April 26, 2011 11:48 AM Eastern Daylight Time

DULLES, Va.--(BUSINESS WIRE)--The dry gas of the Haynesville Shale hasn't been winning any popularity contests lately, as evidenced by a dramatic drop over the past year in the shale rig count standings, but proponents think it's just a matter of time until higher natural gas prices spur increased activity in the Haynesville/Bossier Sands, according to a report in NGI's Shale Daily.

“one rig doesn't necessarily equal one rig anymore.”

The line-up of companies maintaining a stake in the Haynesville is impressive, with Chesapeake Energy leading the top five acreage holders with 530,000 acres, followed by Petrohawk Energy (375,000), Encana (350,000), ExxonMobil (240,000) and EOG Resources (183,000), according to a tally by NGI's Shale Daily.

And while the Haynesville has been eclipsed "temporarily" by oilier plays such as the Eagle Ford and parts of the Marcellus, it is still is a huge resource that only requires demand to pick up and natural gas prices to move closer to oil prices for drilling to take off again, according to the consensus view.

There's no denying that Haynesville drilling experienced one of the biggest slides in rig counts over the last year while most other plays have seen substantive percentage increases (albeit on much smaller starting numbers in some instances). According to NGI's Shale Daily Unconventional Rig Count, for the week ending April 22 Haynesville/Bossier Sands activity was down to 138 rigs, or 28% fewer than the 192 active rigs a year earlier.

With high oil prices, the drilling and completion equipment is heading for wetter plays where producers can stand the increasing costs. For instance, Encana and Comstock Resources have cut production expectations based on a lack of oilfield services availability.

Devon Energy, the seventh largest acreage holder in the Haynesville, still considers it a "very good asset" in its portfolio despite having shifted all of its activity there to more lucrative oily plays.

Basically, it will take a big jump in prices to rebound Haynesville rig activity and entice Devon to resume drilling there, spokesman Chip Minty told NGI's Shale Daily. Over the long term of four to five years Devon is "very optimistic about gas prices," especially with soaring power generation demand, but in the interim through about 2013 it expects prices to remain relatively soft.

The long-term outlook is key, according to CenterPoint Energy, which is seeing no letup in Haynesville operations, said Greg Harper, group president of midstream pipelines and field services. CenterPoint connected 183 wells to its gathering lines in 2010, which it considered a pretty active year. One mitigating factor he sees is the development of drilling multiple (four to eight) wells from one pad, so "one rig doesn't necessarily equal one rig anymore." He suggested that a "well count" is a better indicator of drilling levels than the rig count.

And even a well count isn't the last word. Charles Stanley, CEO of QEP Resources, noted last month the big gain in drilling efficiency his company had achieved in Haynesville. "When we started in [the Haynesville Shale] several years ago it took us over 66 days to drill a well from the surface down to about 17,400 feet. During 2010 we averaged a little under 40 days to drill the same well to the same total depth." Not only did this benefit well construction but also completion efficiency, he said, "and as a result our completed well costs have come down from over $10 million in 2009 to $8.5 million in the latter half of 2010."

On Monday Haynesville-North Louisiana and Haynesville-East Texas prices averaged $4.19 and $4.22, respectively, according to NGI's Shale Price Indices (SPI). Haynesville-East Texas pricing was a close match to that in the Barnett ($4.24) and Eagle Ford ($4.24) but trailed Fayetteville ($4.26) and Marcellus ($4.44-$4.58). Haynesville-North Louisiana numbers topped those in the Midcontinent's two Woodford plays along with the Granite Wash and all three of the plays in the Rockies.

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