East Texas, Haynesville Production Stable Despite Wildfires

- East Texas, Haynesville Production Stable Despite Wildfires

Friday, September 09, 2011
Rigzone Staff
by Karen Boman

The wildfires plaguing East Texas have not impacted natural gas production volumes in the region, including Haynesville shale play production, but evacuations and fire-related damage have negatively impacted demand, BENTEK Energy reports.

Over the last three days, evacuations and fire-related damage in Texas have led to a near 1.0 Bcf total demand loss. BENTEK expects demand recovery to be gradual, though some demand should return due to rising temperatures. The Texas gas demand forecast, based on temperatures, shows power burn increasing by nearly 1.0 Bcf in the coming week, BENTEK said.

The Haynesville shale, one of the largest gas shale plays in the U.S., straddles the Texas and Louisiana border. Haynesville shale production from both states totals just above 5.0 Bcf/d, with about half of that production coming from the Texas side, BENTEK reports.

“BENTEK’s sample of production receipts from East Texas and Haynesville has not yet shown a distinct decline in production receipts that could be directly attributable to the fires,” BENTEK said in a report today. However, some of the fires have erupted around the perimeter of Haynesville shale counties, raising concerns about safety and disruptions in the fields.

Wildfires have burned acres in Harrison County, Texas, a core Haynesville production area in the state, and four non-core Haynesville production counties in Texas, Gregg, Marion, Nacogdoches and Rusk.

“If fires were to erupt in more developed areas of the shale, operations would undoubtedly have to be shut in, restricting production,” BENTEK said. “Even without a fire, downed power lines or disruptions in power transmission could also impact operations of pump jacks and compressor stations.”

To date, 26 large fires have burned nearly 114,000 acres in Texas, and are threatening oil and gas operations in the East Texas region as well as Louisiana and Oklahoma. An estimated 1,700 homes were either evacuated or lost, and more are threatened by fires.

“Much of East Texas is experiencing the highest level of drought conditions, and the fire danger in the East Texas Basin remains high to very high,” BENTEK said. Tropical Storm Nate will likely spare Texas from high winds but also withhold chances for rain.

Louisiana’s Department of Natural Resources (DNR) on Sept. 6 issued an advisory calling on oil and gas operators to monitor conditions closely and take necessary steps in case of fire, including shutting in wells, production facilities and pipelines if necessary.

“As drought conditions persist in many areas of our state, so does the risk of wildfire and the potential for wildfires to grow quickly out of control once they start,” said DNR’s Commissioner of Conservation Jim Welsh. He reminded operators that state regulations require combustible vegetation, trash and debris should always be kept at least 100 feet away from wellheads, production equipment, storage tanks and other exploration and production site structures.

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Breitling Charges Ahead in Haynesville Play

- Breitling Charges Ahead in Haynesville Play

Tuesday, July 05, 2011
Breitling O&G Corp.

Breitling O&G issued an operational update on the company's recent activity related to the development of various oil and gas properties in its portfolio. Oil and Gas is working very hard to retain all of its viable Haynesville leases in this difficult pricing environment.

Through June 15, 2011 the company participated in 171 new wells, 21 operated and 150 non-operated. The company is running 4 rigs currently. Breitling Oil and Gas expects to drill an additional 112 wells in the second half of 2011. The company has two frac fleets on retainer and had an inventory of ten wells awaiting completion as of June 2011. Breitling Oil and Gas has leaseholds in Texas that are prospective for the Eagleford Shale; leaseholds in Colorado that are prospective for the Niobrara Shale; leaseholds in Oklahoma that are prospective for the Woodford Shale; and leaseholds in Louisiana that are prospective for the Haynesville and Bossier Shales. The company recently hydraulic fractured its fifth Eagleford well in Guadalupe County, Texas and will commence production operations on this well sometime in August 2011. The company is working in partnership with Sandridge Energy on three wells in Gaines County, Texas and is preparing to spud a well with Devon Energy in Hemphill County, Texas.

Breitling Oil and Gas is developing the Haynesville Shale on acreage in Louisiana, and has three gross wells waiting on completion. The company expects hydraulic fracturing capacity to be available in August 2011 and will start completion operations on this backlog at that time.

