Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?

(edited)

NBC is generally always out in "left field," granted. This, however, is a good piece and worth watching:  https://www.nbcnews.com/leftfield/video/why-is-texas-burning-millions-of-dollars-of-natural-gas-a-day-1436078147715 

For almost a century the Great State of Texas  and the Texas Railroad Commission has led the way, set the example for the rest of the world to follow with regards to hydrocarbon conservation, the preservation of bottom hole gas pressure to increase reservoir recovery rates and the prevention of oil and natural gas waste. There are statutory laws in Texas written for the sake of conserving our States natural resources. Those laws have been abandoned and the regulatory agency entrusted with imposing those laws, the TRRC, is now out to lunch. For the TRRC it is all now about good paying jobs and the votes they represent. The three Texas Railroad Commissioners are elected officials. Lots of associated gas from shale oil wells meets severance tax exemption standards so lots of this flaring does not even hurt the State financially. Make no mistake about it, this about jobs and the "politics" of using American shale oil as a foreign policy tool. 

(I am an active oil and gas operator in Texas, with many employees,  and am taking a big risk by saying this about the TRRC. What Sitton says in this video is a joke.)

The shale oil industry has been touting "drillable locations" in big shale basins for a decade now. Its part of its sales pitch. It is even allowed to book a portion or reserves from undeveloped, imaginary shale oil wells nearby existing wells. Its borrowed money against those proven, undeveloped reserves. All it has to do to make it all legal, and legit, with the Securities and Exchange Commission and with its lenders is turn those proven undeveloped reserves (locations) into proven reserves by actually drilling the wells within 5 years. Those are SEC rules. Even with all that  time the shale oil industry, particularly in the Delaware Basin, and the Bakken of North Dakota, still did get not get its act together to gather this associated gas. But it went ahead and drilled the wells anyway and has got nothing left to do with the gas other than burn if off into the air. So it can export its oil to Asia, all on credit/debt.

For all the hubbub about "technology" that is going to save the day, and make shale oil profitable (for the first time ever!), only if we give enough time...phfttttt. We can't even keep from wasting its associated gas up a damn flare stack. 

The American shale oil industry needs to be on a leash. It needs to be slowed down, its debt paid back, a return made to stakeholders and worldwide oil and natural gas prices stabilized. OPEC and Russia are trying to stabilize prices, why should American not join in? With stable oil prices comes stable, long term employment. With stable oil prices comes long term energy security. Gas gathering infrastructure needs to catch up to oil production, even if that means America's oil needs to STAY in America. Producing this expensive crap as fast as possible is not a good plan. Its a bad plan. 

After 150 years of oil and natural gas production in the United States there is NO excuse for waste. We're better than that. We live in America, not Siberia. 

 

 

 

 

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Edited by Mike Shellman
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(edited)

On 5/28/2019 at 9:54 PM, Mike Shellman said:

The American shale oil industry needs to be on a leash. It needs to be slowed down, its debt paid back, a return made to stakeholders and worldwide oil and natural gas prices stabilized. OPEC and Russia are trying to stabilize prices, why should American not join in? With stable oil prices comes stable, long term employment. With stable oil prices comes long term energy security. Gas gathering infrastructure needs to catch up to oil production, even if that means America's oil needs to STAY in America. Producing this expensive crap as fast as possible is not a good plan. Its a bad plan. 

 

I agree TRRC should enforce the capture and processing of associated gas. The extradinary growth in Permian exceeded gas takeaway capacity. Did Perry let producers slide prioritizing oil over gas. Maybe.

Infrastructure is always playing catchup. Pipelines can cost Billions. Producers are reluctant to commit. Infrastructure goes from bottlenecks to too much capacity. It all works out in the end.

Kinder Morgan's new pipeline completed Q4 2019 will transport 2 bcf/day out of Permian. Kinder has started open season to see interest on a second 46" gas pipeline. Its my understanding gathering lines are starting to be constructed.

But I vehemently disagree with other statements. 

. . . shale industry needs to be put on leash . . .  slowed down . . . return to stakeholders. . . .  OPEC and Russia trying to stabilize prices, why should America not join in."

I didn't hear any complaining when operators were making 80% to 100% return IRR PRE 2015.  Nobody forced you into the shale business.Nobody forced stakeholders to invest in shale.

NOW YOU WANT GOVERNMENT TO REGULATE AN INDUSTRY AND FIX PRICES ? YOU WANT GOVERNMENT TO GUARANTEE SHALE OIL INVESTORS RETURNS. YOU WANT U.S. TO JOIN A CARTEL AND "STABILIZE" PRICES.  ALL THIS JUST FOR SHALE INVESTORS NOT ANY OTHER BUSINESSES IN U.S.  

Please , I wish you success but cowboy up and stop complaining about free enterprise, capitalism, competition and the American way. 

Amazing how someone can turn a topic like capturing associated gas into government subsidizing all of the shale industry. Where is it in the Constitution that guarantees a God given right that, "Shale Investors Shall Not Loose Money"  

Good luck

Edited by Falcon
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The genius former governor who set the financiers lose on the industry is now head of the country's energy department.

