Recommended by Ricochet Members Created with Sketch. Economic Lesson

 

For ten years, I had the pleasure to live on an island paradise, Bald Head Island, NC. It lies a couple of miles from Southport, NC, the separation caused by the Cape Fear River at it’s entry to the ocean. A Houston oil and gas Barron bought the island as a place where two of his twenty-something sons could cut their teeth as developers. This was in the mid-’80s. His name was George Mitchell and was considered the inventor or, more exactly, the pioneer of fracking.

Around 1995, I struck up a chance conversation with George. He had traveled from Texas to BHI to be honored for his support of conservation on the island. I was only vaguely aware of who and what he did. After some small talk, he told me about fracking and I later told him about cheese. He was emphatic about the eventual significance of fracking. I was a believer.

Jump forward about ten years and the impact of fracking became apparent near my other home in Pennsylvania. A little hamlet, Hickory, PA, about six miles from my little farm, became the epicenter of fracking in the Marcellus shale fields. Land owners began collecting large sums of dollars for the oil and gas underground. The economic significance was huge. Farmers bought new equipment, fixed up their property, bought RVs, sent kids to college, and put money in the bank. All that money spent in Hickory and elsewhere in our great country used to go to some sheik in the Middle East. Now it stayed at home. The US is now the largest producer of energy in the world.

Jump forward to this week and our President’s speech in Florida. MrsCheese and I watched and afterward I bought up my conservation with George Mitchell. By that late in the evening, my sugar pie honey bunch had enough politics, had her “ woman ears” on, and really wasn’t listening.

I have needed a haircut for three weeks but the four times I went to the barber shop it was full. When we lived on BHI because of the inconvenience of going to the mainland, on the passenger ferry we bought a hair trimmer and my best girl cut my hair. She was good at it but always fearful she would mess it up. After moving to South Carolina I was told to get a real barber.

Today, I begged my sweetie to get out the clippers. She gave me a terrific cut. When she finished, I reached in my pocket and gave her $25 bucks. We kept the money at home. Just like energy. By the way, I bought gas yesterday at $2.09. Thanks, George. Thanks, Honey Girl.

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There are 23 comments.

  1. Jon1979 Lincoln

    If you Google the words ‘Delaware Basin’ you get in general two results — the Delaware Rive Basin of Pennsylvania and New Jersey, where the environmentalists in the area are freaking out about fracking (though most of it is to the west, in the Susquehanna River Basin and elsewhere in northern PA), and you get the other Delaware Basin, in Texas and New Mexico. It has a Delaware River you can pretty much jump over in most places, but the area, part of the larger Permian Basin, went virtually untapped until 12 years ago, because the original fracking techniques using vertical drilling couldn’t get the oil out of the ground.

    Mitchell’s breakthrough was to combine fracking, which has been around since the late 1940s, with horizontal drilling, so that instead of the fracking being done on vertical wells, you could run latteral lines through a single layer of oil and gas-producting strata, frack the shale there and extract the fossil fuels. It opened up a vast area that really has been the key to the current oil and gas surplus — areas in the eastern and central Permian Basin that have been drilled since the late 1920s found new life via fracking, but most of the areas in the western Permian’s Delaware Basin (especially those to the west of U.S. 285 on your maps) had never been drilled before Mitchell’s new technique made those areas economically viable.

    • #1
    • June 20, 2019, at 7:40 PM PST
    • 9 likes
  2. DonG (skeptic) Coolidge

    Funny thing about the oil production in Texas is that it produces too much associated (natural) gas. By too much, I mean more than there are pipelines to move towards consumers. When that happens, drillers flare it off, if they can get a permit, or pay somebody else to take it. About 4.4% of gas extracted in 2017 was flared. I wonder if the folks protesting pipelines realize that stopping a pipeline might lead to the gas being burned up for no benefit. Matters not in Texas as pipelines are built continuously.  Check out this 42″ natural gas line (passing my vicinity) between west Texas and the Gulf Coast (green dashed line). An extra 2B c.f./day is a lot of capacity! The LNG ports in the map below are for exporting. There is another at the southern end of Texas off the map.

