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Started By
Message
re: Haynesville Shale
Posted on 7/2/08 at 10:38 pm to LSU0358
Posted on 7/2/08 at 10:38 pm to LSU0358
quote:
Hope this is true (not that CHK is saying it, but that this is the 4th largest field in the world). The NW La economy will be sitting pretty for a long time to come if it is.
Yeah... Except for poor 'ol Plain Dealing.
0
Posted on 7/3/08 at 6:40 am to nyvram
Commodity sell off across the board (thankful it was not as bad as coal).
Ridiculous disconnect expanding between underlying value of some of these companies and current market price (even using nat gas strips 30% below todays $13+ prices)
Ridiculous disconnect expanding between underlying value of some of these companies and current market price (even using nat gas strips 30% below todays $13+ prices)
Posted on 7/3/08 at 8:12 am to igoringa
These stock prices are definitely riding on emotion, in the long run I think they will be worth a lot more because of large reserves and rising natural gas prices. the U.S. either has to meet the natural gas demand or import LNG which would mean raising our prices to the same price as our international peers since the U.S. has the cheapest natural gas.
These stocks will rebound.
These stocks will rebound.
Posted on 7/3/08 at 8:56 am to ShreveportTIGER318
Everyone is talking about the activity ending in north Sabine but I know for fact that landmen are now working and offering leases west and southwest of Many.
They are starting to map north Vernon.
Any thoughts on how far south this will finally go?
They are starting to map north Vernon.
Any thoughts on how far south this will finally go?
Posted on 7/3/08 at 8:59 am to doublebogey
North Vernon? Somebody better have Exxon's pocketbook because that is going to be deep if the shale is present at all. I don't see North Vernon having any potential. It would make sense that somewhere in Sabine is where the limits will fall.
Posted on 7/3/08 at 9:17 am to doublebogey
CUBIC ENERGY(qbik) is tanking today. What's up
Posted on 7/3/08 at 9:28 am to animallover
They are all tanking I think
Posted on 7/3/08 at 9:41 am to pittboss33
Does anyone know the depth of the shale around Zwolle and is it better to approach the companies with your available land or wait for them to come to you? any info is appreciated.
Posted on 7/3/08 at 10:05 am to LSU0358
I think he's saying it would be an absolute number and not really relative to spot.
--------------------------------------------------------------------------------
That could be rough if gas drops to the 6-7$ range.
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Sorry, back online again...
To clarify, "basis" is the trading term for NG commodity to express the "then-current" estimated value of NG "into the mainline" on key pipelines across the country. Derivative contracts are traded daily by producers, marketers, and end-users to hedge their physical purchases and/or sales for prompt months and forward months. Derivatives contracts on basis are settled against the NYMEX closing price vs. the actual posted index for that particular trading point (such as TX Gas Zone 1, TETCO ETX or WLA, Centerpoint East, Tennessee Zone 100 or 800 Leg, Henry Hub, less a discount, etc.).....speculators aside, it allows the customer the opportunity to lock-in/hedge a price "specific" to their mainline delivery point for both prompt month/spot as well as long-term (generally decent liquidity for up to 3-5 years). Basis is also a term used to express the current "daily trading discount" on spot (Gas Daily Daily)pricing for a particular point.
In answer to your question concerning the impact to the Haynesville in the event of a huge price drop.....historically, while not always the case in areas with big constraints, basis will usually "tighten" (move closer to the Henry Hub/NYMEX price)due to several factors, including but not limited to (a)absolute commodity price drop and the psychological effect of an established "floor" for the value of gas in general (Rockies gas prices are counter to this, having traded as low as $0.10/mcf prior to CIG expansions, even in low overall NYMEX price environments), and (2)the transportation "fuel" percentage cost dropping, thus allowing more spread value between "supply zone pricing" and the delivered price to a utility downtstream, such as the New York/Chicago markets. As an example, a 6-8% fuel rate alone on TGP or TETCO in NW LA for delivery to New York represents $0.60-0.80 per Dth of the overall delivered price. My guess is, absent a glut in NW LA, basis would shrink back closer to its current levels, perhaps a total of $0.25-0.50 discount, but hopefully not $1.50+.....just my educated opinion.
--------------------------------------------------------------------------------
That could be rough if gas drops to the 6-7$ range.
-----------------------------------------------
Sorry, back online again...