A former land commissioner of Texas, Jerry Patterson, was a neighbor a truly represented what is good about government and serving. Most famous for writing the concealed weapons bill, but was also a USAF Officer and believed in responsible governance. And quite the conservative, being conservative, or liberal, is so different than just ten years ago.

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11 hours ago, John Foote said:

The genius former governor who set the financiers lose on the industry is now head of the country's energy department.

A former land commissioner of Texas, Jerry Patterson, was a neighbor a truly represented what is good about government and serving. Most famous for writing the concealed weapons bill, but was also a USAF Officer and believed in responsible governance. And quite the conservative, being conservative, or liberal, is so different than just ten years ago.

Don't know that Governor Perry was to blame.  The 2008 crash lead to Fed policy of "free money" and shale gas and oil was the only game in town. 

Did Perry let producers slide re gas capture prioritizing oil production ? Maybe.

But not his fault some thought that interest rates would be low forever or thought oil prices would always go up and never drop below $100.

 

Edited by Falcon
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Mike, as usual a well written piece. 

The description of the shale oil industry as a 'foreign policy tool' is especially accurate.

The fact is that the shale oil operators SHOULD have had some idea of the volume of associated gas they would need to address, but they ignored the issue in an effort to get LTO liquids to market.

They should have taken this gas into account in their (assuming the had one) field development plan, if for no other reason than to avoid a backlash from the 'green community'.

Essentially the shale oil fiasco seems to be cloaked in debt, poor management, greed and vanity.

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2 hours ago, Falcon said:

I agree TRRC should enforce the capture and processing of associated gas. The extradinary growth in Permian exceeded capacity with gas.

Kinder Morgan's new pipeline completed Q4 2019 will transport 2 bcf/day out of Permian. Kinder has started open season to have interest on a second 46" gas pipeline. Its my understanding gathering lines are starting to be constructed.

But I vehemently disagree with other statements. 

. . . shale industry needs to be put on leash . . .  slowed down . . . return to stakeholders. . . .  OPEC and Russia trying to stabilize prices, why should America not join in."

I didn't hear any complaining when operators were making 80% to 100% return IRR PRE 2015.  Nobody forced you into the shale business.Nobody forced stakeholders to invest in shale.

NOW YOU WANT GOVERNMENT TO REGULATE AN INDUSTRY AND FIX PRICES ? YOU WANT GOVERNMENT TO GUARUNTEE SHALE OIL INVESTORS RETURNS. YOU WANT US TO JOIN A CARTEL.  ALL THIS JUST FOR SHALE INVESTORS NOT ANY OTHER BUSINESSES IN U.S.  

Please , I wish you success but cowboy up and stop complaining about free enterprise, capitalism, competition and the American way. 

Amazing how someone can turn a topic like capturing associated gas into government subsidizing and detailing all of the shale industry.

Good luck

Sorry to say, but it sounds like you have little or no concern about wasting natural gas, which is a precious national resource and Texas resource. The greener of us should also be concerned about taking the natural gas out of the ground and turning it into heat and air pollutants. 

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(edited)

 

9 hours ago, Falcon said:

Amazing how someone can turn a topic like capturing associated gas into government subsidizing and detailing all of the shale industry.

I have no clue what you mean by government subsidizing, nor half the other things you've mentioned. For 40 years the oil industry was regulated by the Texas Railroad Commission, not the "government" and, in fact, Texas was then very cartel-like. Texas virtually controlled worldwide oil prices during that period. When describing a problem like gas flaring in America it is necessary to "detail" the shale oil industry's history, why this flaring is occurring and how that flaring can be stopped, yes. Its called writing as opposed to just copying and pasting links from the internet. Lots of the forum community may not understand the oil industry as well as you think you do. 

Ignore my comments here. If you are in shale oil business relying on it to make a living you have a whole lot more important things to worry about than me. I'm nobody. You need to worry about OPEC, and Trump, and Mexico, and 2020 elections, and tariffs, and water, and EV's and Wall Street and how willing bankers are to keep floating the whole shale thing...and stuff like this: https://www.bloomberg.com/opinion/articles/2019-05-28/fracking-stocks-less-popular-than-when-oil-was-10.

Besides, what's a couple of BCF's of natural gas getting wasted up a flare stack when you are the No.1 oil producer in the world, right?  

 

 

 

Edited by Mike Shellman
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13 hours ago, ronwagn said:

Sorry to say, but it sounds like you have little or no concern about wasting natural gas, which is a precious national resource and Texas resource. The greener of us should also be concerned about taking the natural gas out of the ground and turning it into heat and air pollutants. 

What ? My opening statement shows concern and states TRRC SHOULD ENFORCE CAPTURE OF ASSOCIATED GAS. 

Now it seems a group of mutual admiration friends want government to bail them out from lack of foresight and poor investment decisions. 

In another post Doug wants to know when small producers make comeback. Take an economics class.  Read the chapter on industry life cycle.

Doug I agree shale is fiasco, debt ridden etc FOR THE OPERATORS THAT FAILED TO SEE WHERE THE ECONOMICS WERE HEADING AND OVER LEVERSGED.

I've made poor investment decisions before.  I cut my losses and moved on.  Just have to make more good decisions than bad.  

