EIA Expects US Shale Production to Slow Down More by October
(Continued from Prior Part)
Haynesville shale natural gas production
The EIA (U.S. Energy Information Administration) estimates that the Haynesville Shale produced 6.48 Bcf (billion cubic feet) per day of natural gas in August. This is according to its Drilling Productivity Report released on September 14, 2015.
The Haynesville Shale’s natural gas production in August was 0.30% lower than the production in July. Even on a YoY (year-over-year) basis, it was 1.10% less. This also marked the third straight month-over-month fall in the Haynesville Shale’s natural gas production in 2015.
The Haynesville Shale is located in Louisiana, southwestern Arkansas, and eastern Texas.
According to the EIA, the natural gas production at the Haynesville Shale rose 69% in the past eight years. In August 2015, the region produced ~6.5 Bcf per day of natural gas compared to ~3.8 Bcf per day in August 2007.
What this means for Haynesville producers
Natural gas producers at the Haynesville Shale will lose from lower production. These include Anadarko Petroleum (APC), BHP Billiton (BHP), EP Energy (EPE), and EXCO Resources (XCO).
Anadarko Petroleum accounts for 1.73% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). It’s also 0.21% of the SPDR S&P 500 ETF Trust (SPY).
Haynesville rigs and monthly additions from one average rig
The number of active rigs at the Haynesville Shale was 37 in August—up from 31 in July. A year ago, there were 52 drilling rigs in the region. It’s important to note that most of the Haynesville Shale rigs are horizontal in trajectory.
From August 2007 to August 2015, the additional natural gas production per rig at the Haynesville Shale rose from ~1.1 MMcf (million cubic feet) per day to 5.84 MMcf per day, or by 4.5x. In the 12 months to August 2015, the natural gas production addition per rig rose 21%.
Have production adjustments started in the US shales?
Crude oil and natural gas production at key US shales rose in the past few years. However, the aggregate crude oil production in these shales fell in the past four months. The aggregate natural gas production also followed suit in the past couple of months. The EIA’s projections suggest that the production could fall more or stagnate at many of these shales within the next two months.
In the next two parts of this series, we’ll review the EIA’s crude oil and natural gas production forecasts for the major US shales.
Continue to Next Part
Browse this series on Market Realist: