Haynesville shale play in northeastern Texas and northwestern Louisiana reached new highs with gas production reaching ~16.8 Bcf/d in April 2023 equivalent to ~17% of all U.S. dry natural gas production. More impressive is the 11 Bcf/d growth in gas production achieved since getting a new lease of life in 2017- that is staggering whichever way you look at it. Haynesville is now the third-largest shale gas-producing play in the United States just behind the Marcellus/Utica play in the Appalachian Basin and associated gas from the Permian Basin. Haynesville’s success can be attributed to several factors. Drastic improvements in the well performance have helped grow production since the start of 2017. Specifically, improved designs in well completions in 2016 are cited as having brought about the step change in a well performance and consistent growth which continues to date.

However, rising gas production does no good to the producers or downstream gas markets if midstream infrastructure doesn’t grow in lockstep. While in the past Haynesville has seen its share of low gas prices due to pipeline constraints, since 2020, the gas takeaway from Haynesville has kept up with supply by timely expanding pipelines and building new pipelines. Enkon routinely analyses natural gas supply and pipeline takeaway capacity balance and advises clients on gas marketing strategies. A detailed pipeline-by-pipeline analysis is required to assess capacity constraints on key corridors that bring gas into and take gas away from Haynesville. As seen from the graphic below, the total inbound corridor capacity into Haynesville is ~13 Bcf/d while the outbound corridor capacity is ~20 Bcf/d taking gas to USGC LNG markets as well as Southeast gas markets.

While in aggregate Haynesville gas pipeline takeaway capacity is sufficient with a utilization rate of 70% in 1Q 2023, we do see some regional constraints on the West-East corridor. Utilization on individual pipelines has ranged from 40% to 100% with most pipelines running close to or at capacity in 1Q 2023. The North-South corridor serving the LNG market in Southern Louisiana saw a significant jump in new capacity in late 2022 and into 2023 which has considerably reduced the risk of pipeline constraints.

 Further, multiple new pipelines from the Haynesville shale play have been proposed. Currently, there are 4 pipelines in various stages of development that will collectively add 4.2 Bcf/d of incremental capacity. Two of the big projects are Louisiana Energy Gateway (LEG) with a capacity of 1.8 Bcf/d and New Generation Gas Gathering (NG3) with a capacity of 1.7 Bcf/d. Both are currently under construction and are expected to be online by the end of 2024. These pipeline additions will likely ensure that Haynesville production can reach growing LNG and other markets in southwest Louisiana and East Texas for the foreseeable future. For now, at least, producers can focus on drilling plans without worrying about gas take-away capacity.

There are several upcoming LNG terminals planned for the region, including the Venture Global LNG and Port Arthur LNG and new industrial plants which may create the need to consider adding more pipeline capacity by 2026. How much of this new demand will be met by Haynesville and what impact would this have on the gas supply and take-away capacity balance? For a deeper dive into the Haynesville gas supply outlook and detailed gas pipeline takeaway assessment, drop us a line at info@enkonenergy.com.