Haynesville Shale surpasses Barnett as US's largest shale gas producer

The Haynesville Shale in Louisiana surpassed the Barnett Shale in Texas as the nation's highest production shale gas play in 2011, according to the US Energy Information Agency. The Barnett in North Texas had been the country's leading shale gas producer for the past decade.

As measured by reported pipeline flows, gas production from the Louisiana section of the Haynesville overtook Barnett volumes in February, even after the Barnett's recovery from well freeze-offs last winter, the EIA said.

Gas production in the Fort Worth Basin has been declining since late in 2010, while the Haynesville Shale has been growing steadily over the same period.

At the time of the EIA announcement, production in the Haynesville Shale was about 5.62 billion cubic feet per day (bcf/d) compared with 5.40 bcf/d in the Barnett Shale.

The EIA pointed to several factors that have contributed to the Haynesville's growth, including an increase in gas-directed drilling in the newer Haynesville, compared with a flattening of drilling levels in the more mature Barnett play.

"As gas-directed drilling in the Barnett slows and natural gas prices remain relatively low, operators are turning their attention to the more liquids-rich areas of the play, thereby reducing the emphasis on gas," noted the EIA.

Technology and experience also plays a large role. Reported pipeline flows show nearly a decade of shale-focused drilling to reach 5 bcf/d in the Barnett. Haynesville operators now use the experience gained from those early horizontal drilling programs to more rapidly ramp up natural gas production. That same 5 bcf/d benchmark took only three years to surpass in the Haynesville.

Regional infrastructure is also a key factor as its expansion helps to accommodate the Haynesville's rising natural gas production. Pipeline capacity expansions were recently completed on the Regency, Midcon Express, and Gulf Crossing systems, each of which transports Haynesville gas. More recently, Enbridge Energy Partners announced its intention to invest an additional $175 million to expand its East Texas system serving Haynesville Shale producers.

In May, Kinder Morgan Energy Partners acquired a 50% interest in Petrohawk Energy's natural gas gathering and treating services in the Haynesville Shale and a 25% interest in Petrohawk's midstream business in the Eagle Ford shale for about $920 million. KMP now owns 100% of KinderHawk, the largest natural gas gathering and midstream business in the Haynesville Shale.

In July, Petrohawk, one of the largest shale gas and oil producers in the US, was acquired by Australia's BHP Billiton in a $15.1 billion transaction.

Taking advantage of the abundant natural gas resources and the relatively low prices of the fuel, Canada's Encana Corp. said in August that its subsidiary, Encana Natural Gas Inc., was setting up a network of mobile LNG refueling stations for heavy-duty trucks that haul water to the Haynesville Shale play. Encana is the sole fuel supplier to California-based Heckmann Water Resources, a provider of water hauling services to Encana and other producers in the shale play. Encana will initially provide fuel to Heckmann's fleet of 200 new LNG trucks from its mobile refueling stations but plans to build its first permanent and public LNG refueling station in nearby Shreveport.

Some of the top producers in the Haynesville Shale in the past year include Chesapeake Energy, Encana, EOG Resources, Petrohawk, ExxonMobil, KCS Resources, EXCO Resources, Questar Exploration & Production, Comstock Resources, and Gastar Exploration.

One of the largest privately-held companies operating in the Haynesville is Tulsa-based Samson Investment Company, which is being acquired by Kohlberg Kravis Roberts & Co. LP (KKR) and a group of investors, including Natural Gas Partners (NGP), Crestview Partners, and Japan's Itochu Corp. for $7.2 billion.

Founded in 1971, Samson owns interests in more than 10,000 wells, of which it operates over 4,000 wells in the United States, with key positions in shale plays including the Bakken, Granite Wash, Cana Woodford, and Haynesville and Bossier.

Tuscaloosa Marine Shale

South and southeast of the Haynesville Shale is the Tuscaloosa Marine Shale, which stretches from the Texas border, across south-central Louisiana, and into Mississippi. Several companies recently announced acquisitions of oil and gas leaseholds in this area. These include Goodrich Petroleum, which has leased 74,000 acres, and Devon Energy, which has accumulated about 250,000 acres.

Analysts say the Tuscaloosa play is between 11,000 and 14,000 feet deep, compared to the 5,000 to 12,000-foot depths of the Eagle Ford Shale in South Texas, to which it has been compared. Based on data from Encore Acquisition Co., which acquired 208,000 acres in the Tuscaloosa in 2008, the Tuscaloosa's brittle siltstone and carbonate levels could mean easier and faster drilling.

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