I had heard a deal with Comstock was imminent a couple weeks ago but then crickets.

So you think XTO is serious about it?

Sumlins Pool Guy said:

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I had heard a deal with Comstock was imminent a couple weeks ago but then crickets.

So you think XTO is serious about it?

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Don't know for sure if XTO, SWN or Comstock. It could (and likely will) be any of those 3. Diversified would be the dark horse (they seem to be sucking everything down) although this isn't their cup of tea and price point.

Sumlins Pool Guy said:

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I had heard a deal with Comstock was imminent a couple weeks ago but then crickets.

So you think XTO is serious about it?

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Could be Comstock but I'm hearing they just bought Tanos's Carthage stuff.

Who bought Diversified's undeveloped Haynesville acreage?

Seems somewhat relevant here.

https://www.reuters.com/business/energy/biden-must-tap-oil-reserves-lower-gasoline-prices-schumer-says-2021-11-14/

Sea Speed said:

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Seems somewhat relevant here.

https://www.reuters.com/business/energy/biden-must-tap-oil-reserves-lower-gasoline-prices-schumer-says-2021-11-14/

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Some good politics being played here. Won't happen and even if they did, won't make a material impact for long. Just some good sound bites!

So my understanding is there is a limit on how many times we can draw down from the SPR before the current domes become unstable. I can't remember where I read it as it was a long time back. To me, (I know, an engineer, not a politician) it would see a good idea to not draw down for stupid market manipulation (that likely won't really make a difference) and save these investments for actual strategic reasons like major supply disruptions or war.

I don't know if the effects are minimized if they don't do a major drawdown, but I assume with the brain trust on this thread, someone would have to know. I'm just not a reservoir engineer. I just play with computers.

How much of this is NOT Biden related?

My understanding is many companies got out of things last year because oil was so low, they were losing money. And now that OPEC has shown what they are willing to do to put a hurt on American oil companies, through supply, is that is what is keeping everyone from fully producing here….

I don't like Biden as much as anyone, and understand he has some direct effect, but how much?

some but its overstated, and yes I hate Biden.

Oil and Gas Shale companies have destroyed literally billions of dollars in capital over the past years due to unbridled spending in excess of cash flow. Investors are now demanding a return on their investment, and PE is not funding the industry like it was back in their drunken sailor days.

It isn't Biden, specifically. But there's an obvious undercurrent of negativity around investing in O&G projects for a whole host of reasons. I don't see it changing anytime soon so you wouldn't expect supply to increase dramatically.

Don't kid yourself, the investors are knocking on the door once again….

mts6175 said:

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Don't kid yourself, the investors are knocking on the door once again….

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Agreed. Especially if it gets above 100 for any sustainable length of time, I look for the money faucets to turn back on.

I finally found it.

https://www.aapg.org/publications/news/spheresofinfluence/details/articleid/36728/the-good-the-bad-and-the-ugly-the-strategic-petroleum-reserve

Quote:

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the storage sites were envisioned to be needed for 25 years and are subject to an estimated five drawdown cycles

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Quote:

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A 2010 study concluded there was a significant mismatch in design and use of the storage caverns. Instead of the initial estimated five large drawdown cycles, a large number of small drawdowns occurred over the previous 20 years. From 1996 through 2014, there were 14 instances of oil removals less than 10 million barrels. These multiple drawdowns have caused cavern deformation, salt falls and other damage to the cavern integrity. In addition, these underground salt caverns are shrinking due to tectonic stresses. The cavern shrinkage (aka closure) is estimated to be approximately two million barrels per year but may be significantly higher.

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Quote:

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Thus, the repeated removal of small volumes of oil over the life of a cavern has led to serious consequences on the shape and integrity of the caverns:

• Dissolution of salt during a drawdown always begins at bottom of cavern.
• If cavern is only partially emptied,the shape of cavern will become distorted with a bulge at the bottom.
• Gravity puts stress on the overhanging salt formation.
• Massive falls can occur and damage hanging steel tubulars.
• Cavern deformation and shrinkage is damaging well casings and cement.

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With all this, I would hope that someone is thinking about next phase SPR, but I am sure they aren't because we won't need oil anymore. Oh well. Such a great and useful tool that we will just let collapse like the rest of our infrastructure.

not in a material way, no they'r enot.

Cyp0111 said:

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not in a material way, no they'r enot.

