The Haynesville Shale is back.
Natural gas production in the dry gas shale play jumped in both 2017 and 2018.
The U.S. Energy Information Administration is projecting Haynesville gas production in May 2018 to reach 8.54 billion cubic feet per day (Bcf/d), up from April’s 8.33 Bcf/d. Production was roughly 6.00 Bcf/d in January 2017.
Quiet achievement
If the May projection is reached, that would be a 42.3% increase in Haynesville dry gas production in just the last 17 months, a feat that has been quietly achieved, Kallanish Energy reports.
The Haynesville is again one of the top shale gas plays in the U.S., behind only the Appalachian and Permian basins. The Haynesville Shale is producing roughly 13% of U.S. shale gas production, according to EIA.
The industry is interested
That production is comparable to the Haynesville production five years ago in the play that covers 9,000 square miles in western Louisiana, eastern Texas and southwestern Arkansas, where nearly 30 drilling companies are at work.
There are strong signs the industry is again interested in the Haynesville. The Haynesville rig count has jumped from 16 in April 2016, to 39 a year ago, to 54 as of May 11.
Chesapeake a big Haynesville player
Houston-based Tellurian has reportedly had discussions with Chesapeake Energy, one of the biggest players in the Haynesville Shale. Tellurian is interested in acquiring Haynesville gas assets for its planned Driftwood liquefied natural gas export facility at Lake Charles, La.
Chesapeake gets 25% of its natural gas production from the Haynesville, 833 million cubic feet per day (MMcf/d), or 139,000 barrels of oil-equivalent per day (BOE/d), the Oklahoma-based company recently reported.
That production has jumped 22.1%, from 682 MMcf/d in Q1 2017.
It has three rigs at work in the Haynesville and expects to complete up to new 25 wells in full-year 2018.
A Chesapeake well in Louisiana’s DeSoto Parish is the top IP well in the Haynesville, producing 38.8 MMcf/d, according to media reports.
In 2017, Tokyo Gas acquired an interest in an E&P subsidiary of Castleton Commodities International that has significant acreage in the Haynesville. It was Tokyo Gas’ first equity investment in U.S. upstream assets.
Production in the Haynesville has jumped 25% from early 2016 to early 2018. That is more than the production increase of 20% in the same timeframe in the Marcellus Shale in Pennsylvania and West Virginia, according to EIA.
Doug Lawler, Chesapeake Energy CEO, told Forbes magazine in a March 2017 article the Haynesville was “largely written off by industry two to three years ago, but it has reemerged stronger than ever.”
The payouts on such wells are very attractive, at $3 per thousand cubic feet of gas, observers have said.
Reasons for increased Haynesville production
The latest production boost of Haynesville gas is due to increased drilling activity, longer laterals, more fracturing stages and improved completion techniques, plus private equity investment and growing demand for U.S. shale gas.
Additional rigs came in, beginning in late 2016, and the Haynesville also started producing higher per-well initial production rates. Drilling operators have gone to tighter stage spacing and significantly increased the quantity of proppant used per well.
The initial Haynesville wells with 5,000-foot laterals have grown to laterals measuring 7,500 feet to 10,000 feet and more in length. The result is stronger Haynesville well economics.
A short Haynesville history
Drilling in the Haynesville started in 2008. In 2011, the Haynesville surpassed the Barnett Shale of North Texas to become the No. 1 spot for natural gas production in the U.S. It reached peak production of 10.4 Bcf/d in November 2011.
In 2012, prices started dropping because of the gas glut, and some E&P companies left the Haynesville for more liquids-rich plays. They departed because of the higher costs in the Haynesville because of the deeper drilling required.
Some operators, including Anadarko Petroleum, EOG Resources and EP Energy divested Haynesville assets from their portfolios.
In early 2013, the Haynesville was surpassed by the Appalachian Basin, which includes the Marcellus and Utica shales.
By late 2015, shale gas production from liquid-rich plays like the Eagle Ford Shale in South Texas and the Permian Basin in West Texas/New Mexico passed the Haynesville. The Haynesville has since climbed past the Eagle Ford back into the third spot.
In 2017, the U.S. Geological Survey reported the Haynesville formation holds 1.1 billion barrels (BBbl) of oil, 195.8 trillion cubic feet (Tcf) of natural gas and 0.9 BBbl of natural gas liquids.
That included 174.6 Tcf of technically recoverable natural gas.
The previous federal estimate was that the formation contained 61.4 Tcf of natural gas. The new report tripled the natural gas in the Haynesville.
That makes Haynesville the No. 2 biggest natural gas basin in the U.S. in terms of recoveravble resources, behind only the Appalachian Basin.
Only 25% of the Haynesville natural gas has been extracted, according to estimates.
Deep and thick
The Haynesville has advantages, and demand is growing. It is close to pipelines, to liquefied natural gas (LNG) export facilities operating and being developed on the Gulf Coast, to export hubs to Mexico and to petrochemical facilities in Louisiana and Texas.
Most Haynesville wells are in areas where the formations have depths from 10,000 feet to 14,000 feet below sea level. Haynesville shale formation thickness ranges from 100 to 350 feet.
It is an overpressurized mudstone formation with higher porosity, permeability and free gas measures. That produces very high IP rates. Those factors also contribute to production declines of 80% in the first year.
The underground rock is high in silica, including quartz and feldspar which results in improved fracture propagation during fracturing.
The companies with the most wells are Maverick (previously Breitburn), Caddo Parish Holdings, XTO Energy, BASA Resources and Three Sisters Petroleum.
The biggest producers, based on 2017 production, were Chesapeake, BHP Billitron Petro, XTO Energy, Vine Oil and Gas, Indigo Minerals, Exco Operating, Covey Park Energy, CCI LLC, Aethon Energy Operating and Comstock Oil and Gas.
