GDN - Golden State Resources

[DAZT49]

Hey Susie,
Whats your take on the probs and remedies.
You have to admit they have been a bit stiff. lol

 

[bigdog]

25-08-2009 09:25 AM GDN Testing Update
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00980604


PRODUCTION TESTING UPDATE
PARADOX BASIN #1 & PARADOX BASIN #2
25 AUGUST 2009

Golden Eagle Field Grand County Utah
● Flow tests on Paradox Basin #1 are underway.
● Paradox Basin #1 was opened on a 12/64” choke and initially produced gas at rates up to 3.3MMcf/d.
● The completion rig is moving back to re-complete Paradox Basin #2

Paradox Basin #1
Testing operations commenced on Paradox Basin #1. A test rig was moved to location on Thursday (US) and following attempts to run down-hole pressure gauges the well was opened to flow on Friday (US). The wellhead pressure (WHP) had built to 3450 psi since the last flow in December. On opening the well a gas rate of 3.36MMcf/day was measured. Gas rates were sustained generally above 2MMcf/day for approximately 20 hours. Some rates during this period are 3.1MMcf/day with 2800 psi WHP after 13 hours. A rate of 2.4MMcf/day 2800 psi WHP was recorded after 19 ½ hours. There was no evidence of the mechanical blockage which was seen in December.

After 20 hours the choke was increased to 14/64” and back pressure on the separator was also increased after which the gas rate declined due to the entry of water into the production string. Tubing pressure and gas rate declined and minor water production commenced 30 minutes after the change in choke size. Rates stabilised at approximately 500,000 cf/day with minor water production. The well has been shut in for a build-up and has exhibited a strong pressure recovery. Golden State is currently evaluating the test results and will review options to isolate the water which is believed to originate from the upper perforations. Gas flows are expected to improve once the water is isolated.

Paradox Basin #2
The work-over rig is now being remobilised to Paradox Basin #2 to recomplete the Ismay Formation. Golden State has evaluated the results of testing on the Ismay Formation in Paradox Basin #2. On test the Ismay Formation in Paradox Basin #2 produced gas at up to 1.6MMcf/d. The gas associated with unexpectedly high rates of water production. Evaluation of the gas zone indicates low connate water implying the water produced on test is sourced from a different interval and the fracture has accessed formation water.

The fracture tracer log shows that the fracture has travelled upwards nearly 300 feet behind the casing to 10,050’ with the main placement occurring from 10,136’ to 10,212’. Evaluation of this zone indicates it is a porous water bearing zone. The Spectrascan tracer log shows negligible placement of the fracture in the Ismay Formation gas zone.

The rig will conduct a cementing operation to isolate the upper water bearing formation some 200 feet above the gas bearing zone which was inadvertently accessed by the fracture. Following the cement squeeze the stimulation will be re-run and further testing will be conducted.

 

[DAZT49]

Big Doggy,
What do you think of that ann??
Pretty good news imo
Market is standing back tho.

 

[DAZT49]

pilots,
cant believe you have let me get away with the last few posts lol
Whats your interpretation of those flare pics?

 

[sharemadder]

Dazt

Pilots is in Broome living the high life, lucky fella.

Was a good ann. Just need to isolate water. If they can sustain +2MMcfd then that would be great.

Lets see how good RdeB is now. I see this ann. had clearer photo's of stand pipe that so many berated on HC. Maybe he's getting a little frustrated with the hate mail.

 

[DAZT49]

suzie stroking the whales at Monkey Mia lol
A time frame for the cement jobs would have been nice.
Any estimates maddy?

 

[sharemadder]

Dazt

Once rig in place,

Well I reackon on PB#2 inside a week we will hear something possibly about isolating water zone. With rig in place 48hrs cement job (squeeze) will be done. Then refrac 48hrs zone again and flow test. RdeB imo will be zooming fast track to get a firm result = dry gas and lots of it.

