The Haynesville gas basin, arguably the most important basin for liquefied natural gas (LNG) exports in the US due to its proximity to existing and planned terminals, is set for a 20% decline in output towards 2023 if Henry Hub prices average at $1.80-$1.90 per million British thermal unit (MMBtu), a Rystad Energy analysis reveals.
Henry Hub prices are currently within the $1.80-$1.90 range, and if they maintain current levels until 2023, gas production in Haynesville is set for a decline in activity. As a result, we expect only an average of 20 horizontal wells per month will be put on production (POP). Haynesville gross gas output will then fall from 12.5 billion to 10 billion cubic feet per day (cfd) throughout 2020-2022, stabilizing in 2023.
In a Henry Hub environment of $2.20-$2.40, we see the running rate of activity at around 30 horizontal wells per month in the medium-term. Such an activity level delivers almost a perfect match with maintenance requirements, with production remaining close to 12.5 billion cfd in 2020-2023. Higher gas prices are sufficient to trigger continuous production growth in Haynesville.
In a $2.70-$3.00 Henry Hub environment, the running rate of activity is set to increase to 40 wells per month – sufficient to see another 3 billion cfd added by Haynesville before the end of 2023.
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“As of today, we have not seen any meaningful production slowdown in Haynesville gas output – yet. With the declining trend, activity is set to fall below maintenance requirements in the next few months. Nevertheless, we should not forget about the likelihood of continuous productivity improvements, which always accompany declining activity due to the renewed focus on the best projects,” says Artem Abramov, Rystad Energy’s Head of Shale Research.