Friday, January 31, 2014

U.S. Rig Count: +8 to 1,785

The Baker Hughes U.S. rig count was up eight this week to 1,785.  Oil rigs were up six to 1,422, gas rigs were up two to 358 and miscellaneous rigs were unchanged at five.  By type, horizontal rigs were up three to 1,173, vertical rigs were down four to 392 and directional rigs were up nine to 220.  Among gas rigs, horizontal rigs were down two to 260, directional rigs were up one to 67 and vertical rigs were up three to 31.

Thursday, January 30, 2014

A Window of Opportunity

What a difference a cold winter makes.  As we shiver down here in Louisiana and are glad we didn't have to spend the night in our cars in Atlanta, gas fans can at least see a silver lining in the recent brutal temperatures as the level of natural gas in storage sinks and gas prices rise.  But I view this as the work of a cold winter rather than a fundamental, sustainable change on the demand side.  It's a break in the clouds but also a window of opportunity.

As the chart below shows, in the past couple of years, gas supplies started the year well above the five year average levels (+15.2% in 2012 - light blue line - and +12.4% in 2013 - dark blue line).  The warm winter of 2011-2 winter drove up storage levels to max out at 60.5% above average in early April 2012.  Reduced gas production and a hot summer helped bleed off much of the excess surplus for the rest of 2012, but the storage level didn't get back in line with the five year average until April 2013, and it was give and take for the rest of the year.


EIA: Gas in Storage -230 Bcf to 2.193 Tcf

The EIA reported today that working gas in storage was down 230 Bcf to 2.193 Tcf.  The weekly withdrawal was 20% larger than the same week last year (-191 Bcf) and 42% greater than the five year average (-162 Bcf).  The current storage level is now 22.5% below last year's level (2.83 Tcf) and 16.6% below the five year average (2.63 Tcf).


Tuesday, January 28, 2014

No Recent Texas Completions

In case you've been wondering why I've not noted any Texas completions for the past couple of weeks, it's because there haven't been any reported.  There has only been one completion reported so far this year (I noted it three weeks ago) and it's the only one since December 19, 2013.  Not my fault! (this time...)

Monday, January 27, 2014

Haynesville Shale Rig Count: +1 to 28

The Haynesville Shale rig count was up one this week to 28.  Louisiana held at 16, while Texas was up one to 12 (EXCO in San Augustine Co.).  I failed to mention it last week, but Chesapeake is now running the most rigs in the Haynesville Shale.  Back to the future!?!


Friday, January 24, 2014

U.S. Rig Count Unchanged, But Gas Rigs Down 9

The Baker Hughes U.S. rig count was unchanged this week at 1,777.  Oil rigs were up eight to 1,416, gas rigs were down nine to 356 and miscellaneous rigs were up one to five.  By type, horizontal rigs were down three to 1,170 vertical rigs were up 11 to 396 and directional rigs were down eight to 211.  Among gas rigs, horizontal rigs were down 12 to 262, directional rigs were up two to 66 and vertical rigs were up one to 28.

A Couple New Louisiana Completions

  • Edgar Cason 12 H #5-ALT , SWEPI, LP: 17.476 MMcf/day IP on 22/64 in. choke at 8,567 psi; Perfs: 12,777-17,352, length: 4,575 ft.; Thorn Lake Field, Red River Parish, S13/T14/R11; res. A, serial #246189 
  • Evans 21-09-13 H #1, XTO Energy: 10.315 MMcf/day IP on 16/64 in. choke at 7,879 psi; Perfs: 11,980-16,432, length: 4,452 ft.; Converse Field, Sabine Parish, S21/T9/R13; res. A, serial #244214 

The "Five Handle"

Yesterday, the Henry Hub spot price for natural gas closed at $5.55/MMBtu, up a whopping 64 cents from Wednesday and the highest it's been since Feb. 16, 2010, a reflection of astronomically high citygate prices in the northeast. The citygate is where the gas is transferred from the pipeline to the utility in large cities.  This week at the New York citygate, prices spiked to $135/MMBtu, and they may go higher before the current frosty blast subsides.  That is not a typo, $135.  Gas plants are takers at any price when the weather is as cold as it has been this month.

Neither of these prices are sustainable, but expect these bad memories to resurface as more coal plants shut down across the northeast later this year.

Thursday, January 23, 2014

Heeee's Back! Aubrey McClendon: Activist Investor or Tail of the Dog?

It looks like former Chesapeke Energy CEO Aubrey McClendon has resurfaced in the Haynesville Shale.  His company Larchmont Resources, LLC has filed drilling applications for 12 alternate unit wells in Bossier Parish on units held by production (HBP) by Chesapeake.  Apparently McClendon is chafing that Chesapeake is leaving so much gas in place by not drilling the thousands of potential well sites under indefinite lease.  Larchmont is rarin' to go, saying that it has $10 billion to invest in Haynesville drilling over the next decade (!).  Woo-hoo!!!

What a turn of events!  Haynesville followers know Chesapeake as the company that used a scatter-shot leasing strategy to snap up as much land prospective for the Haynesville Shale as possible and then drill a well on each unit to HPB it before moving on to the next one.  This cash-sucking land grabbing technique was perfected with McClendon as CEO, allowing the company to hold wide swaths of the Haynesville Shale for later production.  Now he wants Chesapeake to reverse course and sink billions into Haynesville drilling?  I'm sure this will get a chilly reception in OKC, especially as the company tries to remake itself as an oil company.

EIA: Storage -107 Bcf to 2.423 Tcf

The EIA reported that working gas in storage last week was down 107 Bcf to 2.423 Tcf.  The withdrawal was 61% lower than last year (-168 Bcf) and 74% below the five year average (-181 Bcf).  I guess everyone was giving their heater a rest after the polar vortex of a couple of weeks ago.  The current storage level is 19.8% below last year (3.021 Tcf) and 13.2% below the five year average (2.792 Tcf).


Wednesday, January 22, 2014

New Texas Permits (Including Another one in Marion Co.)


  • CGU 21 #51HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: LIDDY, W, A-398 
  • CGU 21 #52HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: LIDDY, W, A-398 

Haynesville Shale Rig Count: -1 to 27

Last week's Haynesville Shale rig count was down one to 27.  Louisiana was down one (Anadarko) to 16, while Texas held at 11.


Sunday, January 19, 2014

IHS: Natural Gas Price to Remain $4-5/MMBtu for Next 20 Years; What's the Implication for the Haynesville?

Research analytics company IHS released a report Thursday concluding that natural gas prices will remain in the $4-5/MMBtu range, inflation adjusted, through 2035.  That's not great news for fans of the Haynesville Shale who are focused on $4.50 as the magic gas price that will bring a higher level of drilling activity to the region.

Before getting too worked up, we should all keep in mind that this is a 20 year estimate of a commodity price and there are many unforeseen circumstances awaiting on the sidelines that will undoubtedly impact this projection.  People were sitting around reading the book The Black Swan but nobody saw the shale gas phenomenon on the horizon six or seven years ago.  The IHS prediction seems largely based on the assumption that natural gas supply will meet any new demand increases through increased production and limit any ability to command a higher price.

Friday, January 17, 2014

U.S. Rig Count: +23 to 1,777

The Baker Hughes U.S. rig count is up 23 rigs this week to 1,777.  Oil rigs are up 15 to 1,408, gas rigs are up eight to 365 and miscellaneous rigs are unchanged at four.  By type, horizontal rigs are up 15 to 1,173, vertical rigs are up 13 to 385 and directional rigs are down five to 219.  Among gas rigs, horizontal rigs are up nine to 274, directional rigs are down five to 64 and vertical rigs are up two to 27.

Another Self-Explanatory Picture


Last week, I posted a chart showing the stark decline in Haynesville Shale production versus U.S. gas production.   Yesterday, EIA posted the above chart, which tells the same story with a different graphic.  While overall natural gas production growth was only up about 1% between 2012 and 2013, Haynesville production fell off 27%, while Marcellus Shale production was up 61% over that same period.  The Marcellus benefits from having a wet gas horizon, which encourages drilling even with low natural gas prices.  The region has also seen improved gathering infrastructure and vast improvements in production per well, even though the rig count dropped by 21%.  Here is a link to the EIA's 2013 lookback on natural gas production (this link is likely to change in a week or two).

Thursday, January 16, 2014

Study Confirms Gas Power Plants Cleaner Than Coal Plants (I Think We Already Knew This)

A soon to be released study comparing emissions from power plants since 1997 confirmed that overall emissions of carbon dioxide and other pollutants have decreased significantly as a result of increased natural gas use over coal, reported Scientific American last week.  The components of this conclusion are widely known, but it's nice to have a reminder that quantifies the difference between coal and natural gas.

