Shale Gas - The Next "CSG" energy alternative?

[shasta]

Shale Gas - Miracle Pill or Empty Promise?

As you may be aware, over the past few weeks, much has been made of this unconventional source of energy.

Some fine publications have even called shale gas a ‘game changer’ and most people are now convinced that shale gas has made ‘Peak Oil’ irrelevant.

So, is shale gas really the miracle pill or is it yet another empty promise from a desperate industry?

Before we attempt to answer this question, we want to throw some light on shale gas, which is nothing more than natural gas trapped within shale (rock) formations, deep under the Earth’s crust (Figure 1).

In the past, due to limitations in drilling technology, shale gas was not accessible.

However, with the advent of horizontal drilling and hydraulic fracturing (more on this below), the energy industry in the US has managed to release the gas from the shale formation.

Figure 1: Geology of natural gas resources

http://www.kitco.com/ind/Saxena/images/apr272010_1.jpg
Source: EIA

It is worth noting that hydraulic fracturing is a process whereby water, sand and chemicals are injected at high pressure deep into the ground to break up the porous shale and allow for enhanced recovery of gas.

Although this sounds simple enough, the problem is that this process of injecting chemicals close to the water table may pose a serious health risk.

In order to get to the bottom of this matter, the US Environmental Protection Agency is moving forward with an investigation into the potential adverse effects of hydraulic fracturing on water quality and public health.

So, it is still unclear as to whether this new technology is safe or if it will cause serious health problems for those who live close to the shales

Apart from environmental and health concerns, shale gas may not turn out to be the ‘game changer’ due to geological realities.

It is notable that despite the optimistic forecasts from the gas companies, shale gas wells are prone to extremely high depletion rates and after twelve months of production, the daily output has shown to plunge dramatically.

Furthermore, the marginal cost of production in shale is around US$7-8 per thousand cubic feet (mcf). Therefore, in the current environment, whereby natural gas is trading around US$4 per mcf, shale gas is uneconomical.

The fact remains that this year the EIA expects total natural gas production in the US to decline by 2.7% to 58.7 billion cubic feet per day (bcf/d) and only increase by a modest 1.1% in 2011.

So, if shale gas is such a big deal, why is total natural gas production not going through the roof?

The truth is that wishful thinking about the decline rates is the sole support for unrealistic expectations.

Contrary to the rosy future being presented by the gas companies, recent studies carried out in the operating gas fields in Barnett Shale (Figure 2) confirm that the geological realities are very different.

Figure 2: Shale gas basins in the US

http://www.kitco.com/ind/Saxena/images/apr272010_2.jpg
Source: USGS, ALL Consulting

You may want to note that Barnett in Texas is the first commercially developed shale play and it is a model for other areas such as Marcellus and Haynesville.

Furthermore, the Barnett Shale currently contains approximately 12,000 gas wells and since 2002, most wells in this shale were drilled horizontally using hydraulic fracturing.

It is estimated that so far, this shale has produced 5.64 trillion cubic feet (tcf) of gas, so it really is the poster-child for shale gas modeling.

Now, it is interesting to observe that although the operators in Barnett claim a gas bounty of 26 tcf, independent studies reveal that only 10 tcf of gas may ever be extracted.

Moreover, even though the operating companies claim a gas recovery rate of 2.5-3.5 billion cubic feet per well, a recent decline-curve analysis of 2,000 wells shows a gas recovery rate of only 0.95 bcf per well!

In other words, the economics of the Barnett Shale may not live up to its reputation; certainly not at today’s depressed natural gas price. And if Barnett’s economics are not favourable in today’s environment, what chance do the other shales have?

Look. At this stage, nobody really knows how this will play out but the reality does not seem to be as pretty as the operators’ claims.

Now, we do not want to ruin the ongoing festivities but a recent study by Wood Mackenzie estimates that total natural gas production in the US is set to rise by only 15% over the next decade!

This sluggish increase in output can be traced to the fact that the existing conventional natural gas fields are also depleting at a frantic pace.

Therefore, much of the additional supply of shale gas will only offset the depletion of the existing conventional gas fields.

In any event, we do not believe that shale gas will solve our problems or fully compensate us for the ongoing depletion in the world’s oil-fields.

Remember, the world’s transportation system is totally dependent on crude oil and an over-supply in natural gas will not make much difference.

For instance, only 0.16% of the automobiles in the US are currently powered by natural gas and even if shale gas turned out to be a winner, the transition towards natural gas powered vehicles will take decades.

It is our conjecture that although the development of shale gas is a step in the right direction, it is not likely to be a ‘game changer’.

In a world where roughly 93% of the world’s transportation runs on oil, an over-supply of natural gas will not quench our thirst for petroleum. So, instead of ushering in a new natural-gas economy, we should all be thinking in terms of oil conservation.

Our research confirms that unless we discover a lot of oil very promptly, the world will struggle to produce more than 89-90 million barrels per day of total liquids.

Today, global usage is 86.5 million barrels per day and with demand rising by roughly 1% every year, aggregate consumption may surpass available supply within the next 3 years.

A few years ago, people used to scoff at ‘Peak Oil’, but now it is widely accepted that the world is losing roughly 4 million barrels per day of output every year due to the ongoing depletion.

Fortunately, up until now, new capacity additions have been sufficient to offset this decline. However, as Figure 3 illustrates, the era of excess capacity is now coming to an end and from next year onwards, new projects will struggle to offset the ongoing depletion in the existing oil-fields.

When that happens and supply becomes tight, the price of oil will surge and perhaps cause another super-spike.

Figure 3: Day of reckoning is around the corner

http://www.kitco.com/ind/Saxena/images/apr272010_3.jpg
Source: Peak Oil Consulting

In summary, as long as the global economy is growing and demand for energy is on the increase, the price of oil will keep climbing and the energy industry will prosper.

Accordingly, we have allocated about a third of our managed capital to outstanding companies in the energy sector and we are confident that these holdings will produce solid growth over the course of this business cycle.

[bermuda]

Great post Shasta. Have a look at Groppe's report. Need to google it.
The conference in Sydney was shale gas orientated so I got some ADE which has the Nappermerri shales in it which are meant to be the best in Australia. Beach is impressed and they have taken a shareholding. In the USA the EPA are looking to control all fraccing and Exxon's deal with XTO has an environmental back out clause in it.

[macduffy]

Accordingly, we have allocated about a third of our managed capital to outstanding companies in the energy sector and we are confident that these holdings will produce solid growth over the course of this business cycle

Hi shasta.

Who are the "we" referred to above?

[shasta]

Hi shasta.

Who are the "we" referred to above?

Sorry Macduffy, i should have acknowledged the authour

Puru Saxena publishes Money Matters, a monthly economic report, which highlights extraordinary investment opportunities in all major markets. In addition to the monthly report, subscribers also receive “Weekly Updates” covering the recent market action. Money Matters is available by subscription from www.purusaxena.com (http://www.purusaxena.com/).

[Crypto Crude]

AKK going to drill a well with ADE sometime, does this mean AKK is back on... lol
.... good post shasta...
:cool:
.^sc

[shasta]

AKK going to drill a well with ADE sometime, does this mean AKK is back on... lol
.... good post shasta...
:cool:
.^sc

Oiler

This is the thread i referred to in the NWE thread.

Cheers

[Serpie]

The article that you posted was also copied over on HC under the same heading Shasta (Miracle Pill or Empty Promise - on the NWE thread) so there's some more discussion over there about it, and also links to related articles.

[shasta]

The article that you posted was also copied over on HC under the same heading Shasta (Miracle Pill or Empty Promise - on the NWE thread) so there's some more discussion over there about it, and also links to related articles.

Didnt know that thanks, i don't use HC too many paid rampers to pump & dump for my liking

[Crypto Crude]

shasta,
you are good at what you do, real good infact...
you have a solid grounding across sectors... you are not restricted to one sector like I am....

but sometimes you have such a closed mind to things...
you also have a closed mind as to the benefits of that site...

I dont think its like that at all...
Because if it were, then I would be getting paid... straight up...
Of course there are big rampers over there, and people have their own motives...
but no ones getting paid...
only a few company representatives do...

Hotcopper is a great site, I just think you maybe took abit of heat in URA days and have turned away from the site for that reason...
As hard as selling URA was, you did the best thing and your future looks sound...
a company is only a means to make money...
peace...

:cool:
.^sc

[Footsie]

shrewd, someone recently told me that the US offshore OIl reserve is massive and untapped and that if it was tapped it would be equivalent to the saudi reserve thereby prolonging peak oil for another say 50 years. I scoffed at this because i thought that peak oil included all known reserves and if people know US reserves are massive then it must have been part of the equation.

