We were approached by a land man over a year ago and signed leases for acreage (thousands of acres) in the Black Warrior region of AL. These leases were not picked up after the initial term expired (one year later). Meanwhile, it's clear that there is a lot of activity (exploration, actual production, and leasing) going on in and around Alabama and specifically the Black Warrior.
Word was the initial lessee could not partner up and sell the leases within the one year period.
Does anybody have any anecdotal information on what's going on on the ground in northwest AL currently?
Low gas prices are making areas like the Black Warrior less prospective for industry right now
Thanks Przzz. Do you know this for a fact or are you surmising?
Also - if you don't mind providing some other information/and an answer:
1- Are you on the ground in Alabama? Are you a lessee-side or lessor-side observer?
2- At what price (NG/oil) would you think activity in the BWB/AL would be economically attractive? There's a lot of O&G getting produced in the US and soon to be a lot more in Mexico which leads most people to believe that energy costs (but not necessarily NG) will be more stable/heading lower going forward. Your thoughts?
Not on the ground in Alabama but very well versed in the O&G industry across the USA. Most gas prone plays are suffering the same fate as the Black Warrior right now due to gas prices ranging from slow downs in drilling to no drilling to releasing / not renewing leases.
Geologist by background / 30+ years experience
Hard to pick a gas price that will make Ala/BWB work without knowing more about well cost economics and take away capabilities / prices paid for produced gas in that region. Price to "revive" gas plays will vary from area to area, but I would guess that dry gas (i.e. no NGL's / 1000 Btu) will need $6 or higher gas to be significantly economic.
Abraham Isaac said:
Thanks Przzz. Do you know this for a fact or are you surmising?
Also - if you don't mind providing some other information/and an answer:
1- Are you on the ground in Alabama? Are you a lessee-side or lessor-side observer?
2- At what price (NG/oil) would you think activity in the BWB/AL would be economically attractive? There's a lot of O&G getting produced in the US and soon to be a lot more in Mexico which leads most people to believe that energy costs (but not necessarily NG) will be more stable/heading lower going forward. Your thoughts?
Great - Thanks PRzzz.
A few followup Q's: Is the BWB/AL in particular known for dry gas, or are their liquids possible or likely?
Would you surmise that NG prices (dry) can increase organically with greater utilization if oil stays in the $80-90/b range? Or will lower oil curtail many of the economic incentives that have been discussed in the past few years regarding industry conversions and an overall increase in NG usage?
Re: Black Warrior Basin O&G
BWB is presently known to be mostly dry gas with only minimal liquid possibilities. Attached USGS summary and other info underscores the methane richness of various formations with almost no associated NGL's and only limited oil.
One of the main reasons for the predominane of gas is the type of organic matter present in the BWB.
Abraham Isaac said:
Great - Thanks PRzzz.
A few followup Q's: Is the BWB/AL in particular known for dry gas, or are their liquids possible or likely?
Would you surmise that NG prices (dry) can increase organically with greater utilization if oil stays in the $80-90/b range? Or will lower oil curtail many of the economic incentives that have been discussed in the past few years regarding industry conversions and an overall increase in NG usage?
2128-USGSBWBstudy.pdf (1.73 MB)
2129-BWBOG.pdf (1.33 MB)
2130-BWBOGB.pdf (810 KB)
Another good publication on the BWB O&G potential.
2127-USGSChattanoogaShale.pdf (3.57 MB)
IMO,lower oil prices - even in the $80-$90 per BO range - will slow oil drilling due to the marginal economics that some operators are dealing with in various plays. This will in turn slow oil production. Plus associated gas volumes.
It is hard to figure how future oil price variations will impact gas prices. More important will be the increase of CNG usage (e.g. vehicles) plus LNG exports. Plus add in a series of cold winters and hot summers and gas prices may increase to a more economically viable level.
Abraham Isaac said:
Great - Thanks PRzzz.
A few followup Q's: Is the BWB/AL in particular known for dry gas, or are their liquids possible or likely?
Would you surmise that NG prices (dry) can increase organically with greater utilization if oil stays in the $80-90/b range? Or will lower oil curtail many of the economic incentives that have been discussed in the past few years regarding industry conversions and an overall increase in NG usage?
Thanks Przzz. Great perspective and information. Really appreciate that.
Przzz said:
IMO,lower oil prices - even in the $80-$90 per BO range - will slow oil drilling due to the marginal economics that some operators are dealing with in various plays. This will in turn slow oil production. Plus associated gas volumes.
It is hard to figure how future oil price variations will impact gas prices. More important will be the increase of CNG usage (e.g. vehicles) plus LNG exports. Plus add in a series of cold winters and hot summers and gas prices may increase to a more economically viable level.
Abraham Isaac said:
Great - Thanks PRzzz.
A few followup Q's: Is the BWB/AL in particular known for dry gas, or are their liquids possible or likely?
Would you surmise that NG prices (dry) can increase organically with greater utilization if oil stays in the $80-90/b range? Or will lower oil curtail many of the economic incentives that have been discussed in the past few years regarding industry conversions and an overall increase in NG usage?