Natural gas producers in the US Southeast are beginning to yield dividends from a bid to reverse declining production in one of the region’s seemingly forgotten shale plays. Recent data from the Haynesville of Arkansas, Louisiana and Texas show production there at its highest since mid-2013. As output continues to rebound from a record low in August 2016, production from the Haynesville is already up by nearly 15%, Platts Analytics data shows. That spectacular turnaround comes amid a rapid expansion in drilling activity which has rivaled that of even the Utica or the Marcellus. In just 12 months, rig count in the Haynesville has more than tripled.
Leaseholders’ renewed devotion to the play comes in spite of relatively weak internal rates of return or IRRs there, which have averaged just 11% over the last year. Those returns have paled in comparison to Appalachian plays where IRRs averaged roughly 14%, in both the Utica and the Marcellus, according to data from Platts Well Economics Analyzer. But with export demand from the Gulf Coast and Texas expected to grow by nearly 7.5 Bcf/d through 2020, a bid to grow production in the Haynesville could be longer-term play by producers seeking access to neighboring markets that are soon likely to trade at a premium.