Natural Gas Storage Report - Nov 9

[dan_s]

This should be the last build in storage this year.

Working gas in storage was 3,790 Bcf as of Friday, November 3, 2017, according to EIA estimates. This represents a net increase of 15 Bcf from the previous week. Stocks were 219 Bcf less than last year at this time and 71 Bcf below the five-year average of 3,861 Bcf. At 3,790 Bcf, total working gas is within the five-year historical range.

I'm not going too far out on a limb here to say that next week's storage report will put storage more than 100 BCF below the five-year average. That has not happened during this decade.

Lots of cold air and snow is coming to the NE quarter of the U.S. before Thanksgiving. See daily updates at https://www.weatherbell.com/premium/
Tonight, the temps in Chicago will dip to 20F and it is windy.

The 5-year average draws from storage for the last two weeks of November (combined) are 74 BCF. Based on today's weather forecast we may see a 200 BCF decline in storage by November 30th. If that happens, we are going to see a strong gas market in December.

[John.A.Hunt]

Regarding the G.R.A. report of 10/20 and its discussion of the qualitative differences between shale plays and the status of EUR's.
Question:
For the shale plays that have fewer pay zones (instead of the Permian's multiple pay zones) what potential, if any, exists for the "wine rack" horizontal drilling pattern to help the "lesser" shale plays?

Related to those lesser shale plays, on 11/17 I'm going to hear a talk on "new-generation" wells in the Eagleford. This week was the first I've ever heard that term. I'm a landman, not an engineer, but I'll comment here what I learn FWIW.

[dan_s]

The major oil shale plays (Bakken, Eagle Ford, SCOOP and STACK) all have "stacked" pay zones. Only STACK appears to be as good as the Tier One areas of the Permian. STACK is much smaller, but the good areas are REALLY GOOD. CLR, DVN, NFX and XEC are the best in STACK.

There has been significant advances on well completion. Most are better placement of the frac stages and a heck of a lot more sand per stage, which is why I'm so bullish on Hi-Crush.

To learn more, go through the presentations on CLR, PXD, CXO and EOG websites.

[John.A.Hunt]

Anecdotal observation - driving into my office this morning - at 6:30 AM on a Saturday the facility of Yellow Jacket Oil Tools on Brittmoore Park Drive was a beehive of activity. Just looked up their website, they make perforating guns, wireline tools, e-tools for all the shale plays. Wonder if they or their sector is an opportunity?

[John.A.Hunt]

Regarding that presentation on "New Generation" Eagleford shale wells - it was short on specifics as to what comprises a "New Generation" Eagleford well. Mostly what we've heard before, improved completion designs, better cost controls, etc.

The interesting part were several charts comparing Eagleford costs, produced water, etc., and the net drilling and operating costs, roi, compared to the Delaware Basin and to the Scoop/Merge/Stack. They made their case in favor of the Eagleford unfortunately I did not take notes and he did not release a version of the presentation.

The counties mentioned are at separate ends the play, from La Salle in the southwest jumping over to Lavaca and counties northeast of Lavaca.
Not the new revelations that I had hoped for. Basically the Eagleford operators are fine-tuning how they work their play to be profitable. So that's good.

[dan_s]

John;

Wall Street loves the Permian Basin because of the "stacked pay zones". Good wells in the Eagle Ford are just is good as the good wells in the Permian, but they don't have the stacked pay upside.
Based on the Sweet 16's results, the over-pressured STACK seems to be the best. However, it is much smaller than the good areas of the Permian Basin.