By BEN CASSELMAN

CADDO PARISH, La. — A massive natural-gas discovery here in northern Louisiana heralds a big shift in the nation’s energy landscape. After an era of declining production, the U.S. is now swimming in natural gas.

Even conservative estimates suggest the Louisiana discovery — known as the Haynesville Shale, for the dense rock formation that contains the gas — could hold some 200 trillion cubic feet of natural gas. That’s the equivalent of 33 billion barrels of oil, or 18 years’ worth of current U.S. oil production. Some industry executives think the field could be several times that size.

“There’s no dry hole here,” says Joan Dunlap, vice president of Petrohawk Energy Corp., standing beside a drilling rig near a former Shreveport amusement park.

Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.

The discoveries have spurred energy experts and policy makers to start looking to natural gas in their pursuit of a wide range of goals: easing the impact of energy-price spikes, reducing dependence on foreign oil, lowering “greenhouse gas” emissions and speeding the transition to renewable fuels.

A climate-change bill being pushed by President Barack Obama could boost reliance on natural gas. The bill, which could emerge from the House Energy and Commerce Committee in May, is expected to set aggressive targets for reducing emissions of carbon dioxide, the most prevalent man-made greenhouse gas.

Meeting such goals would require quickly moving away from coal-fired power plants, which account for substantial carbon emissions. President Obama wants the U.S. to rely more on renewable energy such as wind and solar power, but those technologies aren’t ready to shoulder more than a fraction of the nation’s energy burden. Advocates for natural gas argue that the fuel, which is cleaner than coal, would be a logical quick fix. In addition, billionaire energy investor T. Boone Pickens has been touting natural gas as an alternative to gasoline and diesel for cars and trucks.

“The availability of natural-gas generation enables us to be much more courageous in charting a transition to a low-carbon economy,” says Jason Grumet, executive director of the National Commission on Energy Policy, who was a senior adviser to President Obama during the campaign.

Just three years ago, the conventional wisdom was that U.S. natural-gas production was facing permanent decline. U.S. policy makers were resigned to the idea that the country would have to rely more on foreign imports to supply the fuel that heats half of American homes, generates one-fifth of the nation’s electricity, and is a key component in plastics, chemicals and fertilizer.

But new technologies and a drilling boom have helped production rise 11% in the past two years. Now there’s a glut, which has driven prices down to a six-year low and prompted producers to temporarily cut back drilling and search for new demand.

The natural-gas discoveries come as oil has become harder to find and more expensive to produce. The U.S. is increasingly reliant on supplies imported from the Middle East and other politically unstable regions. In contrast, 98% of the natural gas consumed in the U.S. is produced in North America.

Coal remains plentiful in the U.S., but is likely to face new restrictions. To produce the same amount of energy, burning gas emits about half as much carbon dioxide as burning coal.

Natural gas has never played more than a supporting role in the nation’s energy supply. Crude oil, refined into gasoline or diesel, fuels nearly all U.S. cars or trucks. Coal is the dominant fuel for generating electricity.

Natural-gas production in the U.S. peaked in the early 1970s, then fell for a decade due to weak prices and declining gas fields in Texas, Louisiana and elsewhere. Production bounced back in the 1990s with the discovery of new fields in New Mexico and Wyoming, but by 2002, output was falling again — this time, most experts thought, for good. Believing the U.S. would soon need to import liquefied natural gas from overseas, companies such as ConocoPhillips, El Paso Corp. and Cheniere Energy Inc. spent billions on terminals, pipelines and storage facilities.

The supply fears drove up prices, which spurred innovation. Oil-and-gas companies had known for decades that there was gas trapped in shale, a nonporous rock common in much of the U.S. but considered too dense to produce much gas.

In the 1980s, Texas oilman George Mitchell began trying to produce gas from a formation near Fort Worth, Texas, known as the Barnett Shale. He pumped millions of gallons of water at high pressure down the well, cracking open the rock and allowing gas to flow to the surface.

Oklahoma City-based Devon Energy Corp. bought Mr. Mitchell’s company in 2002. It combined his methods with a technique for drilling straight down to gas-bearing rock, then turning horizontally to stay within the formation. Devon’s first horizontal wells produced about three times as much gas as traditional vertical wells.

The development of the Barnett Shale almost single-handedly reversed the decline in U.S. natural-gas production. Last year, the Barnett produced four billion cubic feet of gas a day, making it the largest field in the U.S. Other companies such as Newfield Exploration Co., Southwestern Energy Co. and Range Resources Corp. found shale fields across the U.S.

One of the most aggressive companies was Oklahoma City-based Chesapeake Energy Corp., which got into the Barnett a couple of years behind cross-town rival Devon, and was an early entrant into the second big U.S. field, the Fayetteville Shale in Arkansas. In 2005, Chesapeake Chief Executive Aubrey McClendon sent teams of geologists across the country with a mission: Find the next Barnett. Less than two years later, they told him they had it, in Louisiana.

