Note: scroll down to the next post to see the wells coming off the confidential list on Friday.
November 23, 2012: another Rigzone essay that might offset some of the concerns in the original post. Bottom line: the low price of natural gas will favor the long-term operators in the Marcellus. Note the designation of the new play: Marcellus 2.0. Sort of like Keystone XL 2.0.
Later, 00:31 am: be sure to read first comment in concert with the post.
However, there is now a very interesting essay at Rigzone.com. I consider the Rigzone about as unbiased as any oil and gas "publication" out there. If that is an accurate assessment of Rigzone, then the essay posted there today about the "illusion" of a relative glut of natural gas for the long term needs to be taken seriously.
I believe a similar article was posted at The Oil Drum.com within the recent past; I don't recall if I posted a link to that story or not.
It appears there are very smart people on both sides of this argument. It will be an interesting story to follow. It certainly will support those in Congress who are already arguing against exporting American natural gas. And it doesn't look like it will take a long time for more data to be generated to suggest which side might be correct -- perhaps as soon as another four or five years.
For investors, it sounds like the oil service companies will have more work, not less work, going forward, completing natural gas wells. And, of course, if the analysis at the linked essay is accurate, it is only more good news for North Dakota.
At the linked article:
The significance of this analysis is that 56 percent of current Texas natural gas production comes from wells drilled in the last 30 months. Fully 75 percent of total gas output comes from wells drilled in the last 54 months, and less than 20 percent comes from wells drilled before 2008. Increasingly, we are relying on gas output from new wells as older wells have declined to such low volumes that collectively they are becoming marginal contributors. [By the way, the same thing is being said about the Bakken, but others disagree. ]
The significance of Mr. Berman's recent Texas gas production analysis, which he has supported with a similar analysis of the production performance of Barnett shale wells, is that it confirms observations he made two and a half years ago in a presentation. Not only does it confirm those projections, but the data shows the current situation to be worse than projected. We suspect what has made the current situation worse is that producers have embraced using more hydraulic fracture stages per well, which drains reserves faster leading to sharply lower future production volumes.
I quit watching the Dallas - Redskins game some time in the third / fourth quarter earlier this afternoon. I forget exactly when, but the score was so lopsided, it was clear what the outcome would be. The final score suggested the game was a lot closer than it really was. Tony Romo has never impressed me, though for short periods, off and on, during the past two years, I thought he was "okay" and might become a "Dallas quarterback." But this year ... he has not been impressive. The Cowboys are 5 - 6 and near the bottom in the standings. It looks like there are only five NFC teams that have a lower percentage season so far this season. Obviously the owner still has "faith" in Romo, but it would not surprise me a bit if there is talk about "the quarterback problem at Dallas" in the sports columns in the next few weeks if things don't turn around. So, we'll see. [Later: I see there's already an article suggesting Jerry Jones is already questioning whether the team can even get to 8 - 8 this season, but the onus is on the coach, not the quarterback, according to this article.]
The following game, the New England Patriots at New York Jets was a much more interesting game -- for the Patriot fans. Even one of the announcers noted that they had probably lost their audience by the middle of the third period.