From reading the ann. I expect they expect good gas flow 2MMcfd+++

 

[DAZT49]

I wonder how the connection to the grid is going.
Both well could be ready to produce pretty quickly, if the results after the cement jobs are good.
Then roll on Para 3!!:

 

[Agentm]

Dazt

Once rig in place,

Well I reackon on PB#2 inside a week we will hear something possibly about isolating water zone. With rig in place 48hrs cement job (squeeze) will be done. Then refrac 48hrs zone again and flow test. RdeB imo will be zooming fast track to get a firm result = dry gas and lots of it.

From reading the ann. I expect they expect good gas flow 2MMcfd+++

i would have thought 10-20 mmcfpd would have been the bare bones start point for economics? 2mmcfpd is lousy, the ip flow is anly 2mmcfpd so it wont get any higher only lower on 7 day flow

comments made recently

Gwozd: Economic ranking in an ‘apple to apple’ comparison of full cycle costs by basin allows producers to determine where to focus their much reduced capital to maximise their overall return. The Spring 2008 Zif Energy study shows that full cycle costs for 24 gas basins (about 90% of North American gas production) varied between US$4.50 to $9.75/Mcf (royalties were calculated at a gas price of $7.00/Mcf ). Overhead costs for producers may vary from $1.00 to over $3.00/BOE. Depending on the location of the gas basin, the gas basis differential may decrease competitiveness by over $1.00/Mcf.

This full cycle cost assessment helps governments develop fair comparisons
to maintain the competitiveness of their gas basins.



Mauger: With gas prices under US$4/Mcf at Henry Hub and high basis
dif erentials (the difference between gas prices around the continent and the
price at Henry Hub), producers in several basins are at the point where the gas price does not cover their cash costs, forcing them to consider shutting in gas production. Cash costs include operating costs, processing royalties, production taxes, local transportation, and selling costs. Governments can help by being sensitive to producers’ cash costs (including production taxes) and full cycle costs and implementing programs that lower these costs.

At times like these, it is critical that producers focus on reducing their
systemic costs; however, a cost conscious focus needs to continue even when energy prices recover to enhance profitability. This was lost by some in the last ‘boom’ cycle

 

[DAZT49]

agentm,
"i would have thought 10-20 mmcfpd would have been the bare bones start point for economics? 2mmcfpd is lousy, the ip flow is anly 2mmcfpd so it wont get any higher only lower on 7 day flow"
Nowhere in any of the documentation of the last 4 years have I seen any mention of 10-20MMcf/d.( Idont think I have seen those figures from ANY gas exploration co that i have looked at...be nice tho lol)
The origional figures were (from memory) 1.5-2MMcf/d to be commercial with projected flows of 4-5MMcf/d.
Nice to see you are still on yr toes tho.Looks like we lost pilots lol

 

[Agentm]

flow rates without water are critical, and the rates you quote datz are too low for economics on an isolated play like that, the ip rates wont be anything like the flow rates on 7 day cycle.. you need many months of flow to understand what your sustained rate would be and give an idea of further future decline rates also.

both wells are producing water and that needs immediate attention.




EOG CEO:Western US Gas Fields Most Vulnerable To Storage Fill

HOUSTON -(Dow Jones)- Natural gas production in the western U.S. could be the most affected by gas storage reaching its capacity, EOG Resources (EOG) Chief Executive Mark Papa said Friday.
U.S. storage for natural gas is on its way to reaching capacity as producers pump huge volumes of the fuel into a market with little demand for it. Papa said the buildup could result in further deterioration of gas prices or production shut-ins as early as September or October.
"The West is the most vulnerable area," Papa said in an earnings conference call with analysts.
Houston-based EOG expects to grow its output this year by 5.5%, but a storage fill-up could result in curtailments, as eroding prices could make some basins in Colorado and Utah uneconomic, Papa said. "There's some risk depending on the storage situation," he added.
Also, if gas storage fills across the nation, pipeline pressure could go up, increasing pressure back at gas wells. That could result in "automated curtailment pretty much across the board," Papa said. "Then, production would just drop for everybody."
The U.S. Energy Information Administration reported Thursday that gas in U.S. storage for the week ended July 31 stood at 3.089 trillion cubic feet - 23% higher than year-ago levels and 19% higher than the five-year average. Storage capacity is estimated at about 4 trillion cubic feet.




also


The short-term outlook for natural gas, however, is bleak.

