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Haynesville Shale - Haynesville Shale Formation

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Haynesville Shale Play: Top US Natural Gas Field

What is the Haynesville Shale?  The Haynesville Shale is a Natural Gas Field located in Northwest Louisiana, East Texas, and also extends into Arkansas.  Several years ago, the price of natural gas exploded higher which sparked a large search for more natural gas all across America.  Geologists knew the haynesville shale existed for decades but the the cost of extracting natural gas from this formation was very expensive.  New drilling technologies allowed drilling companies to drill low cost wells and turn a profit.  Drilling companies went on a land leasing binge and acquired mineral rights contracts from land owners.  Residents that owned land in the Haynesville Shale were getting richer by the week as companies would drill natural gas wells on their land and share royalties.

However, due to economic slowdown from 2008-2011, the price of natural gas collapsed.  The Haynesville Shale field drilling waned and land owners have begun to get angry.  The Haynesville Shale is still very profitable for drilling companies, but operation and production has seen a huge slowdown.  There is also a new shift into emerging oil fields.  To the north of the haynesville shale, the Smackover Brown Dense Formation is being explored.  To the south of the haynesville shale, the Tuscaloosa Marine Shale is really starting to ramp up.  And as most of you know, there is a lot of attention in the Bakken Shale and Eagle Ford Shale.

The Haynesville Shale Rock Formation ( Shreveport Shale ) is based on shale as the subsurface source of natural gas. Geologists have known for a long time that the Haynesville Shale Field held Natural Gas, but the rock was considered the source rather then a gas reservoir. It was also not economical because Natural Gas prices remained very low for many years.  Some of the main Haynesville Shale drillers are: Chesapeake Energy (CHK) - Petrohawk Energy (HK) - and Shell (RDS-A).

History: The Haynesville shale is a rock formation composed of clay-sized particles deposited and buried in the north Louisiana geological area more than 170 million years ago during the Jurassic time. The Shale discovery that went on in North Louisiana had been compared to the gold rush as companies scramble to lease land and contract mineral rights in the area. Local residents in the Shreveport area were striking it big with the land they held back in 2008.


Company Interest: The Haynesville shale has been one hot zone for Natural Gas Companies. Many companies started buying acres of land in and the Shreveport area back in 2006 in hopes to strike it big. Petrohawk Energy was already drilling a gas deposit known as Cotton Valley, a separate deposit that runs above parts of Haynesville Shale's deposits when it became aware of the Haynesville Shale play in 2006. PetroHawk Energy must used special technology to access the Haynesville Formation as it is below 10,000 feet. Companies drill the haynesville shale play vertically and then drill across horizontally. New technology has helped these companies fracture the shale in a timely fashion. Drillers use millions of gallons of fresh water which is pressurized to fracture the shale. In some cases, these haynesville shale operators will use a fresh water/sand combination. This new fracturing technique releases the natural gas trapped in the shale but also has the potential to contaminate the water supply.

County & Field Locations: The Haynesville Shale Formation has been predicted to be around 200 feet thick below the Elm Grove Field. Other zones that run above Haynesville Shale Natural Gas Field in addition to Cotton Valley and Elm Grove fields are: Caddo Parish Shale Field, Bossier Parish Shale Field, DeSoto Parish Shale Field, Greenwood Waskon Field, Sligo Field, Caspiana Field, Johnson Branch Field, LongStreet Shale Field, LoganSport Field, Bethany Longstreet Field, Red Rock Field, Kingston Shale Field, Central Pine Island Field, Longwood Field.

It is important to note that the majority of all activity can be found in four parishes which is known as the " sweet spot. " These parishes are Caddo, Red River, DeSoto, Bossier.

