Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Clean up your language old man----or go dunk your head in the sewer and keep it there!
Sure would be great if Stargazer could review this with morning coffee, etc. and offer some comments......unless this basically repeats what has already been said. Thanks.
SWD Investor Guide: Not sure if anyone would have the time and motivation to "wade thru this" but it appears to have an objective view.
SWDI Investors’ Guide – Economics of Disposal Projects January 22, 2013
Introduction
Income, costs, and profits from saltwater disposal (SWD) wells fit into a complex equation. If the investor is careful, costs and net revenue can be remarkably stable, leading to steady profits and reliable forecasts. This current post will take an abbreviated look at typical costs, market trends, potential problems and due-diligence issues for the careful investor.
CAPEX: Capital costs for disposal well projects can be listed in several categories:
1. Well costs – whether drilling and completing a new well or purchase of an existing bore-hole – these costs can be very easily be into the millions. At least one well is needed but a back-up well is essential to provide constant service at a large disposal facility.
2. Surface equipment – these items might range from several steel or fiberglass tanks, transfer and injection pumps, to extensive concrete pad and full electronic tracking systems.
3. SWD operator may elect to use his own transport trucks to pick up and deliver water.
4. Pipelines – long-term customers will want to be serviced by underground pipelines to avoid problems and cut costs; these might be installed by the customer or by the disposal well operator.
5. Water treatment facilities – might include filters, oil separators, polymer breakers, and paraffin blocks. Generally treatment is meant to improve injection efficiency.
OPEX: Operation and Maintenance costs will of course be on-going throughout the life of the project.
1. Power consumption by the facility for pumps, lights, and secondary equipment.
2. Personnel costs can be large if 24-hour operation is adopted, if trucks are used, or if water treatment must be extensive. Heavy equipment must be used by staff but operations are not routinely hazardous.
3. Motor fuel, lubricants, and chemical costs can be significant.
4. SWD well and equipment maintenance will be significant over the life of the well; working over the well to repair bad casing or a bad packer can cost a half-million dollars.
5. Regulatory compliance will vary between agencies but monthly and annual reports and tests are usually required. An annual mechanical integrity test of the well will require that the well is shut-in for the day with resultant loss in revenue.
6. Environmental liabilities are unlikely but real, tanks are protected by fire-walls but wellheads are usually not and they can have leaks. Trucks can suffer leaks while loading or unloading. Pipelines can leak at the surface or below the surface. Insurance and rapid-response need to be arranged before operation starts.
Revenues: Several profit streams may be present at the disposal facility:
1. Disposal of produced water is of course the principal source of revenue for the well; revenue will depend upon the amount of production in the area, the average water cut (percentage of water in the production stream), and the other disposal wells in the area.
2. Captured crude oil is also an important economic factor. The amount of entrained oil in the water will vary by region and by formation but is often close to 1% of the produced water volume. Revenue is important since the sale of this recovered oil is without royalties.
3. Storing and selling heavy brine can be a source of profits if local operators use heavy brine for drilling or completing wells.
4. Some produced water can be easily treated for a specific re-use such as drilling or fracking.
Trucking: Saltwater hauling can readily be incorporated into the SWD project as a way to increase traffic to the SWD and an added profit stream. A fleet of tank trucks in several sizes can be purchased to insure access to most well site locations. Trucks and trailers are expensive, require frequent maintenance to continue to be efficient, require an adequate truck shed and yard but CAPEX and OPEX for the trucking equipment can be recouped through trucking charges to the area’s oilwell operators. Indeed, if his competitors choose to use trucks, our SWD operator will very likely be forced to add trucking to his repertoire in order to maintain customers.
Landfilling: New drilling wells and older producing wells spin-off liquid wastes that are best injected into an SWD, but they also produce copious volumes of solid wastes that cannot be injected. For example, drill-cuttings are generated while drilling a well; these cuttings are high in salinity and high in oil & grease content. Cuttings are coarse and cannot be liquefied; they are not to be injected into an SWD well except under very unusual conditions. Cuttings and other solids such as contaminated soil are best landfilled and this can be done on-site into a small, lined trench or at a large commercial facility. An oil & gas landfill can be merged with an SWD facility when there is sufficient acreage available and sufficient working capital can be arranged. Regulators usually require that a commercial landfill be equipped with an appropriate geo-membrane liner to isolate the fill contents from groundwater and surface water runoff. The incorporation of a solid waste landfill with the SWD will allow the project owners to accept and bill for all the wastes generated by E&P facilities.
Market Trends: Any business must seek to match its facilities to the demands of the market – if the restaurant is over-built to the clientele, efficiency and net revenues suffer. At the same time the businessman must be knowledgeable of market trends – are demands growing every year or are they shrinking? If a new SWD project has high CAPEX demands it will likely require several years to pay-out and accurate knowledge of the local produced water trends is vital. Following are aspects that need to be considered to understand the local market (note that the word “local” will vary from project to project, its radius is determined by the distance commonly traveled by water trucks in the area):
- Number of producing wells making water in the area. This count can be made from government records, either by county or by an easily-defined polygon. Active and shut-in wells are usually listed so that tabulations can be made.