To clarify, "basis" is the trading term for NG commodity to express the "then-current" estimated value of NG "into the mainline" on key pipelines across the country. Derivative contracts are traded daily by producers, marketers, and end-users to hedge their physical purchases and/or sales for prompt months and forward months. Derivatives contracts on basis are settled against the NYMEX closing price vs. the actual posted index for that particular trading point (such as TX Gas Zone 1, TETCO ETX or WLA, Centerpoint East, Tennessee Zone 100 or 800 Leg, Henry Hub, less a discount, etc.).....speculators aside, it allows the customer the opportunity to lock-in/hedge a price "specific" to their mainline delivery point for both prompt month/spot as well as long-term (generally decent liquidity for up to 3-5 years). Basis is also a term used to express the current "daily trading discount" on spot (Gas Daily Daily)pricing for a particular point.
In answer to your question concerning the impact to the Haynesville in the event of a huge price drop.....historically, while not always the case in areas with big constraints, basis will usually "tighten" (move closer to the Henry Hub/NYMEX price)due to several factors, including but not limited to (a)absolute commodity price drop and the psychological effect of an established "floor" for the value of gas in general (Rockies gas prices are counter to this, having traded as low as $0.10/mcf prior to CIG expansions, even in low overall NYMEX price environments), and (2)the transportation "fuel" percentage cost dropping, thus allowing more spread value between "supply zone pricing" and the delivered price to a utility downtstream, such as the New York/Chicago markets. As an example, a 6-8% fuel rate alone on TGP or TETCO in NW LA for delivery to New York represents $0.60-0.80 per Dth of the overall delivered price. My guess is, absent a glut in NW LA, basis would shrink back closer to its current levels, perhaps a total of $0.25-0.50 discount, but hopefully not $1.50+.....just my educated opinion.
Posted on 7/3/08 at 10:24 am to TigerStuckinOkieland
Doesn't sound too bad. Will the Shale be priced off of Henry Hub or something else?
Posted on 7/3/08 at 11:08 am to Tiger JJ
Somebody on gohaynesvilleshale.com just said that some option trader was saying that CHK was going to buyout HK. I haven't heard anything about this except for the rumors that have been going on since this whole deal began. Anybody know anything about it?
Posted on 7/3/08 at 11:10 am to ShreveportTIGER318
The article they linked is from April 4th. I highly doubt this is going to happen.
Posted on 7/3/08 at 11:25 am to Tiger JJ
me too, i think it was his first post
Posted on 7/3/08 at 11:52 am to ShreveportTIGER318
TigerDog
How deep is too deep?
How deep is too deep?
Posted on 7/3/08 at 12:34 pm to doublebogey
I asked this before but didn't get an answer..if there's a guide for those of us with no clue about NG development, please point me to it.
Define "NG well".
Does this always include the same acerage?
Is it circular acerage? I hear about 640 acre 'sections'..is that what is being referred to?
Does the well (if successful) pay out royalties equally to the surrounding acerage?
Is it just assumed all the land has exactly the same amount of gas under it for purposes of the royalty split?
Define "Choke"
What about the 'choke' numbers we see on the rigs (see the map on page 33)..does the choke fraction imply the well has to be choked to keep too much gas from coming out at once?
Is there a rule that the smaller/larger the fraction..the more potential there is in that gas field?
Rigs vs. Wells
What is the true impact of developing the play? I see these 2 things on the CHK press release and I'm confused:
What does that mean? Are rigs different than wells? It looks like 10-30 rigs per year but 100 or so wells per year?
Can someone explain these 3 concepts?
Define "NG well".
Does this always include the same acerage?
Is it circular acerage? I hear about 640 acre 'sections'..is that what is being referred to?
Does the well (if successful) pay out royalties equally to the surrounding acerage?
Is it just assumed all the land has exactly the same amount of gas under it for purposes of the royalty split?
Define "Choke"
What about the 'choke' numbers we see on the rigs (see the map on page 33)..does the choke fraction imply the well has to be choked to keep too much gas from coming out at once?
Is there a rule that the smaller/larger the fraction..the more potential there is in that gas field?
Rigs vs. Wells
What is the true impact of developing the play? I see these 2 things on the CHK press release and I'm confused:
quote:
at least 12 rigs by YE08
at least 30 rigs by YE09
up to 60 rigs by YE10
quote:
The exit rate rig count for 2010 would imply over 360 wells per year
What does that mean? Are rigs different than wells? It looks like 10-30 rigs per year but 100 or so wells per year?
