Cradle Arc Share Discussion Threads

[septblues] 02/12/2014 08:36

i found this informative last night about oil and gas price, The Bakken and world economy.



some key points

at $60 per barrel US fracking no longer viable - OPEC wins

low oil prices forseen for 6 quarters

normal fracking gas well only lasts for 2 to 3 years

normal oil and gas wells last 10 / 20 years +

@ $60 per barrel, high yield / junk bond stress in financial markets

etc

its based on a Deutsche Bank report which i dont yet have access to

[goatherd] 01/12/2014 19:02

Doc,

Neither pump nor compressor can "suck" anything - the tensile strength of a column of liquid or gas is nil - it can not be "pulled" up.

Think of a traditional village well. If the pump is surface mounted it can only draw water from about 20 ft - this is because atmospheric pressure is about 32 ft of water, and there are inefficiencies. That is why most village pumps have a shaft which operates the pumping mechanism which is close to the water table.

The same applies to liquid at any depth. It will only reach the surface if the pressure in the reservoir [atmospheric in the example above] is sufficient to push it up - you don't need tensile strength to push.

The close the pumping mechanism is to the bottom of the well the longer the reservoir pressure will feed it - and so the higher the proportion of gas or liquid that will be recovered.

Of course reservoir pressure can be maintained, or increased by pumping some gas or liquid into the reservoir, to replace that being removed - but that is not the application we are considering.

[the_doctor] 01/12/2014 17:26

agreed Arf, yes, that'd be part of it

[larry laffer] 01/12/2014 17:09

"10,000 ft is a difference of only 4 PSI.................."

what about at the bottom of a 3km pipe, with temperatures of +75c and pressures of +20bar at the reservoir and atmospheric pressure at the wellhead.

[arf dysg] 01/12/2014 17:05

the_doctor, the difference of 4 psi you refer to (about a quarter of an atmosphere) is for stationary gas. That's still measureable and makes a difference in density.

The moment the gas starts moving (upwards) there is (as you say) an additional pressure difference due to friction in the pipe. That means the pressure differences and hence the density differences are exaggerated the more the gas flows.

[the_doctor] 01/12/2014 16:27

10,000 ft is a difference of only 4 PSI

The reasons are I think as I posted
See here

[arf dysg] 01/12/2014 16:15

Septblues (28398)
"are you in anyway suggesting that Corac compressors could divert gas away from the wellheads into the gas pipeline infrastructure for national benefit rather than burning it off by flaring?"

I thought it was flared from any particular installation precisely because that installation does not have a gas pipeline.




ItchyCrack (28399) "Why does a DGC need to be down the well? Why can't it be near the top?"

One simple answer is that the gas is more compressed and denser at the bottom, because of the weight of that long column of gas above it. That means that a DGC at the bottom has a lot of dense gas to get its teeth into, so with each turn of the rotor more gas (mass measured in kg) is delivered. If the DGC were at the top, each turn of the rotor would deliver less gas. The deeper the well, the greater is the difference between a DGC at the top and at the bottom.

[septblues] 01/12/2014 14:16

i would have thought re flaring that pressure matters less ie the name of the game would be use it rather than flare it. its not about recovery from a well. therefore all a well head gas compressor (WHGC) would have to do would be to get the gas into the network where an IGC takes over.

[the_doctor] 01/12/2014 13:08

I think the outlet of the pipe in which the DGC resides is still at the bottom(ish) downghole, regardless of where the DGC sits

As such, it'd be more a function of which position exerts the best 'pull' on the gas reservoir. My expectation is that setting the DGC at the top would put undesired low pressure in the pipe (whereas at the bottom, the pipe sees high pressure only). The pipe is designed for high pressures not low pressures.
There's also friction in the pipe

The closer you are to the reservoir, the better
If you have the compressor at the top, a lot of effort is spent simply lowering the pressure of the gas in the pipe.
Having the DGC downhole reduces the power requirement and it also reduces the in-pipe velocity, thereby reducing erosion

By placing the DGC near the bottom of the well, it sucks more gas from the bottom hole and reduces the flowing bottom hole pressure

[goatherd] 01/12/2014 11:57

The lower the DGC the more gas it can recover. For example if it is at the surface then the gas reservoir will only be depleted until its internal pressure is no longer adequate to get the gas to the surface.

[supernumerary] 01/12/2014 11:50

Perhaps that novel possibility never occurred to them?

[the_doctor] 01/12/2014 11:41

More efficient?
Not 100% sure

[itchycrack] 01/12/2014 11:31

Why does a DGC need to be down the well? Why can't it be near the top?

[septblues] 01/12/2014 11:24

Baton

are you in anyway suggesting that Corac compressors could divert gas away from the wellheads into the gas pipeline infrastructure for national benefit rather than burning it off by flaring?

[septblues] 01/12/2014 10:10

Barclays have increased their brokers forecast to

2014 Rev £23m Loss £3.38m

2015 Rev £25m Loss £1.69m

and remains a strong buy

[the_doctor] 01/12/2014 09:04

That's more the predicament they're stuck in

The real problem is over-production, which is forcing them to be in that position

The solution is more, reduce production or get stuck with low prices!
(low prices that the shalers I'm told can't handle)

[alchemy] 01/12/2014 08:46

They reduce their prices or get stuck with stock. simples.

[the_doctor] 01/12/2014 08:37

'There's been no fall in production (OPEC) as they are trying to drive the fracking companies (US) into a corner where production becomes uneconomical'


yes... and that's because the US has flooded the oil market with its shale production.
US now produces more per year than OPEC (I gather but can't find the chart right now to check), which is a massive change.
As the 'new entrant', it's only fair that the US cuts too (although how they'd decide which companies cut is another matter?).
This may be the only way to get the US to cut!

[baton] 01/12/2014 05:21

Great link Septblues.

These websites educate us on what Saudi Aramco are involved with and the situations and challenges they face. From this we can see how they may view Corac's technology to enable them to address these challenges.

From this one:

hxxp://www.eia.gov/countries/cab.cfm?fips=SA

"Reserves
Saudi Arabia (including the Neutral Zone) had proved natural gas reserves of 291 trillion cubic feet (Tcf)26 as of January 1, 2014, fifth largest in the world behind Russia, Iran, Qatar, and the United States, according to OGJ. The majority of natural gas fields in Saudi Arabia are associated with petroleum deposits, or are found in the same wells as the crude oil, and production increases of this type of gas remain linked to an increase in oil production.

Production and consumption
Saudi Arabia does not import or export natural gas, so all consumption must be met by domestic production. Saudi Arabia's dry natural gas production and consumption was 3.6 Tcf in 2013. As of 2011, more than 70% of natural gas production consisted of associated gas from Ghawar, Safaniya, and Zuluf fields. Associated gas produced at Ghawar oil field alone accounts for more than 60% of total production.27

Rapid reserve development is necessary for Saudi Arabia's plans to fuel the growth of the petrochemical sector, as well as for power generation and for water desalination. All current and future gas supplies (except NGLs) reportedly remain earmarked for domestic use, in part to minimize the use of crude oil for power generation. However, natural gas production remains limited, as soaring costs of production, exploration, processing, and distribution of natural gas have squeezed supply. The National Oceanic and Atmospheric Administration (NOAA) and the World Bank Global Gas Flaring Reduction partnership estimate that in 2011, Saudi Arabia lost 131 Bcf of gas production to flaring.

Pricing
In addition to facing domestic supply shortages, Saudi Arabia has also come under pressure internationally for its subsidized natural gas prices, which are among the lowest in the Persian Gulf region. These low prices were set when most of Saudi Arabia's gas production came from inexpensive associated gas, but they are inconsistent with the much more expensive high-sulfur gas production coming from offshore fields. As of 2013, domestic natural gas prices in Saudi Arabia are set and sold to domestic consumers at a constant $0.75/million Btu (MMBtu), compared with an average of $3.73/MMBtu spot price at Henry Hub in the United States, $10.51/MMBtu in the United Kingdom,28 and $15.96/MMBtu in Japan.29"

[septblues] 30/11/2014 09:29

Saudi data

hxxp://www.eia.gov/countries/country-data.cfm?fips=sa

The motivations for an Aramco, Hilcorp and ENI would be very different

[secretsqu] 29/11/2014 11:09

There's been no fall in production (OPEC) as they are trying to drive the fracking companies (US) into a corner where production becomes uneconomical.