The Haynesville Shale is centered in northern Louisiana, one of the country’s oldest oil- and gas-producing regions. Wildcatters had explored beneath the lush cow pastures and cotton fields as far back as the 1870s. Shreveport, the region’s largest city, saw decades of booms and busts until the 1980s, when a glut of cheap oil from overseas all but killed the region’s oil industry.

Oil companies knew about the Haynesville Shale, but it was considered a less viable prospect than the Barnett. The shale lies 10,000 or more feet below ground, where high pressure and 300-degree temperatures are enough to fry high-tech drilling equipment.

But in 2006, Chesapeake drilled an exploratory well and decided the results were promising enough to justify the higher cost of drilling in such harsh conditions. By late 2007, Mr. McClendon says, “we knew that we had a tiger by the tail.”

In March 2008, as oil and gas prices were soaring, Chesapeake went public with its findings. The rush was on: Dozens of companies dispatched agents to the area to lease land for drilling, turning farmers and ranchers into millionaires overnight.

“There was excitement in the air,” recalls Jeffrey Wellborn, a Shreveport resident who sits on the board of the local Sierra Club. “You thought everyone in the world had won the lottery.”

The frenzy marked the peak of a nationwide drilling boom that was fueled by a combination of soaring energy prices and easy credit. It didn’t last. Between July and October, oil and gas prices fell by more than 50%, and kept falling.

The weakening economy eroded demand for both oil and gas. Natural gas, unlike oil, suffered from a supply glut. U.S. gas production rose 7.2% last year, while oil production fell 1.9%. As a result, oil prices are up 12% since the start of 2009. Natural-gas prices have fallen 41% to their lowest since 2002.

Gas producers saw their profits evaporate and share prices slump. Liquefied-natural-gas imports plunged, leaving import terminals nearly idle. Worried about a glut, companies cut back sharply on drilling and formed a lobbying group to try to boost demand.

The growing supply created opportunities for policy makers and environmentalists, who saw natural gas as a possible solution to the nation’s energy problems. Some groups suggested burning more gas and less coal for power generation. Others favor its use in vehicles.

Mr. Pickens has spent millions promoting an energy plan that aims to, among other things, convert thousands of big-rig trucks to run on natural gas. Mr. Pickens has large investments in natural gas and stands to benefit if his plan is adopted. In TV ads, Internet videos and speeches, he emphasizes a different goal: reducing U.S. dependence on foreign oil.

Mr. Pickens arrived for a recent speech in Dallas in a natural-gas-fueled Honda Civic with a bright blue “Pickens Plan” logo. He told a packed auditorium that the U.S. is importing two-thirds of its oil even as the country is “absolutely overwhelmed with natural gas.” If the reverse were true, he said, he would favor burning oil.

Some environmentalists have embraced Mr. Pickens’s plan as a way to fight climate change. Carl Pope, executive director of the Sierra Club, says he sees natural gas as a “bridge fuel” that could help the U.S. burn less coal and oil until renewable sources of energy are ready to take over.

The dual message of energy security and environmental responsibility has helped Mr. Pickens win powerful allies, including Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and dozens of elected officials from both parties. A bipartisan bill providing tax incentives for natural-gas cars looks likely to pass this year.

Not everyone shares Mr. Pickens’s enthusiasm for natural-gas vehicles. Major users of natural gas, such as utilities and chemicals companies, are concerned the plan would drive up prices — an outcome that would benefit producers.

Energy Secretary Steven Chu and some other policy makers have expressed doubts about the practicality of retrofitting hundreds of thousands of service stations to offer natural gas. Some environmental groups, including the Natural Resources Defense Council, have argued that natural gas is better used to replace coal for power generation, and that cars should run on electricity generated by the sun, wind and natural gas.

Market forces are already helping natural gas make inroads against coal and oil. Gas is now cheaper than coal in many parts of the country, leading utilities to burn more gas. Of the 372 power plants expected to be built in the U.S. over the next three years, 206 will be fired by gas and just 31 by coal, according to the Energy Information Administration.

Natural gas is gaining market share far more slowly in transportation. Earlier this year, AT&T announced it would convert up to 20% of its truck fleet to run on natural gas, largely because it has been cheaper than gasoline in recent years. Cities including New York, Los Angeles and Atlanta have converted part of their bus fleets to run on natural gas, for air-quality reasons.

Shreveport could be the next city to make the switch. In March, Mayor Cedric Glover announced that the oil capital turned natural-gas boomtown would abandon diesel and convert its bus fleet to natural gas.

http://online.wsj.com/article/SB124104549891270585.html

February 12, 2009

KTBS

2009 looks to be a promising year for the Haynesville shale.