The Haynesville Shale in 2011/2012: As we head into 2012, natural gas prices remain very low, trading at $3.50. 
I am not expecting prices to rise to much in 2012 but I am expecting less drilling and more joint ventures or asset sales.  The Haynesville Shale is here to stay though, companies are still drilling the natural gas here at a decent rate.  If we ever see a spike in natural gas prices, the haynesville shale will become a hot area once again.  The pipelines have already been laid so all it will take is a price increase to get the haynesville shale buzzing with interest again.  Below is a list of Oil & Gas formations which are seeing some interest right now.  It seems that Oil fields are the hot locations right now - Eagle Ford Shale - Niobrara Shale -
Marcellus Shale - Horn River Shale - Bakken Oil Shale - Fayetteville Shale - Brazil Oil Field - Woodford Shale - Barnett Shale - Chattanooga Shale - Utica Shale 

Haynesville Shale Maps, Pictures - Maps of the Haynesville Shale by Parish

Haynesville Shale News - Operational Updates

The first two companies to issue conference calls about the Haynesville Shale, were
 
Goodrich Petroleum GDP and Petrohawk Energy HKSoon after, Chesapeake Energy CHK came out and also said it was there as well.

Haynesville Shale - 2012/2013 Drilling Update Status

Chesapeake Energy (CHK) - Chesapeake Energy (CHK) has stopped most of their drilling in the Haynesville Shale due to lower natural gas prices - Substantial reduction of its drilling activity in dry natural gas plays from 50 operated rigs at the beginning of 2012 to an average of 38 rigs in the 2012 first quarter to an average 12 dry natural gas rigs in the second half of 2012, including approximately only two rigs each in the Barnett and Haynesville Shale plays.

Exxon Mobil XOM - ExxonMobil is very active in the Haynesville Shale with their XTO Acreage as well as the joint venture with Encana (ECA) - In the Haynesville, we are progressing our joint venture with EnCana across our 108,000-gross acre joint venture area. In both the EnCana joint venture and legacy XTO acreage, we are also drilling and testing the prospective Bossier reservoir in selected wells.

Petrohawk Energy HK - Petrohawk Energy (HK) Haynesville Shale Update - During the quarter, the Company averaged 11 operated rigs and drilled 21 operated wells, with net production in the field averaging 684 Mmcfe/d. Sixty-seven non-operated Haynesville Shale wells and 3 Bossier Shale wells were drilled during the quarter. Non-operated activity exceeded expectations during the quarter, in terms of both activity level and capital expenditures, primarily due to the transition to full section development by some operators during the quarter. Petrohawk expects that lower rig counts publicly announced by many industry partners point to lower activity levels in the Haynesville Shale during the second half of the year. Petrohawk is currently operating six rigs and has two dedicated frac fleets in the Haynesville Shale.

The Company achieved an overall cost reduction trend in Haynesville Shale completions during the quarter. Savings of approximately $600,000 to $800,000 per well were accomplished largely as a result of changes in well design that require two fewer frac stages per well, lower overall sand requirements per well, and improved pricing for resin coated sand. During the quarter Petrohawk averaged slightly less than 45 days spud to spud, more than 5 fewer days than during the preceding quarter. Significant additional improvements are expected as the Company moves toward pad drilling and full section development toward the end of 2012.

Improvements in water handling and usage have contributed to more flexibility in water sourcing in the Haynesville Shale. Approximately half of all Petrohawk-operated wells in field have been completed with 20% recycled water. Year to date, the Company has pumped approximately over 2 million gallons of recycled waste water on well completions in the Haynesville Shale.

Haynesville Shale Jobs
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Haynesville Shale Parish Map
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Haynesville Shale Map
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Haynesville Shale Map - Louisiana Shale

Tons of Gas!

The Haynesville Shale Field could potentially be the biggest U.S gas field in history, beating out even the Barnett Shale Field.

