Despite a natural gas rig count that has declined significantly, production from the Haynesville Shale during June was climbing, which was reversing the impact of well shut-ins that began in February, an analysis by Bentek Energy LLC found.

“The trend, which coincided with an uptick in gas prices, suggests the shut-ins are allowing operators to change production levels in response to price and other market conditions,” the Evergreen, CO-based firm said in a market note.

Bentek said that as of June 22 the Haynesville rig count had declined to 36, the lowest count seen since January 2008. However, the firm detected a production increase from its pipeline sample of activity of 382 MMcf/d, or 6%, to an average 6.3 Bcf/d. Between January and April production declined by nearly 600 MMcf/d following shut-in announcements from producers, Bentek said.

According to NGI’s Shale Daily Unconventional Rig Count for the week ending June 29, the Haynesville/Bossier has seen its rig count drop 5% from a month ago and 65% from a year ago to stand currently at 41 rigs, flat with the previous week.

NGI‘s analysis found that as the Haynesville’s rig numbers declined, gas prices in the region increased. According to NGI’s Shale Price Indices, the Haynesville-E. TX spot price and the Haynesville-N. LA spot price increased from $1.82 and $1.80/MMBtu respectively on April 2 to $2.86 and $2.85/MMBtu on June 27, while the Haynesville/Bossier rig count dropped from 64 rigs to 41 rigs over the same period.

“In recent days, the sample has exceeded 6.5 Bcf/d, in line with December and January levels,” Bentek said in its Weekly Southeast/Gulf Observer Report last Thursday. “The majority of the increase occurred on ETC Tiger and Acadian pipelines. In the sample by operator, Chesapeake-operated flows accounted for a majority of the increase in May and June, though it is possible that Chesapeake volumes fell at unreported intrastate meters. The balance of the increase was accounted for in the ‘other’ category, which mainly includes third-party gathering companies. Similar to the production trend, Henry Hub cash prices also hit a low in April of $1.94/MMBtu, and have since rebounded to an average $2.43 in May and $2.38 in June.”

The bump in Haynesville production has contributed to overall choppiness of U.S. production and shows how supply swings can happen in the near term, Bentek said.

“While rig releases and initial production information have historically determined the direction of the Haynesville Shale, the ability of producers to utilize shut-in wells, uncompleted well inventories, chokes and other methods to respond to price, new infrastructure and other changes in market conditions has increased supply sensitivity. Assuming current rig counts and drilling activity, Bentek’s model projects Haynesville production to remain relatively flat through July and decline nearly 600 MMcf/d to 6.0 Bcf/d by the end of the year, from 6.5 Bcf/d today.”

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