What do you know about this? Is there any truth in this "massive offshore reserves"?

thanks

[Dr_Who]

What do you know about this? Is there any truth in this "massive offshore reserves"?

thanks

Common sense tells us it is BS.

If there is any truth, they would be drilling it right now to pay off their huge debt.

[Ketel One]

Long version: http://www.scientificamerican.com/article.cfm?id=can-offshore-drilling-make-us-independent

Short version (summarized from above): No. While there is oil there, it's estimated in the range of 9-45billion barrels. Saudi Arabia has anywhere from 6 to 30 times this in reserves at present. That's just an estimate though (they didn't give probabilities), could be more could be less. To actually find out, and for it to count as reserves, it has to be properly explored and it has to be commercially viable to extract the oil.

[Footsie]

THanks. as i thought. its BS

so at the current rate of consumption, 85m bopd = 31b bopy 1.2t resource = 39 years left

Is that correct? let' just ignore the growth figures for the moment

[Crypto Crude]

hey Footsie,


MMS, Minerals Management services, a US Federal agency claims there are around 90 billion barrels in the highlighted areas below...
of this some 10 billion barrels are of known reserves...

http://clasticdetritus.files.wordpress.com/2008/06/mms_ocs_map.jpg?w=485&h=344

Saudia Arabia oil reserves total some 250 billion barrels of oil...

The problem is, because these offshore prospects have been banned for exploration since the early 1980's there have been no incentives for oil companies to do surveys. So the full extent of these possible reserves are unknown. Studies are based on information that are decades old. New technologies and more importantly updated seismic surveys will see US offshore lift reserves lift significantly.

Gulf of Mexico alone has gone from 150 million barrels estimated in 1985, to 15 billion barrels proven now... with another 30 billion more to come...
add up all different regions off the US coast... Alaska even bigger...
yeah, probably not difficult to think that US offshore is as big as Saudia Arabia...

two totally different beasts though...
and besides the looming future of the SA oil industry, decline of North Sea and others are going to have to be replaced by other sources...

you think about the problems we are having in GOM now with the oil spill...
all the cheap oil near surface, near shore is gone...
we have to drill hundreds of miles out in in 30,000 feet of water...
Things just a few decades were never thought possible will have to happen...

US offshore could add another 3 years of World consumption.
the time involved in the whole process to production. The fact that wells will be drilled to depths as high as airplanes fly. Mechanical robots on the sea floor. multi billion dollar platforms. mate if we cant get it right in the GOM now, what on Earth is going to happen when we expand out further into the great ocean we have.
what next, horizontal completions 40,000 feet.
mate, thats where we are progressing to.


US offshore 250billion...? I dont know...
its not unimaginable... How much of it we can extract is another question...

just dont stuff it up, we cant afford oil spills, the mistakes further out to sea under nhundreds of thousands oil BOPD would be a global disaster.
After recent disasters. Australia worst oil spill disaster ever (I think)... Chinese tanker running aground. GOM spill.. Its too early to open up US offshore for this reason alone...
I mean, if a chinese tanker is 13 nautical miles off course, and if it were unintentional, then WTF is going on...
:cool:
.^sc

[Aotea]

Top post Sasha..and yes my commisserations having been hit by the URA bomb...I too have a close and loving affection for Kate and her gang of robbers.

As for Shale Gas, XStrata had a big claim in the Nevis (Central Otago) which went around my gold claim. They pulled out recently although by all accounts there was a fully exploitable resource proven for further research...

[STRAT]

Thanks Shasta. Only just found this thread :blush:

[shasta]

Thanks Shasta. Only just found this thread :blush:

Better late than never!

[Oiler]

Better late than never!

STRAT you need to heed Shasta's comment ;)

I am going to stick my neck right out and say "shale gas/liquids" is the next boom for Australia. CSG to LNG is not a proven technology yet and granted a lot of money is being spent so have no doubt will become a proven viable industry. FID's are getting delayed for all the LNG plants at Gladstone??? what gives

Technology moves very quickly and with the amount of money poured into the Shale industry we have seen the costs to develop/produce drop dramatically with every well drilled. Note: Eagle Ford/Marcellus/Bakken etc.

AWE/NWE have got a jump on the Shale industry in AU particulalrly in the WA gas starved market. NWE hold huge potential acreages and not just in the gas potential but the more lucrative liquids market.

Traders like me ole mate STRAT will wait till his charts tell him to buy, there will be the Fundamentalist's among us that are jumping on the wagon now.

Time will tell who is right :p

[bermuda]

Hi Oiler,

CSG to LNG is just awaiting final environmental approvals and some clarity on the Super Tax. As British gas says " Gladstone is the Jewel in their Crown". Just got to be patient.

I believe the NWE shale gas story will be a good one. However it is not all beer and skittles. There are plenty of contrary views on shale gas extraction. I might post one tomorrow. Quite long.

Fortunately NWE are in the right location and gas has already been produced conventionally from EP413.

Certainly, there is a big momentum behind shale gas and the Indians are really onto it.

[STRAT]

Traders like me ole mate STRAT will wait till his charts tell him to buy, there will be the Fundamentalist's among us that are jumping on the wagon now.

Time will tell who is right :pThems fightin words G :lol:

Its my understanding there may be Fundamentalists among us who have been on the wagon for quite some time already :p

In the interest of fairness I disclose my current status below :scared:

NWE
Holdings nil
Previous holdings nil
average entry price nil

I will keep you posted ;)

[bermuda]

Hi Oiler,

CSG to LNG is just awaiting final environmental approvals and some clarity on the Super Tax. As British gas says " Gladstone is the Jewel in their Crown". Just got to be patient.

I believe the NWE shale gas story will be a good one. However it is not all beer and skittles. There are plenty of contrary views on shale gas extraction. I might post one tomorrow. Quite long.

Fortunately NWE are in the right location and gas has already been produced conventionally from EP413.

Certainly, there is a big momentum behind shale gas and the Indians are really onto it.

Here are a couple of negative views on shale. 1. Google John Dizard 2. Google Ravi Nagarajan-shale gas

[Oiler]

Here are a couple of negative views on shale. 1. Google John Dizard 2. Google Ravi Nagarajan-shale gas

Bermuda while I agree that there are a lot of pros and cons for shale gas, it all depends in what areas of the US the comentators are talking about. If you look at the Eagle Ford area we get both gas and "liquids". The gas will pay the bills and the liquids are the profit.

The "big profits" with shale gas in the US are being made selling into the domestic market and yes granted the price has dropped a little (+/- $4) which for most producers is still in the money.
We are not talking here of converting shale gas to LNG as is the case with CSG. The US is no longer an importer of gas (LNG) as a result of the development of the shale gas industry.

Move forward to NWE in WA. EP413 potential gas and liquids. We have the Dampier to Bunbury pipeline close by and ready market for the gas for the forseable future. Most of the gas production in WA (offshore) is for the LNG market which leaves the WA domestic market certainly in the short term, a gold mine. Not the case on the East Coast, some producers "giving" there gas away just to be able to produce liquids.

Liquids, the ROI speaks for itself as history tells.

There are always "naysayers" but I cant see them holding the shale industry back in WA.

I know we both have vested interests in seeing NWE suceed ;)

Oiler

[The Big Ease]

I figured this thread has just got lost over time, so a good time to revive.

Here's a pretty good article summarising recent shale developments


ntroduction

The world has a huge appetite for energy. In its publication BP Energy Outlook 2030, BP projects global primary energy consumption to increase by 39% over the 20 year period to 2030. The vast majority of this expanded demand will continue to be met from fossil fuels. As our understanding of unconventional resources improves, and further advances are made in applicable technology, unconventional resources are destined to contribute a far greater share of future energy supplies.

The emergence of the coal seam gas to LNG projects in Australia (please see our Coal Bed Methane Briefing) and the development of shale projects in the United States and Canada and oil sands in Canada, are the clearest examples of how unconventional resources can change the energy landscape. Until recently, Canada and the United States were expected to develop dozens of LNG regasification projects to import gas for domestic needs. The high gas price resulting from these market conditions, combined with the development of key technologies – especially horizontal drilling and hydraulic fracturing – has enabled huge shale gas reserves to be unlocked across North America. These two countries have now secured their own substantial domestic supplies, driving domestic gas prices down and creating the opportunity to instead start exporting LNG.

The ability to now realize the commercial potential of shale gas on a large scale has caught the attention of national and international oil companies.

Transactions in just the past few months include:

March 2011 – Sasol agreed to acquire 50% of Talisman's Cypress A acreage in Canada for over CA$1 billion
June 2011 - Petronas agreed to a $1 billion deal to buy into Progress Energy Resources Corp's Canadian shale gas assets
June 2011 – Mitsui Corporation agreed to buy a 12.5% interest in SM Energy Company's Eagle Ford shale assets, and to reimburse certain sunk costs and to carry 90% of SM Energy's costs up to US$680 million
July 2011 – BHP Billiton agreed to acquire Petrohawk for US$12 billion, following its US$4.75 billion acquisition in February 2011 of shale assets from Chesapeake

The prospects for shale gas are being looked at in various other countries. For example, Poland has substantial recoverable shale gas resources and is leading the industry development in Europe, with companies such as ExxonMobil, Chevron, Total and Talisman all participating.

