Ziff Energy Releases Report: 2014 Economic Ranking of North American Gas and Tight Oil Basins Study

Ziff Energy introduces new report with analysis of North American full-cycle gas and oil costs.

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Figure 1. Gas Supply Cost Components

Figure 1. Gas Supply Cost Components

The study will help producers prioritize in which gas or tight oil basins to increase their activity, and in a fraction of the time and the cost required if they tried to analyze full-cycle costs on their own.

(PRWEB) June 05, 2014

Ziff Energy, a division of HSB Solomon Associates LLC (Solomon), today announced that the 2014 Economic Ranking of North American Gas and Tight Oil Basins report will be available this summer. The report provides an analysis of the full-cycle gas and oil costs in North America.

While natural gas prices are transparent across dozens of gas trading centers, including Henry Hub, AECO, Dawn, WAHA, and Opal, the actual full-cycle costs that producers incur to explore, drill, complete, and produce gas and tight oil are not readily available. To fill that gap, Ziff Energy is proud to announce the upcoming publication of its third edition of the Economic Ranking of North American Gas and Tight Oil Basins Study. The study analyzes the full-cycle costs of new natural gas and tight oil supplies in 24 North American areas. This year's edition includes tight oil basins, specifically the Eagle Ford and Bakken basins, for the first time.

“By using real, full-cycle costs, producers will be better informed to leverage their capital spending by growing their gas production and tight oil in lower-cost basins,” said Paul Ziff, Executive Vice President of Ziff Energy.

This report integrates actual data from a wide range of industry sources and in-house proprietary data sources, including Ziff Energy’s 2013 Western Canada Finding and Development Cost Study, several regional/basin operating cost studies, interviews with key regional producers, North American natural gas research, public corporate data, technical presentations, and industry research.

Ziff Energy has conducted exploration and production cost benchmarking in the United States (US) for nearly 20 years and in Canada for nearly 30 years, combining both geological and engineering disciplines. For many of the basins, full-cycle costs will be provided for several play types.

“The study will help producers prioritize in which gas or tight oil basins to increase their activity, and in a fraction of the time and the cost required if they tried to analyze full-cycle costs on their own,” said Ziff Energy Project Director Simon Mauger, P.Geol.

The report uses clearly defined cost categories. The operating costs represent actual field operating expenses up to the point of sale. The royalties vary, but are typically within 12.5–25% range. US production taxes typically range 2–15%. Finding and development costs include drilling, facilities, land, and seismic. Although the target rate of return on invested capital varies among producers, Ziff Energy uses a 15% rate of return to calculate the cost of capital. Figure 1 shows Ziff Energy’s allocation of full cycle and cash gas and oil costs.

Since there is not a single gas and oil producer that operates in every basin, this report fills those knowledge gaps, providing a cross comparison of similar gas and tight oil strategies. Shale gas and full-cycle costs for Barnett, Eagle Ford, Woodford, Utica, Haynesville, Marcellus, and other shale gas areas are assessed. Similarly, full-cycle tight gas costs are compared between the Rockies, East Texas, North Louisiana, and Western Canada.

Each of the 24 areas will have a summary, including a map illustrating key geological features, the detailed cost for the play types in that basin, and a tabular summary of specific gas (and tight oil) basin costs, initial gas (and oil) well productivity, and resource per well for client economic analysis.

About Ziff Energy

Ziff Energy, a division of HSB Solomon Associates LLC (Solomon), provides upstream performance assessment/improvement and custom consulting to the worldwide energy industry in more than 40 countries, and natural gas consulting services in North America. Solomon is the world’s leading performance improvement company for energy companies seeking to identify and close gaps in operational performance. Combining proven, patented methodologies with objective data analysis, and led by a team of oil and gas consultants with extensive, hands-on operational experience, Solomon consistently helps clients with energy-intensive assets achieve greater efficiencies, enhanced reliability, and improved margins. Solomon is part of HSB Group, Inc. Learn more about Ziff Energy at http://www.ZiffEnergy.com. For information about Solomon, visit http://www.SolomonOnline.com.