[larry laffer] 29/11/2014 09:00

"Something I thought was strange in the last update is that CRA said they were now discussing the economic feasibility of the Saudi Aramco project......"

heres an extract from a blog...

"We tend to have a mental image of Saudi Arabia from the 1970s and 1980s: a fabulously wealthy country with a tiny population sitting on a sea of oil, staffed by brilliant technocrats who can set the world price by adjusting output and exports at will. This power supposedly gives Saudi Arabia not just enormous revenues but also U.S. protection in a dangerous world.

If it ever reflected the truth, this image is now wrong in almost every respect. Saudi rulers face dissent across the Middle East. Saudi Arabia’s population is now almost 30 million, up from 5.7 million in 1970.

The technocrats have thus far failed to develop an industrial economy or to find gas to provide local power. Domestic oil demand keeps on rising. Thirty million Saudis now use as much oil (3 million barrels per day) as 203 million Brazilians.

The Saudis may no longer be in a position to reverse the price fall. The danger of the trend since June is that, with each step downwards, other producers tend to increase short-term production to maximize much-needed revenue.

Any field that can produce a bit more is pushed a little harder. Normal maintenance schedules are postponed and so on. The price drop over the last three months has not generated any fall in production.

On the basis of standard economic theory, a fall in prices should stimulate demand. But the oil market is a special place, where production costs are much disguised by consumer taxes or subsidies......"

[the_doctor] 28/11/2014 14:51

Something I thought was strange in the last update is that CRA said they were now discussing the economic feasibility of the Saudi Aramco project

Unclear if they were having to check the economic feasibility of the application now that the design had been worked out, or if they were more looking at the economic implications of different options.
My hope is that there's not a risk of it being found non-feasible and therefore discontinued.

As such, I've played it down personally and focused on the BP on-rig project and the renewable energy production side, but a positive update on IGC with Saudi Aramco would be good to hear. There's so much upside potential in CET - it's funny how the market has generally been so fixed on DGC

[nick2412] 28/11/2014 14:35

Yes, we are due an update on the OGC if testing is to start in early 2015 :-

Corac unit strengthens contract with Saudi Aramco
By StockMarketWire | Mon, 7th October 2013 - 06:40
Corac Group subsidiary Corac Energy Technologies (CET) has signed an amendment to its contract with Aramco Overseas Company BV, a subsidiary of Saudi Aramco, for a revised scope of work to develop an in-pipe gas compressor (IGC).

This amendment follows a technical review that was completed earlier in the year, as announced at the time of the Group's half year results in September. As a result of this amendment the total contract is now valued in excess of £1m and will enable CET to support the design, development, build and test stages of this pioneering system for the energy industry.

he contract amendment follows extensive joint reviews with the Aramco team in the Kingdom of Saudi Arabia of the available wells and the technical options to provide compact compression at the wellhead. The system will be designed to satisfy a range of well conditions with several hundred candidate wells, to provide potentially substantial returns to CET. Detail design and build of the revised system will begin immediately with field testing anticipated in early 2015.

Corac group chief executive Phil Cartmell said: "This is a big step in the wellhead compression programme as it confirms the strategic route forward and adds a further financial contribution. We now enter a staged development project with our partners in the Kingdom of Saudi Arabia, focused on delivering the first system of its kind in 2015.

"This work sits alongside our other workstreams in downhole and platform based compression systems, using CET's core technologies as the basis to build a range of energy industry applications of real value to our global partners. "The contract further demonstrates the growing commercial and technical maturity of the CET technologies."

[the_doctor] 28/11/2014 11:56

I'm guessing the end of year update may come next week?

My expectation is that this will give the share price a kick up to the next levels, say 8p or 10p.

IMO there won't be much of note said about DGC, or nothing positive, but that we'll hear of further good progress with other CET projects.