Haynesville Gas as an LNG Feedstock
Here is another bunch of hooey from RBN about the role that the Haynesville Gas Play in Texas and Louisiana will have in providing feedstock to $$72 B of FID for Gulf Coast LNG exports...
The Haynesville has to grow over 1 BCFGPD for the next 7 years. The same analysts suggest associated gas from tight oil wells in the Permian has to grow 1.2 BCF per year. These analysts, I think, choose to overlook how fast this tight gas stuff declines.
Below two data sets of Haynesville wells drilled in different time frames emphasizing just how quickly these wells decline.
"U.S. LNG export deals and FID activity hit record highs — U.S. LNG developers have signed sales agreements for ≈29.5 mtpa of LNG so far in 2025, quadruple the volume contracted in all of 2024. Six major projects (including Cheniere, NextDecade and Venture Global schemes) have reached final investment decisions (FIDs) this year, securing ≈US$72 billion in financing. Developers are reportedly commanding liquefaction fees about 15 % higher than a year ago despite inflationary cost pressures. Why It Matters: Record contracting and financing underscores robust global demand for U.S. LNG, supporting long‑term gas development in the Permian and Haynesville. With Qatar also expanding, some analysts fear a future supply glut, but current appetite suggests U.S. liquefaction projects will remain oversubscribed through the mid‑2020s." AFE Leaks
My research suggests annualized decline from tight, unconventional resources, where 78% of all of America's natural gas production now comes from, is something in the order of 31%. So, for tight gas to be able to meet LNG guidance, and growing AI demands, tens of thousands of additional wells will have to be drilled in Texas costing hundreds of billions of dollars. Where will the money come from? For the Haynesville, gas prices below $4.50 make no money. Permian basin tight oil wells do not breakeven below $60 on a full cycle, all-in corporate basis.
Below is a very current Novi chart for the Haynesville gas wells that show when laterals are normalized for length, well productivity is falling and wells being drilled today have significantly lower cumprods. by month 15 and therefore, implied lower EURS.
People are lying a lot these days in an attempt to make the last bit of money they can, anyway they can, from promoting the tail-end of the shale revolution.
America is NOT sitting on an abundance of affordable tight oil and tight gas anymore. The easy stuff is drilled (and exported away) and along the way both shale oil and shale gas lost a lot of money the past 24 years. Now it's all getting more expensive to extract, there is less of it, well economics are getting worse, not better, long term debt for the sector is growing...and people want to borrow more money to export the last molecule they can.
The heart of the shale oil and shale gas watermelon has been eaten.
Country first?
Not with these guys.
Money first. And in a few years the rest of America will be stunned wondering what happened to all the hydrocarbons they were told there was.
Does anyone remember the Natural Gas Policy Act of 1978? Federal legislation enacted as a response to NG shortages in 1976-77. https://en.wikipedia.org/wiki/Natural_Gas_Policy_Act_of_1978 .
'The NGPA was a piece of Jimmy Carter's plan to increase energy supply while reducing domestic consumption of energy." The NGPA set prices based on where natural gas old,new, or of high cost. . . which in turn encouraged oil and natural gas producers to produce from new sources of natural gas."
How are "Market distortions" created?
Does anyone remember what was happening in Europe in 2022?
On February 24, 2022, Russia invaded Ukraine.
https://www.bloomberg.com/news/articles/2022-04-27/four-european-gas-buyers-made-ruble-payments-to-russia
In April 2022, 4 European natural gas buyers made ruble payments to Russia for natural gas. 1o European natural gas buyers opened ruble accounts.
Please note that on May 30, 2022 oil was $120.56/bbl. Yesterday oil was $59.00/bbl.
Nord Stream II was destroyed on September 26, 2022. A coincidence of events?
November 5, 2024 Trump was re-elected president. Oil was $71 .00/bbl.
Yesterday, November 13th, 1 year after Trump's re-election, oil was $59.00/bbl
In my view, natural gas markets are about to get dislocated in a big way. And oil markets will follow in sync.