The natural gas industry is also swollen with surplus production. U.S. working natural gas in storage is 17 percent above the five-year average. EIA predicts natural gas stocks to reach 3,659 billion cubic feet at the end of the 2009 injection season (October), roughly 94 Bcf above the previous record of 3,565 Bcf reported for the end of October 2007.

According to EIA, “the monthly average Henry Hub natural gas spot price is expected to stay under $4 per thousand cubic feet (Mcf) until late in the year as abundant natural gas supplies converge with weak demand driven by an 8 percent decline in industrial sector consumption.” The electric power industry will take advantage of the low natural gas prices and, using cogeneration, will switch from oil to natural gas for its energy source, offsetting some of the 8 percent decline from the industrial sector.

Unlike the oil sector of the industry, natural gas prices are predicted to remain in their current posture with little to no increase until late 2009. EIA suggests natural gas spot prices will average $4.13 per Mcf in 2009 and $5.49 per Mcf in 2010. The Bernstein Research study suggests the mean break-even price for the Mid-Continent marginal gas producers surveyed was $4.66/Mcf, well above recent prices in the range of $3.80/Mcf.

One year ago there were 1,504 rigs drilling for natural gas in the United States; today there are 685 rigs drilling for natural gas, a 54 percent decline. Consequently, the total U.S. marketed natural gas production is expected to decline by 1.1 percent in 2009 and by 2.6 in 2010.

Some analysts believe the need for the natural gas rig count to climb to the levels of 2008 to sustain production levels may not be necessary, pointing to the technology of the unconventional “resource plays.” Wells being drilled in plays like the Haynesville Shale in north Louisiana come on line as barnburners; however, the high rate of production falls off in 12 months and then levels off for several years. I don’t pretend to be an expert, but I do believe the 28 percent production depletion rate will eat away very quickly at the 4 Bcf per day surplus production, and the industry will need to scurry to stay up in the year to come.



GDN have a lot of work ahead of them to do datz, and in a very tough economic region

 

[DAZT49]

agentm,
My figures are from GDN origional prospectus and follow up info.
Do you really think they would go ahead with the project if they new it was uneconomic,I dont think so.
Tough times its true, nobody forsaw the crash of the last 2 years and nobody has picked the current recovery or how fast it is happening.
If all companies took heed of the opinions you posted there would be no exploration at all.

 

[Agentm]

agentm,
My figures are from GDN origional prospectus and follow up info.
Do you really think they would go ahead with the project if they new it was uneconomic,I dont think so.
Tough times its true, nobody forsaw the crash of the last 2 years and nobody has picked the current recovery or how fast it is happening.
If all companies took heed of the opinions you posted there would be no exploration at all.

firstly datz, the ip will not be the sustained flow rate.

if your relying on the original prospectus data then you need to recalculate for the current gas price and not the fancy of the past.

do i think GDN would go ahead if they knew i was uneconomic? no i dont you could as economics speak for themselves. but i dont see a massive forward drilling program in place myself.

re the tough times, yes they absolutely are, not just for gas explorers alone.. my oil investment, adi, is in hibernation atm even though it sits on a massive eagleford shale oil play that is the hottest play in onshore in the usa. but the economics are ok for them and will soon be waking up and going forward with some luck.


re your last comment about companies heeding my opinion then there would be no exploration at all..

1/ its industry comment not mine..

2/i am not sure what closet you just crawled out of datz, but thats exactly whats happening onshore in the usa in the gas and oil industry..

http://en.wikipedia.org/wiki/Shale_gas


look at this site and the economics just for the shale gas alone



Economics

Although shale gas has been produced for more than 100 years in the Appalachian Basin and the Illinois Basin, the wells were often economically marginal. Higher natural gas prices in recent years and advances in hydraulic fracturing and horizontal completions have made shale gas wells more profitable. Shale gas tends to cost more to produce than gas from conventional wells, because of the expense of massive hydraulic fracturing treatments required to produce shale gas, and of horizontal drilling.