Breitling Oil and Gas is working in the Woodford Shale in Oklahoma. The company has six prospects it plans to drill during the second half of 2011. It expects production to commence from the field in early 2012.

Breitling Oil and Gas chief executive officer Chris Faulkner stated, "Breitling has done a great job shifting its focus to liquids during a very difficult gas commodity trading price this year." Faulkner added, "Breitling Oil and Gas is carrying very little debt, is involved in no litigation and lawsuits, has a perfect safety record and has positioned itself for triple-digit revenue growth for the foreseeable future."

The company continues driving innovation within its EnviroFrac™ program which the company started in January 2010. Breitling Oil and Gas' EnviroFrac™ calls for the elimination of any additive not critical to the successful completion of the well and determines if greener alternatives are available for all essential additives.

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Eagle Ford Production Could Overtake Barnett, Haynesville

- Eagle Ford Production Could Overtake Barnett, Haynesville

Thursday, May 19, 2011
Rigzone Staff
by Karen Boman

The liquids rich Eagle Ford shale play in southwest Texas may overtake the Barnett and Haynesville shale gas plays in Texas and Louisiana in terms of production, potentially becoming the largest producing shale play in Texas and the entire U.S., according to a recent report by London-based Evaluate Energy.

The Eagle Ford is currently dwarfed by its neighbors in terms of production, with the Barnett producing 877,000 BOE/d, the Haynesville producing 708,000 BOE/d and Eagle Ford producing 66,000 BOE/d in the fourth quarter of 2010. However, a recent surge in new wells suggests this all about the change, with horizontal drilling for both oil and gas in the Eagle Ford growing rapidly.

Source : Evaluate Energy

Drilling activity in the 22 Texas counties that Eagle Ford formation encompasses has been growing dramatically for the past year, and at the end of first quarter 2011, the area had the most new wells being drilled in Texas. In comparison, the number of new horizontal wells in Barnett Shale counties has fallen to a much lower level than its mid-2008 peak. The number of new wells in Haynesville counties in Texas and Louisiana also has slipped into a slight decline following a two-year increase up to the second quarter of 2010.

Like its Texas counterparts, Eagle Ford drilling activity is now mostly development drilling, which suggests that Eagle Ford production may overtake Barnett and Haynesville production sooner rather than later, Evaluate noted.

EIA Shale Gas Estimate Jumps 134 Percent

Oil and gas producers have increasingly switched their focus from drilling shale gas plays to oil shale plays after the U.S. shale gas drilling boom significantly increased U.S. gas supply and depressed U.S. gas prices.

The supply increase has prompted the U.S. Energy Information Administration (EIA) to raise its estimate of technically recoverable shale gas resources by 134 percent. In its Annual Energy Outlook 2010, technically recoverable shale gas resources were estimated at 368 Tcf. For its Annual Energy Outlook 2011, EIA's estimate rose to 862 Tcf, bringing total U.S. recoverable gas resources to 2,629 Tcf.

EIA attributed the increase in gas resources to technological advances in horizontal drilling and hydraulic fracturing. "This is a welcome change because as little as 10 years ago, analysts and politicians said that the United States could not drill its way out of a natural gas shortage," EIA said.

U.S. shale gas produced 2.3 Tcf of natural gas in 2008, or 11 percent of the U.S. gas market share, and is expected to produce 12.3 Tcf by 2035, a 47 percent share of the gas market. U.S. shale gas resources are the second largest in the world behind China, according to a study EIA commissioned with ARI International.

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Kinder Morgan to Boost Footprint in Eagle Ford, Haynesville

Kinder Morgan to Boost Footprint in Eagle Ford, Haynesville

Thursday, May 05, 2011
Kinder Morgan Energy Partners, L.P.