Encana (ECA) - Encana ECA provides their haynesville shale update - At Haynesville, drilling and completions efficiencies continue to improve in both the company’s resource play hub development model and its remaining lease retention program. Encana received regulatory approval to drill additional long-reach horizontal wells in North Louisiana – a well-established technique that very effectively reduces supply costs and the number of wells required to produce an equivalent volume of natural gas. In the third quarter, Encana drilled two horizontal wells in the Sabine area of East Texas and two in the Haynesville in Louisiana. These wells are among the longest horizontal wells drilled in the region, averaging a horizontal length of 7,500 feet. One of the Haynesville wells surpassed 8,000 feet lateral length and a Sabine well reached a record measured depth of 22,350 feet. Each well is expected to have more than 30 completion stages – work that is planned for the fourth quarter of 2011.

Anadarko Petroleum (APC) - Anadarko Petroleum (APC) Haynesville Shale: Anadarko’s average sales volumes for the quarter were 34 million cubic feet equivalent per day (MMcfe/d), a 56% increase over the 2nd quarter of 2010. The company’s 20-stage completion design has increased the estimated EUR of the wells in the Oak Hill area from about 3.5 Bcf to more than 6 Bcf per well, while the well costs remained essentially flat, resulting in a dramatic improvement in well economics.

Forest Oil (FST) - Forest Oil Updates Investors on the Haynesville Shale - Forest holds approximately 163,000 gross acres (123,000 net) in the East Texas / North Louisiana Area.

Since Forest's last earnings release, the Company completed one horizontal Cotton Valley well (90% working interest) in East Texas that had an average 24-hour initial production rate of 10.3 MMcfe/d, including 662 Bbls/d of oil and natural gas liquids or 39% of total equivalent production. Forest currently has two rigs running in this area focusing on the liquids-rich Cotton Valley interval.

Additionally, Forest completed one well in its Red River Parish acreage (57% working interest) that had an average initial restricted rate of approximately 9.5 MMcf/d, with flowing pressures averaging 7,800 psi. This well has averaged 8.0 MMcf/d over its first 42 producing days. Due to the current low natural gas price environment, Forest has redeployed the Haynesville rig to drill the liquids-rich Cotton Valley interval in East Texas.

EXCO Resources (XCO) - Exco Resources (XCO) Haynesville Shale Update 2012 - Haynesville/Bossier Shale - Our horizontal Haynesville shale development program continues to be a significant asset for EXCO and continues to yield strong results. As of April 16, 2012, our Haynesville/Bossier shale operated production was 1,219 Mmcf per day gross (366.5 Mmcf per day net) and with the addition of net production from our OBO wells, we had 401.0 Mmcf per day of total Haynesville/Bossier shale net production. In response to low natural gas prices, we have made a significant reduction to our drilling program. In 2011 we averaged 22 operated rigs in the Haynesville/Bossier shale throughout the year. We began to reduce our rig count in late 2011 and have further reduced the rig count in the first quarter.

We currently have eight active operated rigs drilling in the play and will reduce to seven rigs in May. We will evaluate product pricing and project economics and make further decisions on rig count throughout the year. Our development drilling program for 2012 is focused in DeSoto Parish, Louisiana where we continue our 80-acre spacing manufacturing program. Our assets in San Augustine and Nacogdoches Counties, Texas have been delineated and tested and almost all of our core acreage in that area is held by production. We do not have plans to drill additional wells in the East Texas area in 2012 and are now focused on evaluation and planning for future full field development.

During 2012, we plan to drill approximately 68 gross (24.5 net) operated wells in the Haynesville/Bossier shale play with almost all of these wells in DeSoto Parish, Louisiana. We drilled and completed 30 gross (8.4 net) operated horizontal Haynesville/Bossier wells and participated in 10 gross (1.6 net) OBO Haynesville/Bossier horizontal wells during the first quarter 2012. We utilized an average of 14 operated rigs and spud 23 operated horizontal wells during the quarter. We averaged one OBO rig drilling in the play and spud three OBO wells during the quarter. We currently have no OBO rigs drilling. In total, we have 324 operated horizontal wells and 177 OBO horizontal wells flowing to sales.  The average initial production rate from our operated Haynesville horizontal wells completed in the first quarter 2012 in DeSoto Parish was 13.3 Mmcf per day with an average of 8,250 psi flowing casing pressure on an average 18/64ths choke. This 18/64ths choke size is indicative of our new restricted choke management program we have implemented in DeSoto Parish, based on the strong results we realized in our East Texas area. We believe that the current choke management program will result in a higher estimated ultimate recovery (EUR) per well than our initial choke program. 

