What is the Haynesville Shale?

The Haynesville Shale, is a black, organic-rich shale of Upper Jurassic age that underlies much of the Gulf Coast area of the United States. "Haynesville Shale" is a drillers term for shale rock units within the Haynesville Formation.

The Haynesville Formation is underlain by the Smackover Formation and overlain by rocks of the Cotton Valley Group. It was deposited about 150 million years ago in a shallow offshore environment.

Geologists have long known that the Haynesville Formation contained natural gas. However, because of its low permeability the Haynesville was originally considered to be a gas source rock rather than a gas reservoir.

Today, natural gas production from the Haynesville occurs from rocks about two miles beneath northwestern Louisiana, southwestern Arkansas and eastern Texas. The most productive areas have been Caddo, Bienville, Bossier, DeSoto, Red River and Webster Parishes of Louisiana plus adjacent areas in southwest Arkansas and east Texas

Playing the Haynesville Shale

"The recent announcement of a large natural gas deposit in northwest Louisiana, called the Haynesville Shale, could be this century's gold rush — or a fool's gold of hype."

"The only certainty at this point is that some fortunate landowners already are grinning all the way to the bank, patting their pocketbooks that are thick with lease bonus payments and anticipation of royalty riches if a producing well follows.

"The Haynesville Shale is being described as one of the richest fields of natural gas ever discovered in this region. But most experts and those connected to the industry agree it's too early to say for sure if the discovery will transform the landscape and economy of parishes that sit atop it."

"The shale's boundaries are still up for interpretation. But the hot zones appear to include all of DeSoto Parish, the mid to southern regions of Caddo and Bossier parishes, the southern tip of Webster, the western end of Bienville Parish, most of Red River Parish, the upper parts of Sabine and Natchitoches parishes and sections of east Texas."

"It could take several years before the potential, or lack thereof, of the Haynesville Shale is fully realized. Drilling likely will shift from the standard vertical wells to more expensive horizontal wells, requiring more manpower, equipment, expertise and time. Predictions are it will take another year or so before knowing if it's a viable commercial opportunity."

"The race for the play — an oil and gas industry term for staking out opportunity — quietly has been under way for about two years with one company, Oklahoma-based Chesapeake Energy, putting more than 200,000 acres in northwest Louisiana under lease with plans to add another 300,000 acres. Industry officials say another company, Cubic Energy, has been drilling on the shale for four years."

 

Your Thoughts on the Haynesville Shale Discovery

Devon Energy Corp. chairman and chief executive Larry Nichols addressed some 800 attendees at this year’s Developing Unconventional Gas conference in Fort Worth this week, hosted by Oil and Gas Investor and E&P magazines, publications of Hart Energy Publishing.

His thoughts on the Haynesville shale: “You don’t drill a couple of wells and say anything is the next Barnett shale.”

–Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week, www.OilandGasInvestor.com; ndarbonne@hartenergy.com

MORE ON THE HAYNESVILLE SHALE DISCOVERY

"There’s Haynesville shale here. There’s Haynesville shale there.

Acreage-holders in northwestern Louisiana have not yet fully defined the economically producible boundaries of the Haynesville shale, and rumors are rampant. One source says an operator is talking about it extending into Arkansas. The shale is becoming as legendary as UFO sightings.

One observer says, “This is the biggest lease play of the last quarter-century. (Shell Oil Co.’s) effort is noteworthy. They don’t chase ‘BS PUDs’ to run the stock. So, Shell must think this play is for real. We know they have transferred a large group of Tech folks from offshore to this play. This is their first serious effort onshore in 30 years.”

A whole report on the play, “Haynesville 101,” is in this month’s issue of Oil and Gas Investor. (For a copy, write to nkunantaeva@hartenergy.com, or if you subscribe to Oil and Gas Investor, go to www.oilandgasinvestor.com.) 

 –Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week, Information from www.OilandGasInvestor.com; ndarbonne@hartenergy.com   

 

 CHESAPEAKE'S INTEREST IN THE  HAYNESVILLE SHALE

"Based on its geoscientific, petrophysical and engineering research during the past two years and the results of three horizontal and four vertical wells it has drilled, Chesapeake believes the Haynesville Shale play could potentially have a larger impact on the company than any other play in which it has participated to date. Chesapeake is currently utilizing four rigs to drill Haynesville Shale wells and plans to increase its drilling activity level to approximately 10 rigs by year-end 2008 and potentially more in 2009. The company currently owns or has commitments for more than 200,000 net acres of leasehold in the Haynesville Shale and has a leasehold acquisition effort underway with the goal of owning up to 500,000 net acres in the play."

Haynesville Shale News - Article pieces from various sources.
 

SHREVEPORT, LA (KSLA) - As big payouts begin to filter through the local economy from the Haynesville Shale, we wanted to draw a clearer picture about the amounts of money changing hands.  Much attention is focused on lease bonus payments; how much a property owner is paid per acre.  But, that's just the tip of the iceberg.

Oil and gas consultant Bill Pittman did some calculating for us on potential royalties and production levels per well.  "It'll come in producing five, ten, fifteen million cubic feet a day.  But it's going to drop rapidly," described Pittman.  In fact, he estimated a 75-percent drop in production the first year alone, along with big drops in years two and three.

So, Pittman estimated a royalty payment after production drops to a baseline of 1-million cubic feet per day after a few years as, "seventy-five dollars per month for one acre in a 640-acre drilling and production unit."  Seventy-five dollars seems incredibly low, compared to the numbers batted around by the general public.  But Pittman said a huge bonus for the Haynesville Shale is how 'tight,' or compacted it is.

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