Mark Your Calendars, the Haynesville Resurgence is in 2-5 years :)
A pretty good piece on the Haynesville and it's future prospects: How do you survive a gas boom and bust? For starters, pay in cash
MANSFIELD, La. -- Local officials in the Haynesville Shale believe they've unlocked the secret for successful spending of gas boom wealth.
The approach? Invest quickly in health, safety and education, and squirrel away the rest for a rainy day.
"Just because we have it don't mean we have to spend it," DeSoto Parish Sheriff Rodney Arbuckle likes to say.
The Haynesville story is a lesson for community leaders in places like North Dakota and Texas, where fuel extraction continues to drive local growth. Between 2008 and 2011, northwestern Louisiana reaped the benefits of a natural gas boom, which lifted annual tax revenues in DeSoto Parish -- where much of the Haynesville activity was concentrated -- from roughly $20 million to $120 million. In fiscal 2013, around the time most drillers left in search of more oily acreage, yearly tax income leveled off at about $40 million.
Now, Louisiana is poised to play host to two of the first natural gas export terminals in the continental United States (Greenwire, June 19). The completion of the Cameron and Sabine Pass liquefaction facilities could once again send gas companies drilling into the depths of the Haynesville, which is located less than 200 miles north of the export sites.
If that happens, parish and muncipal officials say they wouldn't change a thing about the way they spend boom-time funds.
During the years DeSoto's coffers overflowed, parish officials shelled out for equipment and infrastructure upgrades -- but they paid in cash and avoided long-term financial commitments. Arbuckle -- who is responsible not only for law enforcement in the northwestern Louisiana parish, but also for tax collection -- boasts that his department currently has more than $40 million in the bank. That's enough to keep the sheriff's office afloat for three years without any other money coming in, he said.
The town of Mansfield, the DeSoto Parish seat, spent and saved similarly. Its investments in a new firetruck and fire station upgrades helped the rural town -- population 5,000 -- improve its rating with the Property Insurance Association of Louisiana. When activity in the Haynesville died down, municipal officials cut back on extra expenses, but they still have funds in reserve.
Mansfield Mayor Curtis McCoy said he can't imagine a better way to manage an unexpected influx of cash.
"We bought things we ordinarily wouldn't have been able to buy," he said. "We didn't buy anything on credit. Now we can rest easy."
A HAYNESVILLE RESURGENCE?
The school budget disaster was one of just a few trip-ups in DeSoto Parish's boomtime spending experience.
Other parishes struggled a bit more, especially in 2012 as natural gas prices began to fall, recalls Louisiana Oil & Gas Association (LOGA) spokesman Ragan Dickens. Around the time Haynesville activity began to slow, some local officials were calling meetings to ask for more money from industry to help offset the financial loss, he said.
Though they burned through their money quickly, DeSoto's communities made wise investments, Dickens said.
LOGA is currently focused on an emerging oil boom in southern Louisiana's Tuscaloosa Marine Shale. One of the industry group's goals there has been to manage expectations about the amount of money individual landowners stand to make from selling their mineral rights to drillers.
"People saw the mailbox money here," Dickens said, referring to the popular term for royalty checks that leaseholders received in the mail.
But even as it looks ahead to the future of the Tuscaloosa Marine Shale, LOGA still keeps an eye on the Haynesville. Dickens predicts a resurgence for the gassy play as manufacturers, LNG exporters and power generators increase their demand for the fuel.
In anticipation of the gas revival, drillers are still maintaining a presence in the Haynesville.
"I see a lot more of [the gas activity] than other people do," said Walding, the airport manager in Mansfield. "Some people think it has [dropped off completely], but I fly, so I still see wells everywhere, so I know it hasn't. And whenever I go to lunch, I still see there's a parking lot full of oil people."
By Dickens' assessment, the reversal of the Haynesville's slowdown is as soon as two years out and as far as five.
But one thing's for sure, he says: It's coming.
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Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on -
IMO Mr. Dickens is way off. The Haynesville Resurgence began quietly and modestly in the spring when Chesapeake and BHP brought in additional rigs and picked up their pace of drilling. In the last few months both QEP and Comstock have started the process of recommencing drilling operations. I see this because I look at reports daily and note the trends. The reasons that this increase in operations is not widely noticed is that operators are limiting their drilling programs to their best rock and they can drill more perforated lateral with fewer rigs. The newer designs for HC (Horizontal Cross Unit) wells allow 10 rigs to drill what it took 16 rigs to drill in the early days of Haynesville Shale development. In order for development to spread to areas with rock of slightly less quality it may take natural gas prices above $5. I expect that the price may reach $5 by this time next year, 3rd or 4th Quarter, 2015.
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Permalink Reply by TL DS1 on
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I agree. The activity has been steadily increasing for the past year. EXCO is drilling 5 wells in my section in the Holly field right now.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Here is one of the reasons I don't think that prices will reach $6 of some time. More competition. Not just from the Marcellus.
Company plans to ship Ohio natural gas to Louisiana by adding capacity to pipelines
Natural gas pulled from Ohio’s Utica shale could be moved to the Gulf Coast with the expansion of an existing pipeline.
Kentucky-based Texas Gas Transmission LLC has proposed adding north-to-south capacity to its existing 690-mile pipeline system. It would retain south-to-north flows.
The Ohio-Louisiana Access Project would run from Lebanon in southwest Ohio to Perrysville, La. Connections would be built to ship natural gas from eastern Ohio, West Virginia and western Pennsylvania.
The project must win approval from the Federal Energy Regulatory Commission.
Related: Pipeline to carry natural-gas liquids from Ohio to Texas m...
Construction would begin next August, and the project is scheduled to begin service in June 2016, says the company, a wholly owned subsidiary of Texas-based Boardwalk Pipeline Partners.
Gulfport Energy Corp., one of the key drillers in the eastern Ohio, has signed to ship a portion of its natural gas to Louisiana via the Texas Gas pipeline.
The other shippers are Sabine Pass Liquefaction LLC, R.E. Gas Development LLC, Jay-Bee Production Co., Louisville Gas and Electric Co., DTE Energy Trading Inc. and the Public Energy Authority of Kentucky.
Much of the natural gas would be used to power gas-fired plants to produce electricity in the South. Some could go to the Gulf Coast for liquefied natural gas export to other countries.
The company’s discussions with potential customers began in late 2013.
Texas Gas’ pipeline system extends about 6,100 miles and has a daily capacity of 4.6 billion cubic feet per day of natural gas.
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Permalink Reply by Keith Mauck (Site Publisher) on
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I'm not too familiar with the pipeline network, but it would seem that it would make better sense for the Utica to feed the midwest and the northeast, including exports, considering the Haynesville, Fayetteville and Eagle Ford supplies down here
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Permalink Reply by Skip Peel - Mineral Consultant on
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Proximity to end users is a consideration but not the most important one. Cost to produce can trump proximity. I suspect that Utica gas has costs similar to Marcellus. Anyone who markets natural gas is looking at future demand from industrial end users in the Lower Mississippi River Industrial Corridor and the Gulf Coast particularly the LA and upper Texas area. Those end users care only about cost. They don't care where the gas comes from.
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Permalink Reply by cicero on
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Skip, do you see a chance that Shelby County, Tx will resume a lot of drilling. My family had a lease with Chesapeake but they didn't drill. Cicero
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Permalink Reply by Skip Peel - Mineral Consultant on
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I haven't look at Shelby County in a long time. Chesapeake has 8 rigs running here in NW LA and could move one or more to E TX. if they choose to drill some wells to hold selected leases. jffree1 keeps up with Sabine County, I suggest that you ask Julie.
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