Permian Producers Flare More Gas than Reported

@Mike Shellman to the white courtesy phone, please.

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Tom, I am finding on social media and blogs a great deal of anti-oil sentiment and/or a great deal of pro-shale oil sentiment; the subject has now become like everything else in America...very partisan and very divided. I am in the middle and people don't like what I have to say. Hydrocarbons will be vital to our society for a long time to come, but shale oil, as important as it is, is getting a free ride with fiscal stimulus and cannot stand on its own two financial feet. We are depleting our last oil resources in America for all the wrong reasons. I'll answer this, just for you, then skedaddle again:

In Texas the TRRC estimates about 500-700MMCFPD of reported gas is flared each day. New Mexico is like the wild west, however, and if you see the Permian there is a big difference in the two states and flaring is everywhere in New Mexico. I am not in the least bit surprised that there is a lot of unreported flaring going on as it is impossible to regulate such a large area that is awash with activity. I actually believe there is away more than a BCF of gas being flared, maybe as much as 35%, or more, of all associated gas is being flared. That's a guess. I flew it all recently at low altitude and it is stunning, the waste,

There is so much of it, it is not worth anything. There is no place to put it, no takeaway. Because of other associated gas from other shale basins, and the amazing growth in the APP Basin, natural gas is everywhere. When it gets warmer the price is going to collapse. Gas to oil ratios in a lot of these basins is going up so the issue will get worse, not better.

All Americans should be livid about this waste. We live in the greatest industrialized nation in the world and it is occurring because of poor planning and greed. A lot of the oil under all this flared gas is being exported.

Keep a bind on it, Tom.

 

 

 

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Thanks again, Mike, for weighing in with your clear explanation; much appreciated.  It's actually good for the lurkers here to understand the crazy, massive, ongoing waste with this flaring of perfectly good hydrocarbons.

I'm sometimes dumbfounded by the big spin and hype about U.S. shale oil.  Harold Hamm was at it again earlier this week, sounding off more nonsense about shale oil.

"Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

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Some African nations have a ban on flaring in certain regions.... If they can do it....

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Ah the old infrastructure conundrum. It's not expensive to capture, but if you don't have the mid-stream then using and/or storing is. The solution is having capture be at least a break even proposition. Texas has very stringent flaring rules (comparatively) they also have pipelines, and growing value added industries. A fairly recent article about efforts in N. Dakota seems to be a reasonable approach.

https://www.willistonherald.com/news/north-dakota-relaxes-flaring-rules/article_8d8f99bc-ef44-11e8-98da-db6c204faed6.html

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4 hours ago, Tom Kirkman said:

Thanks again, Mike, for weighing in with your clear explanation; much appreciated.  It's actually good for the lurkers here to understand the crazy, massive, ongoing waste with this flaring of perfectly good hydrocarbons.

I'm sometimes dumbfounded by the big spin and hype about U.S. shale oil.  Harold Hamm was at it again earlier this week, sounding off more nonsense about shale oil.

"Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

Ok I'm confused. Hamms quote is that production will decline. Are you predicting a 50% increase in 10 years?

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4 hours ago, lesrof2evils said:

Ok I'm confused. Hamms quote is that production will decline. Are you predicting a 50% increase in 10 years?

Hamm predicted a short term decline, but also a long term increase by 50%.  Last paragragh of the article:

https://www.argusmedia.com/en/news/1833434-crude-summit-hamm-sees-us-shale-output-growth-slowing

"Despite expectations of a near-term slowdown in output growth, the industry's outlook remain bright given the supply demand fundamentals and the improvements in efficiency and the reduction in costs companies have been able to achieve. Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

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9 hours ago, Mike Shellman said:

