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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (182841)	3/2/2014 3:32:42 PM
From: Hannoverian	3 Recommendations Recommended By Bruce L quehubo xxreno Read Replies (1) \| Respond to of 206334

Great response, thoughtful analysis & good question. The depletion issue on a well by well basis is well understand as in individual wells in your Marcellus or the deeper Utica which is in your back yard. From what I have seen & heard, current US Domestic NG production declines by between 22-24%/year. The historical Conventional NG production declines @ 12-14%/year. This % decline as a fact has been well documented by EOG because of the interest of the now departed CEO. Today Conventional & Unconventional NG production are on par, that is, each are contributing ~33.5 BCF/day. If the overall Domestic production base is declining @ 22-24%/year that strongly suggests Unconventional Domestic NG is declining@ 32-34%/year. Now an example, a new Marcellus pipeline bringing a new 0.5 BCF/day to the market place on 1/1'14. Fifty wells, each producing 10 MMCF/day on day one, also 1/1/'14. One year later, that pipeline is transporting ~150 MMCF/day, the 70% decline rate for the individual wells. Thirty five (35) new wells need drilling in the corridor served by our new pipeline, simple right! Well on 1/1/'14, ~12.5% less rigs were working the Marcellus & I'll complicate our new pipeline. It is located in the dry gas window of the Marcellus. Guess what, few if any new wells are being drilled in the dry gas portion of the Marcellus in 2014. & I suspect you will say, never say never & you are 100% correct, as you usually are. To quote, "There are always mitigation factors that emerge that are not apparent at the time when things look bleak." Which is appropriate here as applied to my simple model. In closing, you already know by mid-year '14 Domestic NG production needs to increase by >3.0 BCF/day by all possible venues. Eventually the Marcellus inventory of already drilled wells waiting on pipelines-WOP!-will evaporate & then bad things will happen. I believe we will muddle through, but that will take a NG strip of ~$6.00/MCF/day for 18-24 months.

To: Bearcatbob who wrote (182841)	3/3/2014 10:33:31 AM
From: isopatch	Read Replies (1) \| Respond to of 206334

I've not seen an accurate count of shut-in Marcellus wells, awaiting pipeline construction. Estimates I've read and grapevine talk, out here in the producing region, is it's a large number (somewhere up in the hundreds). What's important is that none of these wells have even begun their decline curve. As that backlog comes on line, it reduces the need for new drilling for, at least, the rest of 2014 Big demand continues to be for pipeline construction workers, not rig crews. Until that changes? Drilling will pick up, ALA we stay above $4. But, no new drilling boom, yet.