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+--- Thread: PNG LNG doesn't need gas (/showthread.php?tid=4228)
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RE: PNG LNG doesn't need gas - Palm - 07-24-2013
Correct STP. A paper from this spring discusses these wells in Barnett and as the author states it's too early to make an overall assessment, but one thing is for sure; NG prices must go up to justify the cost of development and it needs to be in the $5-$6 range. And the outputs will be judged by formations (which are huge), not necessarily each well. At those higher gas prices and with increases in drilling methods it's expected that Barnett, Baakan, Marcellus, Utica will be good producers for many many years.
RE: PNG LNG doesn't need gas - petrengr1 - 07-24-2013
Synbod/Admin- I agree with most of what has been said on this string about the economics of drilling the shale zones for gas. We will need for the price of gas to come up to $6 or $7/MCF to make it profitable for the drillers/procucers. However, I will say that they are still improving the technology/drilling/fracing programs in order to reduce the overall cost of developing and producing these zones.
For example I am seeing some of the horizonal latterals exceeding 10,000 feet with an appropriate increase in the number of stages of fracing. This will increase the cost of individual wells but will decrease the number of wells needed so it should improve the profitability of over all development/recovery of the gas.
It is true that the wells experience a severe production decline in the first 3 or 4 years but I would not say they become "worthless" after that. These wells should be capable of producing a few hundred MCFD for several years which will add to the lifetime profitability of the wells.
RE: PNG LNG doesn't need gas - admin - 07-24-2013
Thanks Pet. In that case GAIL did a pretty good deal at $10.5/BTU, between that and the $6-7 you argue is needed for the gas to be profitable, there is little margin for liquefaction and transport. I assume the latter are at least $5/BTU, probably even a bit more.