2007-2008 Crude Oil Cost

[TheNiche]

A lot of it's appears to be self induced so it seems.

They're union. That's how it works.

[editor]

I guess we'll have to wait to see how the Japanese respond. They are about 2-3 years ahead of GM and Ford in the development cycle.

But the Japanese have to deal with the American energy distribution system. If Honda, Toyota, and friends decided to go all hydrogen tomorrow they'd shoot themselves in the foot. No one would buy those cars because there's nowhere to refuel them.

Saw it @ $4.16 in West Virginia today, $4.47 I paid for diesel.

Last month I saw $4.12 for regular at a BP in Indiana.

I seem to recall from when I lived in West Virginia that gas was really expensive there. Most of it was trucked in from the East Coast.

[TheNiche]

I seem to recall from when I lived in West Virginia that gas was really expensive there. Most of it was trucked in from the East Coast.

What, they don't even have products pipelines!?

[Mark F. Barnes]

There isn't much of anything here in Logan County WV, rural is putting it lightly.

This is the Hatfields and McCoys neck of the woods.

[editor]

What, they don't even have products pipelines!?

I take it you've never seen the mountains of West Virginia.

Let me put it to you this way -- the center of West Virginia is an area called "Chemical Valley" which has a long string of enormous chemical plants, including the twin of the Union Carbide methyl isocyanate plant that blew up in Bhopal, India killing 3,000 people. It's cheaper and easier for these plants to float their raw materials by barge up the Mississippi River, then up the Ohio River, then up the Kanawha River than to build a pipeline.

[RedScare]

I take it you've never seen the mountains of West Virginia.

Niche was too busy blaming the unions to look at a map.

[editor]

Niche was too busy blaming the unions to look at a map.

OT, but I can't tell you how many union grievances have been filed against me over the years.

[Mark F. Barnes]

Yeah this is rugged country, in ways it's a lot more difficult than the Rockies. The peaks and valleys are so interchanging it's tough going. Pipe-lining is a nightmare. They are making their way with LPG lines, however it's a slow EXPENSIVE process. I have drilled wells all over the world and this is in the top three in location difficulty. That's going to be the selling point of this new horizontal air drilling I am trying out.

First off with the coal seams and depleted water sands, you can't hardly drill this areas with conventional hydraulics, (i.e. mud, brine water, etc.) You either have to use foam or air, for cuttings removal and well-bore stability. Only thing there is also hard-rock layers to deal with also and bottom hole temps come into play, so then you get into Nitrogen injection in certain intervals of the drilling.

To top that off then comes the directional assembly, you can't use conventional positive pulse MWD or wet-connect steering tools, when drilling with air and foam, so we are trying EM (electromagnetic) tools, and attempting to cushion and dampen the harmonics of the constant vibrations of the air-hammer. So it's been a tricky experience. However if this pays off it will open a huge ability to drill the vertically fractured Huron Shale and produce this 1200 BTU NG that is at play here, and reduce the cost of trying to drag a drilling rig up the side of these steep mountains to drill them conventional/vertical, and a lot less total depth drilled by locating the rig in a valley and drilling under the mountain. They've been trying to do it with conventional horizontal boring rigs like the use to bore under rivers and through mountains for utility crossings and it hasn't worked, so we are taking this approach. ECA and Chesapeake are huge lease holders up here and this is a joint effort to try and make this work. So far so good. I took a half point of production as an incentive bonus, so I am looking for so great test to come out of this. The seismic looks very lucrative, we'll wait and see.

I know these hillbillies could use the economy boost for sure, tho mostly coal companies hold most of the mineral rights. boost in retail sales alone could impact them somewhat. There will be a lot of support services brought in and hired from locals, if we bring another 100 rigs to the area, when and if this takes off. Lord knows they need it. It's got to beat the heck outta riding a coal car to the bottom of the earth everyday.