    • #2
    • June 20, 2019, at 10:30 PM PST
    • 7 likes
  3. Arahant Member

    It’s amazing what we can do with a little freedom.

    • #3
    • June 21, 2019, at 4:46 AM PST
    • 4 likes
  4. Arahant Member

    PHCheese: I have needed a hair cut for three weeks…

    Hippy!

    • #4
    • June 21, 2019, at 4:47 AM PST
    • 1 like
  5. PHCheese Member
    PHCheese Post author

    Jon1979 (View Comment):

    If you Google the words ‘Delaware Basin’ you get in general two results — the Delaware Rive Basin of Pennsylvania and New Jersey, where the environmentalists in the area are freaking out about fracking (though most of it is to the west, in the Susquehanna River Basin and elsewhere in northern PA), and you get the other Delaware Basin, in Texas and New Mexico. It has a Delaware River you can pretty much jump over in most places, but the area, part of the larger Permian Basin, went virtually untapped until 12 years ago, because the original fracking techniques using vertical drilling couldn’t get the oil out of the ground.

    Mitchell’s breakthrough was to combine fracking, which has been around since the late 1940s, with horizontal drilling, so that instead of the fracking being done on vertical wells, you could run latteral lines through a single layer of oil and gas-producting strata, frack the shale there and extract the fossil fuels. It opened up a vast area that really has been the key to the current oil and gas surplus — areas in the eastern and central Permian Basin that have been drilled since the late 1920s found new life via fracking, but most of the areas in the western Permian’s Delaware Basin (especially those to the west of U.S. 285 on your maps) had never been drilled before Mitchell’s new technique made those areas economically viable.

    Thanks for the expansion.

    • #5
    • June 21, 2019, at 5:03 AM PST
    • Like
  6. PHCheese Member
    PHCheese Post author

    Arahant (View Comment):

    PHCheese: I have needed a hair cut for three weeks…

    Hippy!

    It’s just the few that are left that get long and the hair in my ears. MrsCheese didn’t have time to trim my back either.

    • #6
    • June 21, 2019, at 5:06 AM PST
    • 3 likes
  7. Arahant Member

    PHCheese (View Comment):
    It’s just the few that are left that get long and the hair in my ears. MrsCheese didn’t have time to trim my back either.

    TMI, Cheese. TMI. 😜

    • #7
    • June 21, 2019, at 5:07 AM PST
    • 2 likes
  8. Arahant Member

    Besides, I haven’t had a haircut in years.

    • #8
    • June 21, 2019, at 5:08 AM PST
    • 1 like
  9. JoelB Member

    DonG (View Comment):

    Funny thing about the oil production in Texas is that it produces too much associated (natural) gas. By too much, I mean more than there are pipelines to move towards consumers. When that happens, drillers flare it off, if they can get a permit, or pay somebody else to take it. About 4.4% of gas extracted in 2017 was flared. I wonder if the folks protesting pipelines realize that stopping a pipeline might lead to the gas being burned up for no benefit. Matters not in Texas as pipelines are built continuously.

    I did not know that, @dong This is another example of how politicized environmentalism leads to waste of our natural resources. Sad.

    • #9
    • June 21, 2019, at 5:19 AM PST
    • 2 likes
  10. Jon1979 Lincoln

    JoelB (View Comment):

    DonG (View Comment):

    Funny thing about the oil production in Texas is that it produces too much associated (natural) gas. By too much, I mean more than there are pipelines to move towards consumers. When that happens, drillers flare it off, if they can get a permit, or pay somebody else to take it. About 4.4% of gas extracted in 2017 was flared. I wonder if the folks protesting pipelines realize that stopping a pipeline might lead to the gas being burned up for no benefit. Matters not in Texas as pipelines are built continuously.

