NATURAL GAS: 40 RIGS CAN MAINTAIN HAYNESVILLE PRODUCTION PLATEAU - SeekingAlpha article - August 7, 2012

by Richard Zeits

The key argument often used by natural gas bulls is that the dramatic reduction in rig counts in the dry gas producing shales will translate into a rapid drop off in supply and lead to the price recovery toward the $5 level, and possibly higher. The Haynesville shale, where the rig count has declined from the peak of over 180 rigs two years ago to approximately 27 currently, is often presented as the most compelling evidence supporting that argument.

The view has been advocated by several prominent industry CEOs, including Chesapeake's Aubrey McClendon and Ultra Petroleum's (UPL) Michael Woodford. During Ultra's 2Q earnings conference call on August 2, Michael Woodford re-iterated his macro perspective on natural gas: "Capital is being withdrawn from natural gas investment as seen in the rig count reduction and pressure pumping softness. Production lags capital expenditures and the decline in production is imminent. We see $4 gas in 2013 and $5 gas in 2014." With regard to Haynesville specifically, he commented: "We have a view that says: production supply is about to shrink pretty rapidly. I think there are some comments out yesterday, with some companies that announced and talked about the Haynesville, that they would see a 10% per quarter reduction in their production. I think it is plus or minus 40% for the year. If you apply that to the 6 Bcf per day of Haynesville production, it is 2.5 Bcf per day of annual rate reduction, so I think we are about to see a drop off in supply." Michael Woodford was referring to the earnings call remarks by QEP Resources (QEP) the night before.

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2012 at 9:06

dbob, hmmm thought Pegasi was drilling horizontal CV wells in Marion County.  If the Haynesville is wet, the Bossier may be also due to lesser thermal maturity.  Haynesville liquids wells and now Bossier liquids wells in Cass County.  Reminds me that the value of NGLs have dropped 50% in the last year.  I wonder if the industry will now produce a glut of liquids and degrade the economics of those wells.  Are there reports filed with the TRRC which confirm this production interval as Bossier?

Permalink Reply by dbob on August 13, 2012 at 10:00

Skip -

 

To my knowledge, they have not filed anything clearly defining this as Bossier with the RRC.  In public statements they have used the term "Bossier Shale" although they do not in the most recent statement.  The most recent statement does not indicate a formation/rock type. 

 

The NGL overproduction is already starting to signficantly hurt the economics of the "wet gas" wells as comapred to 18 months ago. 

Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2012 at 9:58

adubu, they have been discussed several times before I'm just unsure which group those discussions appeared in.  Here is a cut and paste from APC's website.

East Texas

Production and development activities at Anadarko's properties in East Texas are concentrated in the Carthage area, and include the East Texas HZ liquids-rich opportunity. With more than 300 million BOE of net resources and 450 identified drilling locations, Anadarko is pioneering this liquids-rich play that includes wells in the Haynesville Shale and Cotton Valley areas. The play offers approximately 35 percent liquids with the majority of acreage held by production.

APC has also published a map for the HA/CV liquids.  It may be somewhere on their website or in the last presentation they released.

Permalink Reply by adubu on August 13, 2012 at 10:32

Skip---Thanks, I will keep looking. If either of us  get confirmation of Named Well let us agree to let the other know.

Permalink Reply by dbob on August 13, 2012 at 10:44

Adubu, Skip,

 

The CGU 10 #52HH reported as a Haynesville completion, with IP of 71 bbl of condensate, 4485 mcf/day and a flowing pressure of 4074psi. 

 

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Permalink Reply by adubu on August 13, 2012 at 16:03

dbob and skip--- the CGU #52 HH prove what you have said --- there is liquid in some of the shale-- Now the question is 71 b of condensate aday with 4.5 mmcfd gas is that enough to be profitable for this cost of these wells. I guess time will tell what these well will make EUR in condensate. Just like the wells below Skip found results on--- will these wells make profit for APC -- sure better than no liquid for 2,000 b in month is about 200,000 gross plus the gas about 300,000 in month 1/2 million per month first few months at today prices  but with decline rapid profit will be what??

Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2012 at 10:51

http://www.gohaynesvilleshale.com/forum/topics/anadarka-liquid-play...

http://www.gohaynesvilleshale.com/forum/topics/anadarko-haynesville...

Reply by Les B on March 18, 2012 at 11:46pm

The following are some the Anadarko wells that tested with liquids production in the Haynesville Shale in Panola County.

 

Anadarko, Boren Unit 1 #9HH  Well, Serial #682117 , Panola  County, 4839 Mcfd, 2 BPD, 22/64" Choke, 2799 psi flowing pressure

Anadarko, CGU 8 #54HH  Well, Serial #718123 , Panola  County, 3021 Mcfd, 6 BPD, 14/64" Choke, 5390 psi flowing pressure

Anadarko, CGU 8 #56HH  Well, Serial #720270 , Panola  County, 3653 Mcfd, 6 BPD, 16/64" Choke, 5565 psi flowing pressure

Anadarko, CGU 12 #16HH  Well, Serial #713088 , Panola  County, 4098 Mcfd, 60.2 BPD, Adj" Choke, 3815 psi flowing pressure

Anadarko, CGU 12 #51HH  Well, Serial #714093 , Panola  County, 3615 Mcfd, 60.7 BPD, Adj" Choke, 3515 psi flowing pressure

Anadarko, CGU 16 #51HH  Well, Serial #708410 , Panola  County, 4550 Mcfd, 150 BPD, 16/64" Choke, 4925 psi flowing pressure

Permalink Reply by adubu on August 13, 2012 at 11:46

Skip--- thanks now I can look &  review those locations--- the 60-150 BPD not bad I wonder how long they will produce that amount --- do you know if condensate or just NGL ?

Permalink Reply by jffree1 on August 13, 2012 at 11:13

Here you go... from APC presentation @ Citi Global Energy Conference 6-04-12.

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2012 at 11:15

Thanks, jffree1.  That was the "map" I was remembering.

Permalink Reply by adubu on August 13, 2012 at 11:43

I knew jffree1 would find it--thanks Julie

Permalink Reply by JHH on August 8, 2012 at 13:20

Thanks for the article... sobering.

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