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Houston, 31 December (Argus) — Natural gas output from the Haynesville shale has begun to increase, signaling that drilling advances could drive growth in 2015 from even the most beleaguered fields. 

The recent rise in Haynesville output could buoy US gas production, especially as large producers rein in drilling because of lower oil prices. A near 50pc drop in crude since June to five-year lows is squeezing major independents such as ConocoPhillips, Continental Resources and Apache. Those companies are cutting spending and looking to drill fewer oil wells in 2015. 

An oil drilling downturn could eventually curb gas production because wells in oil-rich fields like south Texas Eagle Ford shale and the Permian basin of west Texas and southeastern New Mexico often produce large amounts of gas. 

The Haynesville in east Texas and northern Louisiana is mostly free of oil and NGLs and insulated from that oil price drop. In addition, the Haynesville, once the top US gas-producing field, is close to emerging demand from planned LNG export projects, new power plants in the southeast and petrochemical facilities on the Gulf coast. 

Spot prices at the Carthage hub in east Texas this year have traded at an average discount to the Henry Hub in Louisiana of 9¢/mmBtu, widening from a 6¢/mmBtu discount in 2013, amid milder weather and rising production. But gas at the Carthage hub still traded at a premium to many markets in the northeastern US during the non-winter months, meaning that Haynesville production can often fetch a higher price.

Those higher prices and falling well costs have helped lure some gas producers back to the Haynesville. Chesapeake Energy, the largest producer of US gas by volume behind ExxonMobil, said it has driven down costs in the Haynesville, making the field competitive with its other US assets. Chesapeake has drilled some recent wells in the Haynesville for about $7mn each, down from an average of $8.5mn in 2013.

The Haynesville is "a highly attractive investment area," Chesapeake chief executive Doug Lawler said during a recent investor presentation. "This is a strong and powerful asset in our portfolio."

Haynesville production fell as gas prices tumbled to 10-year lows below $2/mmBtu in spring 2012. That drop, resulting from an unusually mild winter and surging production, led many producers to seek out more lucrative opportunities in oil fields. Output from the Haynesville area peaked in November 2011 at about 10.8 Bcf/d (306mn m³/d) but by January 2014 had dropped to 6.5 Bcf/d, according to the US Energy Information Administration (EIA). 

The EIA estimates that production from the Haynesville region, which includes shale and conventional wells, would reach 6.9 Bcf/d in January 2014, an increase of 3pc from a year earlier and marking four consecutive months of higher output.