Thanks for your thoughts on the topic DPCheers

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25/11/19

13:07

Post #: 41614315
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Originally posted by DanglingPointer: ↑

You know more or as much as the majority of the retail investors here.

As for the JAWS 1 holes; the risk and cost models will be clearer and better served in layman's english detail from the forthcoming announcement from STX. It is coming.

I can only give my opinion on it, and it may not be accurate as it is based on data and announcements from before the first "cave-in" on the well.
Hence why I say "bet" because it had a low chance of success already; so now it is basically a gamble.

The current unknowns and risk that I can think off straight away is (and keeping it simple; and I'm not a geo, just an old dude who knows physics):
- Highest risk - another cave-in/well-colapse/blow-out. As the pressure decreases inside the immediate cavities around the well, especially along the horizontal and fractures, the static pressures and mechanical stress on the rocks around the cavities/fractures from the 2+km of earth above it increases. Doing things slowly this time around helps mitigate that as it allows the static load to "set-in" all around the place.
Basically whole thing can just blow-up or collapse again!

- Inert % >> previous disclosed reading may not be accurate regarding the amount CO2 (with CSG it is usually CO2), any other gas compound, they all respond differently to temp-pressure phase changes as the pressure drops. I think Haliburton now would have a way better understanding compared to last time due to the slow pressure change through almost a whole year.

Assuming for the first point that all the statics are fine and the rocks hold up (little seismic activity detected and nothing eye-catching, grumblings in the tummy); and point 2 inerts aren't too bad with recoverable methane easily processed due to expected type of inert (CO2) and percentage isn't too high; then it goes to stage two of your question... "possible time-frames to commercialisation". That will require agreements with possibly STO and small capex for plugging it all in.

The price/terms of the agreement and the capex cost compared to the recoverable methane %; along with the medium to long term avg east coast gas price will determine commerciality of "existing" wells.

Probability 1:
If it means JAWS 2 will make it commercial based on what they have learned, then they may plug JAWS 1 into the grid to Moomba.

Probability 2:
If it means even with JAWS 2 it will not make it commercial, even if they plug JAWS 1 in, the JAWS 1 revenue will not pay for sunk costs and just adds more costs; then it will not get plugged in and it will be abandoned.

Probability 3:
JAWS 1 is plugged in as a technology pilot demonstrator of what can be done with deep coals all the way with gas going to Moomba for processing. However it is temporary and not commercial as they use it to devise other newer ways to do it.

I'm not a GEO. All of the above is conjecture/fantasy.

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Thanks for your thoughts on the topic DP

Cheers

STX Price at posting: 19.5¢ Sentiment: Buy Disclosure: Held
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Thanks for your thoughts on the topic DPCheers

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