    I did not know that, @dong This is another example of how politicized environmentalism leads to waste of our natural resources. Sad.

    There’s a hub in the Permian Basin called Waha where gas gathered is shipped for pricing and from there to be sent to market, either to the Gulf Coast, the West Coast or Mexico. Because of the shortage of pipeline capacity right now, producers have been forced to pay as much as $4 per mcf to take the stuff off their hands for shipping (Texas only lets producers flair a certain amount of gas, so the rest has to be shipped or the drillers simply don’t complete the well for production. And if you don’t complete the well, you can’t get the far-more-valuable-at-the-moment oil that comes out with the gas).

    Part of that problem should fix itself over the next 12-18 months, as the new natural gas pipelines come online, along with new oil pipelines. But there’s still the risk of simply glutting the market after that with oil and gas, to the point the price drops below the point where drilling is viable, though the head of XTO, ExxonMobil’s drilling arm, said back in March there were some areas of the Permian Basin that could be drilled profitable at $20 a barrel. We’ll see if he’s right — most areas right now reportedly have break-evens in the $45-$50 a barrel range.

    • #10
    • June 21, 2019, at 6:30 AM PST
    • 3 likes
  11. The Reticulator Member

    Jon1979 (View Comment):
    Mitchell’s breakthrough was to combine fracking, which has been around since the late 1940s, with horizontal drilling, so that instead of the fracking being done on vertical wells, you could run latteral lines through a single layer of oil and gas-producting strata, frack the shale there and extract the fossil fuels

    So which came first, the horizontal boring done for oil and gas, or the horizontal boring we now use for placing fiber optic cable and other utilities underground? 

    • #11
    • June 21, 2019, at 6:58 AM PST
    • Like
  12. Jon1979 Lincoln

    The Reticulator (View Comment):

    Jon1979 (View Comment):
    Mitchell’s breakthrough was to combine fracking, which has been around since the late 1940s, with horizontal drilling, so that instead of the fracking being done on vertical wells, you could run latteral lines through a single layer of oil and gas-producting strata, frack the shale there and extract the fossil fuels

    So which came first, the horizontal boring done for oil and gas, or the horizontal boring we now use for placing fiber optic cable and other utilities underground?

    The deep drilling, 2-3 miles underground, required the technology to be able to do a vertical drill that deep, then essentially make a 90-degree turn and continue parallel to the surface, while maintaining the ability to them fracture the rock under high pressure and extract the oil and gas while maintaining the integrity of the well bore. Really, really tough, and even now they’re still advancing the technology with longer lateral lines that weren’t possible just a year or two ago (one of the most productive areas in the Delaware Basin has a 10-mile long lake right in the middle of it, and because of the sub-surface strata, the lateral lines are far more productive if they’re bored in a north/south, rather than east/west direction. But until recently that put some areas under the lake out of reach, because you couldn’t get your lateral lines out long enough from whatever peninsula you were drilling on. That’s not going to be the case in the near future, and I would guess the same technology after that will be applied to shale drilling under larger bodies of water, as lines can go further and further out from rig sites).

    • #12
    • June 21, 2019, at 7:06 AM PST
    • 3 likes
  13. Arahant Member

    The Reticulator (View Comment):
    So which came first, the horizontal boring done for oil and gas, or the horizontal boring we now use for placing fiber optic cable and other utilities underground?

    Boring to get across under a river.

