Natural Gas

Gas-directed drilling in the newer Haynesville is on the rise, while flattening somewhat in the Barnett. "As gas-directed drilling in the Barnett slows and natural gas prices remain relatively low, operators are turning their attention to the more liquids-rich areas of the play, thereby reducing the emphasis on gas," noted the EIA.

Technology and experience also plays a large role. Reported pipeline flows show nearly a decade of shale-focused drilling to reach 5 bcf per day in the Barnett. Haynesville operators now use the experience gained from those early horizontal drilling programs to more rapidly ramp up natural gas production. That same 5 bcf/d benchmark took only three years to surpass in the Haynesville.

Regional infrastructure is also a key factor as its expansion helps to accommodate the Haynesville's rising natural gas production. Pipeline capacity expansions were recently completed on the Regency, Midcon Express, and Gulf Crossing systems, each of which transports Haynesville gas. More recently, Enbridge Energy Partners announced its intention to invest an additional $175 million to expand its East Texas system serving Haynesville Shale producers.

In May, Kinder Morgan Energy Partners a 50% interest in Petrohawk Energy's natural gas gathering and treating services in the Haynesville Shale and a 25% interest in Petrohawk's midstream business in the Eagle Ford shale for about $920 million. Upon closing, which is expected in the third quarter of this year, KMP will own 100% of KinderHawk, the largest natural gas gathering and midstream business in the Haynesville Shale.

Petrohawk, one of the largest shale gas and oil producers in the US, is being acquired by Australia's BHP Billiton in a $15.1 billion transaction announced in July.

Taking advantage of the abundant natural gas resources and the relatively low prices of the fuel, Canada's Encana Corp. recently announced that its subsidiary, Encana Natural Gas Inc., will set up a network of mobile LNG refueling stations for heavy-duty trucks that haul water to the Haynesville Shale play. Encana is the sole fuel supplier to California-based Heckmann Water Resources, a provider of water hauling services to Encana and other producers in the shale play. Encana will initially provide fuel to Heckmann's fleet of 200 new LNG trucks from its mobile refueling stations but plans to build its first permanent and public LNG refueling station in nearby Shreveport later this year.

Some of the top producers in the Haynesville Shale in the past year include Chesapeake Energy, Encana, EOG Resources, Petrohawk, ExxonMobil, KCS Resources, EXCO Resources, Questar Exploration & Production, Comstock Resources, and Gastar Exploration. OGFJ