Adjust to economic reality and change or stick your head in the sand like an ostrich and hope it all goes away.

GOOD LUCK

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(edited)

We already addressed this topic over in the gas section but I guess Mike just can't let it go.  Again, not all operators are flaring and not all operators were so short sighted as to complete wells without a way to sell their gas.  Allowables WILL NOT WORK ANYMORE, they are only effective for the shallower formations where decline rates are lower and reservoir capacity is tapped by multiple leases.  Look at how they determine the allowable in a field anyway, it's not going to work with shale.  

Shale is a totally different type of reservoir than those at shallower depths.  To call shale a reservoir is misleading because it assumes some kind of permeability across the entire "reservoir" which just doesn't exist with shale except on a very nearby basis.  The charts of allowables used by the RRC are decades old and it's not clear to me how they were developed because the deeper you go the greater the allowable.  When these tables were developed, there were no wells deeper than about 4000 feet but the tables list allowables for much greater depths.  That assumes some kind of naturally increasing formation pressure with depth I suppose. However it was done, it's nothing more than an extrapolation and has never been validated by real measurement.

Finally, oil allowables only apply to oil in an oil field and do not limit oil based on the volume of associated gas.  Maybe the GOR requirement needs to be changed if you want to conserve associated gas but I am sure there woul be a lot of unintended side effects of doing that.  The most important thing to operators is making a profit and losing that associated gas is losing part of your profits.  It doesn't make sense to me that an operator would forgo an additional 20% revenue stream but there are many that do.  

Finally, the most important job of the RRC is not to set allowables and never has been, it was to protect the minerals held by non-leased interests from being drained by others.  In other words, you DON'T drink my milkshake if you haven't leased my minerals.  That is the primary job of the RRC, not to limit production.  The only reason to assign allowables was protecting the formation pressure in the entire field and that was simply protecting all mineral interest holders, not limiting production.  

Edited by wrs
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1 hour ago, wrs said:

We already addressed this topic over in the gas section but I guess Mike just can't let it go

Let what go? The NBC piece was well done from a videography standpoint; I posted it and commented on it. Did you think you put the gas flaring issue to bed because of your comments about a few wells you have interest in? As over drilling continues in sweet spots so does GOR increase, gas flaring is going up, up, up. Its a problem. Your isolated observations have little to do with the big picture. 

What's the stuff about allowables? I mentioned allowables as one the way the TRRC use to regulate the oil and gas industry. Restricting production from frac'ed rock is not effective and harmful to the well; I did not even remotely suggest that. Limiting well densities per acre of land and spacing between wells IS an effective way of slowing down shale oil development to allow infrastructure to catch up and prices to stabilize, or, gasp, even go higher. Even big time royalty owners like higher prices, right? And their gas sold and not flared, right? 

 

1 hour ago, wrs said:

it was to protect the minerals held by non-leased interests from being drained by others.

That is categorically not true. It is only one of the reasons the TRRC exists. I suggest you review its history, the price of oil after the great East Texas Field discovery, the need for hydrocarbons prior to and during WW II and the language in the Texas Natural Resources Code regarding conservation and the prevention of waste.

I always enjoy how royalty owners bellyache that the TRRC is owned by the oil industry in Texas and  their correlative rights are not properly protected, until, of course, the issue of increased regulations affects their pocketbooks.  Take for instance spacing requirements...when the shale oil industry gets Statewide Field Rules changed and spacing dropped, onerous drilling commitments to earn acreage in leases follows suit. Y'all love that stuff. More wells, more money. Restricting flaring, however, might mean restricting liquids production...that might mean less royalty, and y'all can't stand that. 

I think there is a button up top somewhere that allows you, and others, to block my comments. A few here simply just cannot believe, absolutely cannot even fathom, for some reason, that I actually am concerned about the long term hydrocarbon health of my country. Those that refuse to accept that all seem to have revenue from the shale oil industry in common.  Imagine that. If you're one of those, use the button. Mute me. 

Flaring natural gas is a waste. Its stupid. 

 

 

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33 minutes ago, Mike Shellman said:

Let what go? The NBC piece was well done from a videography standpoint; I posted it and commented on it. Did you think you put the gas flaring issue to bed because of your comments about a few wells you have interest in? As over drilling continues in sweet spots so does GOR increase, gas flaring is going up, up, up. Its a problem. Your isolated observations have little to do with the big picture. 

What's the stuff about allowables? I mentioned allowables as one the way the TRRC use to regulate the oil and gas industry. Restricting production from frac'ed rock is not effective and harmful to the well; I did not even remotely suggest that. Limiting well densities per acre of land and spacing between wells IS an effective way of slowing down shale oil development to allow infrastructure to catch up and prices to stabilize, or, gasp, even go higher. Even big time royalty owners like higher prices, right? And their gas sold and not flared, right? 

