East Texas Oil & Gas Convention
March 21-22, 2017 • Longview, TX • Maude Cobb Convention Center
Heavy in natural gas resources, the Haynesville Shale underlies large parts of southwestern Arkansas, northwest Louisiana and East Texas and lies at depths of 10,000+ feet covering over 9,000 square feet. In 2008, the Haynesville Shale was considered the largest natural gas deposit in the lower 48 states, only to be surpassed by the Marcellus Formation in 2009, making the Haynesville Shale the second most active natural gas formation in the United States.
The Haynesville Shale is a massive dry natural gas formation in Northwest Louisiana and East Texas that lies at true vertical depths between 10,000 and 14,000 feet. The play was discovered by Chesapeake Energy in early 2008, and that triggered a substantial wave of leasing activity in the area. Companies have also reported success in developing the Bossier Shale, another gas formation that lies just above the Haynesville. Many operators simply call the area the Haynesville/Bossier Shale, although they are in fact separate producing formations.
The “sweet spot,” or “core” of the Haynesville Shale is generally considered to be on the Louisiana side of the play, and has been the focus of most horizontal drilling activity by operators thus far. As of Oct. 9, 2015, six of the 24 rigs working the play were in DeSoto Parish, LA. A typical horizontal Haynesville well costs between $7 million and $8 million to drill and complete, depending mostly on lateral length and the cost of rigs and pressure pumping services. One of the main characteristics of the Haynesville Shale is that it is over-pressurized, which has contributed to some very high initial production rates.
The Haynesville Shale is well positioned to capitalize on three emerging trends on the demand side of the industry: growing petrochemical capacity in the Gulf Coast region, the scheduled retirement of coal fired electricity generation in the next several years, and the emergence of LNG export facilities. The Haynesville could become a significant U.S. supply region to the rest of the world by 2020, for the following reasons:
- The formation is located close to the four to five LNG export terminals expected to come to fruition along the Gulf of Mexico.
- Haynesville production is dry gas, so it does not have to be processed before being liquefied.
- Several industry sources estimate there are between 35,000-50,000 wells left to be drilled in the play, so production is scalable.
- There are already plenty of gathering facilities and pipelines in place in the region, so infrastructure bottlenecks are much less likely to be an issue.
- Texas and Louisiana are both “pro-oil and gas” states, so those local governments would likely encourage increased production from the Haynesville.