Tom, I am finding on social media and blogs a great deal of anti-oil sentiment and/or a great deal of pro-shale oil sentiment; the subject has now become like everything else in America...very partisan and very divided. I am in the middle and people don't like what I have to say. Hydrocarbons will be vital to our society for a long time to come, but shale oil, as important as it is, is getting a free ride with fiscal stimulus and cannot stand on its own two financial feet. We are depleting our last oil resources in America for all the wrong reasons. I'll answer this, just for you, then skedaddle again:

In Texas the TRRC estimates about 500-700MMCFPD of reported gas is flared each day. New Mexico is like the wild west, however, and if you see the Permian there is a big difference in the two states and flaring is everywhere in New Mexico. I am not in the least bit surprised that there is a lot of unreported flaring going on as it is impossible to regulate such a large area that is awash with activity. I actually believe there is away more than a BCF of gas being flared, maybe as much as 35%, or more, of all associated gas is being flared. That's a guess. I flew it all recently at low altitude and it is stunning, the waste,

There is so much of it, it is not worth anything. There is no place to put it, no takeaway. Because of other associated gas from other shale basins, and the amazing growth in the APP Basin, natural gas is everywhere. When it gets warmer the price is going to collapse. Gas to oil ratios in a lot of these basins is going up so the issue will get worse, not better.

All Americans should be livid about this waste. We live in the greatest industrialized nation in the world and it is occurring because of poor planning and greed. A lot of the oil under all this flared gas is being exported.

Keep a bind on it, Tom.

 

 

 

3

Mike, all the technology is available. It is not any more expensive than any other equipment and it looks like the government needs to step in and say you can flare a little, but no more than necessary. After you start producing you must divert the natural gas into a processing plant then used onsite or transported to market somewhere as CNG or LNG. This can be done by truck and the trucks can run on CNG or LNG. 

You bring up a good point. We should not be exporting oil if we must waste natural gas to do it.

I can provide the links regarding the mini processing plants. 

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(edited)

40 minutes ago, Tom Kirkman said:

Hamm predicted a short term decline, but also a long term increase by 50%.  Last paragragh of the article:

https://www.argusmedia.com/en/news/1833434-crude-summit-hamm-sees-us-shale-output-growth-slowing

"Despite expectations of a near-term slowdown in output growth, the industry's outlook remain bright given the supply demand fundamentals and the improvements in efficiency and the reduction in costs companies have been able to achieve. Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

2

I disagree Tom, I think that he will be proven right by new exploration and advancing technology which will allow further production. 

https://oilprice.com/Energy/Crude-Oil/US-Set-To-Pump-More-Oil-Than-Russia-And-Saudis-Combined.html

Edited by ronwagn
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2 hours ago, ronwagn said:

I disagree Tom, I think that he will be proven right by new exploration and advancing technology which will allow further production. 

https://oilprice.com/Energy/Crude-Oil/US-Set-To-Pump-More-Oil-Than-Russia-And-Saudis-Combined.html

Obviously I have a minority opinion here.  No worries, I'm used to it  : )

 

bf33453579f59a0b2c561d8b9c12f349aa5502fb32220a673dd58c2b8cb0b1f7.png

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(edited)

Like many Americans Mr. Wagon has an undying loyalty and belief in "technology," and how that will always, always save the day. In that we have been frac'ing for 50 years, and drilling horizontally for nearly 40, or something like that, technology has very little to do with the shale oil phenomena. Cheap money, and high prices did. All of America's shale resources have been delineated in our nations oil basins, there are no more secrets, no more miracles; now it all about how much money it will cost and to what extent the American taxpayer is willing to ultimately fund the shale oil industry. 

Mr. Wagon obviously has a lot of experience in the oil and natural gas business and I hope that he will share with us the economics of converting flared gas to liquids. More importantly I wish to hear from him where the money is going to come from to grow LTO production 50% from current levels. Unless he is certain that prices will rise to $90 plus dollars, and stay there, I see future growth as a real problem. Hamm, by the way, owes $6 billion dollars, and his company is in deep doo doo if prices stay where they are. He is notorious for saying whatever needs to be said for the advancement of shale oil and his personal wealth.