 

That is categorically not true. It is only one of the reasons the TRRC exists. I suggest you review its history, the price of oil after the great East Texas Field discovery, the need for hydrocarbons prior to and during WW II and the language in the Texas Natural Resources Code regarding conservation and the prevention of waste. I always enjoy how royalty owners bellyache that the TRRC is owned by the oil industry in Texas and  their correlative rights are not properly protected, until, of course, the issue of increased regulations affects their pocketbooks.  Take for instance spacing requirements...when the shale oil industry gets Statewide Field Rules changed and spacing dropped, onerous drilling commitments to earn acreage in leases follows suit. Y'all love that stuff. More wells, more money. Restricting flaring, however, might mean restricting liquids production...that might mean less royalty, and y'all can't stand that. 

I think there is a button up top somewhere that allows you, and others, to block my comments. A few here simply just cannot believe, for some reason, that I actually am concerned about the long term hydrocarbon health of my country. If you're one of those, use the button. Mute me. 

 

 

There is a fundamental divide I started to notice around 2003 (was living in Rifle, CO then and seeing the Piceance blow up):

One perspective sees money as a valuable asset to produce energy...

Whereas another perspective sees energy as a valuable asset to produce money.

There is clearly a give and take that must exist between these perspectives in the energy industry, but for the industry to have any sort of long term resiliency, it is foolish to ignore the former in favor of the latter.  The gas flaring situation ongoing in the Permian strikes me as a clear example of doing just that, and I appreciate your diligence, Mr. Shellman, in making that case.  

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45 minutes ago, Mike Shellman said:

Let what go? The NBC piece was well done from a videography standpoint; I posted it and commented on it. Did you think you put the gas flaring issue to bed because of your comments about a few wells you have interest in? As over drilling continues in sweet spots so does GOR increase, gas flaring is going up, up, up. Its a problem. Your isolated observations have little to do with the big picture. 

What's the stuff about allowables? I mentioned allowables as one the way the TRRC use to regulate the oil and gas industry. Restricting production from frac'ed rock is not effective and harmful to the well; I did not even remotely suggest that. Limiting well densities per acre of land and spacing between wells IS an effective way of slowing down shale oil development to allow infrastructure to catch up and prices to stabilize, or, gasp, even go higher. Even big time royalty owners like higher prices, right? And their gas sold and not flared, right? 

 

That is categorically not true. It is only one of the reasons the TRRC exists. I suggest you review its history, the price of oil after the great East Texas Field discovery, the need for hydrocarbons prior to and during WW II and the language in the Texas Natural Resources Code regarding conservation and the prevention of waste.

I always enjoy how royalty owners bellyache that the TRRC is owned by the oil industry in Texas and  their correlative rights are not properly protected, until, of course, the issue of increased regulations affects their pocketbooks.  Take for instance spacing requirements...when the shale oil industry gets Statewide Field Rules changed and spacing dropped, onerous drilling commitments to earn acreage in leases follows suit. Y'all love that stuff. More wells, more money. Restricting flaring, however, might mean restricting liquids production...that might mean less royalty, and y'all can't stand that. 

I think there is a button up top somewhere that allows you, and others, to block my comments. A few here simply just cannot believe, absolutely cannot even fathom, for some reason, that I actually am concerned about the long term hydrocarbon health of my country. Those that refuse to accept that all seem to have revenue from the shale oil industry in common.  Imagine that. If you're one of those, use the button. Mute me. 

Flaring natural gas is a waste. Its stupid. 

 

 

Why should I ignore your comments?  Mostly they need rebutting because they are one sided.  I agree that flaring the gas is stupid and wasteful but we don't need more govt to address that.  I make sure my leases ensure that the operator pays us for flared gas at the best rate, i.e. Henry Hub, not WAHA.  That makes the operator pay a double penalty when they flare.  The interesting thing is that XTO isn't flaring even though we don't have that provision because the lease was signed in 1950 before I was born.  However, our other leases do have that provision and others that protect the royalty interests.

So my point here is that the industry will ultimately have to limit itself because losing that additional revenue stream will render operators unprofitable if oil prices drop due to oversupply as they have in the past.  The pipeline and processing constraints are being eliminated for the most part this year.  The associated gas from these wells is very rich and liquids are fetching a big premium right now.  The operators that are forgoing those revenues are stupid.  Look at this most recent statement I received from XTO and note the prices paid for ethane, butane and propane far exceed the value of the dry gas after processing even allowing for the pipeline discount deduction they took in March.

 

xto319partial.png

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51 minutes ago, wrs said:

 

Why should I ignore your comments?  Mostly they need rebutting because they are one sided.  I agree that flaring the gas is stupid and wasteful but we don't need more govt to address that.  I make sure my leases ensure that the operator pays us for flared gas at the best rate, i.e. Henry Hub, not WAHA.  That makes the operator pay a double penalty when they flare.  The interesting thing is that XTO isn't flaring even though we don't have that provision because the lease was signed in 1950 before I was born.  However, our other leases do have that provision and others that protect the royalty interests.

So my point here is that the industry will ultimately have to limit itself because losing that additional revenue stream will render operators unprofitable if oil prices drop due to oversupply as they have in the past.  The pipeline and processing constraints are being eliminated for the most part this year.  The associated gas from these wells is very rich and liquids are fetching a big premium right now.  The operators that are forgoing those revenues are stupid.  Look at this most recent statement I received from XTO and note the prices paid for ethane, butane and propane far exceed the value of the dry gas after processing even allowing for the pipeline discount deduction they took in March.

