Thursday, March 31, 2011

Haynesville- Beats Barnett in production!! Metrics run high at ~$15,000/acre.

A short note on Haynesville Shale- which beat Barnett in production!!
A recent report by the US Energy Information Administration on US gas production said the Haynesville is now producing at least 5.5 Bcf/d and overtook the Barnett Shale's production of 5.3 Bcf/d. The production from the Haynesville shale increased from 0.4 Bcf in 2007 to 410.9 Bcf in 2009. The production from the play is expected to increase to 2,328.4 Bcf in 2020 at an average annual growth rate of 15.8%. Some industry experts believe the Haynesville shale could ultimately produce as much as 30 to 40 trillion cubic feet of natural gas.
Haynesville Vs Barnett- Haynesville to be the winner??

Haynesville’s rig count has increased 11% over the past year to 168 rigs as against the Barnett’s 31% decline to 53 rigs. The drilling pace in Haynesville is ramping up due to the Barnett having many matured producing wells versus the Haynesville just speeding up the production since 2007 when the first well was hit by Chesapeake. Another reason for continued drilling in the Haynesville Shale in 2011 despite weak natural gas prices is the existence of some independent companies like BG, ExxonMobil and EXCO. These independents, in 2010, gave a new outlook to Haynesville Shale lifting the metrics to ~15,000/acre.

Source: Global Oil and Gas M&A Review

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Haynesville runs @ high metrics of ~15,000/acre
The Haynesville's average 2010 metrics of ~$15,000/acre had increased 67% from the average 2009 metrics of $9,000/acre. The Haynesville metrics is the highest of all the other unconventional gas plays! Observing the growth in Haynesville Shale play, it might become a replica of Barnett.

Here is the snapshot of a Haynesville package up for sale.

Source: Derrick Petroleum E&P Transactions Database

Wintershall reported 2010 annual results; Natural Gas Production up 5% over 2009; Plan to further expand E&P activities in the Northern sector of North Sea and in Russia

Wintershall’s 2010 natural gas production was 14.3 bcm, 5% increase over 2009 production of 13.6 bcm. This is due to activities in Argentina and the first entire year of plateau production from the west Siberian field Yuzhno Russkoye. Crude oil and condensate production down 14% to 5.8 million tons compared to 2009 (2009: 6.8). The decrease in oil and condensate production was primarily caused by the OPEC restrictions in Libya.

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Expansion of successful activities in the North Sea
Overall 23 (2009: 29) exploration and appraisal wells were conducted in 2010 in the search for new crude oil and natural gas deposits. Wintershall discovered new resources with twelve of these wells (2009: 17); five in the Norwegian North Sea alone, and three in the British North Sea. The company is involved in six of the twelve biggest oil discoveries made in Norway in the past five years.

Wintershall is planning to continue the search for new reservoirs in its core regions in 2011 and to push ahead with the development of known deposits, especially in the North Sea in the coming years. The company has earmarked investments of more than 1,000 million Euros (US$1409.79 million) for this region by 2015 and is aiming for a production level of 50,000 boepd in the Norwegian and British sectors of the North Sea.

Source:Derrick Petroleum Planned Exploration Wells Database

Shell plans to drill 17 exploration wells in China!!

Shell plans to spend about $1 billion annually over the next five years on the shale gas projects in China and plans to drill about 17 wells, including probes for tight gas and shale gas, in regions including Sichuan, China’s most prolific gas province.
  • Inspired by the massive success of unconventional gas – coal seam methane, tight gas and shale gas – in the US , China over the past year embarked on an exploration campaign for shale gas, part of Beijing’s goal to boost use of cleaner burning fuel and cut coal.
  • China does not have any shale gas production yet, but Shell has a rough target to pump some 10 per cent of its total gas output from shale gas by 2020.
  • Petrochina and Shell drilled the first evaluation well on the Fushun block in the Sichuan province of southwestern China. The Fushun block occupies an area of about 4000 sq km. 

This happens to be the first joint shale gas development project signed by the two companies with an intention to explore the untapped resources in China.The project is expected to assess China’s shale gas potential and capture the unconventional source of cleaner-burning fuel to meet that country’s increasing demand for fuel.

This is not the first time when PetroChina and Shell jointly landed on a gas development project in China. They also share a deal at Changbei natural gas field in the Shaanxi province of China. Also, Just a year ago, Shell and China National Petroleum Corp (CNPC), parent of PetroChina, signed a 30-year deal to develop another tight-gas block in Sichuan province.

China lags the U.S. in terms of development of shale gas, which is a foremost contributor to future energy mix. Will US's success in the unconventionals be replicated by China? .... its too early to comment!!! 

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