Henry Hub Calendar-21 curve buying and selling in $2.70s/MMBtu
Haynesville half-cycle IRRs common 13% in November
Drilling returns to pre-pandemic degree as rig depend hits 47
New York —
With Henry Hub gasoline priced within the higher $2s/MMBtu by means of 2021, sturdy drilling economics within the Haynesville play are making it the shale gasoline trade’s most probably candidate for manufacturing development in 2021.
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As of late December, the Calendar-year 2021 ahead curve on the Henry Hub continued to commerce within the mid-$2.70s/MMBtu – down about 40 cents from an annual excessive in late October at $3.15/MMBtu, S&P World Platts’ M2MS information confirmed.
Regardless of the current decline, information from S&P World Platts Analytics prompt that even modestly decrease gasoline costs on the Henry Hub might help sturdy drilling economics within the Haynesville.
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In November, the rolling 12-month ahead curve at Henry Hub averaged simply $2.69/MMBtu. Over the identical 30-day interval, although, half-cycle inner charges of return within the Haynesville averaged about 13%, making the Texas-Louisiana play the third-most worthwhile drilling location in North America behind the Permian Delaware and the Permian Midland.
Assuming benchmark gasoline costs stay roughly round that degree subsequent 12 months, a continued ramp-up in Haynesville drilling would spur important in-basin manufacturing development, probably outpacing positive factors in related gasoline manufacturing from the Permian Basin.
In late November, rig depend within the Haynesville climbed to 47, its highest since Jan. 1, information revealed by Enverus DrillingInfo confirmed. That month alone, producers within the Haynesville added seven drilling rigs, making the it the one North American shale basin to totally restore drilling exercise to pre-pandemic ranges.
After bottoming out at simply 31 rigs in Could, the gradual however regular ramp-up in Haynesville drilling exercise over the summer time has already begun lifting manufacturing there. In November, output averaged over 12.5 Bcf/d – up about 700 MMcf/d from an annual low in August, when producers turned out simply 11.8 Bcf/d on common, Platts Analytics information confirmed.
Following November’s steep construct in drilling exercise, the Haynesville now seems poised for development in 2021.
A current forecast from Platts Analytics confirmed Haynesville manufacturing rising by practically 30% from December 2020 to December 2021. Over that very same interval, dry and related gasoline manufacturing from most different North American shale basins is anticipated to contract. In truth, solely the Marcellus and the Permian are anticipated to see web positive factors in gasoline manufacturing over the subsequent 12 months, with considerably smaller volumetric positive factors that quantity to development charges of round 5% to 10%, yearly.
Along with the Haynesville’s comparatively sturdy effectively economics, current and upcoming pipeline enlargement initiatives there must also enable manufacturing to develop unconstrained in 2021. In response to Platts Analytics, the continued midstream buildout will preemptively debottleneck producer entry to the premium Gulf Coast market, enhancing optionality and end-market value outcomes
Most not too long ago, Gulf South initiated service on its Index 99 Growth challenge in August, serving to to deal with potential takeaway constraints linked to Haynesville manufacturing development. The 22-mile pipeline gives as much as 750 MMcf/d in agency transportation service from the East-Texas Haynesville to current interconnects with Transcontinental Gasoline Pipe Line’s Station 85 in Alabama and Sabine Pipeline’s Henry Hub interconnect in Louisiana.
The Gulf South challenge joined the already operational 1 Bcf/d Louisiana Vitality Entry Challenge, or LEAP, which earlier in 2020 started providing producers serviced by the Blue Union Gathering System entry to a brand new 150-mile, 36-inch pipeline hall to the Gulf Coast.
A 3rd challenge underneath growth by Midcoast Vitality, the 1 Bcf/d CJ Specific, will even broaden market entry from the Haynesville with its personal separate startup coming probably by the primary quarter of 2021.