The devastating wildfires that have raced across parts of the central Texas in the last few days have proven that disastrous situations can emerge at a moment’s notice – causing billions of dollars of damage. However, the ‘exceptional’ drought conditions that currently plague Texas, and ultimately supported the wildfire conditions, are nearly identical across parts of North Louisiana. If this situation results in uncontrollable wildfires — similar to the wildfire events recently seen in Texas — it could open the door to a possible nightmare scenario for US natural gas supply coming from the enormously prolific Haynesville natural gas shale formation.

To get an idea of just how the similar the drought and fire conditions are between Texas and Louisiana, one only needs to observe the drought map below. It clearly shows that parts of North Louisiana are in the same ‘exceptional’ drought conditions, which are highly susceptible to nearly unmanageable wildfires.

The Haynesville Shale Formation is a rich natural gas field is located in North Louisiana as is widely known as the most prolific shale gas production play in the US, producing more than 5 Bcf per day of natural gas. Haynesville shale natural gas wells have been drilled in the parishes of Bossier, Caddo, DeSota, &  Natchitoches Parishes of Louisiana, and Harrison County of eastern Texas, to name a few. The entire area is located around the ‘Big Thicket’ vicinity of the US, which is highly concentrated with tall pine trees.

If large wildfires were to start and make their way toward the Haynesville gas production area, it wouldn’t be out of the question to see Nymex gas futures prices rocket higher, potentially testing $5/MMBtu or higher — based on the risk of destroyed or severely damaged gas lines and infrastructure.

This year wildfires in Texas have burned millions of acres of land and most recently destroyed nearly 1,000 homes in central Texas. As drought conditions persist, the fear is that a similar outbreak of fires could occur in N. Louisiana. As such, the Louisiana Department of Natural Resources’ Office of Conservation announced earlier this week a fire threat advisory for oil and natural gas operations throughout the state in response to the fires burning in North Caddo, Louisiana, which is located just north of the Shreveport, LA area. These fires have popped up in the heart of the Haynesville shale vicinity as well, which is dense with tall pine trees and brush that have dried out and become brittle from months of virtually no precipitation.

 

 

 

 

 

 

 

 

 

In fact, the torrential rains brought to South Louisiana last week as a result of Tropical Storm Lee didn’t make it to the Northeast area of the state, which only measured less than a quarter-inch of rainfall during the entire tropical storm event.

The Haynesville shale gas production area Commissioner of Conservation Jim Welsh issued the advisory, calling on operators of all oil and natural gas exploration, production, transportation, waste and storage facilities regulated by the Office of Conservation to keep advised of the latest reports on the location and status of active fires in relation to active sites and to take all appropriate steps to prevent fires from coming into contact with active wells.

Welsh also reminds operators that state regulations require that combustible vegetation, trash and debris should always be kept at least 100 feet away from wellheads, production equipment, storage tanks and other exploration and production site structures.

He notes that operators whose facilities are directly threatened by wildfires should be prepared to take steps that include removing crude oil or condensate from storage tanks or shutting in wells, production facilities, flowlines or pipelines, if necessary.

“As drought conditions persist in many areas of our state, so does the risk of wildfire and the potential for wildfires to grow quickly out of control once they start,” Welsh said. “I am asking our oil and natural gas operators to be proactive in ensuring their sites are as fire-safe as possible and to be informed and ready to take action if wildfires are burning near their facilities.”

However, as witnessed over the last few days with the wildfires in central Texas, even the most careful precautions and preparations to contain and thwart the monstrous fires proved to be nearly uncontainable.

WeatherBell Analytics energy analyst Alan Lammey can be reached by email at alan.lammey@weatherbell.com or by phone at 281-658-0395.

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