We have a major cost reduction and efficiency program underway and are beginning to see significant improvements in capital efficiency. Our DeSoto Parish well costs in the fourth quarter 2011 were approximately $9.3 to $9.5 million per well. With the changes implemented to date, our current estimated well cost in the DeSoto Parish area is $8.5 million, approximately $1.0 million or 10% less than actual costs at year end 2011. We are expecting to realize additional improvements in capital efficiency during 2012 and are targeting $8.0 million per well by year end 2012. We completed a significant spacing test in our Shelby Area of East Texas in the first quarter 2012 to fully develop the Haynesville and Bossier shales across two units. EXCO and an offset  operator drilled 14 new horizontal wells and one vertical monitor well to test and properly evaluate the Haynesville/Bossier shale well spacing to assess the proper development strategy. All wells were turned to sales late in the first quarter 2011 and were completed on schedule. The peak production rate for the project was 215 Mmcf per day gross with flowing casing pressures of 9,085 psi on average with a restricted choke program. Our plans are to evaluate the performance of this spacing pilot before proceeding with additional development in the East Texas area. By enhancing our understanding of reservoir performance, we plan to maximize the EUR from our drilling and completion programs.

Plains Exploration (PXP) - Plains Exploration & Production PXP Haynesville Shale Update - In the Haynesville Shale, first-quarter daily sales volumes averaged 173.5 million cubic feet equivalent (MMcfe) per day net to PXP compared to first-quarter 2011 average daily sales volumes of 161.9 MMcfe per day net to PXP and fourth-quarter 2011 average daily sales volumes of 199.8 MMcfe per day net to PXP. The recent sales volume decline reflects operator driven production curtailments, shut-ins and reduced drilling activity. At the end of April, PXP's primary operator was operating 6 rigs, down considerably from 21 last reported in November 2011. The rate of decline in sales volumes is expected to slow and flatten out between 145 - 155 MMcfe per day net to PXP during the second quarter.

Comstock Resources CRK - Comstock Resources (CRK) is drills both Haynesville Shale & Bossier shale wells. In the East Texas/North Louisiana region, Comstock drilled 64 wells (28.3 net) during 2011, sixty-two of which were Haynesville or Bossier shale horizontal wells. During 2011, Comstock completed 84 (42.3 net) Haynesville or Bossier shale horizontal wells, including 33 wells (22.2 net) that were drilled in 2010. Wells drilled and completed in 2011 were put on production at an average per well initial production rate of 10.7 MMcfe per day. As of December 31, 2011, Comstock had 14 (9.8 net) Haynesville or Bossier horizontal wells waiting on completion.

Cabot Oil & Gas COG - Cabot Oil & Gas (COG) is active in the Haynesville Shale - At the Haynesville area, Cabot has signed two deals with industry peers that provide the Company with a carried interest in the initial well for 24 units. In the third deal, Cabot has elected to sell several non-operated units producing 4 Mmcf per day. This deal is signed and under the normal due diligence evaluation. Closing is scheduled for early May with approximately $50 to $55 million in proceeds expected from all these transactions.

SM Energy (SM) - SM Energy (SM) comments on the Haynesville Shale in 2011 - As gas prices deteriorated in recent months, SM Energy has made the decision to scale back its operated program in the Haynesville by removing four of the wells the Company had previously planned to drill in 2012. As a result of the reduced 2012 drilling activity in the Haynesville, SM Energy has reduced the capital allocated for this program to $35 million to $40 million. After the completion of the currently planned drilling, SM Energy will have approximately 80% of its operated Haynesville shale acreage held by production.

