Permian Producers Flare More Gas than Reported

[ronwagn + 6,290]

14 minutes ago, Jeff_Calgary said:

I have not done the math but I have worked at SAGD facilities. They are really just a water treatment plant - separating the hot water from the oil and then cleaning up the water so it can be turned into steam again. Other than that it is just steaming  the oil off the rocks.

The only thing that makes it 'dirty' is that we need to burn some gas to make the steam - but if the Permian is flaring much gas - the oil sands are cleaner without  having to have the decline curve get steeper and steeper. And without fracking.

It appears that most of these 'tar sands' opponents really don't see what is actually happening.

A few years ago I saw some pretty awful pictures in the Greenie National Geographic and a similar Greenie story with the pictures. I don't know much other than that but presume that article was slanted left like all their articles. 

[Jeff_Calgary + 68]

1 hour ago, ronwagn said:

A few years ago I saw some pretty awful pictures in the Greenie National Geographic and a similar Greenie story with the pictures. I don't know much other than that but presume that article was slanted left like all their articles. 

We have several open pit mines that look the same as a coal mine until the area is reclaimed. Those are the pictures they like to show. Yes they look bad -but the ground is saturated with oil -right to the surface -so you can look at it as a big clean up project. But that is not what they want you to see.

The new plants are for deeper seams -so they use SAGD (Steam assisted gravity drainage) -these are much more compact plants that do not have tailing ponds.

[Ian Austin + 131]

2 hours ago, ronwagn said:

A few years ago I saw some pretty awful pictures in the Greenie National Geographic and a similar Greenie story with the pictures. I don't know much other than that but presume that article was slanted left like all their articles. 

Be careful to distinguish he Mining from SAGD. The Mines look bad from flyover, but are required to be reclaimed (Disclaimer: none of us actually know what this looks like as nine have been yet). 

However, there are places in that area where the Bitumen actually outcrops at surface. I wouldn’t be as bold as to call a strip mine a clean up project, but it isn’t as environmentally disasterous as it’s made out to be

[Marcus Cicero + 2]

On 1/25/2019 at 2:39 AM, Marina Schwarz said:

Report: Permian Basin oil producers flaring more natural gas than reported

If this is true, capturing the gas must be a really expensive affair. I see no other reason to continue flaring at all.

The spot price for natural gas is currently a paltry $2.69 for the March contract. Moreover, it is competing with oil for pipeline space. If you want to know whether it is profitable to capture natural gas at the current price, look at the quarterly earnings reports of the handful of companies that derive 90% of their revenue from natural gas and natural gas liquids: Southwestern, Gulfport, Range Resources, Antero, EQT, and CHK. These companies are generating nothing but losses and their stocks are down 80-90% from their 2014 peaks. One option is to force all oil companies to capture 100% of associated natural gas at a loss, but doing so would destroy the natural gas-focused business model of the many companies I have listed, and with it, any chance of being able to ramp up production with increasing demand. 

[David Jones + 84]

The last US administration placed restrictions on flaring so if this issue of excessive flaring was happening back then and before the current administration relaxed the rules, we can expect excessive flaring to be exacerbated. I hear a lot of you complain about this but the fact is that likely many of you placed the current administration into office to make life "easier" for the fossil fuel industry. Easier in the view of the industry as a whole means more pollution and more waste of a limited resource instead of requiring efficient and prudent use of the resource in question. While you can't always catch everyone red-handed, not looking at all is not going to improve the situation.

To me it seems that shale in general is a short term industry of 2-3 decades at most, it does not seem to be financially viable under low oil prices and these prices will not be going above 100 dollars per barrel ever again, at least not for any prolonged duration. Oil prices are most likely stuck in a range of 60-80 (Brent) with occasional short term lapses outside of that range. As time progresses and alternative energy technologies improve their cost and capabilities, that range will tighten further. Also, the debt that shale have been able to accrue is probably supported by low or basically no cost to refinancing over many years since the financial crisis.

And there's the question of yields and sweet-spot drilling. The way I understand it is that the further away that you drill from the sweet-spot the worse your yields. Yields in general seem to be quite bad with shale and as this rampant drilling continues, I suspect yield issues will outpace technological advances.

Edited February 6, 2019 by David Jones

[ronwagn + 6,290]

20 hours ago, David Jones said:

The last US administration placed restrictions on flaring so if this issue of excessive flaring was happening back then and before the current administration relaxed the rules, we can expect excessive flaring to be exacerbated. I hear a lot of you complain about this but the fact is that likely many of you placed the current administration into office to make life "easier" for the fossil fuel industry. Easier in the view of the industry as a whole means more pollution and more waste of a limited resource instead of requiring efficient and prudent use of the resource in question. While you can't always catch everyone red-handed, not looking at all is not going to improve the situation.

To me it seems that shale in general is a short term industry of 2-3 decades at most, it does not seem to be financially viable under low oil prices and these prices will not be going above 100 dollars per barrel ever again, at least not for any prolonged duration. Oil prices are most likely stuck in a range of 60-80 (Brent) with occasional short term lapses outside of that range. As time progresses and alternative energy technologies improve their cost and capabilities, that range will tighten further. Also, the debt that shale have been able to accrue is probably supported by low or basically no cost to refinancing over many years since the financial crisis.

And there's the question of yields and sweet-spot drilling. The way I understand it is that the further away that you drill from the sweet-spot the worse your yields. Yields in general seem to be quite bad with shale and as this rampant drilling continues, I suspect yield issues will outpace technological advances.

What would you say about the oil majors that are planning to spend tens of billions of dollars more in the shale finds? They obviously have the money to build the natural gas pipelines and the intent to sell it and export the surplus. Do the small companies need to fail if they cannot handle the resources properly? I am all for them if they can do the job, but not if they can't. The Texas Railroad Commission may not care though.