West Texas Shale Could Dwarf Eagle Ford Shale
The Texas oil industry for several decades seemed headed into territory best described by the old saying “all hat and no cattle.”
But the state appears awash again in oil and gas, with drilling in fields across the state, including one West Texas shale formation that could dwarf both the Eagle Ford Shale in South Texas and North Dakota’s famous Bakken Shale.
Texas recently had 839 drilling rigs operating — nearly half of all rigs in the U.S. and 22.7 percent of rigs worldwide, according to the Feb. 15 Baker Hughes Rig Count.
And most of those rigs were working in five regions of the state: the Permian Basin in West Texas, the Eagle Ford Shale in South Texas, the Granite Wash in the Panhandle, the Barnett Shale in North Texas and the Haynesville Shale in East Texas.
“You’d be hard pressed to find anybody who saw this coming,” said economist Karr Ingham, noting that there are more drilling rigs in the Permian Basin than during the 1980s boom. “That’s a stunning turn of events right there.”
West Texas has a multitude of overlapping oil fields, but the Cline Shale has created a stir. The formation runs about 140 miles north to south and about 70 miles wide through Howard, Glasscock, Reagan and Sterling Counties.
Early estimates for the Cline, based on Devon Energy’s exploration in the area, put the estimated recoverable reserves at 30 billion barrels of oil.
By comparison, the U.S. Geological Survey estimates the Eagle Ford holds up to 7 billion to 10 billion in recoverable reserves, while the Bakken Shale could hold as much as 4.3 billion barrels of recoverable oil.
Benjamin Shattuck, an analyst with Wood Mackenzie in Houston, said just 80 to 100 wells have been drilled in the Cline, and data is sketchy so far. He expects the industry in six months will have twice as much information on Cline Shale as it does now.
“Operators are doing their best to keep the result confidential,” he said. “The big thing in the Cline is that results so far have been good.”
Peggy Williams, editorial director with Hart Energy, said the Permian Basin, with more than 400 drilling rigs operating, is the most complex field in the state, with both horizontal and vertical drilling in multiple geologic horizons. The formations are so thick that they’re using vertical hydraulic fracturing, the process of using water, sand and chemicals pumped at high pressure to break open dense rock.
It could be the next hot spot , and it's wet.......
The Cline Shale (also known as the Lower Wolfcamp) lies over a very large area on the eastern shelf of the Permian Basin. The “Cline” is a localized name for the Pennsylvanian aged shale that some recognize as the D bench of the Permian aged Wolfcamp. Starting at the Wolfcamp A bench down to the bottom, Wolfcamp C bench, the rock has less carbonates. However, the underlying shale is interbedded with sand and silt, indicative of its depositional environment. The Cline source rock lies on a broad flat shelf, with very little relief. Total Organic Content (TOC), porosity, permeability, and OOIP are all fairly comparable in both the Wolfcamp and the Cline. Even though the Wolfcamp is thicker, which can be a driver for production in shale plays, it is the pressure and thermal maturity of the Cline that set it apart. The pressure gradient is around 0.55-0.65 psi/ft with an Ro value of 0.85-1.1%. Along with NGLs, this allows for a nice, light crude with an API gravity of 38-42 degrees, which some say is comparable to the Eagle Ford. The industry type curve for the Cline Shale is quoted at 420 Mboe EUR/well with 60% oil and a 30 day IP of 575 Boe/d with 75% oil.
In short, the Cline is an organic rich shale, with Total Organic Content (TOC) of 1-8%, with silt and sand beds mixed in. It lies in a broad shelf, with minimal relief and has nice light oil of 38-42 gravity with excellent porosity of 6-12% in thickness varying 200 to 550 feet thick.
Active players in the shale include Devon Energy, Chesapeake, Firewheel Energy, Apache Energy, Laredo Petroleum, Exco, Callon Petroleum, Pioneer Resources and others.