American's watch too much TV, and spend far too much time on the internet believing what people want them to believe. The shale oil industry has NEVER been profitable and for it to continue to grow we will have to keep funding it. This is not Russia and we are not growing cabbages for the Motherland, this is America and free enterprise must be profitable to succeed.

It should no longer be sufficient to say things will occur in the future simply because we are told that is the way they will happen. If that is your belief and you want others to believe the same way you do, explain to us HOW it is going to happen. In the case of hydrocarbon independence, and shale oil growth, where is the money to going to come from to make it happen? And who, exactly is going to pay for it?

 

 

 

 

 

 

Edited by Mike Shellman
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Well said, yet again, Mike.

13 minutes ago, Mike Shellman said:

Hamm, by the way, owes $6 billion dollars, and his company is in deep doo doo if prices stay where they are. He is notorious for saying whatever needs to be said for the advancement of shale oil and his personal wealth.

Hamm is a walking, talking example of a "vested interest".  Just my opinion.

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2 hours ago, Mike Shellman said:

Like many Americans Mr. Wagon has an undying loyalty and belief in "technology," and how that will always, always save the day. In that we have been frac'ing for 50 years, and drilling horizontally for nearly 40, or something like that, technology has very little to do with the shale oil phenomena. Cheap money, and high prices did. All of America's shale resources have been delineated in our nations oil basins, there are no more secrets, no more miracles; now it all about how much money it will cost and to what extent the American taxpayer is willing to ultimately fund the shale oil industry. 

Mr. Wagon obviously has a lot of experience in the oil and natural gas business and I hope that he will share with us the economics of converting flared gas to liquids. More importantly I wish to hear from him where the money is going to come from to grow LTO production 50% from current levels. Unless he is certain that prices will rise to $90 plus dollars, and stay there, I see future growth as a real problem. Hamm, by the way, owes $6 billion dollars, and his company is in deep doo doo if prices stay where they are. He is notorious for saying whatever needs to be said for the advancement of shale oil and his personal wealth.

American's watch too much TV, and spend far too much time on the internet believing what people want them to believe. The shale oil industry has NEVER been profitable and for it to continue to grow we will have to keep funding it. This is not Russia and we are not growing cabbages for the Motherland, this is America and free enterprise must be profitable to succeed.

It should no longer be sufficient to say things will occur in the future simply because we are told that is the way they will happen. If that is your belief and you want others to believe the same way you do, explain to us HOW it is going to happen. In the case of hydrocarbon independence, and shale oil growth, where is the money to going to come from to make it happen? And who, exactly is going to pay for it?

Mike, we may have ten years to find out you and Tom may be right. I was not thinking only of our shale oil but also our coastal and conventional oil. 

I am not concerned since I advocate natural gas use and I do know that we can use that for fueling anything we need to fuel. That can be done later or sooner. I prefer to leave some oil in the ground and go with CNG or LNG instead of flaring off a cleaner but less costly fuel. Natural gas is far more abundant than oil. Middle Eastern countries are planning to invest many Billions of dollars in American natural gas. 

 

 

 

 

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7 hours ago, Tom Kirkman said:

Hamm predicted a short term decline, but also a long term increase by 50%.  Last paragragh of the article:

https://www.argusmedia.com/en/news/1833434-crude-summit-hamm-sees-us-shale-output-growth-slowing

"Despite expectations of a near-term slowdown in output growth, the industry's outlook remain bright given the supply demand fundamentals and the improvements in efficiency and the reduction in costs companies have been able to achieve. Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

I thought he said that shale production growth would drop to 50% of what it was last year (last years production growth was 1.5mbod), which means that it will grow by 750kbod, but again it all depends on how many rigs are in action. I think to stay on the thread mill they need to keep adding rigs to match the production increases and legacy loss. At this point my feeling is that the faster production rises the faster it will come to an end. As for US environment, I'm sure they would be held to account in populated areas. I just cant get over it, it seems to be the patriotic thing to flag wave about selling your last reserves at a discount to refiners in Europe and China. I thought the US was in a spat with China:)

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Mr. Wagon, as an oil producer I actually agree with you regarding natural gas; it should be the focus of our hydrocarbon future. Its not. It is being wasted and ultimately exported to foreign countries when it needs to stay here in the good 'ol US of A.