[N Judah]

I know a ton of people who would love to move to WV, but more northerly towards PA. I don't know anything about the unions over there but it's nice to know that there are still people out that way who don't just give in to anyone and everyone. I'd be extremely surprised if the oil guys genuinely cared about the well being of the people...but then again I'm only going by my experiences in Houston.

[plumber2]

Niche, you have about as much love for union workers as I have for oil traders.

[Mark F. Barnes]

I know a ton of people who would love to move to WV, but more northerly towards PA. I don't know anything about the unions over there but it's nice to know that there are still people out that way who don't just give in to anyone and everyone. I'd be extremely surprised if the oil guys genuinely cared about the well being of the people...but then again I'm only going by my experiences in Houston.

I am going to stray off topic some but then I am done with it, because I have to defend this point.

Judah I am not sure who you have had dealings with over the years or just how many years that is, but you my friend need to look a little deeper. I have been in the Oil Industry since 1966, I spent 30 years at Texaco, before retiring to become an Independent. At the time of my retirement with Texaco I was V.P. of Exploration, if you are in the loop downtown, ask around I am fairly well known, some may call me an ___hole, but all will tell you I don't play politics, I leave that up to the pros. I myself bend over backwards to watch out for the little man. In most cases, especially in Texas, the landowner is a "little-man". Sometimes a dirt poor farmer that just happens to own the mineral rights to the dust he's turning over for the last 20 years, or sometimes it's just a fortunate soul that inherited it from their grand-parents. With the exception of the play in the Barnett Shale in Ft. Worth, very little of the royalties go to commercial property owners, or large Corporations that own the mineral rights to land. Offshore is a horse of a different color so no need to go there. However I have always seen that the landowner is ALWAYS treated fairly, sometimes beyond fair, to insure a project is successful. Some landowners only own the surface and not the minerals, and I see that they are treated fair as well. I see that the drilling is as less invasive as humanly possible, they usually get several tanks (water ponds) dug and new fencing and cattle-guards built for their trouble, plus surface damages usually in the ballpark of $0.50/sq-ft. and with an average 5 acre location and road, that can bring them a check for $110k-$120k, and they don't even hold and mineral rights. Usually because of the heavy equipment coming in and out they get their road repaved at our expense and any bridges upgrade to hold 100K + lbs. If we have to remove a tree of any substance, that is usually a $20-$25 grand tree that is replanted upon leaving if they so desire.

In this case, here in WV, I am using a lot of local workers to do things. One example is a guy we call "Mr. Dan". He's an older gentleman, who hauls in potable water for my location. I could easily get Spivey Water Services to do it, However I met this man down at the Mom and Pop store in a little Burg called Jeffery's Hollow, and he said he'd like to do it if I could pay in cash, so not to effect his "check". He said he had a truck and trailer, but no tank or pump. He has an Artesian spring on his place that is good drinking water. I went down to Tractor Supply and bought him a new 1200 gallon poly tank, and a small Honda powered transfer pump, and he's now in business hauling potable water. Poor guy's Ford 350's 4 wheel drive is broken and we have to drag him up the hill with a dozer or crawler, but it helps him out and he's very dependable, honest as the day is long. Worked in coal mines most of his life till he couldn't breathe the dust anymore. He and his son are up here once a week, I pay him $.50/gallon, and he gets to keep the tank and pump when we are done. We're all happy and life goes on.

