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Exploration Factors.
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Table of Natural Gas Exploration Factors
Where the gas is and how easily you gain access is just the first step to finding a dry well, regular well, or, gusher.
- political environment;
- land ownership and subsoil rights;
- surface conditions and cover;
- weather conditions;
- geological structures;
- current topography.
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Technical Realities determine safety and application. In turn, these determine potential market acceptance and market size.
Table of Natural Gas Technological Innovation
- pilot light lanterns with glass wind gust shields;
- clay composition of "mud" used to line drill hole before insertion of casing;
- screw together standardized lengths of drill hole metal casing;
- diamond drill bit for efficient and effective rock cutting;
- lateral drilling from the main vertical drill hole;
- pipeline transportation to extend markets;
- pilot light heaters and furnaces;
- liquefaction of gas for storage - transportation;
- pilot light ranges for easier, faster cooking;
- water heaters to provide major electrical savings;
- odorification to make odorless gas more safe;
- MAGSAT satellite transported magnetometer;
- cogeneration with oil, granulated coal;
- high efficiency condensing furnaces;
- natural gas vehicles for fleet savings;
- NGV transit buses for clean environment;
- Nortec-GH Series gas fired humidifier;
- CGRI Integrated Heating Ventilating Appliance;
- Scrap Steel Preheater for major electrical savings;
- Fuel Cells which are economical and efficient.
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Free enterprise development of an industry often means free-anarchy with safety concerns and ethical concerns being sidestepped for greed. Orderliness in mass societies has been relegated to organizational self-discipline (what industry participants believe is best), or, to government bureaucratic regulation (what non-industry officers believe will satisfy voter concerns).
Marketing Monopolies have enabled survival of many common, powerful, large industries today: petroleum, electricity, natural gas, cars and trucks, telephones, radio, wheat, eggs, milk, computers, armaments, pharmaceuticals, .... Patents, regulations, dishonesty, buyouts and mergers have been common methods of creating monopolies.
Once an industry is on a firm base, monopolies sacrifice freedom, innovation and creativity for equality and security. Governments find they must reverse their direction of good intentions or blindsidedness and focus on protecting the financial concerns of the user rather than the financial survival of the provider.
Political Factors Encouraging Increased
Natural Gas Availability and Application
USA Government:
- 1935 - Public Utility Holding Company Act (PUHCA)
- 1938 - Natural Gas Act (NGA)
- 1978 - Natural Gas Policy Act (NGPA)
- 1990 - Clean Air Act Amendments
- 1991 - National Energy Strategy (NES)
- 1992 - Energy Policy Act (EPA)
USA Federal Energy Regulatory Commission Orders (FERC)
- 1983 - Order 380: utilities to buy gas from producers/marketers;
- 1985 - Apr - #436: pipelines able to offer transportation service solely;
- 1987 - Order 451: older well sellers to receive better pricing;
- 1989 - Order 500: protection of pipelines from financial distress;
- 1992 - Order 636: pipelines required to unbundle services.
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Deregulation and Unbundling is the current regulatory trend together with increasing competition AND mergers and acquisitions and partnering.
In 1997-98, drilling contractors AND oil and gas suppliers are consolidating in huge companies of the magnitude of 6 replacing 30. Debt-loaded governments seeking to cut expenses and placate totally indebted voters will do all they can to restrain price increases.
The participation of many new forms of exclusive segregated function participant (aggregator, marketer, pipeline operator, hedge financing banks, investment funds and trusts, processor, deliverer, installer, servicer, ...) spread the responsibility to the consumer between many more parties than in the past.
Dangers and opportunities lie ahead which will be larger than in the past.
Drilling Realities.
- Average jackup rig cost: 1998 $US 80 million;
- Average deep water rig : 1998 $US 200 million+;
- Canadian exploration ratios for 1997:
( 51.9%) 8,553 oil wells producing;
( 29.5%) 4,856 gas wells activated;
( 16.8%) 2,775 dry holes (failures);
( 1.8%) 292 service wells (maintenance);
(100.0%) 16,476 total drilled wells.
373 rigs active in 1997
44 holes drilled each (average)
ratio of dry to new producing wells: 2775/13409 (1 to 4.8)
US $80,000,000 cost of average land rig
US $ 16,000 per day @95% utilization for profit
US $ 10,000 per day max. actual earnings (1997)
US $ 7,000 per day avg. actual earnings (1998)
US $3,600,000 max potential income per rig (1997)
US $ 81,800 min potential cost per new well (1997)
Number of active producing wells for 1997: ________
Percentage of wells going out of service each year: 17%
Number of new wells required to sustain current supply: _______
- wet and early summer (1998) reduces rig activity;
- smaller entrepreneurs are consolidating to survive.
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Deregulation and Unbundling is the current regulatory trend together with increasing competition AND mergers and acquisitions and partnering. In 1997-98, drilling contractors AND oil and gas suppliers are consolidating in huge companies of the magnitude of 6 replacing 30. Debt-loaded governments seeking to cut expenses and placate totally indebted voters will do all they can to restrain price increases.
The participation of many new forms of exclusive segregated function participant (aggregator, marketer, pipeline operator, hedge financing banks, investment funds and trusts, processor, deliverer, installer, servicer, ...) spread the responsibility to the consumer between many more parties than in the past. Dangers and opportunities lie ahead which will be larger than in the past.
Producer-Public High Stakes Table
- BIG success, or, BIG failures;
- LOW cost service-supply, or HIGH cost;
- FEWER production/delivery accidents, or, LARGER disasters;
- INCREASED dependency on gas, and, INCREASED vulnerability;
- FASTER use of reserves could = FEWER reserves.
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The above brief will hopefully make the dynamics of the Natural Gas Industry easier for you to appreciate and understand. With that, YOU will be able to find and see your options for involvement in it with greater ease --- as either an energy user, and/or investor.
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