{"id":14721,"date":"2015-11-24T07:47:14","date_gmt":"2015-11-24T12:47:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14721"},"modified":"2015-11-24T07:47:14","modified_gmt":"2015-11-24T12:47:14","slug":"shale-gas-rig-count-could-implode-here-if-prices-dont-rebound","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14721","title":{"rendered":"Shale Gas Rig Count Could Implode Here If Prices Don\u2019t Rebound"},"content":{"rendered":"

Shale Gas Rig Count Could Implode Here If Prices Don\u2019t Rebound<\/a><\/h3>\n

The Haynesville Shale play needs $6.50 gas prices to break even. With natural gas prices just above $2\/Mcf (thousand cubic feet), we question the shale gas\u00a0business<\/a>\u00a0model that has 31 rigs drilling wells in that play that cost $8-10 million each to sell gas at a loss into an over-supplied market.<\/p>\n

We first evaluated the Haynesville Shale in\u00a02009<\/a>\u00a0and the conclusion then was the same as it is today: the average well by top operators will produce about 4 Bcf and is not commercial at gas prices below $6 or $7 per Mcf. The play has two insurmountable geological problems. First, the shale is not brittle and, therefore, does not respond well to hydraulic fracturing. Second, the reservoir is over-pressured and compacts when gas is produced.<\/p>\n

We have heard fairy tales from operators over the years about how they will improve the miserable performance of Haynesville Shale wells. These included choking back production, re-fracking old wells and, recently, drilling 10,000 foot laterals. None of these approaches worked because bad geology cannot be improved with expensive technology.
\nWe evaluated well performance for the 5 biggest producers in the play based on cumulative gas production and the number of producing wells
\n(Table 1).<\/p>\n

\"\"<\/p>\n

Table 1<\/strong>. Key operators in the Haynesville Shale play based on number of producing wells and cumulative gas production. Source: Drilling Info and Labyrinth Consulting Services, Inc.\u00a0
\n<\/em><\/p>\n

Related:\u00a0Oil Jobs Lost: 250.000 And Counting, Texas Likely To See Massive Layoffs Soon<\/strong><\/a><\/p>\n

We did standard rate vs. time decline-curve analysis by operator and by year of first production to forecast average well reserves (an example is shown in Figure 1).<\/p>\n

\"\"<\/a><\/p>\n

Figure 1<\/strong>. Example of Haynesville Shale decline-curve analysis showing standard log of rate vs. time, rate vs. cumulative production and log of rate vs. log of time plots for a group of\u00a0XTO<\/a>\u00a0Energy wells with first production in 2011. Source: Drilling Info and Labyrinth Consulting Services, Inc.\u00a0(click image to enlarge)<\/em><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Shale Gas Rig Count Could Implode Here If Prices Don\u2019t Rebound The Haynesville Shale play needs $6.50 gas prices to break even. With natural gas prices just above $2\/Mcf (thousand cubic feet), we question the shale gas\u00a0business\u00a0model that has 31 rigs drilling wells in that play that cost $8-10 million each to sell gas at […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[2434,1775,594,595,5332,1644,10733,846],"class_list":["post-14721","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-arthur-berman","tag-oil-price-collapse","tag-oil-prices","tag-oil-production","tag-oilprice-com","tag-rig-count","tag-shale-oil-rig-count","tag-us-shale-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14721"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14721\/revisions"}],"predecessor-version":[{"id":14722,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14721\/revisions\/14722"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}