The point I wish to make again is that many, many Americans look at this shale phenomena as a great miracle and have no idea of its poor economic and financial performance. I think they associate the oil and gas business with tall dudes in cowboy hats driving cars with steer horns on the hood and that everybody makes money in the oil business. I've been told countless times that the shale industry would not be drilling all those wells if it were not making money hand over fist. That is not true for shale oil; it IS, truly, a business disaster.

So before American's think we're all home free and never have to worry about oil or gas again, the way some folks want Americans to feel, they need to view the shale phenomena as a business and begin to ask themselves where the money is going to come from to keep drilling all those wells, is the shale industry going to be able to pay all that debt back and EVER be able to stand on its own financial feet? Right now, its not. Right now it is all floating on low interest stimulus money. Its all sort of a house of cards on a windy day. American's need to get their heads wrapped around that. 

 

 

 

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On 1/25/2019 at 12:58 PM, Mike Shellman said:

Tom, I am finding on social media and blogs a great deal of anti-oil sentiment and/or a great deal of pro-shale oil sentiment; the subject has now become like everything else in America...very partisan and very divided. I am in the middle and people don't like what I have to say. Hydrocarbons will be vital to our society for a long time to come, but shale oil, as important as it is, is getting a free ride with fiscal stimulus and cannot stand on its own two financial feet. We are depleting our last oil resources in America for all the wrong reasons. I'll answer this, just for you, then skedaddle again:

In Texas the TRRC estimates about 500-700MMCFPD of reported gas is flared each day. New Mexico is like the wild west, however, and if you see the Permian there is a big difference in the two states and flaring is everywhere in New Mexico. I am not in the least bit surprised that there is a lot of unreported flaring going on as it is impossible to regulate such a large area that is awash with activity. I actually believe there is away more than a BCF of gas being flared, maybe as much as 35%, or more, of all associated gas is being flared. That's a guess. I flew it all recently at low altitude and it is stunning, the waste,

There is so much of it, it is not worth anything. There is no place to put it, no takeaway. Because of other associated gas from other shale basins, and the amazing growth in the APP Basin, natural gas is everywhere. When it gets warmer the price is going to collapse. Gas to oil ratios in a lot of these basins is going up so the issue will get worse, not better.

All Americans should be livid about this waste. We live in the greatest industrialized nation in the world and it is occurring because of poor planning and greed. A lot of the oil under all this flared gas is being exported.

Keep a bind on it, Tom.

 

 

 

Instead of building all these windmills, the gas should be captured. It is CRAZY that the gas is flared, while windmills get subsidized.... There are nice gas powered gensets for local gas to power existing.....

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On 1/25/2019 at 3:56 PM, Tom Kirkman said:

Hamm predicted a short term decline, but also a long term increase by 50%.  Last paragragh of the article:

https://www.argusmedia.com/en/news/1833434-crude-summit-hamm-sees-us-shale-output-growth-slowing

"Despite expectations of a near-term slowdown in output growth, the industry's outlook remain bright given the supply demand fundamentals and the improvements in efficiency and the reduction in costs companies have been able to achieve. Looking ahead 10 years, Hamm said the industry could see an increase in its output by 50pc from current levels."

Ah got it, thanks. As to the flaring issue. What regulatory and/or monetary policy would you support that addresses this problem, and yes I think it's a problem.

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44 minutes ago, lesrof2evils said:

Ah got it, thanks. As to the flaring issue. What regulatory and/or monetary policy would you support that addresses this problem, and yes I think it's a problem.