In the past few weeks, Australia has suddenly come under the microscope, and some of the world's biggest international oil companies are moving in.
Australian shale gas

According to a June 2011 report commissioned by the U.S. Energy Information Agency, Australia has 396 trillion cubic feet of technically recoverable shale gas resources1. This is equivalent to about 20 per cent of the combined equivalent resources of Canada, Mexico and the United States. It also exceeds the estimated recoverable reserves of coal seam gas in Australia, which underpin three LNG projects that have taken final investment decisions over the past 8 months with an aggregate capacity of more than 25 million tonnes per annum, with additional projects proposed.

The report only assessed four main basins in Australia, and so potential for additional resources exists across the country. Those assessed basins, ranked on a composite play success / prospective area success basis, are the Cooper Basin in South Australia and Queensland, the Maryborough Basin in Queensland, and the Perth Basin and Canning Basin in Western Australia. However it is the Canning Basin that has the highest technically recoverable resource of 229 tcf. This is a substantial resource by any standards. The following table compares the four assessed Australian basins to the technically recoverable resources in the leading Canadian basins and US shale gas plays2:

Technically recoverable shale gas resources

*Resources for the Horn River, Deep and Perth Basins are aggregates of resources in multiple formations

Current players: recent transactions

Although the assessed resource suggests there is huge potential for the shale gas industry in Australia, activity is still very much in its infancy. There have been very few exploration wells drilled, no appraisal programs conducted, and no commercial production.

The Australian industry has been led by domestic players. Companies such as Santos, Beach Energy, Drillsearch Energy, Senex and Icon Energy have been assessing shale potential in the Cooper Basin. AWE and Norwest Energy have been exploring the Perth Basin, while Buru Energy and New Standard Energy are active in the Canning Basin. Other basins have also seen activity, such as the Beetaloo Basin in the Northern Territory, the Eromanga Basin in Queensland, the Georgina Basin across the Northern Territory and Queensland, and the Amadeus Basin straddling the Northern Territory and Western Australia.

Despite only limited exploration, results have been promising. In July 2011, Beach Energy drilled its first shale gas well in the Cooper Basin producing up to 2 million standard cubic feet per day (mmscf/d), a result which was significantly greater than the company's expectations3. In early August 2011, Exoma Energy announced positive well results from its exploration activities in the Eromanga Basin.

The past 12 months, and in particular the past few weeks, have seen significant international interest emerge:

June 2010: Mitsubishi committed to fund an AU$152.4 million exploration & development program, to earn a 50 per cent. interest in the majority of Buru's exploration permits in the Canning Basin, with the additional right to acquire an interest in Buru's production permits in exchange for an additional cash payment.
September 2010: Bharat PetroResources agreed to acquire half of Norwest Energy's interests in two permits in the Perth Basin, committing up to AU$15 million for exploration and drilling.
December 2010: CNOOC executed a farmin agreement to acquire a 50% participating interest in Exoma's coal seam gas and shale gas permits located in the central Queensland Galilee Basin by contributing $50 million towards exploration and appraisal expenditure during the farmin period, expiring on 31 August 2013.
April 2011: Hess agreed a participation and evaluation deal with Falcon Oil and Gas in respect of the Beetalo Basin, pursuant to which Hess may acquire up to a 62.5 per cent. stake in three shale exploration permits and was granted warrants exercisable for 10 million common shares in the company.
July 2011: ConocoPhillips entered into a non-binding heads of agreement and exclusive negotiation period with New Standard Energy to farm-in to a 75 per cent. share of the Goldwyer shale project in the Canning Basin, for US$109.5 million funding obligations and a payment in respect of sunk costs.
July 2011: BG, through its wholly owned subsidiary QGC, agreed to acquire a 60 per cent. interest in one of Drillsearch's tenements in the Cooper Basin plus an option for shares representing 9.9 per cent. of the company. In consideration, BG is to reimburse a share of sunk costs and commit to a five year $130 million three stage exploration and pilot production appraisal program (funding $90m of the first $100m). The venture also includes marketing provisions to sell gas for liquefaction through QGC's Queensland Curtis LNG project.

These transactions pale in comparison to the multi-billion dollar deals in Canada and the United States that have been making the global headlines. However, in many ways Australia is in a similar emerging position to where the North American shale industry was several years ago. As the resource in Australia becomes better defined and clear routes to market identified, then the transaction values could increase significantly
Issues to consider

Shale operations are governed under the umbrella of laws and regulations that govern conventional onshore gas production. Although largely similar, there are some differences in the regulatory framework applicable across the various States and Territories in Australia, and in the way they are applied. Some of the key legal and commercial issues that companies should consider when assessing the Australian shale gas industry include:

Hydraulic fracturing: As with coal seam gas operations, there has been significant public debate over possible environmental risks associated with hydraulic fracturing (fracking), particularly on the potential contamination of aquifers by chemicals used in fracking fluids. Irrespective of the degree of risk actually created by these activities, this remains a sensitive area. In May 2011 the New South Wales government imposed a temporary moratorium on fracking activities in the State, and in July 2011 the ban was extended until the end of the year. Investigation into the environment, economic and social impacts associated with fracking, and their management, should be expedited in order to provide certainty for all stakeholders. For investors, the risk of a moratorium being introduced after investment has been sunk will be of significant concern.
Water use and production: The drilling and fracking process also requires a substantial supply of water - especially the slickwater fracturing process which appears more cost effective for high pressure formations - and so competition for water supplies may be an issue. Some shale formations will produce water, in much the same way as occurs for coal seam gas wells. The substantial quantities of saline fracking waste water pumped back to the surface will typically contain a high level of total dissolved solids and contaminants and, together with any produced water volumes, will need to be treated and disposed of. As re-fracking the shale is often required over time to maximise recovery, water management will be an ongoing and expensive operation. These are emerging issues and the regulatory environment is constantly evolving.
Competing land use: Development of shale resources gives rise to similar competing land use issues as have been encountered with coal seam gas developments. The development and operation of shale projects requires a large number of wells, rigs and collection and transmission pipeline networks. Projects will be competing for land, water and infrastructure with other resource development projects, agricultural uses and communities.
Labour and equipment: Successful development of shale gas assets requires specialized horizontal drilling and hydraulic fracturing techniques, and skilled personnel and specialized equipment to perform them. As a relatively new industry to Australia, these are not in abundant supply, and there are many coal seam gas and tight gas projects competing for the same pool of supply. Conventional petroleum projects and mining projects will also compete for skilled labour. This could result in significantly higher drilling and production costs compared to equivalent activity in North America.
Markets: Australia produces substantially more gas than is required for domestic use. Shale gas will compete with conventional and other unconventional resources to meet the gradual increments in demand for gas and to displace existing feedstock. New markets might be created by virtue of the proposed carbon pricing mechanism, which should act to promote cleaner fuels such as natural gas. However, acting contrary to this is the risk of market collapse. Unconventional plays are present across Asia, particularly in China, India and Indonesia. As large quantities of coal seam gas, shale gas and tight gas become commercially recoverable in Australia and the region, this has the potential to reduce domestic and regional gas prices. Achieving long term export market pricing for shale gas is sensitive to this regional supply picture (although this risk is common to the conventional LNG business).
Reserves certainty: Developers, and their lenders and offtakers, will need to get comfortable with the greater uncertainties surrounding reserves estimation for shale gas. The shale gas industry is relatively new and, as with coal seams, each shale formation is unique and can respond differently to artificial stimulation. It might be misleading to rely on the short term performance history of shale wells in one formation to estimate recoverable reserves in another. A multitude of wells will need to be drilled over the life of a shale gas project, and production rates will be affected by the well completion and cannot be predicted in advance with a great deal of certainty. Additionally, traditional decline curve analysis requires constant well pressure, however performance to date indicates a quick drop in pressure and flow rates. This needs to be taken into account when structuring the project, including for reserves dedication to offtakers, reserves tails for financing, and allocating consequences in the event reserves are less than expected.

