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Friday, January 18, 2013

Random Single Well Comparison of Return on Natural Gas

Link provided by "anon 1." PDF link here.

From a comment sent in by another reader:
Natural gas is the forgotten by product in the Bakken. These plants go for about $300 million a piece, 60-80 jobs that are permanent for the next 80 years or so and pay about 80K a year. It is this job that is forgotten but will be the foundation for stability in western ND. This is what brings the family and builds the house.
Well said.

With regard to all of the above, more from "anon 1":
There is a lot of condensate in the Wet Utica wells, generally.

But the industry hasn't been defining "wet" lately. Something about liquids, but what?

In the Utica it often has rich gas plus condensate. But with little or no condensate, when is it "dry" gas? And, do they all agree? My guess is that it is used very loosely, they don't want to say, and no one is pinning them down. "Analysts" are pretty worthless. They don't ask.

Jeffries is in the back room for the deals, so I take their numbers seriously. I think there are pending deals and they can't really just make stuff up.

There are lots of players.

http://files.shareholder.com/downloads/GPOR/2009695848x0x618743/14B146D8-623E-4FD3-B6BE-82CC350511C9/GPOR_InvestorPres_December.pdf

Gulfport and CHK are probably the most obvious.

Many have land that might be good, but those have lots of good land.

Of the Bakken players, MHR and HK have land that they claim is good, but no data yet.

Hess has a joint venture. XOM and CHV have some land.

The need for processing plants is key. No point producing if they can't keep up. The big production starts this summer. It will grow fast.
How fast?
Natural gas production in North Dakota:



Source: NDIC.


The most interesting thing about this whole discussion: the Bakken is an oil field, not a gas field. When I first started blogging about the Bakken I had no intention of blogging about natural gas. It did not interest me. The Bakken was an oil field, not a gas field. And I did not understand natural gas.

I understand natural gas a bit more now.

2 comments:


  1. Nat gas fields are generally considered dry where nat gas processing plants are not economical to remove the NGL's (meaning only limited ethane but just trace propane, butane, nat gasoline etc are present). Examples of these include Fayettville and Barnett. With nat gas prices so low, the NGL's in wet gas are what drive the economics.

    If a nat gas field is sour, or contains a lot of inerts (argon, neon, nitrogen, helium), a nat gas processing could still be required. A field with recoverable levels of noble gases could be very valuable.

    ReplyDelete
    Replies
    1. ... and that's why I did not want to wade into natural gas when I started the blog; way too many variables. It seemed oil was a lot more straightforward.

      But, the tea leaves certainly suggest ONEOK will do well in the Bakken with its natural gas gathering and processing facilities.

      Delete

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