As natural gas demand grows and prices rise, operators are looking at the Haynesville Shale to fill the supply gaps.
鈥淭he time has come for the Haynesville,鈥� BP CEO Murray Auchincloss said during the CERAWeek by S&P Global conference in March.
But just how much gas does the Haynesville have left in the tank, and how many drilling rigs will it take to meet the rising demand?
The current level of Haynesville drilling activity would leave markets undersupplied heading into 2027 as new LNG export projects come online, according to an analysis by Keybanc Capital Markets.
There鈥檚 a 鈥渨all of demand鈥� rapidly approaching from increased LNG exports on the Gulf Coast, said Gordon Huddleston, president and partner at Aethon Energy, during Hart Energy鈥檚 DUG Gas Conference & Expo.
Aethon Energy is the Haynesville鈥檚 second largest natural gas producer.
U.S. natural gas demand could rise by nearly 6 Bcf/d over the next 12 months to fuel just three LNG export expansions, by Expand Energy鈥檚 forecasts.
But meeting that demand won鈥檛 happen overnight, and it will require billions of dollars of additional investment by operators, Huddleston said.
Privately held Aethon has the capacity to grow production from current levels, around 3 Bcf/d gross.
Dallas-based Aethon plans to spend around $1 billion this year to keep production flat. It could boost capital spending to $2 billion and add another 500 MMcf/d to 600 MMcf/d of production after deducting base declines.
Henry Hub futures prices average $4.56 over the next 12 months, according to CME Group data; 24-month strip averages $4.38.
But Aethon won鈥檛 increase drilling without higher prices鈥攑referably above $5/Mcf鈥攐ver a sustained period.
鈥淎ethon keeps a lot of drill-ready inventory,鈥� Huddleston said. 鈥淏ut certainly, if we were to double or triple capital spending, you鈥檇 be churning through a lot of that.鈥�
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Rig activity
There were 34 active drilling rigs across the Haynesville Shale in the week ended March 11鈥�19 in East Texas and 15 in Louisiana鈥攁ccording to Enverus data. That鈥檚 down from a recent peak of 70 in late 2022.
Haynesville production, including legacy Haynesville and Bossier output and production from the emerging western Haynesville extension, averaged 13.1 Bcf/d in January.
Haynesville drilling activity is 鈥減retty concentrated among the larger operators,鈥� said Tim Rezvan, Keybanc managing director and equity research analyst during Hart Energy鈥檚 DUG Gas Conference & Expo:
- Expand Energy and Comstock Resources were each running six rigs;
- Aethon was running five rigs;
- TG Natural Resources, majority owned by Japanese utility Tokyo Gas and the winning bidder of additional Haynesville assets from Chevron, was running three rigs;
- Sabine Oil & Gas, majority owned by Japanese firm Osaka Gas, was running three rigs;
- BPX Energy, the U.S. shale segment for BP, was running two rigs; and
- Paloma Natural Gas, which was acquired by hedge fund giant Citadel for $1.2 billion in February, was also running two rigs.
Rising prices have certain operators hinting at output growth. Comstock and Expand have indicated a desire to grow Haynesville production from their current levels.
Sabine plans to add a fourth drilling rig in East Texas in April, President and CEO Carl Isaac said at DUG Gas.
But Haynesville operators will need to significantly ramp up drilling activity to meet the growing demand call, according to KeyBanc.
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Current scenario鈥�34 rigs
Under the current level of Haynesville drilling activity, gas production will rise from 13.1 Bcf/d to 14.7 Bcf/d by 2026鈥攁nd to 15 Bcf/d by 2027.
Haynesville output peaks in late 2027 at 15.3 Bcf/d before gradually declining.
鈥淲ithout rig adds, you鈥檙e not going to see meaningful contribution from the Haynesville,鈥� Rezvan said. 鈥淭hat would lean you more in the undersupplied markets with the next couple of projects coming online in late 2026.鈥�
The bank made several assumptions on base declines of existing production, IP-rate degradation for new wells, improvements and efficiencies in cycle times, among other factors, Rezvan said.
Accelerated scenario鈥�50 rigs
If Haynesville drilling were to expand to 50 rigs, production would grow to 17 Bcf/d by 2026 and 18.5 Bcf/d by 2027.
鈥淚 think what鈥檚 important is we can get up to 20 Bcf/d, but really not until 2029,鈥� Rezvan said.
Haynesville production would peak above 20 Bcf/d in mid-2029 and stay flat under a 50-rig scenario.
This level of activity could meet some of the near-term LNG export demand growth. But it鈥檚 unlikely to see that level of Haynesville drilling activity before the second half of 2025, Rezvan said.
鈥淚 recognize out in the field you鈥檙e dealing with labor, gathering systems and other constraints, too,鈥� he added.
Life in the fast lane鈥�60 rigs
With 60 rigs spread across the Haynesville鈥攁lmost double the current activity level鈥攖hings start getting exciting, Rezvan said.
It sounds like an enormous increase over the current 34 rigs. But, 鈥渨e were running 60 [Haynesville] rigs as recently as May 2023,鈥� Rezvan said.
鈥淪o, it鈥檚 not like the industry hasn鈥檛 been there,鈥� he said.
Under a 60-rig program, Haynesville production grows to 18 Bcf/d by 2026 and to 20.7 Bcf/d by 2027.
But it鈥檚 unlikely that Haynesville producers are willing to step on the gas pedal and ramp up to a 60-rig program, Rezvan noted.
Haynesville operators, including Aethon, are hesitant to massively boost production without higher prices into 2027 and beyond.
鈥淭he question is going to be if there is an inclination to go,鈥� Rezvan said.
Magic number鈥�45 rigs
Experts expect to see Haynesville output growing in future months. U.S. Energy Information Administration forecasts have Haynesville production averaging 18 Bcf/d over the fourth quarter of 2026.
That鈥檚 an aggressive forecast, Aethon鈥檚 Huddleston said. Haynesville output by year-end 2026 might be closer to 16 Bcf/d, he said.
According to Keybanc鈥檚 analysis, unless you get a Haynesville rig count to 45 or higher, 鈥測ou鈥檙e really not going to see the production contribution that the Haynesville needs to deliver,鈥� Rezvan said.
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