Australia certainly has sufficient recoverable reserves to underpin a successful shale gas industry. However it won't be without its challenges. It will need robust demand and strong gas prices to underpin the projects, and so will primarily need to look to export markets. In January 2011, the National Energy Administration predicted that in 2011 alone, China's natural gas consumption will have a year on-year rise of 20 per cent. The key question is whether continued strong demand in north Asia and emerging demand centers will be enough to absorb all of the unconventional gas reserves that are emerging in the region.
http://www.mondaq.com/australia/x/143146/Renewables/Unconventional+series+The+shale+gas+revolution+com es+to+Australia

[The Big Ease]

Since July/2011
BRU 100% - 233m
SXY 94% - 716m
DLS 105% - 273m
NSE 35% - 86m

All have significant shale plays. BRU, DLS and NSE have made deals with majors to farm-in/develop.

BUL - 50m
NWE - 30m
Also with significant shales plays, both lost about 10% in that time.
So what are they waiting for? Both have good shale prospects also.
Could be about time to get a move along.

[Entrep]

I bought NWE Friday, picked it in the share comp too (as did many)

[Crypto Crude]

Well,
Timing has been a big theme in Oil, and AUS shale Gas,
seems no different...

After a lengthy sit on the sidelines, only now does it seem something is really brewing...
We are waiting on some big judgements that will set the theme for the sector, and going with that... the timing of how this sector will form into mature producers...

We will have lots of fun...

Im looking to NWE to provide the fruits for reinvestment into other shale stocks...
hopefully we get the returns before Armour arrives...

:cool:
.^sc

[The Big Ease]

i havent really read your posts since rpm shrewdy.
nwe feels like that all over again (so does your enthusiasm!), but before it shot up to 20 cents!

[bermuda]

TBE,
Thanks for that post. A very good article. Australia have a 5-10 year window to exploit their shale resources before China moves into action. Fortunately the Australian Government ( particularly the SA and WA Govts ) understand the situation. I own NWE , SXY, STX, and COE because they won't attract the sort of attention that CSG producers have stirred in populated NSW.
I also own BUL and am in the red. But I just love the Queensland Maryborough shale play that BUL and BPT own. It is situated pretty close to Gladstone. .................Wouldn't it be good if they came up with a non polluting fraccing mix that could use any old water?

There was a big article in the latest NZ Listener about the dangers of fraccing. Now even my mates know more about fraccing than I do!.I ask you. That Gasland Movie sure gets a following. Imagine how Josh Fox felt when his movie was torn to pieces. ( someone filmed kitchen taps igniting back in 1926...TWENTY years before fraccing was ever invented.)

But hey , the media damage has been done. We now have to adher to stricter regulations and just do it better. ( There have been over 1.5 million fraccs done in the USA and fracc gas now meets in excess of 25% of the USA's gas demand. Climbing stongly too.)

There is a 5 year opportunity for all of us to make a few baggers. Here's to a great New Year.

[shasta]

TBE,
Thanks for that post. A very good article. Australia have a 5-10 year window to exploit their shale resources before China moves into action. Fortunately the Australian Government ( particularly the SA and WA Govts ) understand the situation. I own NWE , SXY, STX, and COE because they won't attract the sort of attention that CSG producers have stirred in populated NSW.
I also own BUL and am in the red. But I just love the Queensland Maryborough shale play that BUL and BPT own. It is situated pretty close to Gladstone. .................Wouldn't it be good if they came up with a non polluting fraccing mix that could use any old water?

There was a big article in the latest NZ Listener about the dangers of fraccing. Now even my mates know more about fraccing than I do!.I ask you. That Gasland Movie sure gets a following. Imagine how Josh Fox felt when his movie was torn to pieces. ( someone filmed kitchen taps igniting back in 1926...TWENTY years before fraccing was ever invented.)

But hey , the media damage has been done. We now have to adher to stricter regulations and just do it better. ( There have been over 1.5 million fraccs done in the USA and fracc gas now meets in excess of 25% of the USA's gas demand. Climbing stongly too.)

There is a 5 year opportunity for all of us to make a few baggers. Here's to a great New Year.

Always interesting to read your thoughts Bermuda, i've previously held all the stocks you mentioned cept BUL.

SXY (old VPE), BPT & to an extent NWE, have always suffered from inertia in the past, which puts me off a bit.

I've spent much of my recent down time reviewing stocks, including the energy sector, the lazy way would be to go with just STO, but thats not enough "risk v reward", so i've come up with these as part of a mid/long term portfolio.

OEL - Oil producer, getting ~5% discount to Brent oil price, BHP funding drill in 2012
NSE - Shale Gas, there cash, large JV farm in & stake in BRU interests me (Cheers Corporate!)
WCL - Coal Seam Gas, still a place for CSG stocks, & the heavyweights on the share register give me comfort

I'm bias with OEL as i know the company well, other two are covering the bases for the sector ;)

[The Big Ease]

I got onto NWE and BUL last week.
The prices were simply too good for the potential. Both have had a horrid run of luck but there is much to like.

I spent about 4-5 hours researching shale last night. Canning Basin looks the most promising in terms of total GIP and that's pretty much all tied up between NSE and BRU. Price weakness might tempt me into one or both but I'm not too chuffed about the 90% farm-in.

Still not really sure which of the 4 main basins is the best in terms of well performance potential.
One thing is for sure, the analysts are making all the same noises that they made about CSG even when billions were changing hands in the Surat.
Potential, but high risks, techniques from the US haven't been tested here blah blah

From my limited research, US experts seem to think Australian shale is very prospective and similar techniques should work.

[Corporate]

TBE, what do you mean 90% farmin?

NSE/BRU are respectively 50/50 with Connoco/Mitsubishi.




I got onto NWE and BUL last week.
The prices were simply too good for the potential. Both have had a horrid run of luck but there is much to like.

I spent about 4-5 hours researching shale last night. Canning Basin looks the most promising in terms of total GIP and that's pretty much all tied up between NSE and BRU. Price weakness might tempt me into one or both but I'm not too chuffed about the 90% farm-in.

Still not really sure which of the 4 main basins is the best in terms of well performance potential.
One thing is for sure, the analysts are making all the same noises that they made about CSG even when billions were changing hands in the Surat.
Potential, but high risks, techniques from the US haven't been tested here blah blah

From my limited research, US experts seem to think Australian shale is very prospective and similar techniques should work.

[Corporate]

Always interesting to read your thoughts Bermuda, i've previously held all the stocks you mentioned cept BUL.

SXY (old VPE), BPT & to an extent NWE, have always suffered from inertia in the past, which puts me off a bit.

I've spent much of my recent down time reviewing stocks, including the energy sector, the lazy way would be to go with just STO, but thats not enough "risk v reward", so i've come up with these as part of a mid/long term portfolio.

OEL - Oil producer, getting ~5% discount to Brent oil price, BHP funding drill in 2012
NSE - Shale Gas, there cash, large JV farm in & stake in BRU interests me (Cheers Corporate!)
WCL - Coal Seam Gas, still a place for CSG stocks, & the heavyweights on the share register give me comfort

I'm bias with OEL as i know the company well, other two are covering the bases for the sector ;)


shasta, glad you mentioned NSE. I think this company could be a giant in the next 3-5 years. Not many small companies ride on the back of Connoco in an oily shale basin....

[The Big Ease]

TBE, what do you mean 90% farmin?

NSE/BRU are respectively 50/50 with Connoco/Mitsubishi.
My mistake. The numbers are rattling in my head and I must have been confused.


ConocoPhillips to spend up to $US109.5m to earn and retain the rights to a 75% working interest in the Goldwyer Project

So that's in one prospect for NSE

[Corporate]

Sorry I meant 75% not 50%:)

[Corporate]

According to a June 2011 report commissioned by the U.S. Energy Information Agency, Australia has 396 trillion cubic feet of technically recoverable shale gas resources1.

Does anyone have a link to this document?

[The Big Ease]

I confess to not having my head around their agreements.
It does look like under certain conditions/commitments they can farm-in to 50% of everything NSE owns.
Not sure if that overrides existing agreements on individual prospects like Goldwyer.

edit: Corporate, google Energy Information Agency Australia Shale and you will find a wealth of information. The EIA is widely quoted so it shouldn't be too difficult to verify.

[Corporate]

try this

http://www.asx.com.au/asxpdf/20110930/pdf/421gfsll4f3md5.pdf

[The Big Ease]

The big difference betwen CSG and Shale is that nobody has proven up any shale reserves yet in Australia.
It's all based on acreage and potential.

I've read that the Cooper is probably first up because of the existing infrastructure, but if it is acreage and potential then the Canning Basin looks to have the biggest potential
I posted this in another thread:
http://www.sharetrader.co.nz/attachment.php?attachmentid=3750&d=1326452572

ICN - perhaps they will turn out to be lucky idiots afterall as they have a 60% stake in ATP 855P in the Cooper with BPT the other 40%. In one of ICN's presentations they claim to have 30% of the Cooper shale GIP of 85 TCF. Management really suck though.

