The Rising Influence of Rising Affluence

[flatlander_60048]

I agree that some E&P companies are just concerned with producing gas at the lowest potential cost and therefore may not invest in reservoir analysis. However, long term investors are interested in the overall Barrels of Oil Equivalent (BOE) which is a function of how long the reservoir will continue to produce. Without some analysis, it is impossible to estimate whether the return on investment will be sufficient to cover infrastructure investments or whether it will sustain longer term profitability.

If wells produce only for a few years and rapidly decline in production. It is pretty expensive to determine this behavior by drilling a lot of wells that go bad quickly rather than characterizing the reservoir through a solid geologic exploration program (i.e., one that allows geologic properties to be projected from the initial exploration points).

FL