Haynesville Shale: Production Decline May Continue Through Year End

Mar. 18, 2013 2:55 PM ETHPR, BHP, CHK, CTRA, DVN, OVV, FST-OLD, KWK, FANG, SHEL, RRC, UNG, UPLCQ, WPX, XCO, XOM10 Comments
Richard Zeits profile picture
Richard Zeits
10.45K Followers

As anticipated, the decline in Haynesville Shale natural gas volumes is now clearly visible in EIA 914 production data. The graph below shows EIA gross natural gas withdrawals data for Louisiana, which are largely driven by production from the Haynesville. Based on Zeits Energy Analytics' model, the data would be consistent with a ~13%-15% decline in the Haynesville production during the second half of 2012 (the earlier drop in production in January and February 2012 is mostly attributable to voluntary production curtailments). The pace of decline for the field as a whole appears less steep than reported by some operators for their individual portfolios. Specifically, Chesapeake Energy (CHK) commented during the most recent earnings conference call that Haynesville volumes were down to ~1.3 Bcf/d from ~2.0 Bcf/d at the peak a year earlier. QEP Resources (QEP) has also indicated that production volumes are declining at a rate of approximately 10% quarter-on-quarter since the company suspended their drilling activity in the field.


(Source: EIA, Zeits Energy Analytics)

The production decline does not come as a surprise given that the rig count in the Louisiana part of the play has been exceptionally low. With just 18 rigs currently active in the core of the play, drilling activity still remains far from sufficient to maintain production flat, even in combination with wells being placed in line from the backlog. (The map below indicates current rig locations in the play's "core" in Northwest Louisiana.)


(Source: Bake Hughes)

Among operators currently active in the Louisiana "core" of the play are BHP Billiton (BHP), EXCO Resources (XCO), Encana (ECA), J-W Operating (private), Chesapeake, and Royal Dutch Shell (RDS.A). In addition, Exxon Mobil (XOM) is running three rigs in the southern part of the play in the Shelby Trough area.

The rig count in the Louisiana Haynesville

This article was written by

Richard Zeits profile picture
10.45K Followers
Richard Zeits is an Oil & Gas industry analyst and consultant. His background includes fourteen years as Energy industry-focused investment banker, portfolio manager and senior investment analyst with bulge bracket firms in New York. Zeits Energy Analytics use elaborate proprietary analytics and data bases to provide in-depth industry research, market intelligence, and forecasting.

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