"BENTEK Top Stories
Northeast demand will peak today; TCO announces first injection of season
Northeast gas demand will peak today as the region is hit by another round of colder weather. Demand is expected to hit 20 Bcf/d, which is 6 Bcf/d above normal for this time of year and the highest demand level since March 27, when Northeast demand touched 22 Bcf/d. "
Lower power burn and outflows to help rebuild storage this summer
Southeast gas inventories fell to a low of 150 Bcf on March 26 and are currently estimated at 153 Bcf, a 161-Bcf deficit to the 5-year average and a 141-Bcf deficit to last year. Inventories at the 59-Bcf Pine Prairie facility have averaged 13.6 Bcf over the last 30 days, 22 Bcf (62%) below last year, suggesting that the facility will need to fill at an average rate of 110 MMcf/d faster this year compared to last in order to reach 2013 summer-ending inventories. Bentek expects that lower gas burn and outflows will help the region rebuild this massive deficit. During summer 2014, Bentek expects total power burn to average 0.2 Bcf/d less and outflows to the Midcon and Northeast to average 1.6 Bcf/d less, year-over-year. "
Looks like you will get your wish , another low injection on top of an epic draw season.It will be interesting to see how the build unfolds this summer and fall.
BENTEK Top Stories
Supply/Demand Balance Analytic Report
US demand falls to lowest level since November
US demand is at 62 Bcf today, down 2.3 Bcf/d from Sunday and 5.6 Bcf/d from Friday as a drop in res/comm outpaced a small gain in power burn over the past two days. Demand is now at its lowest level since November 2013. Northeast region res/comm demand fell to 8.8 Bcf/d, a 0.9-Bcf/d decline from Sunday, and is expected to continue to fall to an average 7.4 Bcf/d over the next six days. Res/comm in the West and Midcon decreased by 1.3 Bcf/d from Sunday to 7.2 Bcf/d as the regions saw milder temperatures. Demand in these areas is expected to average 7.1 Bcf/d for the coming week. US dry gas production remained fairly flat over the weekend at 67.1 Bcf/d and is expected to maintain that level through this week. Production last week averaged 67.3
It doesn’t appear the market is pricing in a shortage yet even after an epic draw season. The drillers are in control in a way , they control how their drilling budgets are spent , dry gas is the least profitable for them. I hope CHK stays on course here……………
Weekend brings record-high PG&E injection rates
PG&E storage injections spiked over the weekend and will likely be elevated throughout the week, as strong PG&E CG prices and mild demand encourage ample net injections. The PG&E market area fields injected 963 MMcf/d and 900 MMcf/d on Saturday and Sunday, the highest injection rates the system has noted in April dating back to 2010. Over the first week of April, PG&E net injected a total of 2.8 Bcf, sending inventory levels to 74.4 Bcf. The Opal-PG&E CG and AECO-PG&E CG spreads widened by $0.05 and $0.08 to $0.60 and $0.77 during the 7-day span, incentivizing an uptick in flowing volumes from surrounding regions. Redwood Path receipts from GTN and Ruby rose a combined 610 MMcf/d to 2.01 Bcf/d from the March average of 1.4 Bcf/d. With the strong start to the storage injection season, the spring shoulder months are shaping up to continue filling inventory levels at record-high rates, so long as the downstream market conditions of high prices and weak res/comm demand remain.
Not short wallpack , just realistic . There is a downside to low storage though , I can’t see Utilities planning future power generation based on current storage and I can’t see the drillers ramping up production on $4.30 gas either. I Believe Lawler is making the right moves here , limiting drilling to cash flow from operations is a top priority , drilling in the low cost fields in the Marcellus and Eagle Ford should help , they have dropped their drilling cost through new efficiency’s in The Eagle Ford to 7-8 million from 10, at that price they can make 100% with $4.30 gas . I am hoping the new management will drive CHK price higher rather than what the weather does.
"We asked Moore about the end-of-year final
tally for 2014 as well. “We’re still looking at
somewhere between 3.6 and low 3.7 Tcf. No
records next year, for sure. The biggest question
is what the power burn will look like.