 

xto319partial.png

Now this is why I have read this forum for years now.  Yes, you to Mike Shellman.  😃

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12 hours ago, Falcon said:

I agree TRRC should enforce the capture and processing of associated gas. The extradinary growth in Permian exceeded takeaway capacity with gas. Did Perry let producers slide prioritizing oil over gas. Maybe.

Infrastructure is always playing catchup. Pipelines can cost Billions. Producers are reluctant to commit. Infrastructure goes from bottlenecks to too much capacity. It all works out in the end.

Kinder Morgan's new pipeline completed Q4 2019 will transport 2 bcf/day out of Permian. Kinder has started open season to see interest on a second 46" gas pipeline. Its my understanding gathering lines are starting to be constructed.

But I vehemently disagree with other statements. 

. . . shale industry needs to be put on leash . . .  slowed down . . . return to stakeholders. . . .  OPEC and Russia trying to stabilize prices, why should America not join in."

I didn't hear any complaining when operators were making 80% to 100% return IRR PRE 2015.  Nobody forced you into the shale business.Nobody forced stakeholders to invest in shale.

NOW YOU WANT GOVERNMENT TO REGULATE AN INDUSTRY AND FIX PRICES ? YOU WANT GOVERNMENT TO GUARANTEE SHALE OIL INVESTORS RETURNS. YOU WANT U.S. TO JOIN A CARTEL AND "STABILIZE" PRICES.  ALL THIS JUST FOR SHALE INVESTORS NOT ANY OTHER BUSINESSES IN U.S.  

Please , I wish you success but cowboy up and stop complaining about free enterprise, capitalism, competition and the American way. 

Amazing how someone can turn a topic like capturing associated gas into government subsidizing all of the shale industry. Where is it in the Constitution that guarantees a God given right that, "Shale Investors Shall Not Loose Money"  

Good luck

Falcon,

You do realize that conservation of resources was the standard in Texas from 1936-1970 and the main reason for relative oil price stability over that period.  The boom/bust cycles from 1970 to 2017 have been very damaging for the oil industry.

How do you think auto manufacturers would fare if the average selling price of light vehicles(fleet average) randomly fluctuated from 15k ASP to 60k ASP?  My guess is not well.

Nobody is suggesting shale producers should be guaranteed a profit, instead it is suggested that the law should be enforced.

Maybe Mike should get the EPA on the case if the TRRC will not do its job.  :)

Though with the Chump in office, the EPA also no longer does its job.

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1 hour ago, wrs said:

So my point here is that the industry will ultimately have to limit itself because losing that additional revenue stream will render operators unprofitable if oil prices drop due to oversupply as they have in the past

My observations are directed at the shale oil industry as a whole, in all shale oil basins in America, because I am concerned about my country and its future. You, on the other hand provide us with revenue statements from 3-4 wells you have interest in out of 83,000 in America, yet suggest my comments are "one sided" and need rebutting. Right.

We agree flaring is stupid, thanks. You believe common sense, capitalism, will ultimately prevail in the shale oil industry and they will stop flaring for economic reasons. Respectfully, that's sort of funny. There are countless producers in all basins that will do no such thing. They did not when natural gas prices and liquids prices were much higher, they will not now. They are trapped like goats in a pen by debt and debt costs. Gathering gas costs money. What money they have then need to go make 1000 BOPD IP180s for cash flow, and to meet onerous drilling commitments to earn acreage, and in some cases to appease stakeholders. They don't give a rats ass about wasting natural gas. This all needs to be regulated by the TRRC. It needs to be stopped. I understand completely why that is frightening to some people. 

  

 

 

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2 minutes ago, Mike Shellman said:

My observations are directed at the shale oil industry as a whole, in all shale oil basins in America, because I am concerned about my country and its future. You, on the other hand provide us with revenue statements from 3-4 wells you have interest in out of 83,000 in America, yet suggest my comments are "one sided" and need rebutting. Right.

We agree flaring is stupid, thanks. You believe common sense, capitalism, will ultimately prevail in the shale oil industry and they will stop flaring for economic reasons. Respectfully, that's sort of funny. There are countless producers in all basins that will do no such thing. They did not when natural gas prices and liquids prices were much higher, they will not now. They are trapped like goats in a pen by debt and debt costs. Gathering gas costs money. What money they have then need to go make 1000 BOPD IP180s for cash flow, and to meet onerous drilling commitments to earn acreage, and in some cases to appease stakeholders. They don't give a rats ass about wasting natural gas. This all needs to be regulated by the TRRC. It needs to be stopped. I understand completely why that is frightening to some people. 

  

 

 

So you don't think XTO is doing the same thing on their other leases that they are doing on mine?  There is no provision to limit flaring in that shitty producer 88 lease that my ancestors signed and yet look at XTO, they waited to develop this section until there was sufficient infrastructure to sell all their output and maximize revenue and profit yet you say no one is doing this.  Seems to me that you don't want to see facts in opposition to your opinions.