From the study, on average:
  • Coal-fired plants emit 32 oz. of CO2 per kilowatt hour (kWh) of power
  • Gas-fired plants emit 19 oz of CO2/kWh

Only One New Texas Permit This Week

1/8/14 - 1/15/14:
  • CGU 13-14 # 71HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: DUNCAN, S, A-158
No new completions were reported over this period.

New Louisiana Completions

  • Johnnson 9-14-15 H #2-ALT, Chesapeake Operating: 13.968 MMcf/day IP on 22/64 in. choke at 6,404 psi; Perfs: 11,932-16,407, length: 4,475 ft.; Bethany Longstreet Field, DeSoto Parish, S9/T14/R15; res. A, serial #244133 
  • OB Madden 7-6 HC #2-ALT, Encana Corp.: 20.839 MMcf/day IP on 25/64 in. choke at 8,362 psi; Perfs: 12,434-20,085, length: 7,651 ft.; Woodardville Field, Red River Parish, S7/T14/R10; res. A, serial #245851 

Gas in Storage: -287 Bcf to 2.53 Tcf

The cold week last week finally showed up in the storage report, as EIA reported that working gas in storage was down 287 Bcf to 2.53 Tcf.  The withdrawal was 84% greater than last year (-156 Bcf) and 81% higher than the five year average (-159 Bcf).  Last week's withdrawal was 2 Bcf higher than the monster withdrawal reported on December 19, 2013, which I believe was the largest on record.  The current storage level is 20.7% below last year (3.189 Tcf) and 14.9% below the five year average (2.973 Tcf).


Wednesday, January 15, 2014

The Ghost of El Paso Set to IPO this Week

This week, the former El Paso E&P will resurface in the public markets as EP Energy.  The estimated price of the IPO should value the equity around $6.2 billion.  It was only a year and a half ago that Apollo took El Paso E&P private following Kinder Morgan's acquisition of El Paso and the subsequent sale of its E&P business.

What does this mean for Haynesville fans?  Nothing really.  EP is focusing on west Texas and the Rockies, completely ignoring the Haynesville, even though it remains the company's largest producer of natural gas (148 Bcf of 243 Bcf in Q3 2013 - see table below).  In Q3 2013, the company only planned to spend $1 million of its $466 million capital budget on the Haynesville.  Where's the love?  Don't answer that -  I already know.

Haynesville Shale Rig Count: Unchanged at 28

Last week's Haynesville Shale rig count was unchanged from the previous week, holding at 28, with both Louisiana and Texas unchanged at 17 and 11 rigs, respectively.  But like a duck churning under the calm surface of the water, there was some more activity than meets the eye.  In Louisiana, Petrohawk was down one rig, while XTO was up one.  There is also greater diversity in location.  Back in the fall, all Texas rigs were in Panola Co. and most Louisiana rigs were DeSoto Parish, with just a couple elsewhere.  This week, Haynesville rigs are in nine different parishes and counties.  It's not a party like 2010 all over again, but there has been subtle change over recent months.  I'm going to update the map for the first time in a few months.

Friday, January 10, 2014

U.S. Rig Count: +3 to 1,754

The Baker Hughes U.S. rig count was up three this week to 1,754.  Oil rigs were up 15 to 1,393, gas rigs were down 15 to 357 and miscellaneous rigs were up three to four.  By type, horizontal rigs were up ten to 1,158, vertical rigs were down five to 372 and directional rigs were down two to 224.  Among gas rigs, horizontal rigs were down ten to 263, directional rigs were down three to 69 and vertical rigs were down two to 25.

Thursday, January 9, 2014

A Picture Saves Me a Thousand Words


But I'll still get a few words in...  I glance at shale gas production data from the EIA every week or so, but the recent update of production through year end 2013 really caught my eye.  EIA presents production data by shale basin (see their chart at bottom of this post), but I took the data to make it more Haynesville-centric (above).  Production in the Haynesville Shale peaked in November 2011 at 7.171 Bcf/day.  As of December 2013, Haynesville production stood at 3.898 Bcf/d, a reduction of 3.272 Bcf/d, or 45.6%.  Haynesville production hasn't been this low since July 2010 when there were far fewer wells pumping (but they were young and pumping hard at the time...).