[The Big Ease]

How do you like this?
http://www.theaustralian.com.au/business/wall-street-journal/oil-india-on-the-shale-gas-hunt/story-fnay3vxj-1226246074010

Oil India on the shale gas hunt

From: The Wall Street Journal
January 17, 2012 8:56AM


STATE-RUN Oil India plans to buy shale gas assets worth up to $US200 million and is scouting for potential acquisitions in Australia and the US, as it seeks to gain expertise in the field ahead of India’s plans to auction blocks in the country.

[airedale]

HI Big Ease, I don't think that $US200 million will buy a very big slice of the action in this sector.

[Corporate]

TBE

I love this image from the latest BRU corporate presentation as it applies to NSE....229tcf for the Goldwyer shales

3756

And we are talking about an EV of about $35m with a free carry by Conoco.

[hal]

TBE

I love this image from the latest BRU corporate presentation as it applies to NSE....229tcf for the Goldwyer shales

3756

And we are talking about an EV of about $35m with a free carry by Conoco.

looks really good for Buru as both companies believe that Buru have the oily zone(at least that is how i read it). Very exciting year by the looks for the oil & gas companies involved with these fields.

[The Big Ease]

Still in doubt?


Beach Energy Takeover Seen With Australia Shale 2% of U.S. Value: Real M&A
Q
By James Paton - Jan 19, 2012 7:00 AM ET

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Surging prices for shale gas and oil properties in the U.S. are turning owners of deposits as far away as Australia into potential takeover targets.

While shale assets in Texas sold at $25,000 an acre this year and a holding in Ohio and Pennsylvania changed hands at about $15,000 last month, shale properties owned by Australia’s Beach Energy Ltd. can be bought for $406 per acre, according to data compiled by Bloomberg and DNB Markets. Energy companies are pursuing unconventional assets such as shale after the average price for Brent oil futures reached a record in 2011 and the cost to find and develop oil jumped, the data show.

With explorers from Senex Energy Ltd. (SXY) to Drillsearch Energy Ltd. (DLS) also owning pieces of an estimated 400 trillion cubic feet of recoverable shale-gas resources, Australia is poised to commercialize its holdings on a “large scale,” according to the U.S. Energy Information Administration. While the country’s explorers are trailing their U.S. counterparts in development by several years and face higher drilling costs, Asian demand for natural gas may lure energy and power producers to Australia’s shale properties, Commonwealth Bank of Australia said.

“This could be the next big thing,” Mark Carnegie, former head of Lazard Ltd.’s Australian private equity business, said from Sydney. Carnegie manages a A$170 million ($177 million) venture capital fund at M.H. Carnegie & Co., which owns about 11 percent of Perth-based shale explorer Strike Energy Ltd. (STX)

“There’s no reason the economics shouldn’t be the same in Australia as they are in the Eagle Ford,” shale region in Texas, he said. “If we get anything like that we’re going to end up with a phenomenal return.”
Fracking Technology

Advances over the past decade in the technology for hydraulic fracturing, or fracking, used to free gas and oil trapped in dense shale-rock formations, has helped spur the increase in prices for shale acreage. The process involves fracturing the formation by injecting water mixed with sand and chemicals to keep the cracks open and petroleum flowing.

Companies are also expanding into unconventional drilling areas after Brent oil futures, the London-traded benchmark for two-thirds of the world’s crude, jumped 26 percent to an average of $110.91 a barrel in 2011, the highest level on record.

Japan’s Marubeni Corp. (8002) this month agreed to pay as much as $25,000 an acre for a stake in an Eagle Ford shale oil and gas property, a 19 percent increase from the per-acre price paid for a nearby holding by Marathon Oil Corp. last year.

Cooper Basin

Beach Energy (BPT), Senex and Drillsearch each own resources in the Cooper Basin, Australia’s main source of onshore gas. The area is already connected by pipeline to Sydney and other eastern markets, according to an April EIA report, which found that Australia has “geologic and industry conditions resembling those” of the U.S. and Canada.

“The country appears poised to commercialize its gas shale resources on a large scale,” it said.

Natural gas demand on the east coast of Australia may triple by 2020, driven by exports to Asia and Australia’s move to tax carbon emissions, Commonwealth Bank said in a note last month.

BG Group Plc, ConocoPhillips and Santos Ltd. are building more than $50 billion of projects on the coast of Queensland state that will convert gas extracted from coal deposits into liquid so it can be shipped to Japan, China and South Korea. Arrow Energy Ltd., owned by Royal Dutch Shell Plc and PetroChina Co., has said it plans a fourth venture.
Oil India

Those projects may need Cooper Basin shale-gas to underpin expansion plans, said Lucas Huang, a Singapore-based analyst at DNB Markets. Utilities and international oil companies may also seek Cooper Basin shale gas properties, according to Commonwealth Bank analyst Luke Smith.

Oil India Ltd. (OINL), which said this week that it plans to spend as much as $200 million on its first shale-gas investment in the U.S., has also asked banks to propose investments in Australia.

“We’ll see consolidation because the LNG plants, we think, will be under-supplied with gas,” said Tim Hannon, who manages a A$100 million hedge fund at Melbourne-based Evergreen Capital Partners Ltd. “If you’re a large LNG player in Australia you might want to get in first and make an acquisition.”

Beach Energy, Senex and Drillsearch make up about 15 percent of the Evergreen fund’s holdings, and Hannon said he plans to invest in more shares of Australian shale gas companies. New Standard Energy Ltd. (NSE), AWE Ltd. (AWE) and Buru Energy Ltd. (BRU) are among other potential investments, he said.
‘First Mover’

Beach Energy, whose 61 percent gain in the past 12 months through yesterday was the biggest in the S&P/ASX 200 Energy Index, has held talks with companies that may help develop its shale assets, Managing Director Reginald Nelson said last year. The company has a market value of about A$1.52 billion.

“We’re a first mover in shale gas,” Adelaide, South Australia-based Beach Energy said in an e-mailed response to questions. “We’re happy to see continuing corporate momentum surrounding shale gas assets in Australia, bringing further attention to a significant new resource.”

Senex (SXY) has also held discussions with international energy producers for potential partnerships, Ian Davies, managing director at the Brisbane-based explorer, said last year.

“You’ve seen waves of consolidation with coal-seam gas in Queensland, and given the scale of the resource potential in the Cooper Basin, it’s a reasonable extension you will see farm-outs and further consolidation there,” Davies said this week.
‘Strong Landholding’

Beach Energy in August reported an initial 2 trillion cubic feet of potential resources in its Cooper Basin shale gas acreage after the drilling results from two wells exceeded projections. The company, active in eight countries including the U.S., Egypt and Tanzania, also plans to spend A$355 million on development and exploration in the year through June, more than double spending in fiscal 2011.

The Australian oil company this month completed its acquisition of Adelaide Energy Ltd., gaining shale gas exploration stakes in the Cooper Basin that Beach Energy said in November would consolidate its “strong landholding.”

Senex, whose market value has more than doubled in the 12 months through yesterday to A$733 million, may be an acquisition target for power supplier AGL Energy Ltd. (AGK), the Australian Financial Review reported in its Street Talk column on Jan. 16, without citing any sources. Davies and AGL declined to comment.

Drillsearch, cited as a potential acquisition target by Commonwealth Bank, signed a partnership accord with BG Group in July. The U.K. gas producer agreed to invest A$130 million to search for unconventional gas in the Cooper Basin, Drillsearch said. The Sydney-based company’s shares have risen 44 percent in the last year, valuing it at A$298 million yesterday.
‘Big Balance Sheets’

Brad Lingo, managing director of Drillsearch, didn’t return a telephone message left yesterday.

Conoco, Mitsubishi Corp. (8058) and Hess Corp. have also agreed to fund shale gas exploration through ventures with Australian partners. Further deals will probably follow, said Andrew Williams, an analyst at RBC Capital Markets in Melbourne.

“If you have a look at what’s happening globally, these assets are cheap, and the big international companies are cashed up,” said Williams, who has an “outperform” rating on Senex. “It’s going to take big balance sheets to exploit it.”

Beach Energy, which has about 875,000 acres of Cooper Basin shale according to DNB data, excluding the assets of Adelaide Energy, would be among the explorers most in demand when global companies seek out Australian shale, Huang said. DNB values the company’s Cooper Basin shale holdings at A$342 million, or A$391 an acre.
$15,000 an Acre

Beach Energy’s bid for Adelaide Energy valued the target’s shale holdings at A$761 an acre, Huang estimates. Total SA (FP) on Dec. 30 acquired a 25 percent stake in 619,000 acres in the Utica shale for about $15,000 an acre, including drilling costs, data compiled by Bloomberg show. That’s more than four times the average price from seven transactions in the Ohio and Pennsylvania shale region from March to September 2011, according to IHS Inc. data.