Encana, a Canadian natural gas company, have already drilled wells into the shale.

Jeff Wojahn, director of U.S. operations, says none of the wells are record breakers, but they are producing sizable amounts of natural gas.

“They’re strong wells.  We have had good results that have been equivalent to results published by the industry,” said Wojahn.

Those results have encouraged Encana to plan on drilling five more wells over the next year, into the Haynesville shale and another formation called the Deep Bossier.

Chesapeake Energy, one of the early players in the shale, is also looking to expand in 2009.  “We’re currently operating 20 rigs a today.  We expect to end the year with 35 rigs operational in this 3.5 million acre acrea,” said Kevin McCotter, company spokesman.

Another big player, Petrohawk, also has plans to add at least a dozen more rigs.

Don Briggs, president of the Louisiana Oil and Gas Association, says there is almost 100 rigs working in north Louisiana.

Many of those rigs were moved from the Barnett shale in Fort Worth and the Marcellus shale in West Virginia and Pennsylvania.

HOUSTON–(BUSINESS WIRE)–Object Reservoir Inc., a technology and services provider to the global upstream oil and gas industry, today announced the commencement of a multi-company initiative to help increase the value of Haynesville shale assets. Companies now participating include BP America, Comstock Resources, EXCO Resources, Forest Oil, Petrohawk Energy, and several other prominent Haynesville operators. A limited number of additional operator participants will be admitted to the project.

The Haynesville Shale Collaborative Exploitation Project, or CEP, formally commenced on April 1^st, and the first workshop for participants will be held in Houston on April 21^st. The objectives of this CEP are to accelerate the learning curve for optimal exploitation of operators’ Haynesville shale assets, with best practices for well stimulation, completion, and spacing.

In addition, in partnership with leading reserves determination firm, DeGolyer and MacNaughton, Object Reservoir’s efforts are intended to lead to practical prescriptions for “turning resources into reserves”, helping operators to monetize their assets earlier by booking proved reserves and determining contingent resources. The project will include well and other data from both Louisiana and Texas.

About Object Reservoir

Object Reservoir Inc. is a technology and services provider to the global E&P industry. Operators in numerous oil and gas basins around the world have improved reservoir exploitation economics by employing Object Reservoir’s unique Resolve^TM technology and workflow plus extensive reservoir characterization and development planning expertise. Headquartered in Houston, Object Reservoir has business offices in Dallas and Buenos Aires and has its technology and software development center in Austin.

By Bobbie J. Clark • bobbieclark@gannett.com • April 29, 2009

The Caddo Parish Commission will wait to hear from Louisiana Commissioner of Conservation Jim Welsh before taking action on its proposed oil and gas drilling regulations.

Caddo Parish Commissioner for District 12 Ken Epperson hosted a community forum Tuesday night, where it was announced that Welsh will hold a public hearing concerning oil and gas regulations for drilling in the Haynesville Shale. Epperson also addressed the local General Motors assembly plant, which is in his district.

The public hearing takes place at 6 p.m. May 21, at the Louisiana State Exhibit Museum, located at 3015 Greenwood Road in Shreveport.

“The commissioner of conservation has a lot of control over the way oil and gas operators do their business,” Caddo Parish Attorney Charles Grubb said. “(Welsh) has published a draft of regulations of how the drilling of the Haynesville Shale is going to take place up here.”

The Caddo Parish Commission’s ordinances on regulating the drilling is currently in committee discussion.

“Nothing is concrete. No laws have been passed,” Epperson said.

The commission also wants input from the community before voting on its ordinances, he added.

The proposed set of regulations, drafted Feb. 18, includes stipulations on the abatement of dust, vibration or odors, installation of pipelines, use of public water supplies and noise, just to name a few.

“The commission’s interest is not killing the oil and gas industry, but to make sure when they do drilling in urban areas or neighborhoods, that it is done in such a way that we don’t lose quiet, peaceful possession of our property,” Grubb said.

After addressing the oil and gas issues, Epperson turned the forum’s focus toward the General Motors assembly plant, which is in his district.

Epperson urged his constituents to contact legislators on the state and federal level and ask them to do whatever it takes to keep the local GM plant open.

He said if the local GM plant shuts down, its employees won’t get multi-million-dollar “golden parachutes” like the automaker’s corporate executives.

“Guess where our people are? They’re at the unemployment office,” he said. “This is the last bastion of manufacturing in the United States, the automobile industry.”

United Auto Worker Local 2166 President Morgan Johnson said the local GM plant is “what’s right with Louisiana.

“We hate all this stuff that’s going on right now, but we’re going to get through this. This is just hard times.”

http://www.shreveporttimes.com/article/20090429/NEWS01/904290359/1060

By Drew Pierson • dpierson@gannett.com • April 27, 2009