Not sure where you get your view from, but I am far from alone when it comes to looking out for "the well being of people". I really think a lot of the bad rep laid on oil companies is a lot of BS, mostly generated by irresponsible media and zealots, who want to be looked upon as saving the world. I have spent most of my life in this business, and have approached it from all angles. Worked my way up from a wet-nosed engineer graduate, up the chain of command, and most likely could be setting in one of the big chairs @ Chevron, had I chose to play their politics game, however I don't play politics well, as I said before. Texaco was a different type of Company, we took care of people, our own as well as others. I may be blinded by non-typical biased views, being a lifer with the Star, but I feel objectively enough to say we lost a great icon when they were swallowed up by the beast that rose from the ashes of Standard Oil Company. I chose to go out on my own instead of changing my values to pad my wallet. There are a lot of different views of Texaco, some good and some bad, but all in all it was a great company. I like being independent now, and I feel like I do a lot of good for my fellow man. I don't place a dollar value on my views of a man's worth. A firm handshake and a square look in the eye, means more to me than a bank statement. Don't get me wrong, I do what I do to make money, that's why most of us go to work everyday. And these days it's more than good, but I don't harm others to do it. It's not necessary, there is enough margin to make room for the safety and welfare of others and still make a profit. I just get tired of people blankly labeling the "Oil Guys" as bad news, because that horsecrap plain and simple.

All right I am done..........sorry for the hijack.

[N Judah]

Interesting take on the subject. Thanks for the input! I'm sure you're an honest guy who plays fairly. Much has been written about the other side of the story so no need to go there, at least not on this thread. Usually people who "look deeper" end up detesting the oil companies and for more info on that perspective a simple Google search will do.

To oil people, I say good luck in West Virginia! (Even though drilling in a state park is against the law.) I am sure the people there take what they can get and I don't doubt there is a ton of money to be made that way.

[jb4647]

As someone who works for an Oil Co, I'm loving the high prices....good for Houston's economy and good for my economy!

[editor]

There isn't much of anything here in Logan County WV, rural is putting it lightly.

This is the Hatfields and McCoys neck of the woods.

Wow. Logan County. I remember Logan County. I remember having to drive all the way to Pikeville, Kentucky for gas because even though I drove a pick-em-up, no one would sell any gas to me because it had "Yankee" (New York) plates.

[Mark F. Barnes]

Interesting take on the subject. Thanks for the input! I'm sure you're an honest guy who plays fairly. Much has been written about the other side of the story so no need to go there, at least not on this thread. Usually people who "look deeper" end up detesting the oil companies and for more info on that perspective a simple Google search will do.

To oil people, I say good luck in West Virginia! (Even though drilling in a state park is against the law.) I am sure the people there take what they can get and I don't doubt there is a ton of money to be made that way.

Since when is it against the law. You acquire proper permitting, meet all the standards required by the governing body and drill away. It's done everyday. Some fall under the BLM, I've drill wells in Texas State Parks that fall under the TNRCC and the TRRC. Sam Houston National Forest that fall under the BLM and the TNRCC as well as the TRRC. BLM lands all over the country are being drilled in, especially in the Rockies.

Besides the play in WV is no where hear any State Parks, it's mainly in Western WV. The only two state parks in the area are very small, Beech Fork and Chief Logan, both could be drilled under without encroaching on the surface, if need be.

[Mark F. Barnes]

Wow. Logan County. I remember Logan County. I remember having to drive all the way to Pikeville, Kentucky for gas because even though I drove a pick-em-up, no one would sell any gas to me because it had "Yankee" (New York) plates.

Well you know right where I am at, beautiful as far as scenery goes, as nice as the Appalachians go, but very rural and undeveloped. In some ways that's good in others maybe not. Definitely "don't take no liken' to no damn Yankees". However us Texicans they seen to like just fine.

[TheNiche]

Well you know right where I am at, beautiful as far as scenery goes, as nice as the Appalachians go, but very rural and undeveloped. In some ways that's good in others maybe not. Definitely "don't take no liken' to no damn Yankees". However us Texicans they seen to like just fine.

I know a guy whose family originated from up that way, in Magoffin County, Kentucky. He's still sitting on several hundred acres with coal, gas, and high-quality oil on it, and that's about 35 miles northwest of Pikeville. In his efforts to work with the local landmen, all he found were folks trying to rip him off. Pathetic offers maxed out at 12% royalties, $100/acre surface rights, no guaranties about damage to the property, and no guaranites about the timing of well development or ongoing production volume. I suspect that all that they were trying to do was tie it all up so that they could sell the contract to another producer at an outrageously high profit.

