Friday, September 14, 2012

Counting Louisiana Completions

I posted my weekly batch of Louisiana completions earlier today and I thought it might be time to step back and look at the big picture.  As everyone knows, the Haynesville Shale rig count is a small fraction of what it was back in the summer of 2010 (today its about 14% of what it was then).  Completions lag behind rig counts and they are not directly correlated since the completion work done by a separate crew, but they certainly are related.

The chart below provides a monthly count of Louisiana rigs (averaged) and completions (totaled).  (Because of holes in the data, I don't collect completion dates for Texas.)  The most current three months are shaded lighter to indicate that the data is incomplete for those months because completions are still coming in.

It's interesting to see that Haynesville completions have not plunged to the same degree as rig count.  They have gone down but not at the same rate.  The two are correlated, but since the infrastructure and personnel to complete wells is more constrained than drilling rigs, there has long been a backlog of uncompleted wells.  It appears as though the backlog is being chipped away.  Comstock Resources, for instance, hasn't had a drilling rig working since March 2, 2012, but it completed four rigs in July 2012.  The official state report shows that in September 2012 there are 205 wells awaiting completion, testing or other operations, down from 467 in September 2011.

One of the ongoing conversations of late has been when Haynesville production will start to go down.  Since shale gas wells decline significantly after the first year (less so now than a couple of years ago because of improved well management techniques), with fewer wells being completed, it follows that production will start to decline at some point soon.  But when and how much?

1 comment:

Anonymous said...

Intersting anaysis...your conclusion is pretty accurate, since most of the big operators have an inventory of drilled wells waiting on completion. Little tidbit on comstock, they had one frac crew split between work on their Eagleford and Haynesville acreage. So it is very plausible that they had wells drilled in the Haynesville with their contract crew in the Eagleford completing wells down there for them. With the current state of natural gas prices, I imagine they want to complete their Eagleford wells first and as soon as the inventory is done, send the crew back to the Haynesville while they rebuild the inventory in the south.