If you believe the economic analysis and corporate hype, the Haynesville Shale will become the nation's top producing natural gas field within the next six years. The money involved in such a feat is astounding: Drilling one well in the shale will cost more than $6 million, and already there are about 17 companies lined up to play. That the area covers four parishes — Caddo, Bossier, DeSoto and Red River — is just as impressive as what the shale actually is: a layer of sedimentary rock located 10,000 feet or more below the surface of the earth.
Energy companies working in the area for several years have found indications of a potentially large supply of gas trapped within some portions of the shale. In simpler terms, it's an untapped gold mine. The action, however, is drying up investments in south Louisiana. Petroleum landmen and energy companies can only put their money in so many places, especially during dour economic times.
The numbers don't lie. According to the Department of Natural Resources (DNR), 97 rigs have been erected in Louisiana this year, of which 77 are in north Louisiana and 66 are in the Haynesville Shale. During the same period in 2008, there were 129 rigs statewide, with 72 in north Louisiana and 21 in the shale play.
DNR Secretary Scott Angelle admits development and exploration in south Louisiana is "anemic," but adds it's hard to stand up to and compete against a historic opportunity that's just a few hours away. "This is a game changer," Angelle says. "The Haynesville Shale represents the best geographic area in the U.S. to be drilled, and people want to get involved."
Meanwhile, the area south of I-10 is quickly becoming the stepchild of energy investments. If more evidence is needed, look no further than the state Mineral Board's monthly oil and gas lease sales. The August sale produced a small-but-noticeable bump for south Louisiana, where eight leases were awarded in areas that hadn't seen interest in months. The one lease awarded in offshore waters in August in Terrebonne Parish, following another single sale in July, highlights the lull, especially when you consider they were the first sales on record since January.
If the August sale revealed any consistency, it can be found in the fact that action is still hot in north Louisiana. Twenty of the 23 north Louisiana leases were sold in Caddo, DeSoto and Red River parishes in the area of the Haynesville Shale natural gas formation. Of that 20, 16 were sold in Caddo Parish, the hub of related activity. Lease values also remained strong in the area, with the 20 Haynesville Shale area leases averaging more than $6,500 an acre — up from nearly $4,800 an acre in July.
The state commissioned Baton Rouge economist Dr. Loren Scott to estimate the statewide economic impact of the shale play. His findings suggest it will become every bit the "game changer" that Angelle predicts — to the point of possibly benefiting south Louisiana in the long run. Last year alone, the play generated $2.4 billion in new business sales, roughly $3.9 billion in additional household earnings and more than 32,000 new jobs. "As a reference point, this is slightly larger than total employment in all of Louisiana's banks and credit unions," Scott explains in the study.
Companies are taking note. Just a few weeks ago, Chesapeake Energy Corp. opened a headquarters near the shale and promised to be a "good partner" for the state. It already has distributed more than $30 million in royalty payments and is the largest landholder in the region. Gov. Bobby Jindal attended Chesapeake's grand opening and commented on what the move means for Louisiana — north and south. "With an estimated 6.5 billion cubic feet of recoverable natural gas per well in Haynesville, Chesapeake is certain to remain in Louisiana for some time and they will help ensure that Louisiana remains at the forefront of the nation's energy industry," Jindal says.
In related news, Dallas-based Regency Energy Partners unveiled new plans to build a $44 million pipeline extension to the shale area. When it comes to technological advances, the shale is once again leaving south Louisiana behind. For starters, there's the leap into urban drilling. Officials were forced into this because of the proximity of production operations in the Haynesville Shale zone and nearby populated areas.
From advances in operations to the amount of investments, there's no doubt north Louisiana is outshining southern parishes these days. But to hear Angelle explain it, the shale may end up carrying the entire state into a new economic era. "You can connect the dots in a bunch of different ways, but it's important not to underestimate the importance of the Haynesville Shale statewide," Angelle says. "It's brought Louisiana another area that can be explored and developed."
Jeremy Alford can be reached at email@example.com.