The feedback he kept on getting was that a fair number of those eastern Kentuckians still resent Texans that used disingenuous tactics back in the 70's and 80's to take mineral rights from locals. Seems like the locals have since learned how to do it themselves.

[N Judah]

Since when is it against the law. You acquire proper permitting, meet all the standards required by the governing body and drill away. It's done everyday. Some fall under the BLM, I've drill wells in Texas State Parks that fall under the TNRCC and the TRRC. Sam Houston National Forest that fall under the BLM and the TNRCC as well as the TRRC. BLM lands all over the country are being drilled in, especially in the Rockies.

Besides the play in WV is no where hear any State Parks, it's mainly in Western WV. The only two state parks in the area are very small, Beech Fork and Chief Logan, both could be drilled under without encroaching on the surface, if need be.

My fault, I thought you were part of the group that was doing stuff in Chief Logan State Park. It is illegal, and when told so, threw a temper tantrum (hardly a new tactic for the oil and gas industry).

[Mark F. Barnes]

My fault, I thought you were part of the group that was doing stuff in Chief Logan State Park. It is illegal, and when told so, threw a temper tantrum (hardly a new tactic for the oil and gas industry).

No that's Cabot Oil & Gas, and there problems are their own doing. They've gone about it all wrong. They act like they have a right to, instead of asking for permission, and were going to bully their way in and the State shot them down. Besides they were going to drill it, conventionally/vertically, actually putting rigs in the State Park and that wasn't acceptable to the WVBM and the WVDEP. Basically what I am doing just South of the Park, is proving how it can possibly be done without the invasive measures of putting a rig on actual Park Property. Ralph Triplet with the WVDEP visits my location every day to watch the progress and see how we are doing this.

See the big problem is the directional portion, without using fluids to drill with. Directional tools communicate to the surface via drilling fluid, with electronic pulses. No fluid no signal, and it's not done to this point, because the tools aren't readily available that with function in an air drilling environment. We've had the EM (electromagnetic) tool for some years now, however it also was made to use in a fluid environment. With an air drilling operation there are fifty times the down-hole vibrations, which in turn develops erratic harmonics, that cause a tool failure. What I am trying to do is develop a dampener that will give the tool harmonic balance, and allow the tool to complete the job in a reasonable amount of time and cost. That why this Wildcat venture is drawing such close scrutiny, because if I can successfully pull this off, and keep it economically feasible, I might be able to write my ticket, and retire on this.

I know Cabot has been snooping around quite a bit. Had to put a guard on the gate of the location, because I am not releasing drilling reports for the Net, it's what we refer to as "Tite Hole". Keeping this as a black bag op, because when John Cabot approaches me now, I am going to break it off in his backside. See John Cabot is a prick, and thinks his you know what doesn't stink. He tried to Bull-rush the state here and got slapped down. Like I said in my previous post, you have to submit a proposal that is approved by the state or governing body. And putting rigs actually in the park is not what they want. Now if I can make the new EM tool successful, then a different proposal can be made. Cabot has been fighting the State for almost a year. I spoke with Thomas Liberatore 6 months ago about this possibility, and they thumbed their nose at me. I found a solid investor that was interested in this technology, and the possibilities it could produce, and here I am. So when/if Cabot comes back to me, it will cost them twice as much. I normally farm out most of this kind of deal, but I have too much riding on it to trust it to anyone else. This could be a big turning point, not for just State lands, but for the hard to get to locations, because of terrain. See the Huron Shale is vertically fractured, sealed off top and bottom by the Berea Sandstone and Java Lime, and to drill it vertically is a hit and miss deal. However similar to the Austin Chalk in Texas, if you approach it horizontally, it is much more lucrative pay. If you look at the older fields where they drilled vertical holes, especially in West Texas or up North of Mexia and around Kilgore, some wells are just a few feet apart, and there will be miles of it that way. With Multi-leg horizontal drilling you can have one surface hole that will cover and entire lease, if formations permit it. Heavy faulting can throw you a curve sometimes, cutting faults is always unpredictable. Some faults are pressured from lower zones, and if you are drilling in a say 9.5 ppg environment, and drill off into a pressured fault with say 18 ppg environment, you sometime will lose it and burn a rig down, and that's not good. You saw a lot of it down in the Dilley Pearsall area of South Texas, because of the treacherous Frio/Vicksburg Fault-line.

