It's the monthly production of natural gas produced in the US and specific data for what used to be the largest producing states (Pennsylvania is still lumped in with "other states")
The latest report is
If you look at the graph in the upper right corner or even at the tables, there are three obvious trends:
1) Other (led by the Marcellus) has skyrocketed.
2) Federal Offshore has steadily declined
3)Louisiana had a sharp increase in 2010 and 2011, but has had almost as sharp of a decline since then.
I presume the reason for the sharp decline is that the Haynesville gas is too dry and the cost to drill too high.
My questions are:
Is the decline solely due to natural decline or are there wells actually shut in?
Does anyone have a sense of when the decline flattens out?
Obviously the natural gas market is well supplied right now, and would be glutted if Louisiana production was still at 9bcf/day instead of 6bcf. It's kind of an economic cruelty that Louisiana/Haynesville has borne the brunt of the decline.
Thanks in advance if you have any insight to my questions.
There are a number of wells that are still slated as WOCR (waiting on completion rig). Skip keeps a decent track on these, if he would be available to share. The Shreveport district scout report make for a good source for primary data on these. Being that these wells will generally not flow in any appreciable quantity as a vertical completion, the wells are functionally equivalent to a shut-in well (capable of production, as soon as someone finishes the drilling, completion and/or frac).
There is not much pressure to convert these wells to producers yet. There are several factors, as you mention dry gas trades at a low enough value so as to make further substantial development impractical, and bringing additional volumes of gas would only compound the problem. The ROI in the Marcellus is currently more attractive where it can be developed, and there is still substantial drive in the Marcellus to hold existing leases by drilling and producing wells. Once that lessens, I suspect that the Marcellus production will similarly level and possibly recede to an point such that an equilibrium based upon ROI and acreage attrition will be the primary factors driving development.
There still is a historical premium on liquids compared to equivalent gas costs based on equivalency and BTU, so the oily plays still rank ahead of dry gas. Takeaway and refining capacity issues along the northern border will cause more of an effect in the Bakken than in those areas nearer to home (e.g., Texas plays), where piping and infrastructure can more easily accommodate delivery to the market and refining centers.
The Haynesville has entered the second phase of development - manufacturing and buildout. This will be driven by revenues and cost metrics rather than the initial sunk costs of development (G&G, Land, Legal, Lease Acquisition). Production and profits will dictate the pace. Until the natural gas price ascends to a level that would warrant another wave of wholesale lease acquisition ($6 - $8+, depending on the source) and subsequent buildout into the lesser tiers, or another "game changer" surfaces, things should remain static.
Dingo and Dion~
As of Oct. 1 the state lists Haynesville Shale wells as follows:
127 Waiting On Completion
55 Permitted, Not Drilling
There are 25 wells listed as Shut-In (Status Codes 31 - 37)
Note that new horizontal wells are predominantly Cross Unit Lateral well designs. Each of those wells effectively drills ~1.6 times the lateral length of earlier non-Cross Unit wells. Therefore the 28 wells currently drilling, if all are CULs, would equal ~45 wells with a lateral contained fully within one section.
I think it's due to the high decline rate of shale wells. That's a major difference between conventional plays and shale plays. In shale plays you have to keep drilling in order to keep production even. In conventional plays you can drill, complete, and watch the money come in until it's time to work-over or open another zone to produce in an existing well.
The Eagleford and the Bakken will also follow the same pattern as the Barnett and apparently the Haynesville. That's why the big players Shell and Chevron are having second thoughts about shale plays. I don't think that's a major problem for shale plays. Leave shale to companies that don't have the overhead.
My projection for a couple of years now has been to expect higher Nat Gas prices, I'm sure I waivered at times, but I think you'll see higher prices followed by higher rig counts in shale gas plays.