Part 3 of 3 in a series covering the 2009 Developing Unconventional Gas Conference
By Austin Eudaly

Several companies spoke about their specific positions in each of the prolific shale plays in the US. It should be noted that there was a tremendous amount of new buzz surrounding the Marcellus Shale at this year’s conference. Range Resources CEO, John Pinkerton, appeared to be the most popular speaker at the press conference after his discussion regarding the Marcellus, graciously answering questions for nearly an hour.

The Haynesville was also being held in high praise for the majority of the conference. Richard “Dick” Stoneburner, COO for Petrohawk Energy Corp. was question at length by media types after his keynote presentation”. While some groups tried to accuse the Haynesville of being too expensive to participate in, many have remained bullish regarding the H-Shale.

From an outsider’s standpoint, it seemed that many sentiments regarding the Barnett were that it was “old news”. This is a bit strange, considering it is one of the largest proven natural gas basins in the world. One thing I have learned about this industry is that many of the trends are about hype. In a year such as this one, hype can bring outside money to the table. This is a good thing for many operators. The Barnett had little, if any hype surrounding it at the conference. Im

So who is king amongst the three shales? Let’s look at a few current pros and cons of each.

The Haynesville’s Case:

Pros
- Very high initial production (IP) rates
- Rich organic rock with “quiet” geology throughout core
- Fairly good pipeline infrastructure in place
- Lots of great gas in the ground
- Attractive EUR’s per section for outside investors

Cons
- Very complicated drilling and completion
- Long term life expectancies still unknown
- More expensive to drill than almost every other shale play
- Decline curve is very steep in first 2 years

The Marcellus’ Case:

Pros
- Good IP flows, improving techniques each month
- An operator can receive a premium on their gas due to proximity of NYMEX market
-Wells are cheaper to drill than H-shale
- Much cheaper to acquire leasehold
- Longer lease terms for operators
- Great EUR’s per well for outside investors

Cons
- Technical drilling and completion
- Long term life expectancies still unknown factor
- Pipeline infrastructure still up in the air
- Major water concerns

The Barnett’s Case:

Pros
- Proven field and production
- Known decline curves and EUR’s
- Constantly improving pipeline infrastructure
- Opportunity to come in for re-works in future

Cons
- IP flows not nearly as large as Haynesville and some Marcellus
- Core is in an urban area and very complicated to lease and get approved for drilling
- Not as attractive for outside investment money to come in and complete all the drilling that needs to occur

All said and done, the Haynesville and Marcellus appear to have officially ousted the Barnett as the top dog in the US unconventional shale plays. Which play will end up being more prolific between the two of them (Marcellus or H-Shale) is yet to be determined. The economics on a Marcellus well are very attractive for all E&P companies right now at $3.80 gas. Haynesville Shale economics look good as well, but a clear advantage goes to the Marcellus for its ability to get a better price for its gas. Time will only tell which of these plays will prove to be king. I don’t think the Haynesville will give up the this title without a fight.