Haynesville Shale Production Turns Upward Again

The Louisiana state oil and gas reporting system shows well by well production, usually about 3-5 months lagging.  Based on the operators who have reported monthly production, February shows the first significant uptick in production after a long decline and plateau.  All the gains are in De Soto Parish, in fact.

With the rapid rise in working rigs, the Haynesville is likely to see gains for some time, perhaps returning to it's 7 BCFD glory next year if activity continues ramping up.  

Haynesville Shale: Rig Counts Rise +3 to 34, vs 15 Last Year. Gas Production Outlook?

Rig counts have been steadily rising in the Haynesville Shale for a very long time now.  The production response has been muted/sluggish/nonexistent thus far.  

Louisiana has a well production reporting system that has a 4-5 month lag before data is substantially complete, so November '16 is solidifying now, and it shows a slight uptick in daily production, though the plateau in output that prevailed for the prior 15 months hasn't been decisively broken.  

The two parishes that contribute the lion's share of output (70%), Caddo and DeSoto, are shown below as well.  The long lag in reporting makes this data fairly backward looking, but even so.  

Haynesville Shale Natural Gas Production Trends

Most Haynesville area producers have reported production results for January 2014.  The word most is critical here, as it leads to the opposite conclusion that all would.  Rig counts have been very low but stable for a year and a half on both sides of the (TX/LA) border, but production has been trailing off without cease since late 2011.  

With rig and well productivity trending upward in the industry for years now, a naive logical hypothesis would be:

Production will eventually stabilize and perhaps begin a slightly upward trend if rig counts remain stable in the Haynesville.  

But the Haynesville has been a popular whipping boy for so long that it has become axiomatic to illustrate 'terminal decline' of mature and/or uneconomic plays, and the steep decline curve of tight gas.

So.  This is probably going to be wrong.  In 2014.  

Preliminary data show that January 2014 is probably going to be flat with December 2013.  The volumes reported in the first 60 days after a period are a reliable fraction of the final total, and the initial reports from Texas and Louisiana are rather higher than would be typical if gas production declines are anticipated.  These production numbers are going to be steadily revised upwards week after week, as they always have been in the past. (see notes at the bottom of this post). 

The visualizations below show that:

• LA reports 3.346 BCFD for JAN, vs 3.944 BCFD for DEC
• TX reports 1.978 BCFD for JAN, vs 2.062 BCFD for DEC

PDF Report by County/Parish

Notes:

• Reporting practices and trends for each state differ materially, and until final numbers are in (which can take over a year in TX, but much less is LA) the verdict cannot be pronounced.
• The data is foggy for other reasons...it includes all gas production, which includes legacy production, associated gas production, and production from other formations...but those are not very big numbers nor do they tend to vary much from month to month.  The gas rig count, too, can be skewed by rig classification variances, mainly an issue on the Texas side of the border, since few oil rigs are working in LA Haynesville parishes.
• The production data comes from:  Texas RRC  Louisiana DNR

Louisiana Haynesville Gas Production

December natural gas output from the Louisiana Haynesville Parishes is not quite completely reported yet, so expect small upward revisions over the next three weeks.  As it stands now, the decline in daily output from November to December 2013 was 130 MMCFD, or about 3%.  It is possible that revisions may raise this to the November level or above, as some pipeline maintenance was ongoing during this period.  

We should see output much flatter in 2014, as the rig count has been steady at a low level (near 20 rigs) for a year and a half, and in fact a few rigs are expected to return this year.  The output is worth watching because national gas output was rising quickly over the past two years in spite of a massive decline in the Haynesville of 3 BCFD (on the LA side of the border only).  Production should not fall by another 1BCFD in 2014, and may even hold steady.  

Similar math is in effect for the Gulf of Mexico, where a steep multi-year decline has been arrested.