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This is correct. Financing in O&G right now is brutal. Which means all production growth has to essentially be self-funded via free-cash-flow. For established players in the sector, this is perfect & it's what their investors want- Slow production growth with massive returns to clean up balance sheets, pay distributions, etc.

The problem for the economy in general is that O&G demand will continue to outpace supply in a FCF-only growth model, so prices are going to continue to rise & rise & rise. With no outside financing to expedite capital expenditure, this recovery is going to take forever. Biden's anti-O&G policies do zero favors to alleviate any of the financing hurdles and established O&G companies really have zero incentive to take on debt right now.

Not trying to argue, but that article makes it seem more severe than it actually is:

1. Roof falls happen fairly often in all caverns (mainly while leaching) and should not have a bearing on cavern integrity unless it damages the production casing/cement and thus the cavern fails an MIT, or the formation above is now exposed to the cavern (also fails MIT)

2. Cavern shapes change all the time and a lot of that is due to the error built into sonar tools that measure the shape and size (I've seen enough to see how much estimation goes into it)

3. All domal salt caverns get smaller due to creep from the underlying salt layer below, and its easily managed (mention of liquid like state of salt at that depth in the article)

4. SPR is actively drilling more wells to replace any loss of cavern size due to creep

Like I said, I've seen some pretty severe draw downs and build-ups of product/brine in storage caverns without any major effect on cavern shape or integrity, which includes wells that are 100 years old.

We completely empty our storage caverns every 3 years for inventory accounting reasons, and are moving in and out of most of them daily.

Like graves said, creep is normal and not a problem at all. Over decades you lose usable capacity, but manageable.

Integrity problems we've seen are usually on wide, flat roofed caverns. And problems are caused by pressuring up or down too quickly (not matching HC and brine flow) and running too high or low on pressure.

Thanks for the info. Like I said, I am not a reservoir engineer, but when I read the article, you can see how it could be construed as concerning. And I don't trust the government to do anything right.

Boat Shoes said:

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Comeby! said:

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"Oil and Gas Private Capital: Family Funded

As traditional public and private sources of capital step back, family offices are stepping in to fund selective oil and gas deals. The question is, what attracts them and can they fill the gap?"

https://www.hartenergy.com/exclusives/oil-and-gas-private-capital-family-funded-197359


I may or may not be in this article.

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You must be in the part behind the paywall.

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Boat Shoes said:

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Comeby! said:

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"Oil and Gas Private Capital: Family Funded

As traditional public and private sources of capital step back, family offices are stepping in to fund selective oil and gas deals. The question is, what attracts them and can they fill the gap?"

https://www.hartenergy.com/exclusives/oil-and-gas-private-capital-family-funded-197359


I may or may not be in this article.

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You must be in the part behind the paywall.

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Good work isn't free, yo.
On a serious note, didn't know it was on the other side. :/

Thank you for the PM. You are a gentleman and scholar!

Back when gas prices were truly high W played around SPR sales and it did nothing.

I will say that the mere threat of the SPR seems to be keeping prices probably $2-3 below where they would/should be, guess it's doing its job.

Anyone watch GOM lease sale today? I caught the first bit of it.

Lease Sale 257 | Bureau of Ocean Energy Management (boem.gov)
High Bids Ranked Descending by Total Bid Amount (boem.gov)
Summary of Company Bids (boem.gov)

XOM bought up a ton of lease blocks on the shelf off the Texas coast.
Anadarko (Oxi) got blocks in Aliminos Canyon, East Breaks, Garden Banks. I guess they haven't finished all their merger work and still buying under Anadarko name.

BIDS - Oil and Gas Lease Sale 257 (arcgis.com) Map

GOM lease sale results. BP and Chevron still placing big bets.

https://www.boem.gov/sites/default/files/documents/oil-gas-energy/leasing/sale-257-company.pdf

I used to be. I got moved away from the BOP line a few months ago but I'm still with the same company. It feels weird to "start over" while still maintaining seniority.

If Diamond is very happy then I wonder if that means HMH is not so happy.

Finally get an answer, 50MM Bbls from the SPR with coordination from other importing countries. Reports are that OPEC+ is considering lowering production to offset that or another COVID wave so oil is up.

https://www.cnbc.com/2021/11/23/biden-says-us-will-tap-strategic-petroleum-reserve-as-gas-prices-hover-around-7-hear-high.html