The Americas continue to be the world’s top jurisdiction for oil and gas investment. With Chinese super-E&P Cnooc saying this past week it is seeking farm-in deals in newly-opened plays in the Gulf of Mexico.
And in onshore shale, activity is just a frenetic. With new data showing a surprising surge in drilling for one play that few observers have been watching of late.
The Haynesville shale of Arkansas, Louisiana and Texas.
Unconventional drilling in this play has largely been overshadowed by higher-profile shales like the Permian, Eagle Ford and Marcellus/Utica the last few years. In fact, as the chart below shows, overall Haynesville natural gas production had been steadily falling since mid-2013 — up until the beginning of this year.
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Haynesville shale natural gas production had been falling the last few years — but has recently started to climb (source: Energy Information Administration)
But as you can see in the chart, 2017 has seen a reversal of those declines — with Haynesville production rising steadily so far this year.
In fact, new data from Platts this week showed that overall Haynesville natgas output was up 35 percent in September — as compared to the same period of 2016. Marking a 4-year high for production.
Rig count numbers also show a resurgence in the Haynesville. With the play currently having 44 rigs deployed on drilling jobs — nearly equal to the 47 rigs at work right now in the much higher-profile Marcellus shale of the northeastern U.S.
The question is, why? After all, U.S. natural gas prices are still languishing around $3/mcf — hardly the kind of environment where old natgas plays should be attractive. Related: Is Artificial Intelligence The Next Step In Total's Tech Push?
Part of the answer is, the Haynesville appears to be delivering exceptional drilling results. As the chart below shows, this play has been delivering one of the highest rates of new production per drilling rig in America — handily beating the Permian and Eagle Ford, and second only to the Marcellus.
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Drilling productivity in the Haynesville has been beating other top shales (source: Energy Information Administration)
Sources have also cited another reason for the Haynesville renaissance: the proximity of the play to the Gulf Coast and Mexico. Where numerous new liquefied natural gas (LNG) export terminals are being built, along with pipelines for exports to Mexican markets.
Drillers are reportedly betting that rising demand from both LNG and Mexican pipeline shipments will boost local prices. Watch to see if such a rise does indeed come — and for a continued rise in Haynesville activity if prices here firm up.
By Dave Forest
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