Friday, May 30, 2008

Economic Benefits of Haynesville Shale could be 'Monstrous' for Louisiana

The Haynesville Shale is being described as one of the richest fields of natural gas ever discovered in Louisiana and possibly in the United States. If it is as viable as several large companies believe, it will bring billions of dollars into the state treasury over the long run.

“The economic impact will be absolutely monstrous if it’s as big as it can be,” said Don Briggs, president of the Louisiana Oil and Gas Association.

Until now, the production of oil and gas in Louisiana has been obtained from the conventional subsurface reservoirs that are located in sandstone or limestone formations. The Haynesville Play is predicated on shale as the subsurface source of natural gas, according to information from M.B. Kumar, Office of Conservation geologist administrator. The shale is a rock formation mainly composed of consolidated clay-sized particles deposited and buried in the north Louisiana geological basin more than 170 million years ago during the geologic Jurassic time. It's characterized by ultra-low permeability in contrast with the conventional sandstone/limestone reservoir rocks that have high permeability.

The shale’s boundaries are still up for interpretation. But the hot zones appear to include all of DeSoto Parish, the mid- to southern regions of Caddo and Bossier parishes, the southern tip of Webster, the western end of Bienville, most of Red River, the upper parts of Sabine and Natchitoches parishes and sections of East Texas.

What if the Haynesville Shale turns out to overshadow the East Texas Barnett Shale, the granddaddy of all natural gas fields? “We don’t know how that will look. It’s going to take a little time,” Briggs said. “However, there’s obviously enough evidence with the preliminary test that certainly has sparked an immense fever of excitement about drilling in the Haynesville Shale, and it could be very big. The economic impact to the northwest part of the state and the state of Louisiana will be very substantial.”

The need for more energy in the United States is behind the push to explore these natural gas fields. Louisiana is a net consumer of natural gas, consuming all of what’s produced in state. “We have a tremendous need for it with all of the petrochemical industry that we have. That’s a power source. … The heart of the natural gas industry flows through all of Louisiana and flows through the rest of the country. Twenty-five percent of all natural gas for the country flows through Louisiana,” Briggs said.

The News Star

Chesapeake Energy announced the find in March. Chesapeake is the largest independent and third-largest overall producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Mid-Continent, Fort Worth Barnett Shale, Fayetteville Shale, Haynesville Shale, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast, Ark-La-Tex and Appalachian Basin.

Chesapeake CEO Aubrey McLendon believes that the Haynesville Play is the biggest thing Chesapeake has ever been into, and they are knee-deep in the Barnett Shale in Texas, currently the largest gas field in the country.

Other Sources for information:

My Bossier

Oil & Gas Investor

The Absurd Report

Prime News Wire

Yahoo! Finance

Houston Business Journal

Reuters

Forbes

Fort Worth Business Press

State Revenue Department Information on Natural Gas Severance Tax

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