Rigs moving out of Barnett, into Haynesville. Are things getting ready to heat up further?
July 31st, 2009
Rigs moving out of Barnett, into Haynesville
Haynesville
Rigs moving out of Barnett Shale, into Haynesville
As producers continue ramping up production in the Haynesville
Shale of northern Louisiana, drilling rigs are being pulled into the play
from other large producing basins — most notably, the Barnett Shale of
North Texas.
Running counter to the national trend, the Haynesville has seen a
dramatic increase in drilling activity at a time when producers are laying
down rigs in reaction to a supply glut and deflated wellhead prices.
According to a July 27 article by Don Briggs, president of the
Louisiana Oil & Gas Association, the North Louisiana rig count grew by
about 12% in the previous week, to 85 from 76.
“The growth in the North Louisiana rig count is unprecedented in the US,”
Briggs wrote, adding that the count has increased by more than 20% year over
year. “That stands out more clearly when compared to the rig decline of 52% for
the United States, and even more so compared to Texas’ and Oklahoma’s decline
of 64% and 62% respectively,” he said.
“Today there are 130 producing Haynesville Shale wells, 60 drilling, 149 waiting
on completion, and 156 permitted to drill,” Briggs wrote.
As drilling activity has fallen off in other producing basins, the Haynesville
has become a magnet both for investment capital and drilling activity, attracting
rigs from those other areas, Richard Mason, publisher of Land Rig newsletter,
told Platts.
“Rigs, especially higher-spec rigs, are relocating to the Hayneville, typically out
of the Barnett,” Mason said.
“The biggest thing to have happened is [drilling in] the Barnett has gone
down. The Haynesville has benefitted from that as the rigs have relocated 200
miles east into Louisiana,” he said. “If you’re an operator, you’ve probably cut
back on what you’re doing in the Barnett and if you’ve got Haynesville holdings,
you’re moving your capital to the Haynesville. And the rigs will follow.”
In addition to attracting rigs from its neighboring state’s biggest shale play,
Louisiana’s Haynesville also is snaring rigs that until recently were operating in
even closer unconventional gas plays in Texas, such as the Bossier Sands and the
Cotton Valley formation.
“Some rigs that have been idled in East Texas have been redeployed — they
really didn’t have to go very far — into northern Louisiana,” Mason said. “I’m not
aware of any rigs coming out of the Rockies or farther markets to work in the
Haynesville. That’s not to say it hasn’t happened. But if it has, it’s been on an
incremental basis, one or two rigs.”
In addition, a number of the rigs operating in the Haynesville are newly built,
specially designed to drill to the deeper gas-bearing formations there. “Those rigs
that were added to the market … were fit-for-purpose rigs, configured for the
higher demands of drilling in what is one of the most difficult land drilling areas
in the US,” Mason explained.
“They need a higher-spec rig in the Haynesville. It’s a much deeper formation.
Often times you’re looking at a 1,500-horsepower rig with a million pounds of
hoist. That’s probably a little big for the Barnett, although there were some of
those rigs working there,” he said.
Reflecting the recent trend toward rapid gas development in the
Haynesville, Oklahoma-based Chesapeake Energy last week announced plans to
spend $2 billion annually over the next 20 years to develop its gas properties
in the North Louisiana region.
Chesapeake officials made the announcement last Friday at the opening of the
company’s new corporate office location in Shreveport in the northern portion of
the play. “The Haynesville Shale is likely to surpass the Barnett Shale by 2015 to
become the largest natural gas-producing field in America and one of the 10
largest fields in the world in time,” Chesapeake Chairman and CEO Aubrey
McClendon said in a statement.
Kevin McCotter, Chesapeake’s director of corporate development for
Louisiana, said the company is currently producing about 306,000 Mcf/d and
operating 29 rigs in the Haynesville.
“We’ve continued to add rigs, just as we had previously announced. In fact
we’re a little ahead of schedule. We had forecasted that we would end the year
with approximately 30 rigs and we would be operating approximately 35 rigs by
the middle of 2010,” he said. “With the fact that we’re at 29 rigs before the first
of August, we’re a little ahead of that forecast.”
Louisiana Governor Bobby Jindal, who attended the opening ceremonies for
Chesapeake’s Shreveport headquarters, noted in a statement that Chesapeake distributed
nearly $30 million in royalty payments within the state during 2008.
“With an estimated 6.5 billion cubic feet of recoverable natural gas per well
in Haynesville, Chesapeake is certain to remain in Louisiana for some time,”
Jindal said. — Jim Magill
Rigs moving out of Barnett, into Haynesville
Haynesville
Rigs moving out of Barnett Shale, into Haynesville
As producers continue ramping up production in the Haynesville
Shale of northern Louisiana, drilling rigs are being pulled into the play
from other large producing basins — most notably, the Barnett Shale of
North Texas.