Kinder Morgan Energy Partners, L.P. (KMP) on Thursday announced it has entered into a definitive agreement to pay approximately $855 million to Petrohawk Energy Corp. and assume approximately $65 million in debt for Petrohawk's 50 percent interest in KinderHawk Field Services (the natural gas gathering and treating services provider in the Haynesville Shale) and a 25 percent interest in Petrohawk's natural gas gathering and treating business in the Eagle Ford Shale. Additionally, KMP will invest approximately $220 million to build a new crude/condensate pipeline with a capacity of approximately 300,000 barrels per day (bpd) that will initially transport 50,000 bpd of condensate for Petrohawk from its production area in the Eagle Ford to the Houston Ship Channel.

"We are pleased to increase our footprint in the Eagle Ford and Haynesville shale plays by acquiring these fee-based assets from Petrohawk and building a crude/condensate pipeline," said Chairman and CEO Richard D. Kinder. "As we detailed at our recent investor conference, we expect opportunities in the prolific natural gas shales to be a primary driver of future growth at KMP. In addition to our Natural Gas business segment, which will benefit from the acquisition, our Products Pipelines segment will realize growth from the construction and operation of the new pipeline that will transport condensate and crude oil. We have executed a long-term anchor agreement with Petrohawk for 50,000 bpd of condensate, and this new pipeline offers the potential to ship significant incremental third-party volumes above that amount."

Upon closing, which is expected in the third quarter this year, KMP will own 100 percent of KinderHawk, the largest natural gas gathering and midstream business in the Haynesville Shale of northwest Louisiana. KinderHawk currently has more than 400 miles of pipeline with over 2 billion cubic feet (Bcf) per day of pipeline capacity and throughput of over 0.9 Bcf per day. Throughput is expected to reach 1.2 Bcf per day by year end.

In the Eagle Ford Shale in south Texas, KMP and Petrohawk will form a joint venture (KMP will own 25 percent and Petrohawk 75 percent) that will own two midstream gathering systems in and around Petrohawk's Hawkville and Black Hawk fields. The joint venture, which will have a life of lease dedication of Petrohawk's reserves, will provide Petrohawk and other area producers with gas and condensate gathering, treating and condensate stabilization services. Combined, the joint venture assets will consist of more than 280 miles of gas gathering pipelines and approximately 112 miles of condensate gathering lines to be in service by year end. KMP already has a significant presence in the Eagle Ford through its existing assets and its joint venture with Copano Energy, L.L.C. (Nasdaq: CPNO), which provides natural gas gathering, transportation, processing and fractionation services to various customers.

KMP's crude/condensate pipeline will consist of about 61 miles of new-build construction and 109 miles of existing natural gas pipeline that is being converted. Service to KMP's natural gas customers in the Houston Ship Channel will not be affected by this optimization of the company's Texas intrastate pipeline system. The pipeline will originate in Petrohawk's Black Hawk Field near Cuero, Texas, and extend to the Houston Ship Channel where it will initially deliver condensate to multiple terminaling facilities with access to local refineries, petrochemical plants and docks. The new pipeline is expected to be in service in the second quarter of 2012.

"We believe the crude/condensate pipeline will be very attractive to other Eagle Ford producers who are looking to get their products into the marketplace," Kinder said. "We are in the advanced stage of discussions with other producers, which are expected to result in substantial additional throughput agreements in the future." Those interested in obtaining more detailed information about the pipeline project can visit the Kinder Morgan web site or contact Don Lindley, vice president of business development for the company's Products Pipelines business segment, at (713) 369-8840 or Don_Lindley@kindermorgan.com.

The acquisition of Petrohawk's assets is expected to be accretive to cash available to unitholders upon closing, even including the assumption that KMP finances the transaction with about 60 percent equity. The general partner of KMP (Kinder Morgan, Inc. (KMI)) has agreed to forego a portion of its incremental incentive distributions in 2012 and 2013 of approximately $26 million and $4 million, respectively, to support this transaction. The new condensate pipeline will be accretive to cash available to unitholders when it begins service next year.

The transaction will be immediately accretive to KMI's cash available to pay dividends, even after foregoing a portion of the incremental incentive distributions this transaction is expected to produce. The increase in KMI's cash available to pay dividends (net of the amounts voluntarily foregone in 2012 and 2013) is expected to be approximately $6 million in 2011, $17 million in 2012 and $25 million in 2013, and is expected to grow thereafter.