The prices required to make drilling and producing shale gas economic are different for each shale area. One study concluded that a wellhead gas price above $4.25 per thousand cubic feet (MCF) was required to make wells completed in the Fayettville Shale in Arkansas economic, while wells to the Woodford Shale in Oklahoma required a price above $6.50.[3] Another study concluded that the Fayettville shale required a NYMEX gas price above $5.95 per million British thermal units (MMBTU), and the Woodford shale a price above $7.24; the same study arrived at break-even NYMEX prices of between $5.40 to $7.39 for the Barnett, and $6.31 for Appalachian gas shale.[4] (The conclusions might appear to be different, but one is in terms of wellhead price per MCF, and the other study is in terms of NYMEX price per MMBTU).

To date, all successful shale gas wells have been in rocks of Paleozoic and Mesozoic age.

North America has been the leader in developing and producing shale gas because of high gas prices in that market. The great economic success of the Barnett Shale play in Texas in particular has spurred the search for other sources of shale gas across the United States and Canada.


datz very little is happening in the way of onshore gas exploration, as the economics are killing it. chevron pulled out of all onshore drilling in the usa by the end of 2009!! companies are putting projects on ice and stopping exploration and also field development. there are thousads of articles and announcements from the oil sector and its not exactly a secret datz..

the haynesville shale wells are massive producers, and they are economic in a lot of cases, the shale gas and the shale gas condensate fields are so large they will supply USA for 95 years easily, the gas price is not going to go up any time soon.. oil is the place to be. not gas..

gas at $2.88 datz... you have to say its not economic to be chasing gas onshore in the usa..


all imho and dyor

 

[DAZT49]

1/ its industry comment not mine..
..Thats what you are basing yr assessment on.
And those industry comments are based on this point in time assuming the economy of this time.
These projects (GDN etc) are long term.

2/i am not sure what closet you just crawled out of datz, but thats exactly whats happening onshore in the usa in the gas and oil industry..
Havent come out ....yet lol

This is a chart of last 5 years Henry Hub spot prices.
For the sake of argument(mine) lets ignore 2005 (green) and 2008 (orange)
Last 12 month (red) is histical low, but if you take a mean of the other years
the rough average is $6.50-$7.
This is the sought of figure they would base the commerciality of the project. imo

 

[Agentm]

datz your dreaming..

do some research on what industry analysts are predicting for the next year and the coming years.. your deluding yourself on expecting prices like what your saying.. operators are shutting down the gas..

pretty soon it will cost you if you want to put gas in the pipeline, its at near capacity now

Natural gas prices to remain low. Flood of LNG coming to market

August 24, 2009

Natural gas prices are the lowest in seven years. Current price is below $3/million btu. Decline resulted from latest inventory report. Rigs drilling for natural gas are down by one half in the U.S. and by two-thirds in Canada. Companies that are still drilling, connect wells to pipelines but leave the valve closed. Others, like leader EnCana, are shutting in wells until prices improve. Analystssay...


datz, please dont start a debate on gas prices right now, i think you need to look at the picture of USA today.. not yesterday.. dont dream that the hub prices will come back up.. it wont happen in the near term at all..

good luck with the 2 wells and the water issues and all the best, a reality check is needed imho

all imho and dyor

 

[DAZT49]

Agentm,
ok we differ, time will tell good luck with yr shale co.
I am a bit tired of our argument.
I know yr opinion ,you know mine...cease fire.

 

[Agentm]

Agentm,
ok we differ, time will tell good luck with yr shale co.
I am a bit tired of our argument.
I know yr opinion ,you know mine...cease fire.

only just started to load the rifle..

if you want a broadside let me know..

$2.88 gas wont be numbers a perth small cap can make work..

you can have the greatest gas field on the planet, but the economics have to be there..

its not a case of differ, this is not a personality issue, or a pissing contest at all datz,, just pure economics..

the shale deal adi are doing is one of the biggest, only a few players could take on the massive undertaking on the play,, it may happen,, and if it does the "leap of bounty" will pale into insignificance,, but it needs the player to enter and buy into the play..

datz, if the shale is the real deal the adi thing will happen and all hell will break lose.. keep a watch on it in any case

right now its a sleeper..

i hope you made plenty on the gdn show, i think plenty made a killing,, and thats the game isnt it??

surely your not holding datz,, you must have played the magnificent ride gdn just put on for you and made a packet. ..