Put flaring under the control and direction of The Texas Railroad Commission.

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On 1/25/2019 at 9:01 AM, lesrof2evils said:

Ah the old infrastructure conundrum. It's not expensive to capture, but if you don't have the mid-stream then using and/or storing is. The solution is having capture be at least a break even proposition. Texas has very stringent flaring rules (comparatively) they also have pipelines, and growing value added industries. A fairly recent article about efforts in N. Dakota seems to be a reasonable approach.

https://www.willistonherald.com/news/north-dakota-relaxes-flaring-rules/article_8d8f99bc-ef44-11e8-98da-db6c204faed6.html

I agree:

“If the wells that are flaring are low producers, we shouldn’t really have an issue with those,” Hicks said. “It’s more the total volume they are worried about. So the (North Dakota Industrial Commission) wanted to make sure they are incentivizing the investment in gas capture infrastructure.”

Hicks said they also want to encourage investment in value-added projects, as well as infrastructure. This could include a petrochemicals plant, electrical generation, greenhouse projects, or use as rig fuels or for heating hydraulic fracturing water.

“There are a lot of projects out there that can use the gas in a beneficial way,” Hicks said. “Instead of selling the gas, use it.”

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7 hours ago, Tom Kirkman said:

Put flaring under the control and direction of The Texas Railroad Commission.

Wouldn't that result in no change?

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3 minutes ago, ronwagn said:

Wouldn't that result in no change?

Many decades ago, the Texas RR Commission used to do a pretty good job in putting some control in Texas oilfields.

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17 hours ago, Mike Shellman said:

Mr. Wagon, as an oil producer I actually agree with you regarding natural gas; it should be the focus of our hydrocarbon future. Its not. It is being wasted and ultimately exported to foreign countries when it needs to stay here in the good 'ol US of A.

The point I wish to make again is that many, many Americans look at this shale phenomena as a great miracle and have no idea of its poor economic and financial performance. I think they associate the oil and gas business with tall dudes in cowboy hats driving cars with steer horns on the hood and that everybody makes money in the oil business. I've been told countless times that the shale industry would not be drilling all those wells if it were not making money hand over fist. That is not true for shale oil; it IS, truly, a business disaster.

So before American's think we're all home free and never have to worry about oil or gas again, the way some folks want Americans to feel, they need to view the shale phenomena as a business and begin to ask themselves where the money is going to come from to keep drilling all those wells, is the shale industry going to be able to pay all that debt back and EVER be able to stand on its own financial feet? Right now, its not. Right now it is all floating on low interest stimulus money. Its all sort of a house of cards on a windy day. American's need to get their heads wrapped around that. 

I agree with everything you just said. I have devoted several years to studying natural gas as a replacement for gasoline and diesel. This started about eight years ago when we had the supposed energy crisis. I looked at all options and picked natural gas. So far I picked the right horse. 

When I first got out of the army in 1965 I worked for Tidewater Oil, Seaside, Getty Oil, and Phillips 66. It was all out of two major offices on Wilshire Blvd. in Los Angeles. Very interesting and educational. The oil industry is a great asset to America. Without it we would possibly be speaking German. 

 

 

 

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(edited)

10 minutes ago, Tom Kirkman said:

Many decades ago, the Texas RR Commission used to do a pretty good job in putting some control in Texas oilfields.

I am familiar with the story of a barrel of oil for pocket change and how they shut down overproduction. I wonder how raw capitalism would have ended up. 

Edited by ronwagn
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North Dakota should make some decent progress this year:

"Industry leaders are hopeful North Dakota will make significant progress on gas capture in 2019.

Four major natural gas processing plants are expected to be complete next year, adding a total processing capacity of 690 million cubic feet per day — greater than the volume currently being flared."

https://thedickinsonpress.com/business/energy-and-mining/4548181-north-dakota-natural-gas-flaring-hits-record-high-improvement

 

 

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