Haynesville Shale An Economic Bright Spot For Louisiana

by Don Briggs

For more than a century, the oil and gas industry has remained the backbone of Louisiana’s economy. From the developments and discoveries of the early 20th century, to the boom of the 1970’s, and to the eventual bust of the mid 80’s, the industry has experienced a long roller-coaster ride of ups and downs. However, the unprecedented discovery of the Haynesville Shale has the potential to subside the turbulent and cyclical ebb and flow of the industry in North Louisiana.

From preliminary speculations to what we have seen from current initial production results, the Haynesville Shale has proven to be an extraordinary natural resource find. Chesapeake Energy Corporation estimates that the shale formation could contain more than 245 trillion cubic feet of natural gas, making it potentially the largest onshore natural gas find in U.S. history.

Specifically, the Haynesville Shale is located primarily in five parishes in Louisiana — Caddo, Bossier, DeSoto, Sabine and Red River. Since its discovery in early 2008, North Louisiana has become a hotbed of leasing and drilling activity. Secretary of the Department of Natural Resources Scott Angelle announced that activity in the Haynesville Shale accounts for nearly 10.4 percent of all of the current oil and gas exploration in the United States. Even more astounding, Secretary Angelle noted that “5 percent of the nation’s drilling activity is in one parish — DeSoto.” As of Dec. 8, there are 788 active Haynesville Shale wells. Of those 788 wells, 271 have been completed and are producing, 247 are permitted and waiting operations, and 86 are in the process of drilling.

Recently, in November, Petrohawk Energy Corporation’s CEO Floyd Wilson announced that the company’s gross output from the Haynesville Shale has reached 500 million cubic feet of natural gas equivalent a day from 64 operated wells. hesapeake Energy, the largest leasehold owner in the Haynesville Shale, has completed 137 operated horizontal wells in the Haynesville Shale and project by year-en, to produce a monthly average of 670 mmcfe net per day. At these production volumes, it’s only inevitable that the Haynesville Shale could become the largest producing field in the northern hemisphere.

Local communities and as far south as Lafayette have benefitted from this development. According to Scott Loren’s 2008 Economic Impact of the Haynesville Shale study, more than $3.2 billion has already been paid to private landowners in bonuses for leases and royalty checks.

In 2008, investment in the Haynesville Shale resulted in the direct creation of more than 430 high-paying jobs. In addition, state and local tax revenues also skyrocketed by at least $153 million. We can most certainly expect an exponentially larger number of jobs created, higher tax revenues, and increased royalty payments in the future.

With any new development, the potential for obstacles and hurdles is inevitable. Matters of safety, the establishment of new city ordinances and regulations and concerns of water usage are only but a few issues that must be addressed in the near future.

Local and state government, industry and local residents must work together to create sound policies that ensure the safety of our communities while also maintaining a business-friendly environment. It is important that we work together to make the development of the Haynesville Shale a success.

Don Briggs is the President of the Louisiana Oil & Gas Association.

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