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I have said this before under different topics on this forum about flaring and also about the indiscriminate waste of precious water resources used in drilling and hydraulic fracturing operations, both of which are being addressed but not fast enough. This is one area where I do support Federal/State intervention in passing science based, technology driven , sensible and meaningful regulation to put an end to environmental quality degradation, waste of natural resources, reuse and recycling of natural resources, proper management of natural resources and timely approval of permits for sound and safe build out of needed infrastructure such as storage tanks, feeder and trunk lines, processing and gathering facilities etc.

On the subject of exports, I do not believe that there should be a ban on exports unless it is defined and classified as a nationals security matter. It would boil down to the aspect of putting a ban on exports of any goods or services produced or grown in the US based on an industry's or a specific group's interest. We could just go on and start demanding to ban the export of US beef, poultry, soybeans, cotton, corn, beets, sunflower oil, canola oil , ethanol, US steel, US pharmaceutical products and the list goes on.

 

 

I have mentioned some where else on this forum recently and last year about the various options for produced gas before pipelines and processing/gathering facilities are in place to prevent the flaring.

These options below can be deployed rapidly in comparison to large scale facilities and can be dismantled and relocated to a new location/new production  basin as needed in the future.

One has to understand that when E&P companies go into an area to explore and drill, the midstream companies (pipelines, oil and gas separation and processing plants, storage and other related infrastructure and services companies) do not go before the E&P companies to lay the pipe and develop the infrastructure, until such time the basin/region proves out to be containing substantial resources (oil gas etc) for years to come and can be sustainable for the long term. Once that is established , they rush in to provide the services and develop the infrastructure. Federal, State and Local permitting is also a major factor how fast these facilities are developed and put into operations.

This, however does not preclude the E&P companies nor the services companies to sit idle and just flare the gas. Can you imagine if E&P companies just let the oil flow out of the wells into the fields and ditches and waterways? Why spew the gas then into the air?!!!

The industry needs to cooperate and collaborate with each other and out of industry players with the right techs and concepts to develop meaningful, sustainable, cost effective, environmentally safe methodologies, technologies and applications and implementation of all these to maximize the use of the resources available and being developed.

1) Produced gas re-injection into the formation or into another zone for later use and or increasing liquid hydrocarbons production volume sa an EOR for liquids recovery.. We tried that in several different parts of the country and different countries and it worked well. Saved a valuable resource for future use and also prevented the air quality issues etc.

2) Compact (and or small scale) GTL plants that would convert the gas to liquids fuels . There are several companies that offered the solution in the oil and gas fields and provided it as a service. Some companies provide tech services that will convert the natgas to high quality methanol, ethanol, formalin/formaldehyde and other petrochem feedstocks and liquid fuels  and further use of inhouse tech to components of cleaner burning fuels. This adds value to the end product compared to just the lower value of the gas and these liquids can be transported off site by tanker trucks with ease or stored at a nearby storage facility for further transportation via rail or connect to a products pipeline if feasible.

3) Compact LNG plants , offering the same as 2) for easy onsite or near site within a play /field region for gas to LNG and further transport by LNG trucks to points of storage/transport or re-gasification

4) On or near sites of production and or production basin based compact NG- LPG plants

5) Portable/mobile natgas power plants that can provide electric power to the operators on site and also can connect that generated electric power into the grid

6) Develop regional gas storage hub as the E&P companies ramp up exploration and production in the basin or region. It could be in salt caverns or man made storage facilities as the production is ramping up. It will require shorter pipeline distances or temporary pipeline setup that are safe and reliable to move the produced gas to the nearby basin /regional storage hub. Collaboration would be required with the permitting and approval process for these as well. Once the trunk pipelines are in place, the companies can move the stored gas to areas where the demand is.. power plants, main gas storage hubs, LNG plants etc.

 

Just some thoughts, some of which have been executed and implemented with success! Rampant, illogical, willful , negligent flaring for ease and convenience should end!

However, perhaps, probably, some folks who do not like the shale industry, would go on to demand , and actually have demanded the shut down of the shale industry, without any scientific merit to ban hydraulic fracturing. CO is on such a path.

 

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Analysis: Methane Emissions Intensity Declines in Top Shale Basins

Saturday, April 27, 2019

Increased natural gas consumption has generated a truly incredible story for the environment as U.S. greenhouse gas emissions have fallen to their lowest levels since 1992. But the air quality improvements go even further, as a new Energy In Depth analysis shows: The U.S. oil and gas industry is also making incredible progress in reducing methane emissions as production surges in America’s top shale basins.

Methane emissions from onshore U.S. oil and natural gas production fell 24 percent, while oil and natural gas production rose 65 percent and 19 percent, respectively, from 2011 to 2017, according to data from the U.S. Environmental Protection Agency and the Energy Information Administration.

As EID’s latest infographic shows, even more incredible is the rate at which methane emissions intensity – or emissions per unit of production – has declined in the top U.S. oil and natural gas basins.

Permian Basin

The Permian Basin in Texas and New Mexico is home to the world’s top producing oilfield and some of the highest natural gas production in the country. This significant production has resulted in major economic benefits for the region.

