The battle to restore energy reliability in Europe has breathed new life into North American LNG export projects — and into the Haynesville Shale in Louisiana, the closest supply basin to many of the planned and proposed liquefaction facilities. Gas production in the region has climbed more than 4 Bcf/d — an impressive 39% — since 2019 and we expect it to grow nearly as much over the next three years. The big question on everyone’s mind, however, is whether there will be enough pipeline capacity to move that gas to where it’s needed on the coast. Pipeline capacity for southbound flows through the Bayou State is already showing signs of stress. Will recently completed and upcoming debottlenecking projects help stave off major supply and pricing disruptions? In today’s RBN blog, we provide our outlook on Haynesville production and the nature and timing of Gulf-bound pipeline projects.
The Haynesville Shale isn’t the only supply basin competing for LNG export demand. However, Haynesville’s high dry gas content — an advantage in a high-gas-price environment and where liquefaction is concerned — in addition to its proximity to Gulf Coast liquefaction facilities and Louisiana’s favorable regulatory environment for pipeline expansions, have made it attractive to producers looking to market certified gas to LNG offtakers seeking to balance energy security with climate-change goals. As a result, the Haynesville has been a hotbed of drilling and M&A activity, including Appalachia-focused producers Southwestern Energy and Chesapeake Energy jumping into the mix (see I Can’t Go For That, Part 3). As the U.S. natural gas rig count returned to pre-pandemic levels in recent months, the Haynesville has driven much of the increase, with producers more than doubling the rig count from its recent trough in the low 30s in early-summer 2020 to 75 as of last Friday. Even as production growth in many other basins flattened out to varying degrees over the past two years, production in the Haynesville — shown in Figure 1 — climbed steadily.
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