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A sunny outlook for Haynesville shale?

This year may be brighter for the Haynesville shale than many expected. According to Argus Media, production has begun to increase in the formation, putting 2015 off to a good start.

The article reports that a decrease in oil drilling due to low prices might actually work in favor for the natural gas play. Slowdowns in the Eagle Ford and Permian formations are causing a drop in natural gas production as well, but upcoming liquefied natural gas facilities in the Gulf Coast are amping up the need for the fossil fuel. Multiple LNG facilities in Louisiana and Texas are set to begin production and exportation starting this year.

Prices for natural gas out of Haynesville have begun to stabilize, especially compared to the plummeting oil prices. Argus Media reports:

Spot prices at the Carthage hub in east Texas this year have traded at an average discount to the Henry Hub in Louisiana of 9¢/mmBtu, widening from a 6¢/mmBtu discount in 2013, amid milder weather and rising production. But gas at the Carthage hub still traded at a premium to many markets in the northeastern US during the non-winter months, meaning that Haynesville production can often fetch a higher price.

New advanced technologies and consequent lower well costs have begun to increase allure for Haynesville shale. Increased efficiency with the new technology is proving a boon to breathing life back into the industry in north Texas and east Louisiana.

In related news, oil price crash claims first U.S. LNG project casualty.


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