The U.S. projects still deserve higher multiples than those in Australia because they are already producing or in a more advanced stage of development, according to Huang. To draw interest from global oil companies, Australian shale gas explorers need to cut drilling expenses and boost reserves, which may take at least three years, he said.

Drilling in Australia may cost $10 million to $15 million a well, compared with $4 million to $6 million in parts of the U.S., Morgan Stanley estimated in June.
‘On the Radar’

“We are seeing signs that drilling service providers are looking to work with shale gas operators to slowly move the costs down,” Huang said. “They might not be takeout targets for the large majors now, but in another three, four, five years, they will look attractive.”

PetroChina and China Petroleum & Chemical Corp., known as Sinopec, may also seek to purchase assets, he said. Beijing- based spokesmen for both said the companies are interested in shale and other natural gas sources.

“PetroChina is very interested in unconventional natural gas resources,” said spokesman Mao Zefeng. Sinopec “will pick the right time to acquire the right assets,” Sinopec’s Huang Wensheng said. Both declined to comment on speculation or specific projects.

While Australian shale project developers must overcome technical hurdles and demonstrate that the projects can be commercially successful, they are “on the radar screens” of international oil producers, John Young, a Melbourne-based analyst at Wilson HTM Investment Group, said.

“As they do more work, and there’s more confidence these assets will be commercial, people will be prepared to pay more for them,” he said.

[airedale]

Thanks, TBE, good reading.

[The Big Ease]

There are about 8 companies out there with good shale prospects.
In order of "readiness" for action I see it like this:
BPT - cooper
SXY - cooper
DLS - cooper
BRU - canning
NSE - canning

NWE - perth
BUL - Maryborough

The last three offer the most upside IMO but are further away than the top few.

The question is, do you invest in those most likely to go now or wait for the multi-baggers to be ripe and ready?
If I invest in BPT and SXY, hoping to back the gains into the remainder....will it be too late in the game?

[drillfix]

Good post there TBE,


But this:


Drilling in Australia may cost $10 million to $15 million a well, compared with $4 million to $6 million in parts of the U.S., Morgan Stanley estimated in June.
‘On the Radar’


Why does it cost a min of 3 times to drill here in Australia?

I think its all BS and this goes to show how many Types are lining their pockets because they know it is at the expense of the investor.

To me, this sucks big time. Sure a premium maybe? Perhaps, but no reason for this to be like this.

[The Big Ease]

probably labour, equipment shortage, logistics all fairly scarce. Remote locations won't help either. Then I'm sure there is a good deal of profiteering by suppliers.
But that's just me spculating. I really don't know.

[airedale]

It would be a good idea to email the author James Paton and ask him that question. I see that he invites contact by posting his address.

[drillfix]

It would be a good idea to email the author James Paton and ask him that question. I see that he invites contact by posting his address.


Yeah but you 1st have to sign up to the fricking website to read the full article of which his contact details are also there.

Having said what I have, I dont need to know why it costs 3 times that of the US, it is clear to me Aus Execs are over paid Fat Pigs whom most of them whom are like a club so investors must just accept this.

Kinda like the banks in some ways when asked:
Q: Where does the profits or money that you get go?
A: We dont actually know, it just goes (says the banks)

They are all one an the same IMO.

[The Big Ease]

BHP pressing the brakes on their shale developments.
That's quite a change of speed after investing 20b last year!

Is this just a domestic situation in the US?

[bermuda]

BHP pressing the brakes on their shale developments.
That's quite a change of speed after investing 20b last year!

Is this just a domestic situation in the US?

They invested assuming the gas price was going up. It is not economic at $4/Gj. BHP will be just scaling back just as Chesapeake and BG and others are now doing. Don't worry. There is a huge demand for gas coming up. The coal boys are sweating as shale gas eats into their market. Even Detroit Deisel are now producing Detroit CNG trucks. The demand for gas is increasing rapidly.

The big boys are just setting some ground rules. ( to force the price of gas up ).

I have been watching my MAD this morning. It is going crazy MAD.

[winner69]

Nothing to do with stocks but fracking has some other uses .... or id their some other subtle message

[The Big Ease]

a very good article on why Europe cannot ignore shale gas. (http://www.naturalgaseurope.com/europe-cant-ignore-shale-gas-4999)

[upside_umop]

Good article TBE. I think it is only a matter of time before a lot of that comes true....if America did become self sufficient, why would they waste resources in the middle east?

Looks like NSE's investment in EXR is pretty strategic over the long term.

[CMo]

If anyone is interested in the UK shale scene (including info on Wessex Basin - NWE interest) a good overview is available here... https://www.og.decc.gov.uk/UKpromote/onshore_paper/UK_onshore_shalegas.pdf

[The Big Ease]

Here are the six shale stocks in the Eureka report published this evening:

• Beach Energy (BPT). 1.8b
• AWE Ltd (AWE). 900m
• Norwest Energy (NWE). 50m
• Buru Energy (BRU). 620m
• New Standard Energy (NSE). 150m
• Senex Energy (SXY). 900m

Look at the leverage on the stocks in bold.
That's why I hold both.

I have just read the report. It pretty much tells you what is fairly well known. Nothing new in there but great to see the info spreading to a bigger audience.

[The Big Ease]

Origin Says Australia at ‘Foothills’ of Shale Gas Development (http://www.bloomberg.com/news/2012-03-19/origin-says-australia-at-foothills-of-shale-gas-development.html)






Australia is at the “foothills” of developing shale gas with hundreds of trillion cubic feet of resources that may be recovered, explorer Origin Energy Ltd. (ORG) said.

“This isn’t short-term -- we’re at the foothills of exploration,” Paul Zealand, chief executive officer of Origin’s upstream business, said in an interview today in Sydney. “I don’t think we’ll see commercial production in five years.”

Origin, building a $20 billion LNG project in Australia’s Queensland state with ConocoPhillips (COP), is “always looking for potential opportunities,” Zealand said, declining to be more specific. “We’re looking in our own backyard.”


There's a loooong way to go. Many bags.

[trackers]

Thanks for that article TBE - It would be nice to see some more fraccing spreads about the place, and I guess there's a lack of technical knowledge too?

I'm not sure about NSE, but from what I understand NWE is pretty close to existing gas pipelines which could reduce time to market in a big way... But as you say, an industry in its infancy

[The Big Ease]

NSE has such large acreage that saying they are close to a pipeline isn't entirely accurate. Some of their acreage is about 250kms from a pipeline. Other parts are a few hundred kms from an export facility. There are plenty of options either way. Conoco can sort that out when they take NSE over ;)

[drillfix]

For Reference,
Here is a current list of Co's I added to a ProRealtime watchlist with today's + & - %'s, close price and volumes.

Not sure every single one of these is shale but pretty close!
==========================

ACN +2.33% 0.220 1,502k
AUT -1.30% 3.800 930,670
AWE +2.19% 1.870 2,131k
BPT -0.31% 1.620 8,979k
BRU +2.96% 3.480 2,068k
COE +0.85% 0.595 1,631k
DLS +0.69% 1.460 2,192k
EGO -5.26% 0.018 5,793k
EXE -6.45% 0.145 1,182k
EXR +12.50% 0.081 2,681k
ICN +1.89% 0.270 1,461k
MPO +0.75% 0.675 290,556
NSE +2.94% 0.700 4,598k
NWE +0.00% 0.068 3,627k
OBL +4.84% 0.065 26,104k
OEX -4.69% 0.305 781,795
ORG -0.31% 13.010 3,843k
SNE +0.00% 0.150 18,000
STO +0.21% 14.410 2,065k
STX +5.26% 0.200 3,697k
SXY +2.65% 1.160 3,018k
TSV +6.25% 0.017 7,519k
TTE +1.60% 0.016 121,225K
==========================

Cheers~!

[Crypto Crude]

awesome list drilly...
add in tte...
market cap 10 million...
and volumes going bananas...

should be 3c soon...

:cool:
.^sc

[drillfix]

Fixed it up now SC.

I have this as a list in my ProRealtime Account, so maybe able to paste it a bit better with any additions however those quotes were on the actual day I posted that so who knows where they all are at this moment.

[trackers]

Any of you guys have a viewpoint on OEX? India Shale, ~$70mil market cap and has gone nowhere - Currently nearing the end of a potentially very productive fracc program:

http://www.stocknessmonster.com/news-item?S=OEX&E=ASX&N=579552

[Corporate]

Any of you guys have a viewpoint on OEX? India Shale, ~$70mil market cap and has gone nowhere - Currently nearing the end of a potentially very productive fracc program:

http://www.stocknessmonster.com/news-item?S=OEX&E=ASX&N=579552

trackers, I'm in! I think OEX has been overlooked. This is in part due to the location and I think with the delay in fracking the current well. Not for long though!!!