Running counter to the national trend, the Haynesville has seen a
dramatic increase in drilling activity at a time when producers are laying
down rigs in reaction to a supply glut and deflated wellhead prices.
According to a July 27 article by Don Briggs, president of the
Louisiana Oil & Gas Association, the North Louisiana rig count grew by
about 12% in the previous week, to 85 from 76.
“The growth in the North Louisiana rig count is unprecedented in the US,”
Briggs wrote, adding that the count has increased by more than 20% year over
year. “That stands out more clearly when compared to the rig decline of 52% for
the United States, and even more so compared to Texas’ and Oklahoma’s decline
of 64% and 62% respectively,” he said.
“Today there are 130 producing Haynesville Shale wells, 60 drilling, 149 waiting
on completion, and 156 permitted to drill,” Briggs wrote.
As drilling activity has fallen off in other producing basins, the Haynesville
has become a magnet both for investment capital and drilling activity, attracting
rigs from those other areas, Richard Mason, publisher of Land Rig newsletter,
told Platts.
“Rigs, especially higher-spec rigs, are relocating to the Hayneville, typically out
of the Barnett,” Mason said.
“The biggest thing to have happened is [drilling in] the Barnett has gone
down. The Haynesville has benefitted from that as the rigs have relocated 200
miles east into Louisiana,” he said. “If you’re an operator, you’ve probably cut
back on what you’re doing in the Barnett and if you’ve got Haynesville holdings,
you’re moving your capital to the Haynesville. And the rigs will follow.”
In addition to attracting rigs from its neighboring state’s biggest shale play,
Louisiana’s Haynesville also is snaring rigs that until recently were operating in
even closer unconventional gas plays in Texas, such as the Bossier Sands and the
Cotton Valley formation.
“Some rigs that have been idled in East Texas have been redeployed — they
really didn’t have to go very far — into northern Louisiana,” Mason said. “I’m not
aware of any rigs coming out of the Rockies or farther markets to work in the
Haynesville. That’s not to say it hasn’t happened. But if it has, it’s been on an
incremental basis, one or two rigs.”
In addition, a number of the rigs operating in the Haynesville are newly built,
specially designed to drill to the deeper gas-bearing formations there. “Those rigs
that were added to the market … were fit-for-purpose rigs, configured for the
higher demands of drilling in what is one of the most difficult land drilling areas
in the US,” Mason explained.
“They need a higher-spec rig in the Haynesville. It’s a much deeper formation.
Often times you’re looking at a 1,500-horsepower rig with a million pounds of
hoist. That’s probably a little big for the Barnett, although there were some of
those rigs working there,” he said.
Reflecting the recent trend toward rapid gas development in the
Haynesville, Oklahoma-based Chesapeake Energy last week announced plans to
spend $2 billion annually over the next 20 years to develop its gas properties
in the North Louisiana region.
Chesapeake officials made the announcement last Friday at the opening of the
company’s new corporate office location in Shreveport in the northern portion of
the play. “The Haynesville Shale is likely to surpass the Barnett Shale by 2015 to
become the largest natural gas-producing field in America and one of the 10
largest fields in the world in time,” Chesapeake Chairman and CEO Aubrey
McClendon said in a statement.
Kevin McCotter, Chesapeake’s director of corporate development for
Louisiana, said the company is currently producing about 306,000 Mcf/d and
operating 29 rigs in the Haynesville.
“We’ve continued to add rigs, just as we had previously announced. In fact
we’re a little ahead of schedule. We had forecasted that we would end the year
with approximately 30 rigs and we would be operating approximately 35 rigs by
the middle of 2010,” he said. “With the fact that we’re at 29 rigs before the first
of August, we’re a little ahead of that forecast.”
Louisiana Governor Bobby Jindal, who attended the opening ceremonies for
Chesapeake’s Shreveport headquarters, noted in a statement that Chesapeake distributed
nearly $30 million in royalty payments within the state during 2008.
“With an estimated 6.5 billion cubic feet of recoverable natural gas per well
in Haynesville, Chesapeake is certain to remain in Louisiana for some time,”
Jindal said. — Jim Magill
Views: 61
Replies to This Discussion
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Permalink Reply by E & E on
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http://www.pennenergy.com/index/articles/display/4436081080/s-artic...
