Since late 2023, Haynesville gas production has been on a decline as a result of lower gas prices, strategic reductions/delays in drilling activity and well completions by gas producers, and temporary operational issues. The gas production currently stands at ~15.4 Bcf/d, down 1.8 Bcf/d from the heights seen last summer. Prior to this drop, Haynesville production accounted for roughly 16% of total U.S. natural gas production. Particularly noteworthy is the staggering 11 Bcf/d increase in gas production since its revitalization in 2017. Now ranking as the third-largest shale gas-producing play in the United States, behind the Marcellus/Utica play in the Appalachian Basin and associated gas from the Permian Basin, Haynesville is expected to make a recovery later as natural gas pricing improves driven by new LNG demand coming online in late 2024 and 2025.

Haynesville downstream natural gas pipeline infrastructure evaluation

However, sustained gas production growth can only translate into meaningful benefits for producers and downstream gas markets if accompanied by commensurate expansion in midstream infrastructure. While previous years witnessed challenges stemming from pipeline constraints leading to depressed gas prices, the scenario has shifted since 2020. Timely expansion and construction of pipelines have ensured that gas takeaway capacity from Haynesville keeps pace with supply.

Enkon, provides natural gas supply dynamics and pipeline infrastructure assessments to clients and regularly conducts comprehensive analysis to assess the balance between gas supply and pipeline takeaway capacity in various parts of the U.S. A detailed examination of key corridors facilitating gas transport to and from Haynesville as shown below is imperative to identify potential capacity constraints and the corresponding impact on the value of gas for Haynesville producers.

While overall pipeline takeaway capacity from Haynesville remains sufficient, with a utilization rate of 75% in 1Q 2024, regional constraints on the West-East corridor have been observed. Utilization rates on individual pipelines have ranged from 40% to 100%, with most operating close to or at full capacity. The North-South corridor, catering to the LNG market in Southern Louisiana, has witnessed substantial capacity expansions, significantly mitigating the risk of pipeline constraints.

New gas pipeline projects are on the way

Haynesville landscape is poised for further enhancements with multiple new pipeline projects expected to start service in 2025 – just in time when production is expected to recover. Currently, three pipelines in various stages of development are set to collectively add 3.7 Bcf/d of incremental capacity. Notable among these projects are the Louisiana Energy Gateway (LEG) and New Generation Gas Gathering (NG3), both anticipated to come online by the end of 2025. These additions are expected to fortify Haynesville’s capacity to serve burgeoning LNG and other markets in southwest Louisiana and East Texas.

Impacts on Haynesville from Permian production

Additionally, it is crucial to note the significant impact of Permian gas on the Haynesville landscape. With the Permian Basin witnessing high oil production, there is a substantial influx of associated gas, exerting pressure on Haynesville gas markets. This phenomenon underscores the dynamic interplay between different shale plays and highlights the need for a nuanced understanding of regional gas dynamics. In our forthcoming article, we will delve deeper into this evolving scenario, examining key factors such Permian gas push and its impact on a regional basis that shape gas flows between these regions.

• Kush Thakkar

If you are interested in the U.S. shale gas outlook and obtaining a detailed analysis of the regional pipeline outlook, please contact us at info@enkonenergy.com. We encourage you to subscribe to our articles to get weekly articles via email.

Enkon Energy Advisors is a boutique consulting firm specializing in oil & gas, and energy transition since 2012. We bring deep expertise in a range of markets including natural gas, NGLs, Oil, LNG, and Energy Transition where we provide commercial and market advisory to investors, energy companies, and project developers with consulting services, subscription reports, and analytics, with the goal of delivering commercially actionable outcomes to our client.