Six Weeks of Texas Completions

11/21/13 - 1/8/14:
  • Brammer Pan #1H, Chesapeake Operating: 11.512 MMcf/day IP, 22/64" choke, 5,560 psi; Perfs: 11,342-16,425 (penetrations also at 6,504'-6,510' and 8,598'-9,502'), length: 5,083 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: JACKSON, S, A-352 
  • Carthage Gas Unit 17 #14, Valence Operating: 2.223 MMcf/day IP, 35.1 Bbl/day liquids, 24/64" choke, 965 psi; Perfs: 9,886-11,207, length: 1,321 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: DIAL, C, A-184 

A Couple More Louisiana Completions

  • OB Madden 7-6 HC #1-ALT, Encana Corp.: 21.935 MMcf/day IP on 25/64 in. choke at 8,353 psi; Perfs: 12,441-20,305, length: 7,864 ft.; Woodardville Field, Red River Parish, S7/T14/R10; res. A, serial #245850 
  • Olympia Min 2-35 HC #1, Encana Corp.: 23.244 MMcf/day IP on 24/64 in. choke at 8,904 psi; Perfs: 12,999-19,015, length: 6,016 ft.; Bayou San Miguel Field, Sabine Parish, S2/T8/R12; res. A, serial #246706
...And now I am current on Louisiana completions through Jan. 8.

EIA Storage: -157 Bcf to 2.817 Tcf

The EIA reported this week that working gas in storage was down 157 Bcf to 2.817 Tcf.  The weekly withdrawal was 18% lower than last year (-191 Bcf) but 20% greater than the five year average (-131 Bcf).  The current storage level is now 15.8% below last year (3.345 Tcf) and 10.1% below the five year average.


With recent large withdrawals, the beginning of year deviation of the current storage level from the past couple of years is fairly wide:

Wednesday, January 8, 2014

Haynesville Shale Rig Count: +1 to 28 Over Past Two Weeks

With the holidays, I've been derelict in keeping the Haynesville rig count current, so here is the catch-up report...  Over the past two weeks, the Haynesville Shale rig count was up one to 28.  In Louisiana, the count was down one to 17 (Chesapeake up one, XTO and Encana both down one) while Texas was up two to 11 (Anadarko and EXCO both up one).

The news in Texas is that Anadarko is now running a Haynesville rig in Marion County.  By my count (and the TRRC's), this is the first Haynesville well in Marion Co.  Let's see what happens there.  EXCO's rig is its first in Texas since February 2012 when it dropped from six to zero in a period of seven weeks.

Tuesday, January 7, 2014

Six Weeks of Texas Permits

11/21/13 - 1/6/14:
(Check out Haynesville permit in Marion Co.)
  • Clark Gas Unit #1H, Anadarko E&P; Carthage Field (Haynesville Shale), Marion Co. Co., Survey: JEFFRIES, S, A-213 
  • CGU 28 #51HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: MORRIS, J, A-446 

Two Weeks of Louisiana Completions

  • Powers 21 H #3, Petrohawk Operating: 7.873 MMcf/day IP on 14/64 in. choke at 2,363 psi; Perfs: 11,492-15,612, length: 4,120 ft.; Elm Grove Field, Bossier Parish, S21/T16/R11; res. A, serial #246098 
  • Powers 21 H #4, Petrohawk Operating: 7.347 MMcf/day IP on 14/64 in. choke at 7,175 psi; Perfs: 11,370-15,894, length: 4,524 ft.; Elm Grove Field, Bossier Parish, S21/T16/R11; res. A, serial #246099 

Monday, January 6, 2014

What a Difference a Year Makes

Happy New Year to all!  As part of my transition from 2013 to 2014 I have to update most of the charts I compile for this silly site.  The most noticeable change will be the price chart.  That chart compares the current year Henry Hub spot price against last year, the five year average and a range from the previous five years.  Because the five year range included 2008, a year during which gas prices spiked over $13/MMBtu, it didn't quite reflect the "new normal" gas prices post-shale and made the chart look like a tsunami.  Now that the trailing five years starts in 2009, things look a little different...

Old:

Friday, January 3, 2014

U.S. Rig Count: -6 to 1,751

The Baker Hughes U.S. rig count was down six this week to 1,751. Oil rigs were down four to 1,378, gas rigs were down two to 372 and miscellaneous rigs were unchanged at one. By type, horizontal rigs were up two to 1,148, vertical rigs were down ten to 377 and directional rigs were up two to 226. Among gas rigs, horizontal rigs were unchanged at 273, directional rigs were up one to 72 and vertical rigs were down three to 27.

EIA: Storage -97 Bcf to 2.974 Tcf

EIA announced today that working gas in storage was down 97 Bcf to 2.974 Tcf.  The withdrawal was 23% lower than last year (-126 Bcf) and 20% below the five year average (-121 Bcf).  The current level is 15.9% below last year (3.536 Tcf) and 8.9% below the five year average (3.263 Tcf).