Ooops...Hijacked the thread again

[Mark F. Barnes]

[editor]

That's very cool. I think it's the first time you've posted pictures of your work. More, please!

[Mark F. Barnes]

Here is a picture of a WV rig I ran across, it's a circa '46, couldn't believe my eyes when I drove up. Hadn't seen one since I was a kid.

I don't do much field work as I use to, but I had to be directly invovled in this one. But this was a great break from the normal grind, and got to see if I could still step up to the plate.

[N Judah]

Yikes I guess I could not have been more wrong. Sorry if I seemed overly antagonistic in my earlier posts. Cool pictures!

[editor]

So... once you find oil in West Virginia... how do you get it to a refinery? I know there are refineries in Ashland/Huntington. Does it go by truck?

[Mark F. Barnes]

So... once you find oil in West Virginia... how do you get it to a refinery? I know there are refineries in Ashland/Huntington. Does it go by truck?

It absolutely goes by truck to a load station, same as in Texas. It's loaded on trucks at the well-site, and trucked to the nearest load station to be offloaded to a pipeline to the refinery. There aren't as many load stations here or pipelines as they have in TX, but there are a few, and they are constantly trying to establish more. In TX it's only usually trucked a few miles due to the huge pipeline network we have. LNG is transported by pipeline 99% of the time in the US. Overseas it's transported numerous ways, truck, train, Barge, and ship. They compress NG to a liquid and transport it under pressure.

[Mark F. Barnes]

This is a very rough sketch I just threw together in Paint to show what I am trying to achieve. The red well-bores are the conventional way or doing things, the green ones are my objectives. Once I get single legs down then I will venture into multi-laterals, with multple legs from one vertical bore.

This ones for you TJ

[houstonmacbro]

So read what an OPEC oil minister said below, especially about the falling dollar. Also, have you ever thought about why they are called 'ministers'? Is it because we worship oil and money? Food for thought.

*****

http://www.cnbc.com/id/24225972

There is a balance between supply and demand," he said, speaking during a visit to Kuwait. "Even if we raised the production we may not find a buyer," Khelil said.

He added a previous output increase had failed to bring prices down.

"We raised output last year and there was an increase in prices not decrease." A falling dollar was a main factor behind the surge in oil prices, he said.

[TheNiche]

So read what an OPEC oil minister said below, especially about the falling dollar. Also, have you ever thought about why they are called 'ministers'? Is it because we worship oil and money? Food for thought.

Don't trust these guys. They're notorious for trying to manipulate short-term market outlooks, and are always saying oddball stuff as a component of the brilliant stuff.

[plumber2]

So read what an OPEC oil minister said below, especially about the falling dollar. Also, have you ever thought about why they are called 'ministers'? Is it because we worship oil and money? Food for thought.

*****

http://www.cnbc.com/id/24225972

There is a balance between supply and demand," he said, speaking during a visit to Kuwait. "Even if we raised the production we may not find a buyer," Khelil said.

He added a previous output increase had failed to bring prices down.

"We raised output last year and there was an increase in prices not decrease." A falling dollar was a main factor behind the surge in oil prices, he said.

"Baloney"

[N Judah]

So read what an OPEC oil minister said below, especially about the falling dollar. Also, have you ever thought about why they are called 'ministers'? Is it because we worship oil and money? Food for thought.

He sounds identical to many of the posters on this board. Everything can be reduced to simple demand and supply! There is no such thing as gamesmanship.

Personally I think I"ll blame the hedge funds.