[boysy]

Been not long now for a few months now hasnt it if you look at the track record of this mob?

[drillfix]

Had considered a trade a week or so ago with OEX but the decline was obvious that it was being traded and plus as you can see from the bid-sell ratio, there is a wall of sellers who are extremely willing to be taken out at 30c on so not sure if there is enough conviction from buyers/traders, although time will tell.

[CMo]

Big pressure coming on to a lot of the shale stocks.

NSE,NWE,BRU,OBL,DLS all down again today.

BRU now under $3

Patience will be required to see us through the next 6 weeks.

[The Big Ease]

I don't know about the others but NWE, NSE and BRU have plenty of activity going on in the next couple of months to keep the SP's juiced up.

NWE and NSE drilling in June. BRU plenty more to come from Valhalla/Ungani.

You're right though. Sector wide pullback has been quite strong.

[bermuda]

I don't know about the others but NWE, NSE and BRU have plenty of activity going on in the next couple of months to keep the SP's juiced up.

NWE and NSE drilling in June. BRU plenty more to come from Valhalla/Ungani.

You're right though. Sector wide pullback has been quite strong.

Sell in May, go away. It may be April. But hey, Shale stocks are here to stay.

We have only just got started.

[bermuda]

Have a look at SXY today. This will defy everything. Beautiful $100m OIL revenue, a CSG play plus the biggest plus of all. Shale Gas in a environmental friendly Austraian Desert. The CSG is probably worth $1 on its own. Well, call it 70 cents. Plus, this company has WET shales.
The Oil is beautiful. 700,000 bbbl/year and climbing.

This is a definite takeover target. Get on board now. I am such a bad ramper. DYOR. I am biased.

[CMo]

.Get on board now. I am such a bad ramper. DYOR. I am biased.

Ha-ha love it!!

I'm well in on SXY, NWE and NSE and intent on holding through to the spring at least. I know pullbacks are a nature of a climbing stock, but it sure makes me sad when i see the portfolio red for the week!

Agree that SXY is a strong T/O target (mainly for the oil and the quick bucks available) and there do seem to be more and more reports of big internationals from US, China, Japan and UK sniffing around the sector. There's a risk that some of the smaller plays that are rising fast on the back of others (TTE, OBL, EXE etc) will be left behind. See them as a good short term, poor medium term. I hope i'm wrong, but there could be a few dancers left without partners.

Which of the smaller plays have good prospective Oil?

[Crypto Crude]

SXY,
is a supreme company...
but not a good company to invest for me because its too large...
The idea is to find the next SXY...
and new stocks are sprouting up all the time...
Check out KEY and GRK
:cool:
.^sc

[macduffy]

The "fracking causes earthquakes" issue gets another hearing in the USA - and some support from govt scientists.

http://www.bloomberg.com/news/2012-04-12/earthquake-outbreak-in-central-u-s-tied-to-drilling-wastewater.html

[drillfix]

The "fracking causes earthquakes" issue gets another hearing in the USA - and some support from govt scientists.

http://www.bloomberg.com/news/2012-04-12/earthquake-outbreak-in-central-u-s-tied-to-drilling-wastewater.html

Haahaaa!

Love the yanks, they are some mob they are.

Check this quote taken from that link Macduff:
The earthquakes were “fairly small,” and rarely caused damage, Hayes said.


Like who actually cares if it actually causes earthquakes or not, ROFL!

[macduffy]

No, earthquakes aren't necessarily the problem but the price of gas in the US may be a cause for concern for producers.

http://www.sharecafe.com.au/article_air.asp?a=AV&ai=23592

[slimwin]

http://www.stuff.co.nz/national/6756501/Fracking-quakes-small-report

[CMo]

I'm still no overly sure how they can categorically link these tremors to fracking (One a 2.3 one a 1.4, 7 weeks apart - (Source. http://www.bbc.co.uk/news/uk-england-lancashire-15550458))

especially when you see this.... 10 August 2007 - 2.5 - Strongest of six tremors that occurred during August 2007

http://en.wikipedia.org/wiki/List_of_earthquakes_in_the_British_Isles

[trackers]

FYI - Tap enters shale agreement with private player:

http://www.tapoil.com.au/investor-asx.aspx?ContentID=5241

[tricha]

The problem with gas in the short\medium term.

Natural Gas Going to ZeroDrillers Must Continue DrillingBy Nick Hodge
Friday, April 20th, 2012
"I think there's a reasonable chance we will fill up the storage this year."
That's what Joe Averett said about natural gas storage in Texas and Louisiana this week.
Joe would know.
His company, Crystal Gas Storage, built the huge salt-dome caverns that store natural gas in the Gulf states.
He says the industry's ability to extract shale gas has led to such a rapid surge in production that the market is having difficulty absorbing it all.
And yet, the drillers can't stop drilling.
Many of the contracts they signed will expire if they don't drill.
"They're still drilling wells just to hold the lease, and them having to do that, that's continued the excess production," Joe says.
Natural gas prices fell to a fresh 10-year low yesterday below $2.00, settling at $1.94 per mmBtu.

Pleasure and PainPeople like us who pay electric bills are loving it.Last year at this time I was paying over $0.60 per therm. This year it's down to $0.57.My March gas bill was $43.60. (I spent over $300 filling my truck that same month.)If you burn natural gas for heat, hot water, or cooking... I know you're loving it, too.But drillers aren't loving it so much.Chesapeake Energy (NYSE: CHK) and Encana (NYSE: ECA), for example, are down over 40% in the past year.
https://images.angelpub.com/2012/16/14079/chesapeak-vs-encana.jpg
And like I said, they have to continue to drill in order to hold their leases, even as storage reaches capacity.
These guys would have to drill even if the price of natural gas goes to zero, which it may. If production continues at current rates, peak storage capacity of 4.1 tcf will be reached by October.
The only way to make money from natural gas drillers right now is to short them.

The Best Free Investment You'll Ever MakeOur analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the newsletter below. You'll also get our free report, U.S. to Be Natural Gas Exporter by our resident expert Nick Hodge.


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Where's It Gonna Go?
That is the question you need to be asking, because the answer will lead you to natural gas profits.
For starters, Cheniere Energy (AMEX: LNG) just received federal approval to build the largest U.S. natural gas export terminal ever.
The $10 billion facility will be built in Cameron, Louisiana and has already lined up customers from the UK, Spain, India, and South Korea.
What's more, almost every new electric plant in the works burns natural gas in some way, whether as a primary fuel or, in the case of solar, a back-up fuel.
And there's also a plan to convert the nation's trucking and fleet vehicles to run on natural gas, which would help eat up excess supply.
So there is plenty of money to be made. Exporters, shippers, engine manufacturers, and infrastructure plays are all on the table, and some are already starting to move.
Natural gas engine maker Westport (NASDAQ: WPRT) is up 40% in the past year to $32.00. I first recommended that stock in 2007 when it traded for $10.00, and again in 2010 at $14.00.
We know the energy market around here.
And with the focus of the natural gas market shifting so quickly, we've just released a brand new report on how to play it.
It explains in more detail why you should stay away from explorers and drillers, and focus on the “picks and shovels” of the industry.
You can have it for free, right here. (http://www.angelnexus.com/o/web/34880)

Call it like you see it,
https://images.angelpub.com/2011/25/9071/nick-hodge-signature.gif
Nick Hodge
https://images.angelpub.com/2011/50/11971/follow-basic.jpg@nickchodge on Twitter (https://twitter.com/nickchodge)

[gazprom1]

Guar Gum (or cluster bean) - the main ingredient in increasing the viscosity of proppants used in fracking has increased in price so dramatically that it has hurt Halliburtons 2nd quarter earnings. Incredible to think that the humble Guar is hurting the earnigns of multi-national - guar seed is up 10 times from a year ago. Will there be a guar shortage therefore slowing down the amount of fracking being carried out? Probably not - they will no doubt come up with a replacement.

Interesting background to guar in the Daily Maverick article of 28 May.

Gazprom

[soltrader]

The problem with gas in the short\medium term.

Natural Gas Going to ZeroDrillers Must Continue DrillingBy Nick Hodge
Friday, April 20th, 2012
"I think there's a reasonable chance we will fill up the storage this year."
That's what Joe Averett said about natural gas storage in Texas and Louisiana this week.
Joe would know.
His company, Crystal Gas Storage, built the huge salt-dome caverns that store natural gas in the Gulf states.
He says the industry's ability to extract shale gas has led to such a rapid surge in production that the market is having difficulty absorbing it all.
And yet, the drillers can't stop drilling.
Many of the contracts they signed will expire if they don't drill.
"They're still drilling wells just to hold the lease, and them having to do that, that's continued the excess production," Joe says.
Natural gas prices fell to a fresh 10-year low yesterday below $2.00, settling at $1.94 per mmBtu.

