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Is It Time for the Barnett to Bow to Haynesville?

Pipeline flows recorded by Bentek Energy LLC show that Louisiana's Haynesville Shale region has surpassed the Fort Worth Basin/Barnett Shale region of North Texas in natural gas output. The two shale plays themselves are neck and neck in output. While it's too soon to call a new Lower 48 shale king, all signs are that the Barnett will soon bow to the Haynesville.

For about the last decade the Barnett has been the country's No. 1 shale gas producer.

"Natural gas production from the Louisiana section of the Haynesville overtook the Barnett's volumes in early to mid-February, even after the Barnett's recovery from the winter's well freezeoffs," EIA said on its website, citing Bentek research.

But that's not quite right, said Bentek's Matt Marshall, senior energy analyst. He told NGI's Shale Daily that the Bentek pipeline flow statistics include some legacy gas that isn't coming from either of the shale plays. "We are including any gas produced in the area that is prospective for Haynesville Shale," he said. "So there is definitely an amount of legacy production that was on beforehand as Haynesville production really started increasing in late 2009." Legacy production also finds its way into the Barnett Shale region numbers.

Gas flows from the respective regions are what's important to the market -- and prices -- Marshall said, not which shale play is producing more.

"From a markets point of view, who cares? If methane is being sold for the same price no matter if it comes from Cotton Valley, James Lime, Smackover or Haynesville, who cares?" he said. "My point of view is that this area of Northern Louisiana is now producing more gas than Fort Worth. While Fort Worth was the granddaddy of shale gas plays, it started first, grew to be the biggest and now is being overtaken. For anybody who's watching prices or the flow of gas, the way my analysis was done was to figure out how is the dynamic changing from North Texas over to North Louisiana."

But since we asked, the Fort Worth Barnett Shale and the Louisiana Haynesville/Bossier were about neck and neck at 4.65 Bcf/d each Monday, based on Bentek research, Marshall said. "They are almost exactly equal."

Looking at the corresponding regions, the Haynesville/Bossier area has been trending about 5.6 Bcf/d, while the Fort Worth Barnett Shale has been at about 5.4 Bcf/d, Marshall said, noting that the Fort Worth Basin has been recovering from freezeoffs experienced earlier this year.

Over the weekend the Haynesville region saw a production spike of about 300 MMcf/d, Marshall said, which caused it to hit an all-time high. "The play probably hit its high too because all incremental gas coming out of there is Haynesville or Bossier shale production; there's very little volume coming from other reservoirs," he said.

According to NGI's Shale Daily Unconventional Rig Count for March 18, activity in the Barnett is down 16% from a year ago while activity in the Haynesville/Bossier is off by 26%. Last week 72 rigs were targeting the Barnett while there were 143 active in the Haynesville/Bossier, according to the count. Those figures are down from the week-ago period when 75 rigs were active in the Barnett and 145 were active in the Haynesville/Bossier.

Bentek suggested that producers are targeting the liquids-rich areas of the Barnett, reducing gas output from the play. Additionally, the firm said experiences in the Barnett have aided producers in ramping up faster in the Haynesville. "Based on reported pipeline flows, it took nearly a decade of shale-focused drilling to reach 5 Bcf/d at the Barnett; that threshold was surpassed at the Haynesville in less than three years," EIA and Bentek said.

Additionally, the Haynesville has seen a buildout of infrastructure to facilitate transportation of Haynesville gas to market, Bentek noted.

"We don't show Barnett growing very much in the next several years," Marshall said. "But in the Haynesville, even though we expect some rigs to be laid down by the beginning of 2012, we still expect growth to continue because of some of the productivity gains that operators are realizing."

Gene Powell, publisher of the Powell Shale Digest newsletter, spotted the legacy/non-Haynesville production in Bentek's analysis as reported by the EIA. For now he remains a Barnett loyalist.

"We know the Barnett Shale gas production will be surpassed by other shale formations in the futures; we just would like it done from actual well production data reported to state agencies and not 'estimates,'" he wrote in the latest issue of his newsletter.

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