    • #13
    • June 21, 2019, at 7:11 AM PST
    • 1 like
  14. The Reticulator Member

    Jon1979 (View Comment):
    The deep drilling, 2-3 miles underground, required the technology to be able to do a vertical drill that deep, then essentially make a 90-degree turn and continue parallel to the surface, while maintaining the ability to them fracture the rock under high pressure and extract the oil and gas while maintaining the integrity of the well bore. Really, really tough, and even now they’re still advancing the technology with longer lateral lines that weren’t possible just a year or two ago (one of the most productive areas in the Delaware Basin has a 10-mile long lake right in the middle of it, and because of the sub-surface strata, the lateral lines are far more productive if they’re bored in a north/south, rather than east/west direction. But until recently that put some areas under the lake out of reach, because you couldn’t get your lateral lines out long enough from whatever peninsula you were drilling on. That’s not going to be the case in the near future, and I would guess the same technology after that will be applied to shale drilling under larger bodies of water, as lines can go further and further out from rig sites).

    Very interesting. What sort of radius do those 90-degree turns have?

    • #14
    • June 21, 2019, at 7:15 AM PST
    • Like
  15. The Reticulator Member

    Arahant (View Comment):

    The Reticulator (View Comment):
    So which came first, the horizontal boring done for oil and gas, or the horizontal boring we now use for placing fiber optic cable and other utilities underground?

    Boring to get across under a river.

    Well, yes. I had to wait for an under-river project (under the Kalamazoo River) to get done before a subcontractor could move on to our big fiber project ten years ago. But this is drilling, albeit through glacial till rather than rock. So you don’t have the kind of drill bits I presume they use when going for oil and gas. The guys would take pride in showing me how they could go underground to get under the root system of a big grove of trees, then come up and pop out of the ground right at their target at a building entrance. One contractor we had used for a small job, earlier, with a smaller rig, demonstrated some of the things that can go wrong. Didn’t use them again. They were newbies trying to get into the game, but it’s probably better for them to learn elsewhere. 

    • #15
    • June 21, 2019, at 7:32 AM PST
    • 2 likes
  16. cirby Member

    Back in the 70s and 80s, my dad sold oil well drill bits. He had to know a LOT about the geology of east Texas, his sales area.

    I remember him telling about how much oil and gas was being left alone because we couldn’t get to it for a reasonable price – slant drilling was still uncommon, and fracking wasn’t an option at all at the time. He pointed to a few spots on the map near where we lived and said there was several times as much oil there as in neighboring fields, and we had to leave it in the ground.

    For that matter, there’s a huge number of abandoned and capped wells all over the country that could be reopened and fracked as-is for a fraction of the cost of a new well… if it wasn’t illegal to do so.

     

    • #16
    • June 21, 2019, at 5:24 PM PST
    • 2 likes
  17. Jon1979 Lincoln

    The Reticulator (View Comment):

    Jon1979 (View Comment):
    The deep drilling, 2-3 miles underground, required the technology to be able to do a vertical drill that deep, then essentially make a 90-degree turn and continue parallel to the surface, while maintaining the ability to them fracture the rock under high pressure and extract the oil and gas while maintaining the integrity of the well bore. Really, really tough, and even now they’re still advancing the technology with longer lateral lines that weren’t possible just a year or two ago (one of the most productive areas in the Delaware Basin has a 10-mile long lake right in the middle of it, and because of the sub-surface strata, the lateral lines are far more productive if they’re bored in a north/south, rather than east/west direction. But until recently that put some areas under the lake out of reach, because you couldn’t get your lateral lines out long enough from whatever peninsula you were drilling on. That’s not going to be the case in the near future, and I would guess the same technology after that will be applied to shale drilling under larger bodies of water, as lines can go further and further out from rig sites).

    Very interesting. What sort of radius do those 90-degree turns have?

    Not sure about the angles. But for the Delaware Basin, you do have wells where the drill site will actually be on a different block of surveyed land from where the actual oil and gas extraction will take place, so I’d assume the drills can’t have an overly tight radii in those cases or they might start sucking up things that are part of the adjoining mineral lease.

    • #17
    • June 21, 2019, at 5:50 PM PST
    • 1 like
  18. cirby Member

    The Reticulator (View Comment):
    Very interesting. What sort of radius do those 90-degree turns have?