- Change in the number of producing wells in the past 10 or 20 years. Depending upon the agency, monthly or annual totals can be retrieved and plotted in a simple graph to identify changes and current trends.
- Number of new wells drilled this year. New wells will involve large volumes of drilling waste needing to be managed. Older wells will show increases in the amount of water produced every day.
- Number of SWDs in the area and the changes in the past 10 or 20 years.
All of these trends have their own causes and implications for the current and future SWD market. The SWDI specializes in the interpretation of market trends and can help investors.
Potential Problems: There are issues that can exist in area or that can happen in the future that will have a significant effect on the economics of the SWD project:
Inadequate injection zone. The injection zone is one of the most important aspects of the SWD; it needs capability (the ability to take fluid at a given pressure, as measured by permeability) and capacity (the ability to store fluid over a long period as defined by porosity). Without both properties, the SWD may not be a suitable candidate. If the well exists and has a history of injection, certain forecasts can be attempted but if the well has not yet been drilled, the forecast will need to be extrapolated from nearby wells.
Scale and fouling in the well. Some injection zones are sensitive to certain saltwater chemistry, their permeability can be fouled with precipitating scale; this must be removed by periodic flushing with acid. At other times customers can submit waste water that contains drilling mud or cement, fluids that can permanently damage the injection zone. The SWD might need to be re-perforated or re-drilled.
Seismic activity can of course happen anywhere in the United States on any day of the year but an earthquake near an SWD has a certain implication for the news media and people who are exposed to that media. This subject has been dealt with in other blog-posts so details are not needed here. It appears to be true that some SWDs cause some earthquakes in some areas of the country. If a string of quakes is linked to an SWD, the operator may wish to perforate a different zone, cut the rate of injection, or drill a new well at another location.
Impact to nearby water well can have a myriad of causes but an SWD is a common target. Analyses of the impacted well and surrounding water wells are a must in order to identify the contaminants. The contaminants can then be related back to the impacting source which might be percolating fertilizer run-off or oilfield brine. After the point-source of the contamination is traced down, the SWD operator might want to drill a new private water well or another solution.
Loss of mechanical integrity within the SWD well implies corrosion or crack in the casing, a hole in the injection tubing, or leak in the packer. In any case it must be repaired before injection can resume. Repairs can shut-in the well for weeks waiting on repairs.
Due-Diligence Considerations: Prior to investment or purchase, the investor would do well to consider a number of factors involved in the subject SWD project:
- Market analysis to determine current market status and future market.
- New drilling plays in the general area.
- Condition of current SWDs in the area.
- Newly permitted SWDs in the area.
Appropriateness of the selected site:
- Easy road access.
- Adequate surface area for planned facilities.
- Separation from residences.
- Dates and locations of any previous spills or leaks.
- Capability of the injection zone in the area.
- Regional subsurface problems such as faults and corrosive groundwater.
Investors considering a SWD project must investigate the pros and cons of the specific project whether it is in operation or is meant to be drilled and the surface facilities built from scratch. An experienced, full-service contractor such as SWDI can help evaluate the project.
The Authors:
Marian M. Smith, Ph.D., University of South Carolina (Geology) is a partner in Odin Oil and Gas, LLC, in Oklahoma City, OK. Dr. Smith has expertise in reservoir geology and image analysis. For most of her career she was an educator at all levels from graduate school geology courses at Michigan Technological University to the teaching of science in middle school in South Carolina. At present she is combining her background in research and teaching to work as a consultant with Dr. Langhus at Odin Oil and Gas, LLC.
Bruce G. Langhus, Ph.D., is a petroleum geologist with over 45 years' experience in oil and gas business including water-flood design and operation; Class I, II, and III disposal well location, permitting and operation; and injection well remediation. Dr. Langhus has been the Class II Program Manager in Oklahoma, the second largest UIC program in the country. He was a founding partner of ALL Consulting, a successful geotechnical consultancy in Tulsa, OK. Dr. Langhus is now part of Amerex Resources, operators of disposal facilities in Texas, Oklahoma, Montana, and North Dakota.
Samson Oil & Gas Operational Advisory
Font size: A | A | A
8:00 PM ET 4/1/13 | BusinessWire
Samson Oil & Gas Limited ("Samson" or the "Company") (ASX: SSN) (NYSE MKT: SSN) advises that the first four infill development wells on its North Stockyard field have commenced with the setting of a 16 inch conductor in each of the wells, establishment of the individual cellars and other preparatory work having been completed.
The wells that have been commenced are the following:
Duckstein 1-13-14H TF
Billabong 2-13-14H BK
Blackdog 3-13-14H TF
Sail and Anchor 4-13-14H BK
Wells with a "TF" designation will be completed in the first bench of the Three Forks Formation and those with a "BK" designation will be completed in the middle Bakken Formation. Each well will be "batch" drilled and the forward plan is to initially set the Frontier Rig 24 on the Duckstein location then drill and set surface casing at 2,300 feet. Following the Duckstein location, the rig will skid to the subsequent locations, setting surface casing in each of the four wells.