Pleasure and PainPeople like us who pay electric bills are loving it.Last year at this time I was paying over $0.60 per therm. This year it's down to $0.57.My March gas bill was $43.60. (I spent over $300 filling my truck that same month.)If you burn natural gas for heat, hot water, or cooking... I know you're loving it, too.But drillers aren't loving it so much.Chesapeake Energy (NYSE: CHK) and Encana (NYSE: ECA), for example, are down over 40% in the past year.
https://images.angelpub.com/2012/16/14079/chesapeak-vs-encana.jpg
And like I said, they have to continue to drill in order to hold their leases, even as storage reaches capacity.
These guys would have to drill even if the price of natural gas goes to zero, which it may. If production continues at current rates, peak storage capacity of 4.1 tcf will be reached by October.
The only way to make money from natural gas drillers right now is to short them.

The Best Free Investment You'll Ever MakeOur analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the newsletter below. You'll also get our free report, U.S. to Be Natural Gas Exporter by our resident expert Nick Hodge.


Enter your email:
We never spam! View our Privacy Policy (http://www.energyandcapital.com/subscription/manage/)

Where's It Gonna Go?
That is the question you need to be asking, because the answer will lead you to natural gas profits.
For starters, Cheniere Energy (AMEX: LNG) just received federal approval to build the largest U.S. natural gas export terminal ever.
The $10 billion facility will be built in Cameron, Louisiana and has already lined up customers from the UK, Spain, India, and South Korea.
What's more, almost every new electric plant in the works burns natural gas in some way, whether as a primary fuel or, in the case of solar, a back-up fuel.
And there's also a plan to convert the nation's trucking and fleet vehicles to run on natural gas, which would help eat up excess supply.
So there is plenty of money to be made. Exporters, shippers, engine manufacturers, and infrastructure plays are all on the table, and some are already starting to move.
Natural gas engine maker Westport (NASDAQ: WPRT) is up 40% in the past year to $32.00. I first recommended that stock in 2007 when it traded for $10.00, and again in 2010 at $14.00.
We know the energy market around here.
And with the focus of the natural gas market shifting so quickly, we've just released a brand new report on how to play it.
It explains in more detail why you should stay away from explorers and drillers, and focus on the “picks and shovels” of the industry.
You can have it for free, right here. (http://www.angelnexus.com/o/web/34880)

Call it like you see it,
https://images.angelpub.com/2011/25/9071/nick-hodge-signature.gif
Nick Hodge
https://images.angelpub.com/2011/50/11971/follow-basic.jpg@nickchodge on Twitter (https://twitter.com/nickchodge)


This thread has since gone quiet since this posting. Where are all the earlier posters to give (at least) some nuance into this?

[bermuda]

Soltrader,
New leases for shale gas have slowed. Most leases are now concentrating on shale oil. e.g Eagleford. A few of the Majors have cut back gas production because I think the shale gas break even price is well over the current sale price. But at the moment there is a glut in the States and yes they are getting ready to increase the number of exporting terminals. The big question is whether the US Govt will allow gas exports. Because over the next few years gas demand in the USA ( and world ) is going to soar far higher than that currently predicted.

And as demand soars the price will rise.

In Australia we have experts predicting price rises on the East Coast and with respect to WA you only have to look at NWE's recent preso to see the imbalance that is now occuring.

The Golden Age of Gas is upon us. Have a google of what going on in the USA. Demand is soaring and this time there will be no stopping it. Detroit are now producing Detroit LNG/ CNG vehicles...gone are the Detroit Deisels. And black coal fired power stations are being replaced with efficient gas turbines. A huge automotive infrastructure is now being created right across the country. Things are changing rapidly. The analysts are playing catch up.

I awaiting the NWE fracc in WA with interest.

[The Big Ease]

How much longer before BPT and SXY book reserves?
BPT already has a 2TCF contingent resource.
Any ideas on when they will be converting those into reserves?
Will the current fracturing program suffice?

The reason I ask this in the industry thread is because I think this will be the catalyst for corporate action in the aussie shale sector.
AWE/NWE have got 3 locations to stimulate in the NPB, starting later this month, which should build on the industry momentum.
NSE is starting a three well program in July. It looks like the next 3 months will be exciting for the industry.

I wonder if it will get the majors reaching for their cheque books?

[hal]

How much longer before BPT and SXY book reserves?
BPT already has a 2TCF contingent resource.
Any ideas on when they will be converting those into reserves?
Will the current fracturing program suffice?

The reason I ask this in the industry thread is because I think this will be the catalyst for corporate action in the aussie shale sector.
AWE/NWE have got 3 locations to stimulate in the NPB, starting later this month, which should build on the industry momentum.
NSE is starting a three well program in July. It looks like the next 3 months will be exciting for the industry.

I wonder if it will get the majors reaching for their cheque books?

Also Buru are currently drilling 2 wells. I believe one (Paradise deepening) should be finished very soon. They have stated in announcements that the gas shows are similar to Valhalla North 1 and if so that could prove up an extension of many kilometres of wet gas(many TCF with lots of liquids).

They are also drilling Yulleroo 3 which could (if sucessful) greatly increase the resource they have there.

Exciting times seems right to me. Hopefully they sort out Europe/U.S. financial problems and it will be all go.

[trackers]

AJQ also drilling now, and being a 100% shale gas company with $80mil cash they're not mucking around. anyone know when TTE's first program starts?

[percy]

AJQ also drilling now, and being a 100% shale gas company with $80mil cash they're not mucking around. anyone know when TTE's first program starts?

In the TTE North Perth Basin presentation 24/5/12;"two stratigraphic test wells to be drilled late second quarter/early third quarter 2012."

[trackers]

Cheers Percy, just around the corner... Can't believe half the year is gone... go the AB's :)

[soltrader]

Soltrader,
New leases for shale gas have slowed. Most leases are now concentrating on shale oil. e.g Eagleford. A few of the Majors have cut back gas production because I think the shale gas break even price is well over the current sale price. But at the moment there is a glut in the States and yes they are getting ready to increase the number of exporting terminals. The big question is whether the US Govt will allow gas exports. Because over the next few years gas demand in the USA ( and world ) is going to soar far higher than that currently predicted.

And as demand soars the price will rise.

In Australia we have experts predicting price rises on the East Coast and with respect to WA you only have to look at NWE's recent preso to see the imbalance that is now occuring.

The Golden Age of Gas is upon us. Have a google of what going on in the USA. Demand is soaring and this time there will be no stopping it. Detroit are now producing Detroit LNG/ CNG vehicles...gone are the Detroit Deisels. And black coal fired power stations are being replaced with efficient gas turbines. A huge automotive infrastructure is now being created right across the country. Things are changing rapidly. The analysts are playing catch up.

I awaiting the NWE fracc in WA with interest.


Thanks Bermuda for the insight. I don't think the US Govt will have the power to prevent gas exports, though. It would go against "free market principles". Politicians are already complaining about too much regulation anyway. Now I'm not so sure the price will rise to the originally expected levels. Looks like shale gas has turned peak oil on its head.

Also awaiting NWE frac with interest this month. Problem is I'm one of those with a tendency to chase the flavour of the moment, and just when I think I have my research right, suddenly the sector I thought had potential doesn't look as promising.

[bermuda]

Thanks Bermuda for the insight. I don't think the US Govt will have the power to prevent gas exports, though. It would go against "free market principles". Politicians are already complaining about too much regulation anyway. Now I'm not so sure the price will rise to the originally expected levels. Looks like shale gas has turned peak oil on its head.

Also awaiting NWE frac with interest this month. Problem is I'm one of those with a tendency to chase the flavour of the moment, and just when I think I have my research right, suddenly the sector I thought had potential doesn't look as promising.

Soltrader,
Peak Oil has already arrived. 2005. Conventional oil production is declining at over 5% per annum. It is only the reduced demand and alternative expensive energy that is keeping the world going. But basically we cannot afford $100 oil. And that's why we are entering the Golden Age of Gas. It is stareing us in the face.

Also, I have read that buried in the USA constitution is a 'get out' clause which enables any President to deny resource exports. I am not sure whether it has ever been used but it's there. The US Govt does have the power. They think of everything.

ps It looks as though China's projected shale gas resources are going to take another downgrade. Which of course is great for Australia even though Aussie has a 4 year time advantage.

[gazprom1]

Natural gas price up over 12% this am in the US albeit from a very low base. Had been hammered by more than 20% the past two weeks.

Gazprom

[trackers]

92 years old and more common sense than 90% of people half his age...

http://www.guardian.co.uk/environment/2012/jun/15/james-lovelock-interview-gaia-theory?CMP=twt_gu

http://www.guardian.co.uk/environment/blog/2012/jun/15/james-lovelock-fracking-greens-climate