Assuming that power burn will come in at
2013 levels, we could hit much higher than
the 3.6 Tcf … but we’re forecasting some decent
growth in power burn for 2014.This is
partially due to a return to normal weather
and a fair amount to new builds coming on
line this year. Here again, this is all despite
the fact we will be looking at some very strong
production numbers,” Moore says.
“I think the biggest thing I’ve
learned this year is don’t chase EIA,” he says.
“When the EIA report surprises you to one
side or the other, don’t change what you do,
don’t chase their numbers. Learn from what
they report, but carry on … ”
There it is: Jeff Moore and company
at Bentek Energy are the best gas storage
forecasters in the land for 2013 according
to the Energy Metro Desk weekly boxscores,
North America’s biggest and oldest weekly
gas storage survey and report. Bentek bested
40 other models, surveys and analysts to win
this year’s title."
That particular information came from Bentek Energy , they track the producers , they have some useful information but as with the IEA their numbers are estimates, follow the money …………….the traders seem to have a better handle on it.
DENVER, April 1, 2014 /PRNewswire/ -- Spurred on by the top three highest producing days in U.S. history, domestic natural gas production in the lower 48 states averaged 66.6 billion cubic feet per day (Bcf/day) in March 2014, according to the latest estimates from Bentek Energy, the oil and natural gas analytic unit of Platts. Production levels on March 29, 30 and 31 all came in at 67.6 Bcf/d, the single highest production days since November 9, 2013. March 28 production came in just 0.1 Bcf/d shy of these levels.
"ND natural gas production set a new record at 1.06 bcf/d.
The state should also eclipse 10,000 producing wells before year-end. Natural gas production in the Williston Basin could more than quadruple current levels, pushing North Dakota into a more leading role in supplying the U.S. natural gas market, according to a study released Wednesday."
Now obviously they are not flaring off 1Bcf a day , new pipelines are nearing completion.
Average is the key word , we are past our high consumption mark until November , we will be adding 10-12 Bcf per day in a week or two, not to mention new supply from the Bakken.
No problem filling storage by next fall , Infrastructure being built in the Bakken will add 300 to 400Mcf per day that they are now flaring off , same thing in the Marcellus minus the flaring part, they don’t have the infrastructure to fully exploit the resource. If there was any pending shortage you would not see NG at 4 bucks and some change………..
It’s not that storage is not important , it represents 10% of yearly usage on average[2.5Tcf] It’s my belief production and usage is a better metric. Usage has been flat the last few years even as power plants are switching from coal …………go figure, NG dropped 2 ½% after the last EIA report even though it put us 46% under the five year average.
The US uses 72Bcf a day of natty , storage represents a small percentage of use , it’s an important barometer but a bit misleading , now that the weather is clearing production will get stronger.
"The company also provided an update on its asset sales, stating that in 2014 it has received $209M of net proceeds from the sale of its common equity ownership interest in Chaparral Energy and believes it will receive proceeds in excess of $150M during 2014 that were held back for title review or other purposes at the time of closing. These items should generate proceeds of about $1B, and Chesapeake sees the sale of these assets having a minimal impact on 2014 operating cash flow guidance. Looking ahead, the company sees 2014 total production up 2%-4% and sees its 2014 daily equivalent rate at 680mboe-695mboe. The company expects to have additional asset dispositions in 2014, potentially including a spin-off of COS to Chesapeake shareholders or an outright sale. On its earnings conference call, the company said it no longer needs to divest assets to survive or fund its drilling capital program. Chesapeake also commented that it has "a lot of noise" on its balance sheet, though major charges and quarterly earnings adjustments are "in the rear-view mirror". The company has no plans to issue new equity, management said."
The good news is cash flow will provide drilling capital............................
I wouldn't be surprised to see Seattle leading this game early, but nobody adjusts at the half like Denver and Peyton. I see Eric Decker sneaking up on the secondary for a big game. Broncos 24, Seahawks 17.............Go Broncos
Yahoo message board flatulence is the cause of global warming …………….It’s so powerful it even heats up Mars