Annual methane emissions from Permian production fell from 4.8 million metric tons (MMT) to 4.6 MMT from 2011 to 2017. Simultaneously, combined oil and natural gas annual average production jumped from 638.9 million barrels of oil equivalent (Boe) to 1.4 billion Boe. The result was a 57 percent reduction in methane emissions per unit of oil and gas produced.

From 2011 to 2017, methane emissions intensity in the Permian Basin – which is producing more oil than any other basin on Earth – was cut in half.

Appalachian Basin

If the Appalachian Basin were a country, it would be the third largest natural gas producing nation in the world. The region has transformed into a natural gas producing powerhouse in the past decade, and is also attracting billions of dollars in new manufacturing investment as a result.

From 2011 to 2017, combined oil and natural gas annual average production grew from 322 million Boe to 1.5 billion Boe. At the same time, methane emissions from production in the basin fell from 5.3 MMT to 4.7 MMT, resulting in an emissions intensity reduction of 82 percent.

Conclusion

The U.S. oil and natural gas industry is stepping up to reduce its environmental footprint. Methane emissions reductions are an important focus of the industry, and as EID’s new analysis demonstrates, the technological innovation and increased efforts are having real results in some of the most prolific U.S. shale basins. As the Independent Petroleum Association of America’s Executive Vice President Lee Fuller stated:

“America’s oil and natural gas producers are working hard to develop America’s own abundant resources in a safe and environmentally sound manner. The federal government’s own data confirms methane emissions have fallen in recent years and are continuing to drop, even as oil and natural gas production has risen. As technology has improved, the industry’s processes have become more efficient. Responsible energy development has and will continue to play a leading role in making the United States the world leader in greenhouse gas reductions.”

 

 


Note: Methane emissions intensity figures were calculated using production data from the EIA Drilling Productivity Report and emissions data from the EPA Greenhouse Gas Reporting Program. Daily annual average production data was multiplied by 365 to get annual figures. Natural gas production figures were converted from cubic feet to barrel of oil equivalent (Boe). Methane emissions were divided by total combined oil and natural gas production in Boe. 

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(edited)

2 hours ago, D Coyne said:

Falcon,

You do realize that conservation of resources was the standard in Texas from 1936-1970 and the main reason for relative oil price stability over that period.  The boom/bust cycles from 1970 to 2017 have been very damaging for the oil industry.

How do you think auto manufacturers would fare if the average selling price of light vehicles(fleet average) randomly fluctuated from 15k ASP to 60k ASP?  My guess is not well.

Nobody is suggesting shale producers should be guaranteed a profit, instead it is suggested that the law should be enforced.

Maybe Mike should get the EPA on the case if the TRRC will not do its job.  :)

Though with the Chump in office, the EPA also no longer does its job.

I believe price btw 1936 to 1970 was due to price elasticity.  US imported some OPEC oil that controlled price more than TRRC. Economies very different today.  International economies very dependent on energy. Oil demand has become inelastic.  That's why Saudis were able to sell oil that cost $1.50 for $120.00. Things change, shlcht happens.

In 1970s OPEC weaponized oil due to US support of Israel in the war.

Later in 7Os, 1984 - 1985 and 1998 - 1999 OPEC flooded US with cheap oil to hamper US production.  They were successful back then.

The US is starting to catch up with needed infrastructure to catch associated gas. Remember there wasn't pipeline, processing plants, storage, LNG plants and export terminals.  Even if you had pipelines the rest of infrastructure was not there.  The additional gas would of crushed natural gas prices down to 10 cents mm/btu Haynesville and Barnett shale would be out of business.  The US would have gone into deeper recession than 2008/2009.

Infrastructure being built now. 

Entrepreneurial spirit and risk taking is what created the shale industry.  I applaud risk takers , but don't change the system when one makes a miscalculation. 

Edited by Falcon

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(edited)

2 hours ago, wrs said:

Seems to me that you don't want to see facts in opposition to your opinions

Exxon currently (Jan. 2019) operates <1.6% of all unconventional HZ wells drilled in the Permian since 2009 and <0.005% of total US shale oil wells drilled in the same time frame. Its results in Eddy and Lea counties, on the $6.6Bn BOPCO fiasco, appear thus far to be an economic  disaster. Your observations regarding XOM on a few leases you have interest do not represent "facts" relevant to the big picture. I am into the bigger picture. Chevron, on the other hand, I have hope for. It did not pay $80K per net stupid mineral acre, has no onerous drilling commitments to be burdened by, has a lot of 0.9500 NRI's to work with....and a no flaring policy. It has a chance of making some money in the Wolfcamp/Bone Springs HZ thing. Its smart enough, and honorable enough to openly admit to its stakeholders that even then it might be 2021-2022 before they can.  

https://oilprice.com/Energy/Crude-Oil/Only-10-Of-US-Shale-Drillers-Has-A-Positive-Cash-Flow.html..."the lowest cash flow from operating activities we've (Rystad) has seen since 4Q2107. The gap between spending and operating expenses has reached a staggering $4.7 billion." 

Flaring is a waste. I have spent all the time I can on this issue; y'all spin it however you need to. Good luck with that. 

 

Edited by Mike Shellman
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The companies flaring off the gas are the ones that are losing an extremely valuable resource and are extremely shortsighted. The benefits of natgas as a value added feedstock for petchems outweighs any flaring for the long term. Again the desire and need to sell the crude and liquids is also there but they can all be managed effectively so that natgas is not flared and wasted.

