I guess the devil is in the detail of the G&C report and the economic and Main assumptions are outlined in the
Executive Summary below:
- Reasonable Case NPV 10% = $2.2 billion (gas in place has not been proved - as reserves and (this is an SPE definition) there is a large downside to the resource estimate, most releases have focussed on the upside and a large amount of work to achieve this)
- Gas price $7.50 GJ (fine)
- Initial well cost of $8.30 million (probably ~10 mill) per well including pipework
so we need between 200 and 220 mill for 20 wells trouble free.
Facilities cost and tie-in to D-B pipe
say 50-100 mill
- Initial production rate per well of 5 TJ/day and recovery of 5.1 Bcf per well
Production from fractured reservoirs drop off very quickly, which means that to keep up with a contact for supply you have to keep drilling or stimulating.. check to see how many wells are on the Jonah field
- Production plateau of 150 TJ/day see above
- Total recovered gas of 1,909 Bcf
I would not cast aspertions at Alcoa - they have a different agenda and the NPV looks good from where they sit.. but for small players trying to raise $$$, the devil will be in proving up the reserves, which will cost plenty, as proving reserves in tight gas is a tedious and slow process. This is why the US tight gas projects have been federally funded, as the rate of return was no where near good enough to attract the oil investors in the US.
food for thought
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