 

[DAZT49]

"$2.88 gas wont be numbers a perth small cap can make work.."
TSV??
I did have some shares in a shale oil co a few years ago (Aussie co Tomahawk) that drilled in Oaklahoma, dont know if they are still listed.
P.s. I would win the pissing contest.

 

[bigdog]

17/09/2009 General Update
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00988900

Planning has commenced for a third well on the field!!!

The company is in discussions with US financial institutions who have expressed an interest to debt fund development drilling.

GOLDEN EAGLE GAS FEILD UPDATE
17 SEPTEMBER 2009
Golden Eagle Gas Field Grand County Utah

● Golden State Resources has earned an 83.33% interest in the Golden Eagle gas field by completing the Farm-in obligations to Eclipse.
● The company is reviewing options for recompleting the current wells.
● Both wells have indicated potentially commercial gas flow rates.
o Paradox Basin #1 produced gas at rates up to 3.3 Million cubic feet per day.
o Paradox Basin #2 produced gas at rates up to 1.6 Million cubic feet per day confirming the presence of gas in the Ismay Formation approximately 400 feet lower in the Golden Eagle structure than Paradox Basin #1.
● Planning is underway for the placement and design of a third well which will specifically target Ismay Formation production.

Golden State Resources is reviewing current field operations on the Golden Eagle gas field in Grand County Utah. The current wells have demonstrated commercial flow rates with 3.36 and 1.6 million cubic feet per day respectively for Paradox Basin #1 and 2, the gas production associates with high water production. Testing results suggest the water is likely channelled from behind the casing.

Paradox Basin #1 and #2 were designed as deep exploration wells as stipulated by the farm-in terms. The design is not ideal for production from the shallower Ismay Formation discovery. Both wells have confirmed the Ismay Formation as the main zone of commercial interest. Establishing commercial Ismay Formation production will be the focus of future wells.

Field Development
The discovery of the Golden Eagle gas field by Paradox Basin #1 and the subsequent further appraisal by Paradox Basin #2 has defined an appreciable gas resource which is well located with access to major US markets. By completing the wells Golden State has earned an 83.3% working interest in the field, and is now in a position to focus on developing the Ismay Formation gas discovery. Future wells on the field will specifically target Ismay Formation production, as such they will be shallower, considerably cheaper to drill and complete, and will have the completion design engineered into the casing program.

Recompletions of the current wells will also be investigated. Possibilities include more comprehensive cement squeezes to potentially drilling short radius laterals into the productive intervals.

Paradox Basin #1
Following the previously reported production testing high-resolution surface pressure gauges were placed on Paradox Basin #1 to record the shut-in pressures during the build-up. The well exhibits a rapid pressure recovery following production suggesting that it is capable of sustained high gas rates as witnessed during the testing. Work on Paradox Basin #1 is pending further evaluation of the test results.

Paradox Basin #2
Paradox Basin #2 has established the Ismay Formation as the main zone of commercial interest in the Golden Eagle Field. The current well is not ideal for production as it was designed to test deeper objectives and does not have sufficient cement coverage across the Ismay Formation. The well successfully appraised the southern extent of the field with gas flows from the Ismay Formation. With the farmin terms now satisfied Golden State Resources will be able to focus on establishing production from the Ismay Formation.

Paradox Basin #3
Planning has commenced for a third well on the field. Paradox Basin #3 will target the crest of the Ismay Formation approximately 1.8km north east of Paradox Basin #1 along seismic line 99X. The well will be drilled from the Paradox Basin #1 pad and will deviate at approximately 36 degrees to intersect a possible reefal build-up observable on the seismic. Well design and engineering are in progress.
The company is in discussions with US financial institutions who have expressed an interest to debt fund development drilling.

 

[pilots]

So we have two dusters, can we get 3 out of 3 to be dusters??
I have been told not all is lost, GDN are going to dig up the first two wells and cut them in to one meter lengths, they will then sell them to the local ranchers for fence post holes.