more fields to stem the decline, with little luck. During the past four years, the number of rigs drilling for gas has more than doubled, from around 600 in March 2002 to more than 1,300 today. Yet, natural gas production has remained flat or falling and it cannot even be attributed to the recent hurricanes. The country no longer has the geological and physical requirements to increase production. The increase in drilling activity, fuelled by increases in natural gas prices, is not slowing the inevitable decline of domestic production.
Importing natural gas from foreign countries—cooled into LNG—will soon be America’s only option for meeting demand. That is increasingly the case in other countries such as Japan, South Korea, and much of Europe, all of which have no significant domestic reserves and, like the United States, are eager to import.
This situation puts LNG exporters, like oil exporters, in an incredibly powerful position. Countries such as Algeria and Qatar—also-rans in the oil business—are poised to become natural gas powers in the 21st century [see chart]. They are certain to organize a natural gas cartel, similar to OPEC. That scenario worrisome for several reasons. Some of these countries, such as Russia, have already used natural gas as a political weapon.
Others, notably Iran (which has only scratched the surface of its gas potential), already appear headed for confrontation with the United States and Europe. Iran helped form the Gas Exporting Countries’ Forum (GECF)—a group of 15 gas-producing countries that met for the first time in Tehran in May 2001. Collectively, the GECF controls 73 percent of the world’s natural gas reserves and 41 percent of production. Somehow, the GECF has escaped the world’s attention. As the gas market grows increasingly global, that kind of indifference will become a luxury of the past.
Posted: Fri May 30, 2008 5:38 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
wow seahorse thats quite the sobering article. I will be anxious to hear OF2s response. Maybe him and Freddy H can come up with some stuff to thwart what your man in the business is seeing.
Joined: Mar 26, 2008 Posts: 1140 Location: Seattle
Posted: Fri May 30, 2008 7:54 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
seahorse2 wrote:
OF,
I posted the same article on the Olduvai Gorge thread. You suggest the article concludes that the US will not need LNG bc unconventional NG production in the US is rising. That's not the conclusion of the article. The article clearly concludes the US is making a mistake by not importing LNG now and by not doing so is setting itself up for a problem in the future. This quote is from the above article:
Yes, that was the conclusion of some of the people interviewed in the article. The article itself had no "conclusion," it merely pointed out that LNG terminals in the US aren't doing the business they thought they would. IMO that one sentence mentioning an unexpected increase in US domestic NG production missed the main reason why these LNG terminals are off to such a slow start, only mentioning it in passing. Perhaps the reporter should have interviewed the CEO of Chesapeake Energy.
seahorse2 wrote:
That would hardly be concerning, were bad news not en route. Domestic gas production is in decline. Companies have scrambled to drill more fields to stem the decline, with little luck.
Your friend is already wrong:
http://tonto.eia.doe.gov/dnav/ng/hist/n9010us2m.htm
^
2007 October NG production reached an all-time high, at least since they've been keeping monthly records in 1980.
2007 November NG production reached an all-time high.
2007 December NG production reached an all-time high.
2008 January NG production reached an all-time high.
2008 February NG production reached an all-time high.
2008 March NG production reached an all-time high.
In fact, last year US NG production reached an all-time high. _________________ Abundance - what a concept!
Joined: Mar 26, 2008 Posts: 1140 Location: Seattle
Posted: Fri May 30, 2008 8:06 pm Post subject: Re: Chesapeake Energy CEO: US soon to be awash in natural ga
In fact, now that I look over that EIA monthly chart again, not only did March break the record for the month of March, it broke the record for all months on record! _________________ Abundance - what a concept!
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