From an accounting perspective, because KMP is paying less for the second half of the Haynesville assets than it paid for the first half, KMP will take a second quarter non-cash write down of the carrying value of the first half of the Haynesville assets estimated to be less than $200 million. From an economic perspective, KMP expects to earn an attractive return well in excess of the company's cost of capital on the total investment in the Haynesville and the other components of this transaction.

Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates approximately 28,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP has an enterprise value of over $33 billion. The general partner of KMP is owned by Kinder Morgan, Inc. Combined, KMI and KMP have an enterprise value of approximately $55 billion.

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Enbridge to Expand Haynesville Shale Infrastructure

Enbridge to Expand Haynesville Shale Infrastructure

Friday, April 29, 2011
Enbridge Energy Partners L.P.

Enbridge announced that it plans to invest an additional $175 million to expand its East Texas system. The Partnership has signed long-term agreements with several major natural gas producers on the Texas side of the Haynesville shale to provide gathering, treating and transmission services in Shelby, Sabine, San Augustine and Nacogdoches counties. The projects involve construction of gathering and related market outlet pipelines and related treating facilities in the Texas Haynesville shale.

"We are pleased to announce these new projects for our customers in the Texas Haynesville shale region. Our East Texas system is well positioned with substantial infrastructure and unmatched access to numerous intrastate and interstate connecting pipelines. We envision additional infrastructure development for our customers beyond what we've already committed in this region," said Mark Maki, president of the Partnership's management company. "We consider the Texas Haynesville to be one of the best natural gas plays in North America and expect long-term fundamentals to support development of this resource well into the future. These projects will support continued growth in cash flow and distributions for our unit holders."

Sun River Begins Production at Haynesville Well

Sun River Begins Production at Haynesville Well

Tuesday, April 05, 2011

Sun River Energy Inc.

Sun River announced it turned the Neal Heirs # 1 well to production on March 31, 2011.
The Neal Heirs # 1 well (API # 42-365-37706) is drilled vertically to a total depth of 11,057 feet in Panola County, Texas. The well is completed in the Haynesville Shale geological formation at 10,214' to 10,716'. The well is located within the prolific Carthage Field. The well initially shut-in at 5,386 PSI tubing pressure after fracture treatment. Presently, the well is producing both natural gas and crude. The well is flowing at 2,256 MCF a day with a constant flowing tubing pressure of 3,320 PSI.

Sun River Operating, Inc. operates the well. Sun River Energy, Inc. owns a 77.5% working interest in the well.

Donal R. Schmidt, Jr., the Company's CEO and President, stated, "It is always a relief to have your first well in a project come on like the Neal Heirs #1. The well exceeded our team's initial expectation in every way. We are presently preparing to drill two more wells in adjoining gas units and expect similar results. The Neal Heirs #1 confirms my belief that our team has what it takes to consistently develop deep unconventional gas at an attractive cost. Our preliminary estimate is that the net finding and development cost per MCFE of proved gas in this well will be around $1.24. This will place us at the top of low cost producers in our sector of the natural gas market."

Another Expert Says Haynesville Not Bigger than Shale

Another Expert Says Haynesville Not Bigger than Shale

Friday, March 25, 2011

by  Jack Z. Smith

Fort Worth Star-Telegram, Texas

 

There's a new voice in the debate over whether North Texas' Barnett Shale has been eclipsed by the Haynesville Shale as the No. 1 natural gas field in America.

Lippman Consulting, an El Paso-based natural gas consulting firm, is taking issue with a recent U.S. Energy Information Administration website posting that said the Haynesville in northwest Louisiana and Northeast Texas is the new leader in production among U.S. shales. The administration cited data from Bentek Energy, an Evergreen, Colo.-based consulting firm.

George Lippman, president of Lippman Consulting, has joined those questioning the assumption that Haynesville is the new top dog.

"Our data clearly shows that the Barnett production is still greater than the Haynesville production," Lippman said in an e-mail to the Star-Telegram after reading an article the newspaper published Tuesday on the subject.

