The Third Growth Phase of the Haynesville Shale Play
The Haynesville Shale’s small ‘consortium’ of dedicated operators has credited the optimization of well design and completion efficiencies as the key to the renaissance of the basin in recent years. A hallmark of the second growth phase of the Haynesville play has been the steady increase in the intensity of completions. In the first quarter of 2015, the average completion in the play used less than 1,800 pounds of proppant per foot, only a few hundred pounds per foot more than the first growth phase, several years prior. By the second quarter of 2017, that number more than doubled, but was accompanied by a rise in well costs as activity began to pick up again.
Haynesville Shale: Average well* proppant intensity and D&C capex per lateral foot. *Includes horizontal wells TIL in each quarter. Source: Rystad Energy ShaleWellCube.
However, since 3Q, 2018, operators have been able to steadily reduce their average well cost to about $1,072 per foot as of the fourth quarter of 2020. While some of this decline can be attributed to cyclical service price deflation, the consortium of operators has clearly captured efficiencies, as the average completion intensity hit an all-time high at over 4,000 lbs/ft in the fourth quarter of 2019.
It appears for now that most producers have found their ‘sweet spot’ at between 3,000 and 3,500 pounds per foot. Furthermore, the efficiency gains captured by Haynesville operators are evident from the changes seen between 2018 and 2020 in the average frac speed per well, measured in lateral feet stimulated per day. The play average reached 617 feet per day in 2020, up from 537 in 2018, with some companies, such as Comstock, Rockcliff and Goodrich posting major gains. While geological factors and operational strategies, such as proppant intensity and the number of frac stages, can influence the ability to complete frac jobs faster, more lateral feet stimulated per day, generally indicates the more efficient use of capital in completing wells.
Rockcliff Energy, active in the East Texas portion of the play, saw increases in both frac speed and fluid per foot in 2019 and 2020, completing frac jobs faster and with more fluid per foot. Key factors in driving the westward extension of the play’s core. The Haynesville rock in the northwestern part of the play is shallower than elsewhere, but thicker and less pressured than the traditional core, resulting in it being largely neglected in the play’s first boom period.
Haynesville Shale: Horizontal wells TIL* 4Q19-3Q20 by operator. Bubble size indicates half-year three-stream cumulative production (million cubic feet equivalent). *Includes horizontal wells with at least three months on production. Source: Rystad Energy ShaleWellCube, Rystad Energy GIS Services.
However, thanks to the aforementioned completion efficiencies, producers have been able to see improving well results at a fraction of the cost of the Louisiana core and (albeit deeper) the Shelby Trough. Although productivity in north-western Haynesville, still lags behind the core, these trends bode well for the area’s significant future development potential. This view is corroborated by continued rapid production growth in the Texas Haynesville (prior to the Texas freeze in February) for key operators including Rockcliff, Comstock and ExxonMobil.
While the cost efficiencies and improvements in well design and completion techniques may have reached a peak in 2020, Rystad Energy believes that the Haynesville still has room to grow over the course of the next five years. Using an average 2020 well decline curve, analysis concludes that production can grow by another 5 billion cubic feet per day (Bcfd) in the play over the next five years using an average of 54 rigs, and that growth can be maintained even if the number of rigs were to drop to 35.
