Don't Call It a Comeback - It's Not Your Father's Haynesville Natural Gas Shale Play

After spending the past few years on the backburner with declining production volumes, the Haynesville Shale natural gas play, which straddles the Northeast Texas-Louisiana border, is back in the headlines. Rig counts in the region have doubled in the Haynesville in the past six months or so. Exco Resources—which has four rigs operating there currently—last week said it is divesting its Eagle Ford assets in favor of boosting drilling investment in the Haynesville. At the same time, there’s a new crop of operators in the play dedicated specifically to drilling in the Haynesville. While total basin production volumes have yet to take off, all signs point to a Haynesville resurrection of sorts. But there are also early clues that much has changed since the first go-round and the drilling profile of today’s Haynesville is likely to look much different than it did nearly 10 years ago. Today we begin a look at RBN’s latest analysis of production economics in the Haynesville Shale.

Our blog title today is from the first line of LL Cool J’s tune, “Mama Said Knock You Out,” that pleads: “Don't call it a comeback, I been here for years.” And so it goes for the Haynesville Shale. The mostly pure gas play came on the scene in 2008 and quickly became the darling of the Shale Revolution But when gas prices began falling, drilling economics there were priced out of the market and the play eventually lost favor among producers, hanging on for a time as some wells continued to be drilled to hold leases (for more on HBP, or held-by-production leases, see Hold on Tight). The Haynesville never entirely went away, except perhaps from the headlines, but it’s been largely sidelined in recent years—that is, until now.

We’ll get to what’s happening now in a bit, but first it’s worth reviewing a brief history of the Haynesville. The Haynesville Shaleunderlies a 9,000-square mile area across northwest Louisiana, East Texas and parts of southwestern Arkansas at an average depth of about 13,000 feet. The formation’s vast natural gas reserves—estimated at 75 trillion cubic feet—were known to the industry well before they were accessible, at least in a way that was cost-effective for producers. But improvements in hydraulic fracturing and completion techniques to extract gas from shale, honed first in the nearby Barnett Shale in Texas, changed all that.