    I’ve heard numbers ranging up to three degrees per hundred feet, with two degrees per hundred being pretty average.

     

    • #18
    • June 21, 2019, at 6:10 PM PST
    • 1 like
  19. The Reticulator Member

    cirby (View Comment):

    The Reticulator (View Comment):
    Very interesting. What sort of radius do those 90-degree turns have?

    I’ve heard numbers ranging up to three degrees per hundred feet, with two degrees per hundred being pretty average.

    So a little less than a mile to make a 90 degree turn? Does that sound right? (4500/5280 = 0.85 mile. Or a minimum of 3000/5280 = 0.57 mile)

    Of course that wouldn’t be a mile in depth.

    • #19
    • June 21, 2019, at 7:28 PM PST
    • Like
  20. cirby Member

    The Reticulator (View Comment):

    cirby (View Comment):

    The Reticulator (View Comment):
    Very interesting. What sort of radius do those 90-degree turns have?

    I’ve heard numbers ranging up to three degrees per hundred feet, with two degrees per hundred being pretty average.

    So a little less than a mile to make a 90 degree turn? Does that sound right? (4500/5280 = 0.85 mile. Or a minimum of 3000/5280 = 0.57 mile)

    Of course that wouldn’t be a mile in depth.

    Yeah, it would probably be closer to 2/3 of a mile of depth for a 90.

    They can start with a slant-well setup, though – start at 45 degrees and you save a lot of depth.

    • #20
    • June 22, 2019, at 3:45 AM PST
    • 1 like
  21. PHCheese Member
    PHCheese Post author

    cirby (View Comment):

    Back in the 70s and 80s, my dad sold oil well drill bits. He had to know a LOT about the geology of east Texas, his sales area.

    I remember him telling about how much oil and gas was being left alone because we couldn’t get to it for a reasonable price – slant drilling was still uncommon, and fracking wasn’t an option at all at the time. He pointed to a few spots on the map near where we lived and said there was several times as much oil there as in neighboring fields, and we had to leave it in the ground.

    For that matter, there’s a huge number of abandoned and capped wells all over the country that could be reopened and fracked as-is for a fraction of the cost of a new well… if it wasn’t illegal to do so.

     

    I wasn’t aware that it was illegal to frack a capped well. Is that a state or federal law?

    • #21
    • June 22, 2019, at 4:24 AM PST
    • 1 like
  22. cirby Member

    PHCheese (View Comment):

    cirby (View Comment):

    Back in the 70s and 80s, my dad sold oil well drill bits. He had to know a LOT about the geology of east Texas, his sales area.

    I remember him telling about how much oil and gas was being left alone because we couldn’t get to it for a reasonable price – slant drilling was still uncommon, and fracking wasn’t an option at all at the time. He pointed to a few spots on the map near where we lived and said there was several times as much oil there as in neighboring fields, and we had to leave it in the ground.

    For that matter, there’s a huge number of abandoned and capped wells all over the country that could be reopened and fracked as-is for a fraction of the cost of a new well… if it wasn’t illegal to do so.

     

    I wasn’t aware that it was illegal to frack a capped well. Is that a state or federal law?

    It’s not that it’s illegal to frack one, it’s illegal to reopen a closed well. I was always told it was Federal regulation, but it’s been years since I really thought about it.

     

    • #22
    • June 22, 2019, at 5:11 PM PST
    • 1 like
  23. kedavis Member

    cirby (View Comment):
    It’s not that it’s illegal to frack one, it’s illegal to reopen a closed well. I was always told it was Federal regulation, but it’s been years since I really thought about it.

    That certainly seems worth changing. As technology advances, it’s possible to do more with an existing well. Re-opening makes more sense than drilling a new one nearby. Even “environmentalists” should be in favor of that.

    • #23
    • June 25, 2019, at 6:46 AM PST
    • 2 likes