_____________________________________________________________

Enterprise to extend ethylene pipeline system to South Texas coast

Enterprise Products Partners will extend its new Houston-area ethylene pipeline system south to the middle of the Texas coast, the company said Tuesday.

 

Enterprise said the 90-mile Baymark pipeline would originate in Bayport near the mouth of the Houston Ship Channel and end in Markham, about 39 miles east of Formosa Plastics' petrochemical complex in Point Comfort. The project is a joint venture of Enterprise and Lavaca Pipe Line Co., a Formosa Plastics subsidiary.

"The US petrochemical industry is experiencing unprecedented growth" with production of ethylene expected to exceed 45 million mt/year by 2025, Enterprise CEO Jim Teague said in a statement.

The Baymark project will connect ethylene producers and buyers to Enterprise's storage hub in Mont Belvieu east of Houston "as well as linking them to growing domestic and international markets," he said.

Formosa is building a 1.25 million mt/year cracker and two polyethylene plants with a combined capacity of 800,000 mt/year, all slated to start up in the second half of 2019. Those plants are among eight crackers and 13 PE plants starting up in Texas and Louisiana from 2017 through this year in the first wave of more than $200 billion in new petrochemical infrastructure to emerge from cheap ethane unearthed by the US natural gas shale boom.

More projects are slated to start up or planned in second and third waves from 2020 and beyond, including a petrochemical complex 125 miles west of Markham near Corpus Christi. That joint venture planned by ExxonMobil and Sabic will include a 1.8 million mt/year ethylene plant.

Enterprise is building a 1 million mt/year ethylene export terminal at Morgan's Point on the ship channel, next to the company's ethane export facility, that is expected to start up its first phase in the fourth quarter of this year, followed by full service with on-site refrigerated storage a year later.

The company also is converting an ethane storage cavern at its Mont Belvieu natural gas liquids hub to hold 272,155 mt of ethylene, which the company said Monday was expected to be completed in the third quarter of this year. An ethylene pipeline linking Enterprise's Mont Belvieu operations to Morgan's Point also is slated to start up in Q4, followed by the startup in the q3 2020 of a second leg linking Morgan's Point to Bayport. The Baymark pipeline would extend that 24-mile, bidirectional system.

The US currently has one ethylene export terminal, a 300,000 mt/year facility deep in the ship channel operated by Targa Resources and contracted to Mitsubishi Chemical.

 

 

Despite global push to reduce plastic use, demand impact for oil and other feedstocks remains unaffected

A movement to reduce plastic use has led to bans worldwide on shopping bags, straws and other single-use items, but no noticeable impact on demand for crude oil and other feedstocks used to make plastic.

Petrochemical and plastic demand is forecast to increase at as much as four times the rate of demand for transportation fuels and petrochemicals will account for roughly 30% of global oil demand over the next five years, according to the International Energy Agency.

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2 hours ago, Mike Shellman said:

 

Flaring is a waste. I have spent all the time I can on this issue; y'all spin it however you need to. Good luck with that. 

 

LOL effing LOL!  I am sure this won't be the last we hear of it from you.  In the meantime, I will continue to cash my gas and liquids checks from XTO and from my independent.  I personally am glad that my sections are operated by responsible outfits.  I am sure that if you were doing shale that you would operate similarly.

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7 hours ago, Mike Shellman said:

My observations are directed at the shale oil industry as a whole, in all shale oil basins in America, because I am concerned about my country and its future. You, on the other hand provide us with revenue statements from 3-4 wells you have interest in out of 83,000 in America, yet suggest my comments are "one sided" and need rebutting. Right.

We agree flaring is stupid, thanks. You believe common sense, capitalism, will ultimately prevail in the shale oil industry and they will stop flaring for economic reasons. Respectfully, that's sort of funny. There are countless producers in all basins that will do no such thing. They did not when natural gas prices and liquids prices were much higher, they will not now. They are trapped like goats in a pen by debt and debt costs. Gathering gas costs money. What money they have then need to go make 1000 BOPD IP180s for cash flow, and to meet onerous drilling commitments to earn acreage, and in some cases to appease stakeholders. They don't give a rats ass about wasting natural gas. This all needs to be regulated by the TRRC. It needs to be stopped. I understand completely why that is frightening to some people. 

  

 

 

 

8 hours ago, ceo_energemsier said:

Kringstad said he wasn’t aware of any other planned infrastructure projects. Building a gas processing plant typically takes about three years, he said.

He is very ignorant about the options or, more likely, just flat lying. There are myriad ways of using natural gas onsite or transporting it. The time required would be a few months at most if the industry was serious. 

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4 hours ago, wrs said:

LOL effing LOL!  I am sure this won't be the last we hear of it from you.  In the meantime, I will continue to cash my gas and liquids checks from XTO and from my independent.  I personally am glad that my sections are operated by responsible outfits.  I am sure that if you were doing shale that you would operate similarly.

You are taking this discussion personally. It is not an attack on you. You have no say so as to how the operations are handled. Or do you?

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