Hi Gassed,Glad you given me simple questions. Actually working...

Hi Gassed,

Glad you given me simple questions. Actually working on a lengthy post (and I mean lengthy which I hope wont bore everyone its about Shale Gas and LNG so the subject is meaty).

Q1. Not really. I am expecting that for every 1Mmcfd of intial gas flow gas flow to be able to get close to 300Bcf of Contingent Resource. So 3 Mmcfd get gross resource 1Tcf and 40% goes to ICN.

Q2. Something has gone astray in the logic controller of your computer Gassed. That and I think a decimal point and conversion error has occured. You re out by a factor of 1,000, as 2.2Tcf = 2,200 Bcf = 2,200,000 Mmcf. On a per annum basis its 110Bcf = 110,000 Mmcf. Little ole Halifax-1 at 3.5Mmcfpd flow will produce about 1Bcf for the year (allowing for maintenance etc using 300 days online).



Firstly, a contingent Resource wont map to 2P reserves no matter how much delineation, drilling and engineering occurs. Secondly and most important, one well will NOT drain the reservoir (wait for info in next post).

What that means is that a well has an Estimated Ultimate Recovery (EUR) over time based on IP, IP30/60/90 that usually follows a modelled hyperbolic type curve. At this stage purely guesswork - but lets say 855 follows say the Barnett Shale or Haynesville shale of US. Each well might have EUR of say 5Bcf (ICN share is 2Bcf). Thats over the life of the well!! And shale wells can decline very quickly.

For ICN to be delivering 110Bcf per year for 20 years think lots of wells, lots and lots of wells (say 50??).

Onshore shale gas is nothing like the flow of offshore conventional gas. Its like a factory with lots of wells every 40 acres or so (depends on reservoir).


I hope that makes sense. 2 Tcf is a heck of a lot of gas. 110Bcf is a lot of gas as well.

ICN has the offtake agreement - it does not need to be the source of the all the production (hard to see it even possible).

That is why my valuation matrix has numbers going from Resource to Reserve to "Netback".