Chesapeake sees sharp Haynesville output hike
By OGJ editors
HOUSTON, Aug. 3 – Chesapeake Energy Corp. expects to hike its Haynesville shale gas output to a gross operated 575 MMcfe/d at the end of 2009 and as much as 1.025 bcfe/d by the end of 2010.
The production rate in late July was 175 MMcfe/d net and 285 MMcfe/d gross operated.
The company plans to average 33 operated rigs in the second half of 2009 and 36 rigs in 2010 compared with 29 currently active.
Chesapeake has added 40,000 net acres since Mar. 31, 2009, and is now the play’s largest leasehold owner at 510,000 net acres. Plains Exploration & Production Co., Houston, Chesapeake’s 20% joint venture partner, owns another 113,000 net acres.
The two companies have drilled and completed 74 Chesapeake-operated horizontal wells.
Assuming a flat Nymex gas price of $7/Mcf for the life of the well, Chesapeake estimated pretax rates of return from a 6.5 bcfe horizontal Haynesville well drilled for $7.5 million of 42% excluding the benefit of drilling carries and more than 345% including carries.
Chesapeake recovered 35% of its $4.7 billion Haynesville leasehold investment with the sale of a 20% interest to Plains, bringing Chesapeake’s net investment in Haynesville leasehold to $6,000/net acre.
Three second quarter completions achieved pipeline-constrained initial 30-day average production of 15.3, 14.2, and 15.2 MMcfe/d. The three wells are in Caddo and De Soto parishes, La.
Parker,
I'd have to say they have to get the rigs from some where if they are going to reach these numbers.
Earlene the barefooted UMO
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Permalink Reply by Parkdota on
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They've got to drill to keep the drilling rights so I'm not too surprised. What I've heard, though, is that they've had trouble getting enough rigs to drill, which is why they're pulling rigs from great areas like the Barnett to the Haynesville. That along with the national rig/drilling drop in tune with the surge in Haynesville drilling is quite stunning. It's hard to believe sometimes. I'm concerned about supply, though. Today natgas went over $4 and stocks are looking great. I would assume the demand for natgas will continue but even if rigs nation wide are shutting in/down but the Haynesville has such large deposits is supply really going to drop enough to affect price in an upward movement? I feel certain that these natgas companies can somehow control it....I just don't know how. Projections say natgas will be up around $6-$7 by Jan./Feb. and I hope that's correct, but somehow I'm a little concerned that it will happen. The good news is, though, that demand will increase somewhat w/the winter months and international economic stabilization and maybe even slight growth, but...will the vast supply in the Haynesville offset the demand?
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Permalink Reply by Mac Davis on
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I've run across a number of vertical wells on SONRIS recently drilled at what seems to be the right depth for the HS. Some of them have SONRIS data that seems to indicate that they're really horizontal wells despite what the data on SONRIS says.
I wonder if some of them aren't simply "HBP" wells that will produce now to HBP, and will probably be drilled horizontal later when appropriate rigs become available. Do they ever produce from a vertical well for a while, then add a lateral later?
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Permalink Reply by Bobi Carr ("parker") on
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Mac,
They could also have pipeline constraints. I noticed some that are waiting on pipelines.
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Permalink Reply by Skip Peel - Mineral Consultant on -
There seems to be an increase in CHK verticals of late, That is non-typical. I do not have sufficient information currently to make a prediction as to intent.
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Permalink Reply by Les Bamburg on
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Mac, look at the vertical and measured depth on the well permit to determine if the well is horizontal. About of 80-90% of the wells currently being drilled in Northwest Louisiana are targetting the Haynesville Shale and most are horizontal.
Most vertical Haynesville Shale wells drilled to date will not be converted to horizontals because the casing strings are too small.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Les, What is the minimum casing diameter that allows for a well to be completed as a horizontal?
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Permalink Reply by Les Bamburg on
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Skip, I think most designs have either 7" or 7&5/8" thru the vertical section of the well so the lateral can be cased with +/- 5".
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Permalink Reply by Les Bamburg on
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Logan, there are currently 77 drilling rigs working in the Barnett Shale which is 60% below last year's peak of 190 rigs. The decrease happened due to several reasons:
- Most of the "core" Barnett Shale acreage is now held by production.
- Drilling wells in acreage outside of the original core and Tier 1 had become uneconomic and companies have elected to let leases expire.
- Smaller privately held companies lost access to outside capital funds.
- Most of the larger players shifted capital and other resources to the Haynesville, Marcellus, Fayetteville and Woodford Shale plays.
As Electro said, many of these stacked rigs are not capable of drilling Haynesville Shale horizontal wells. Petrohawk and a few others are using smaller rigs as "spudder" rigs for the vertical section but this is very limited.
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