How should we rate, or decide, if a well is "good or bad??"

Comment

Comment by sesport on October 28, 2009 at 6:42pm

Hobbs (and Electro) - Thanks for the info and for continuing with assistance.

best :0)

Comment by Electrodynamics on October 28, 2009 at 4:28pm

Angie,
To keep it simple. The O&G company owning the well will contact a NG pipeline compnay that has a transport line as near as possible to the well. This same company may or may not be the actual buyer of the gas. When a contract is made to both transport and buy the gas on the open market then the O&G company well connect the well to the pipeline company's transport line with their own line. This line will have meters at the well and at the point the gas enters the pipeline company's line to measure the amount of gas put into the pipeline and sold.

Comment by Angie on October 28, 2009 at 12:03pm

How is gas, from a well sold to the gas company?

Comment by Hobbs on October 22, 2009 at 5:44pm

Sesport, as to your questions, gas can migrate in a non-shale (primarily sand) formation, but normally it migrates (by gravity) only "up" toward the surface to the shallowest point at which it encounters impermeable layers of rock (or more gas or oil) that keep it from moving further. On rare occasion, gas can migrate up a fault past impermeable zones to a shallower permeable zone, and empty into it. It has been down there so long already, it has probably migrated as much as it ever will by nature, so that only human intervention would cause it to migrate more. An example of this would be if a company drilled a conventional prospect well and drained the top (shallowest) part of a formation. Gas below it could migrate "up" to the highest point gravity will take it, filling in the area that has been drained.

There is almost no migration of gas in "tight", low permeability rock. Because it doesn't move, you have to go in and get it where it sits. As such, most shale wells are not economic unless they are drilled and produced horizontally - opening up more wellbore to the formation for production. The drainage area around the wellbore is like a cigar with a parallel line (the wellbore) through the center. Wells can drain gas within a certain radius (300' in some cases) from the wellbore with existing frac technology, but it's a far smaller area than a conventional reservoir. For that reason, shale prospecting is more expensive because it requires multiple wells to drain the same area that one well can drain in a conventional play. The horizontal shale wells come on at high rates as the downhole pressure forces the gas close to the wellbore into the opening, but the rate drops off dramatically in a relatively short time because of the low permeability of the shale. At the outside boundary of the radius I mentioned before, there's not enough pressure underground to force the gas through the tight shale rock to the wellbore.

Therefore, if you have property under which the Haynesville Shale lies, the gas isn't going anywhere unless you give someone the right to drill on or unitize your property and haul it out. Be blessed!

Comment by Electrodynamics on October 22, 2009 at 4:43pm

Kim,
The section line runs east to west approx. 1/4 mile north of Harper Rd. If you are approx. 1/4 mile north of Harper Rd. then chances are you are in sec 7. If you are south of Harper Rd. then you will be in sec. 18.

Comment by kim on October 22, 2009 at 1:58pm

I own property minerals in Colquitt estates south of Colquitt Rd. and want to get any information that I can. The legal from the assessors office shows 16-14-07 but I keep finding it listed on maps as 16-14-18. I do not know which one is correct. The street name is Monticello Dr. Can anyone help??

Comment by Hobbs on October 22, 2009 at 12:28pm

Shaley and Patrick - very astute comments. A shale drilling and production engineer can give you better advice here, if one is a member of this forum, but if not or until then, here are some generalities.

Regarding Shaley's mention of initial rate ("IP" or "IPR"), and as to shale wells, the higher the IP of a well, usually the better chance it has of being an economic success for the company (and better for the mineral owners) because of the time value of money. You can pay off the money you borrow to drill the well sooner and incur less interest charge (or if drilled on existing cash flow, you get your money back sooner to invest elsewhere, plus profit). Producing conventional (sand) prospects at higher IPs is much more dangerous than in shale wells, as the chance of formation damage/water intrusion is much greater if you "pull the well harder", resulting in a failure to produce the maximum producible gas reserves. Historically, the best well typically produce less than half of hydrocarbons in place, the amount depending on a number of factors including porosity and permeability of the rock, frac techniques, technology applied (which is why Denbury is getting 4X+ recovery from previously produced oil wells after injecting CO2), etc.

There are mechanical reasons that some shale wells don't have higer IPs, but might produce the same amount of total gas (i.e. same total royalty over a longer period of time, assuming price stays the same, which it never does). Some wells encounter water, which require companies to "shut off" or otherwise not frac portions of wellbores in order to avoid the negative effects of water production. This would reduce the area of the wellbore contributing gas production and, thus, the IP. Also, fracs have varying levels of success for different reasons, which will impact IP (and, potentially, the total gas produced). Other limiters of IP can include parted casing or other wellbore problems, shorter laterals, and the quality of the shale at the location drilled.

Therefore, judging a well can be very difficult unless you have answers to all the issues above, which most of us don't have. Beauty is in the eyes of the beholder, right? Electro ultimately makes the best point - it's a blessing to receive benefit from a resource to which we added no value, and we should all encourage responsible development and production.

Comment by Electrodynamics on October 22, 2009 at 11:54am

Charles,
There is no way for the landowner to guess or speculate how well an oil or gas well may produce on their land unless there are already wells being produced from the same formation in the immediate area. In some formations this will not be a good indicator either but, with the haynesville shale you can use wells in the immediate area to get a fair idea of what your well should be capable of. If you would paost the sec. township and range where you land is located it will help us determine what may already be near you.

Comment by Shaley on October 22, 2009 at 10:47am

From a mineral owners perspective, any well drilled is a good well. Mineral interests are virtually worthless until a company risks the money to drill a well. Sure, mineral interests have some value related to leasing the property from time-to-time or being bought or sold, but until those minerals are produced, they have no actual value. From a company's perspective, each company has different economic parameters that they use to judge whether a well is "good" or "bad". Initial rate is only one piece of information that goes into that determination. The well making 15 MMCFD today might be at 0 next month. The well making 500 MCFD today might still be making that 10 years from now.

Comment by Charles E. Woodard on October 21, 2009 at 11:54pm

I'm new here and I just found out they're drilling a well on my Dad's property, south of Ringgold, La. Is there anyway to get an estimate on how much it may produce and when someone will contact my family? My family inherited almost 30 acres in the section the well is being drilled on. Just want to ensure my family is kept abreast.
Thanks,
Charles E. Woodard

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