Can someone explain these 3 concepts?
Posted on 7/3/08 at 12:45 pm to nyvram
I can answer the rigs part - rigs are the huge pieces of machinery that they have to cart around to dig the wells. Each rig can do maybe 10-12 wells per year.
Posted on 7/3/08 at 3:27 pm to nyvram
quote:
Define "NG well".
Natural Gas.
quote:
Does this always include the same acerage?
No.
quote:
Is it circular acerage? I hear about 640 acre 'sections'..is that what is being referred to?
A section is a geogrpahical square containing 640 acres. These wells are probably being unitized in 640 Acre gas units - always in the form of a square.
quote:
Does the well (if successful) pay out royalties equally to the surrounding acerage?
RI of mineral owners is based on what they negotiated in their leases and is thereafter propertionately reduced to the amount of acreage they have in the unit so if you have a 25% RI and your property comprises 30% of the unit you would have a 7.5% interest in production.
quote:
Is it just assumed all the land has exactly the same amount of gas under it for purposes of the royalty split?
See above - the unit determines allocation.
quote:
What about the 'choke' numbers we see on the rigs (see the map on page 33)..does the choke fraction imply the well has to be choked to keep too much gas from coming out at once?
Controls the rate of production.
Posted on 7/3/08 at 4:39 pm to cwill
Thanks all, so to summarize:
NG wells are bored by rigs; the more rigs in use, the more wells can be drilled. Assuming 30 operational rigs, potentially 300 or so wells could be drilled per year.
Choke controls production..but what does the fraction imply? If you're a landowner is a larger or smaller fraction better? Or is this irrelevant to how much gas is harvested by the well? Is there a maximum amount of NG per day (in theory) a conventional well can handle?
Royalties - assuming for the moment the royalty percentage is the same for all landowners on a given piece of land; the royalty would be divided evenly among the 640 acres (is this a typical unit covered by a well?) and everyone on that patch of land would see identical royalties/per acre.
Did I get it right?
NG wells are bored by rigs; the more rigs in use, the more wells can be drilled. Assuming 30 operational rigs, potentially 300 or so wells could be drilled per year.
Choke controls production..but what does the fraction imply? If you're a landowner is a larger or smaller fraction better? Or is this irrelevant to how much gas is harvested by the well? Is there a maximum amount of NG per day (in theory) a conventional well can handle?
Royalties - assuming for the moment the royalty percentage is the same for all landowners on a given piece of land; the royalty would be divided evenly among the 640 acres (is this a typical unit covered by a well?) and everyone on that patch of land would see identical royalties/per acre.
Did I get it right?
This post was edited on 7/3/08 at 4:42 pm
Posted on 7/4/08 at 12:02 am to Tiger JJ
Quote:
Haynesville Shale
Doesn't sound too bad. Will the Shale be priced off of Henry Hub or something else?
_______________________________________________
The intrastate pipelines usually price their purchases off a Henry Hub index....depending on the area and the volume, it can be a 10-20% discount to Henry Hub...
If the gas is connected to one of the many interstate pipelines in the area, it will fall usually fall under their appropriate index for that region.......wellhead gas on Texas Gas Transmission (TGT), which is historically a stronger index price than Tennessee or TETCO in NW LA, has traded at a discount to it's index due to constraints downstream....Carthage Plant being full for some time now due to past 10+ years of infill drilling by UPRC and others.....minimal capacity going east/NE.....
bottom line, there will be more capacity developed to accomodate this play, but there could be an interim delay that will cause a widening of "basis".
Haynesville Shale
Doesn't sound too bad. Will the Shale be priced off of Henry Hub or something else?
_______________________________________________
The intrastate pipelines usually price their purchases off a Henry Hub index....depending on the area and the volume, it can be a 10-20% discount to Henry Hub...
If the gas is connected to one of the many interstate pipelines in the area, it will fall usually fall under their appropriate index for that region.......wellhead gas on Texas Gas Transmission (TGT), which is historically a stronger index price than Tennessee or TETCO in NW LA, has traded at a discount to it's index due to constraints downstream....Carthage Plant being full for some time now due to past 10+ years of infill drilling by UPRC and others.....minimal capacity going east/NE.....
bottom line, there will be more capacity developed to accomodate this play, but there could be an interim delay that will cause a widening of "basis".
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