Comstock Resources CRK - In the East Texas/North Louisiana region, Comstock has drilled 15 wells (6.9 net) in the first quarter of 2011, all of which were Haynesville or Bossier shale wells. During 2011's first quarter, Comstock has completed 13 operated and 8 non-operated Haynesville or Bossier shale wells which have been put on production at an average per well initial production rate of 11.2 MMcfe per day. 

Goodrich Petroleum (GDP) - Goodrich Petroleum (GDP) updates the Haynesville Shale and East Taxes properties - The Company participated in three completions in the quarter of small non-operated interest wells, the McEachern 9H-1 (6% WI), Cason 24H-1 (3% WI) and Frazier-Federal 1H (5% WI), with an average peak 24-hour initial production rate of 14,438 Mcf per day.

PetroQuest Energy (PQ) - PetroQuest Energy (PQ) Cotton Valley/Haynesville Shale Update - In East Texas, the Company's second Classic operated horizontal Cotton Valley well (NRI-20%) was recently completed and achieved an initial 24 hour gross daily production rate of approximately 3,800 Mcf of gas and 250 barrels of liquids. This initial rate was curtailed on a 28/64th inch choke to prevent this well from shutting-in existing production in the area. Once additional gathering facilities are in place during the third quarter, the Company expects line pressures to be reduced and field production will be restored. The Company recently spud its third Classic operated horizontal Cotton Valley well (WI-29%) and the Company's first Chevron operated horizontal Cotton Valley well (WI-50%) has reached total depth. Additionally, the Company's first operated horizontal Cotton Valley well (WI-50%) is nearing total depth and the Company expects completion activities on these wells will commence during the summer.

GMX Resources (GMXR) - GMX Resources (GMXR) Haynesville Shale, East Texas Oiul -
  • Production for third quarter of 2011 was 6.1 Bcfe, an increase of 32% over the 4.7 Bcfe of production in the third quarter of 2010. The Company completed one Haynesville/Bossier ("H/B") Hz well during the third quarter of 2011.
  • Production increased by 54% to 18.7 Bcfe in the first nine months of 2011 compared to 12.2 Bcfe in the first nine months of 2010.
  • In the current natural gas commodity price environment, the Company has elected to temporarily suspend its H/B Hz drilling until natural gas prices and/or completed well costs support more economical development. The Company completed its eighth and final 2011 H/B Hz well in the third quarter of 2011. Completed well costs in the H/B for third quarter of 2011 were approximately $8.6 million, which is unchanged from the second quarter of 2011.
  • The Company's full year production guidance is expected to be in a range of 23.2 Bcfe to 24.0 Bcfe, with the midpoint of 23.6 Bcfe representing an increase of 35% from the 17.5 Bcfe in production for 2010.
  • The Company is currently conducting a 3D seismic shoot ("Crossroads") of 33 square miles, covering almost all of the Company's contiguous operated acreage in Harrison County, Texas, to aid in a more complete assessment of several oil targets and proven natural gas developments. The Crossroads shoot is expected to be completed in the fourth quarter of 2011. Our remaining 2011 drilling capital expenditure budget on oil development in the Bakken, Niobrara and other East Texas oil targets.
  • Cubic Energy (QBC) - Our corporate strategy with respect to our asset acquisition and development efforts was to position the Company in a low risk opportunity while building main stream high yield reserves. The acquisition of our Cotton Valley acreage in DeSoto and Caddo Parishes, Louisiana, put us in a reservoir rich environment both in the Cotton Valley and Bossier/Haynesville Shale formations, and gives us the potential to discover additional commercial horizons that can add value to the bottom line. We have had success on our acreage with wells drilled by achieving production from not only the Cotton Valley and Bossier/Haynesville Shale formations, but also the Hosston formations.

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