The Frontier Rig 24 has currently exited its manufacture point and is en-route to North Dakota. The first loads are expected on location later this week. Drilling operations are expected to commence with this rig in approximately 10 days.
10/4 Thank you for your kind sentiments. I'm glad you got it right on some of your stock picks. I hope the DD some have done on this site for IPRC rewards all of us. We still have naysayers and "barking dogs" on Yahoo.
Seems to makes perfect sense---go to public offering---instead of to a bank. Just wondering.....if anything productive materializes from continued drilling that could change things drastically on share price.....also tensions in Middle East affect penny oil stocks just like their seniors....any thoughts?
Just wondering.....you spoke of some other things you were following....I'm also watching SSN---just wondering if you were too and your thoughts on recent news. Thanks.
Ever wonder what "Columbo" would say about all this before today's opening.....
COLUMBO:(turning around at exit door) Just one more thing,sir....I don't think I've told you this before...you see...my wife dabbles in the stock market too....and wouldn't you know... she owns IPRC too....except she got in at $.32.
GENTLEMAN: So what.....we're all in this for the long haul.....what's your point, Lieutenant?
COLUMBO: Yes sir...I know that...it's just that she told me the other day that when the share price was at her buying level.... she didn't have all the positive news we are hearing now...you know about repairs completed....trucks lined up....extended hours...that kind of thing....and...well, sir....she was just wondering that....since we are hearing that kind of news NOW... why does the share price still seem to be locked in between 6 and 7 cents.....don't you find that amazing, sir????
GENTLEMAN: Lieutenant....apparently both of you don't know much about the stock market...please tell your wife that the institutional buyers on wall street do not move on news reports....they move on earnings reports!!!! Now, I have a 10:30 with my sales managers....so if.........
COLUMBO: Oh,I'm sorry sir....just bear with me please...actually I thought about that.....but that wouldn't explain the higher volume we've had recently with not much movement in share price....would it??? Traders are out there buying and selling IPRC whether it's institutional buying or not......oh,well....I'm going to keep on trying to find an answer....if there is one...and when I do....you'll be the first one to know....I can promise you that! Well...good day sir.
Thank you. It's an opinion very well stated.
I agree. And I wish I knew why there is no record of insider buying. The barking dogs have nothing better to offer and they always speak in vague generalities. Yet, We're pretty much at the mercy of what the company wants to tell us. And, when we do hear something-----doesn't seem to cause much stock price movement. I guess institutional buying is done on favorable earnings report-----which we don't have at present.
I agree! Flying high! I'm in at average costing of $1.12. So, I'm hoping for some more good upside. Did you know blackberrystocks.com is a great fan of SSN? Once you're there, search for Penny Stocks 2013 and view his comments.
We have "barking dogs" on yahoo and other sites making nursery rhymes about IPRC. I prefer research to "barking". Hope you do too. The research seems to be well founded and documented. I guess the barking dogs want us to "kick at them." But I think we are better served ignoring them and let DD speak for itself.
GREAT! THANKS! Now if we only knew someone living in that area who could check things out the way Stargazer said about whether trucks are actually lined up or is it just a matter of seeing a truck here and there. Wish we could find out.
Where is everyone? Not many comments pre or post-Sandy. Hope some are still holding with IPRC.
Just wondering if any IPRC followers on this board may live in Texas somewhat in proximity to where all the "trucks" are supposed to be doing their hauling. Someone on another board expressed interest in flying to FWD and renting a car to take them the rest of the way to where the "trucks" are supposed to be doing their job. Sure would be great if we could receive some kind of eye-witness report like that. Any hope????
I saw what has been posted on yahoo board. I still think we have a good case to present about this company.
Your confidence seems well founded! I think someone would be hard pressed to present a counter argument to what you have said. Amazing! It just appears to be playing out very close to what you have posted. It just looks like you're on the verge of being "vindicated". I guess time will tell.
Should have read more extensively on company profile at their web site. Some answers are provided to my questions in previous post.
Post #250 Previously you mentioned some concern about IPRC potential customers who would possibly be under legal contract with other companies and could not simply "change over". I guess I also wonder about what these potential customers were doing to meet their needs before IPRC became operational again. Doesn't IPRC have any competitors????? Isn't anyone going to jump in and try to accomplish what IPRC is doing and offer to meet whatever price IPRC is offering new customers?
Also, any comments on why we don't see any insider buying??? Many thanks for any observations you may have on the above.
Thank you. I always enjoy & appreciate your posts. No offense intended---just curious. You seem to be very knowledgable on what IPRC is doing and how it all works. I don't think most of us know much about "fracking operations" and "geologic saltwater...trapped inside the Barnett Shale formation." You explain it well. In Post #226,I believe you mentioned that we will soon know if this company is a "scam". So, it would seem you are not affiliated with this company. Just wondering, if you care to comment,how you are so knowledgable on company's operations---maybe you have just done excellent research. Thanks for any comments you may choose to post on this.
I agree. Also wonder why there is no history of "insider buying"
Probably a reason---just don't understand why prospects of resuming operations wouldn't prompt "insiders" to buy stock????