By July 27, 2009 0 Comments Read More →

Haynesville Shale no longer diamond in rough

Louisiana Oil & Gas Association – Don Briggs –

The North Louisiana rig count continued on its upward trend to 85 rigs this past week, up 9 rigs from 76, while the South Louisiana land, inland water and Gulf of Mexico rig count collectively gained 2 rigs for a total of 52, a historic low. The growth in the North Louisiana rig count is unprecedented in the United States. While the South Louisiana rig count is down 55 percent compared to last year, North Louisiana’s rig count has increased over 20 percent. The 20 percent growth in North Louisiana stands out more clearly when compared to the rig decline of 52 percent for the United States, and even more so compared to Texas’ and Oklahoma’s decline of 64 percent and 62 percent respectively.

Just over a year ago, when North Louisiana’s rig count was at 47, I wrote, “As much as I dislike the word “boom”, there are likely the beginnings of one in North Louisiana.

Just how vast an area the Haynesville Shale covers, I don’t know, but I have been told from good sources it spreads out into five North Louisiana parishes.” I went on further to predict the Haynesville shale rig count would be at 70 rigs in twelve months. Platt’s wrote at that time, “Until some solid repeatable well data emerges, the Haynesville will remain more a diamond in the rough than diamond ring”. It appears to me the Haynesville shale is no longer a mere diamond in the rough. The Haynesville is the real thing.

Today there are 130 producing Haynesville Shale wells, 60 drilling, 149 waiting on completion, and 156 permitted to drill. The Louisiana Office of Conservation reports there are 888 adopted Haynesville Shale units.

Just how big is the Haynesville Shale? Estimates are 250 tcf (trillion cubic feet) and up. The economic impact of the Haynesville Shale on the entire state of Louisiana is of major significance. To understand the potential magnitude of the Haynesville, Louisiana Department of Natural Resources Secretary, Scott Angelle, contracted economist Loren Scott to conduct a direct and indirect economic impact study of the Haynesville shale to Louisiana’s economy

Scott determined during the year of 2008: The extraction activity of these seven firms generated approximately $2.4 billion in new business sales within the state of Louisiana. New business sales in turn created new household earnings for residents of the state. As a result of these activities, nearly $3.9 billion in household earnings was created in 2008. This estimate includes both direct and indirect earnings and includes almost $3.2 billion in lease and royalty payments to private landowners.

Including the direct employment of approximately 431 employees and contract workers reported by these seven firms, there was an increase of 32,742 new jobs within the state in 2008 Our conservative estimate is that collectively, state and local tax revenues increased by at least $153.3 million in 2008 due to the extraction activities in the Haynesville Shale. In one parish sales tax collections alone are up over 300 percent in the first quarter of 2009. At a difficult time for our state’s economy and our industry, the Haynesville Shale will be a major pillar that will help prop up the businesses and economy of Louisiana.

Posted in: Daily News

About the Author:

The Louisiana Oil & Gas Association (known before 2006 as LIOGA) was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Our primary goal is to provide our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana’s oil & gas industry, warding off tax increases, changing existing burdensome regulations, and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

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