Lippman said his firm's estimates show Barnett production averaging 5.52 billion cubic feet per day in February, easily exceeding the output of 5.03 billion cubic feet daily from Haynesville.

He said his company's calculations were derived from Texas Railroad Commission data, "plus the most-recent data from our Gas Processing Plant database that collects daily volumes at the outlet of all gas-processing plants in each region and then extrapolates that data back to wellhead volumes."

Steven Grape, the Dallas-based domestic reserves project manager for the Energy Information Administration, and Gene Powell, publisher of the Fort Worth-based Powell Shale Digest, said Monday that they need further clarification and confirming data before they can be assured that the Haynesville is the new No. 1.

Lippman said he expects that Haynesville will surpass the Barnett in production "in the months ahead ... but that has not happened yet."

Haynesville Surpasses Barnett as Largest Shale Gas-Producer in US

Tuesday, March 22, 2011

by  Jack Z. Smith

Fort Worth Star-Telegram, Texas

 

The Haynesville Shale play in Northwest Louisiana and East Texas has surpassed North Texas' Barnett Shale as the No. 1 natural gas producer among U.S. shale plays, according to the U.S. Energy Information Administration website and an energy consulting firm.

But there's still some debate as to whether Haynesville is the clear-cut No. 1.

Among those wanting further clarification and more detailed confirming data Monday were Steven Grape, the Dallas-based domestic reserves project manager for the EIA, and Gene Powell, publisher of the Fort Worth-based Powell Shale Digest, widely considered an authority on U.S. shale-gas plays and especially the Barnett Shale, which underlies more than 20 North Texas counties.

 

The EIA had posted on its website Monday an item headlined "Haynesville surpasses Barnett as the Nation's leading shale play," based on "reported pipeline flows" of natural gas from the two regions.

It cited as its source Bentek Energy of Evergreen, Colo., a well-known energy consulting firm.

The EIA website included a Bentek chart showing that the Haynesville Shale area had production of an estimated 5.5 billion cubic feet of natural gas per day, compared to 5.25 billion for Barnett. It said Haynesville surpassed Barnett in output even after the North Texas field had recovered fully from "freeze-offs" at wellsites that had briefly reduced production during bitterly cold weather in early February.

Matt Marshall, a senior energy analyst for Bentek, told the Star-Telegram in a telephone interview Monday afternoon that company estimates, updated through Sunday, showed output in the Haynesville production area in Louisiana had jumped to 5.6 billion cubic feet per day.

However, that number includes an estimated 950 million cubic feet of output that, while in the general Haynesville production area, actually comes from geological formations other than the Haynesville Shale itself, Marshall said. But the 5.6 billion does not include roughly "several hundred million" cubic feet of daily gas production from the East Texas portion of the Haynesville Shale, he said.

Marshall said Bentek's latest estimates show that production in the Fort Worth Basin, home to the Barnett Shale, is 5.44 billion cubic feet per day. But that figure includes about 790 million cubic feet that actually is from formations other than the Barnett, he said.

Actual production from the entire Barnett Shale per se and the Haynesville Shale per se in Louisiana is virtually tied at about 4.65 billion cubic feet per day, Marshall said. But if you add in the Haynesville Shale production from East Texas, Haynesville is the clear-cut leader, based on estimates of flows through gas pipelines, Marshall said.

Both Powell and Grape said Monday that they want more information about the Bentek analysis before they can be assured that Haynesville is the new No. 1 shale play in gas production.

Powell said the most-accurate measurement of production from each shale play is actual well production data, rather than estimates based on reported pipeline flows. But there can be a time lag of several months before firm well-production data can be assembled. Grape, the EIA official, stressed that the Bentek information represents "estimates" based on pipeline flows. He said he needed more information before being able to say firmly whether Haynesville or Barnett is now the top producer.

EIA data for 2009, based considerably on natural gas reserves, showed the Barnett Shale as the leading gas-producing area in the nation, with nearly 1.8 trillion cubic feet of output. Grape said earlier this month that he thought Barnett also was the leading producer last year, although the EIA hasn't published final 2010 figures.

 

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