The Daley Note: November 17, 2023
Where do you go when you need an extra kick to your gas supply? Haynesville producers have raised their output in November, defying rig trends and East Daley Analytics’ ArkLaTex Basin forecast.
Pipeline flows in the Haynesville shale are off to a strong start this month. Samples in Louisiana and East Texas have averaged 13.2 Bcf/d through November 16, up ~300 MMcf/d over October and the highest volumes East Daley has observed since the basin sample peaked at 13.7 Bcf/d in May 2023 (see chart).
Most of the gains have shown up on Energy Transfer’s (ET) Enable - Haynesville gathering system (+275 MMcf/d). Williams’ (WMB) Louisiana/Magnolia system has actually seen flows decline by -206 MMcf/d M-o-M so far, offset by small gains on several other gathering systems.
Record LNG feedgas demand to the south could be responsible for some of the increase in flows. Venture Global’s Calcasieu Pass LNG recently has received record-high volumes near 1.8 Bcf/d, and could have commitments leading to the growth.
Some producers may also have hedges tied to deliveries in November 2023, the start of the 2023-24 heating season. Henry Hub futures have consistently traded over $3/MMBtu this year for the winter months, and contracts were priced over $4 at the start of 2023. Producers with favorable hedges may bringing on new wells to meet commitments and increasing overall supply.
EDA has been calling for production declines in the Haynesville since July. Our latest ArkLaTex Supply and Demand Forecast predicts wellhead gas production to fall to 17.5 Bcf/d by YE23 from the peak of 18.7 Bcf/d in May 2023.
Rig counts in the Haynesville averaged 53 in October, down from 75 rigs at the start of the year. The ArkLaTex forecast expects production to continue declining through July 2024, with significant rig adds starting in May 2024 as gas prices turn around.
Leading Haynesville producers are guiding to a similar outlook. On the company’s 3Q23 earnings call, Southwestern Energy (SWN) executives said they expect overall Haynesville production to decline “at least into early next year,” and that “strip prices are not yet high enough to incentivize production growth.”
Chesapeake Energy (CHK) guided to a steady drilling program of 5 rigs in the Haynesville, with the option to add a rig in the back half of 2024 if prices improve from new LNG demand. Comstock Resources (CRK) has also guided to a flat rig program. CRK is focused on developing its Western Haynesville acreage in Texas, where 2 rigs are currently drilling. CRK plans to add a rig to that acreage in 2024 and another in 2025, keeping the producer’s overall basin rig count at 7. – Oren Pilant Tickers: CHK, CRK, ET, SWN, WMB.
East Daley, Hart Bring NEW Gas & Midstream Weekly
East Daley is teaming up with Hart Energy on the NEW Gas & Midstream Weekly newsletter. This new report combines the strengths of Hart Energy's journalistic reporting and analysis on natural gas, LNG, midstream energy and deal-making with EDA's deep research and intelligence of hydrocarbons, storage and transportation.
Published every Thursday morning, this new powerhouse newsletter is an interactive and enlightening read highlighting breaking news, exclusive interviews, videos, charts, maps and more. The newsletter utilizes East Daley's Energy Data Studio tools for natural gas predictive analytics with Hart Energy's Rextag mapping tools to present a holistic view of pricing triggers, infrastructure growth, pipeline and processing bottlenecks, regulatory and legal hurdles, and the inevitable solutions.
Energy Data Studio
East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.
Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.
Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact firstname.lastname@example.org.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.