The Haynesville shale natural gas play in East Texas and northwestern Louisiana has roared back to life thanks to higher natural gas prices and a slew of new liquefied natural gas export terminals coming online along the Gulf Coast.
Haynesville gas production is at its highest level since the previous 2011 peak and should hit a new record later this year, according to a new report from the Norwegian research firm Rystad.
The continental U.S. began exporting LNG in early 2016 when Houston-based Cheniere Energy Sabine Pass terminal came online on the Louisiana side of the Texas border. That terminal has continued to expand since, increasing Haynesville gas demand throughout 2016 and 2017.
"We conclude that Haynesville Shale's revival, for the second year in a row, looks sustainable," said Rystad partner Artem Abramov. "Supported by its proximity to a new LNG export terminal, gas production will continue to grow, and achieving new all-time high gas production levels should happen within a matter of months."
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Cheniere just started shipping out LNG from its new Corpus Christi terminal late last year and projects by other companies are coming online later this year, including Freeport LNG in Texas and Cameron LNG in Louisiana.
More than 50 drilling rigs are currently running in the Hayneville, according to the weekly count from Baker Hughes, a GE company. Natural gas prices have been higher for the past several months, although they've dipped a bit this January.
The demand for U.S. LNG is driven by Asian growth, especially China and India, as well as other emerging markets in the region. Asia will account for 75 percent of global LNG demand by 2030, Rystad estimates.
The Haynesville was part of the early shale boom a decade ago, but low natural gas prices halted much of the activity in the region and more shale drilling efforts shifted from gas to crude oil.
Longer horizontal well with more volumes of sand and water have made the wells more productive, and a trio of oilfield services companies are dominating about 90 percent of the hydraulic fracturing, or fracking, market share in the Haynesville, Rystad said. Those are global industry leaders Halliburton and Schlumberger, as well as Tomball-based BJ Services, which spun out of Baker Hughes a couple years ago.
"The Haynesville Shale is truly a different play today than it was in the first growth phase," Abramov said, noting that well productivity doubled from 2012 to 2018.