• 40 mins Shell Oil Trading Head Steps Down After 29 Years
  • 5 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 8 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 10 hours Venezuela Officially In Default
  • 12 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 14 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 20 hours Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 1 day Rosneft Announces Completion Of World’s Longest Well
  • 1 day Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 1 day Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 2 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 2 days Russian Hackers Target British Energy Industry
  • 2 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 2 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 2 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 3 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 3 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 3 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 3 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 3 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 4 days GE Considers Selling Baker Hughes Assets
  • 4 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 4 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 4 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 4 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 7 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 7 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 7 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

A Very Bullish Case For Commodities

Goldman Sachs has put forward…

Alt Text

Oil Tycoon Hamm Slams EIA’s Overoptimistic Shale Forecasts

Shale billionaire and chief executive…

Alt Text

Google Gets There First: Autonomous Cars On The Road

Google’s self-driving car project, Waymo,…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

The U.S. Shale Play To Watch In 2018

Permian

The original shale gas play, the one that kicked off the shale drilling bonanza a decade ago but then went into decline, is getting a new lease on life. The Haynesville Shale, which straddles the Texas-Louisiana border, has seen a resurgence in natural gas production, after years of neglect.

The Haynesville Shale is one of the founding fathers of the modern shale drilling boom. A decade ago, fracking unleashed a wave of natural gas production as hundreds of rigs piled into northwestern Louisiana. But the surge in production pushed down prices, which had been high and relatively volatile for years. The crash in prices meant that shale drillers moved on to greener pastures, and most of them began looking for oil rather than gas because crude fetched $70 to $80 per barrel.

By then, the Marcellus Shale was just beginning to ramp up, boasting rock-bottom costs of production. The massive surge in production made the Haynesville Shale somewhat redundant, and the Marcellus Shale took over as the country’s premier gas producing region, as it remains today. The best days for the Haynesville were already over.

But, the Haynesville is enjoying a second wind. The recent uptick in production is a story of advancements in drilling technology, a renewed interest from major financial institutions, as well as its proximity to new demand centers. Related: Is The Aramco IPO On The Brink Of Collapse?

Natural gas production in the Haynesville is up 20 percent so far this year, and the EIA predicts output will increase by another 2 percent between October and November. The rig count current stands at 44, up from just 16 at this point last year.

(Click to enlarge)

(Click to enlarge)

One of the reasons for the uptick in production is more efficient drilling techniques. Chesapeake Energy, an early pioneer of the Haynesville Shale, told investors that it’s squeezing more gas out of each well by drilling longer laterals, according to The Wall Street Journal. Another method that drillers are using to boost output is refracking, which is pretty much what it sounds like: refracking old wells that had already been drilled. The difference this time around is that drilling technology is much improved, allowing companies like Chesapeake to get another bite at the apple.

But it isn’t just that drilling techniques have improved. A new wave of finance is also sweeping over the region. This time around, private equity giants are trying to profit off the long-overlooked Haynesville. The WSJ reports that private equity-backed companies have spent billions buying up Haynesville acreage from oil majors like ExxonMobil and Royal Dutch Shell.

A third reason for the renaissance underway in the Haynesville is that there are new sources of demand for the gas that didn’t exist a decade ago when the drilling frenzy first got underway. The Haynesville is close to Cheniere Energy’s Sabine Pass LNG export terminal, which came online in 2016. It was the first in a long line of LNG projects planned for the Gulf Coast, which will likely lead to a massive volumes of U.S. shale gas sent to Europe, South America and maybe even Asia. By the early 2020s, the U.S. will rival Qatar and Australia as the largest LNG exporter in the world. Related: Oil Markets Fear Iraqi Escalation

At odds with the LNG craze is the flurry of petrochemical complexes that have been built in Louisiana and Texas over the past decade, hoping to take advantage of the abundant gas supply. The WSJ estimates there are about 80 major petrochemical facilities under construction in the region, with plans to make fertilizers, plastics, and other industrial products. The petrochemical industry battled LNG developers years ago in Washington, hoping to slow the growing federal support for U.S. gas exports. LNG suppliers largely won that fight, and gas exports have been given a green light. So far, the feared price increase for gas hasn’t played out, at least not yet.

Then there’s the steady rise in gas consumption for electricity generation. Coal has fallen victim to cheap gas and renewables, and shuttered coal-fired power plants have been replaced by many more plants burning gas. Gas consumption in the electric power sector has jumped by 50 percent since 2008.

Gas exports, petrochemicals and electric power generators are all vying for cheap gas—for Haynesville shale drillers, that’s welcome news. 

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News