Tuesday, April 14, 2020

Completing The Discussion On That "Pop-Quiz" Earlier Today -- April 14, 2020

This completes the blog I started earlier -- link here to the "pop-quiz" from earlier today.

A reminder: the NDIC now reports natural gas statistics for each well: the amount of natural gas produced by the well; the amount sold, and the amount vented/flared.

In the "old days,"
  • MFC produced = MCF sold + vented/flared;
But now, more and more, in the Bakken:
  • MFC produced ≠ MCF sold + vented/flared
Where is the "missing MCF (natural gas)?

A reader provides this:
Since the DMR has added the "Flared" column in wells' production profiles, it is now possible to determine how much produced natgas is consumed or re-injected (for gas lift Artificial Lift) for each well/pad.

This is determined by starting with gross production, then subtracting amount sold, then subtracting amount flared.

The remaining balance - if any - should be the amount burned onsite to power compressors and/or generators with the rest being injected back downhole for the now near-ubiquitous (in the Bakken, soon, everywhere) gas lift approach in the Artificial Lift phase.
(There are at least 3 main subsets to this, but I am still trying to gather information).

Bottom line, using the two Lime Rock wells from today - #24511 and #-33634 - one finds: ~500 M cubic feet/month consumed for the former, with ~ 800 M cubic feet/month for the latter.

(I started tracking this months ago with the 500,000 cubic feet per month per well being about average).

Using a VERY generous 'retail' price of $2/mmbtu - essentially $2.00 for every thousand feet of natgas - these operators are 'paying' (to themselves, no less) between $1,000 and $1,600 per MONTH for the use of this natgas.
In reality, these operators - Lime Rock, in this example - are getting FREE fuel for their equipment and re-injection purposes. Equipment seems mainly to consist of the aforementioned compressors and generators.

Very little info seems to be in the public domain in these matters.
Absolutely fascinating. 

2 comments:

  1. Some will probably sue eventually, more than likely the language in the lease will favor the oil companies.

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    Replies
    1. After my initial post, I thought about it again For those with large stakes, like the state, they might like to look into this. For mom and pop mineral owners it would be such a small return, not worth worrying about.

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