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Haynesville Shale

The East Texas and northern Louisiana counties making up the Haynesville Shale formation came to the public's attention in 2008, when exploration companies began flocking to the region in search of its unconventional gas resources. However, the area has been tapped for conventional oil and natural gas deposits since the start of the 20th century. Using the tabs below, learn more about the history of oil and gas extraction in the Haynesville Shale and drilling's effects on economic activity in the area.

The Region

Highlights

The Haynesville Shale formation covers 23 counties on the border of Texas and Louisiana.[1] The region is rich in natural gas. DeSoto parish in Louisiana leads the region in natural gas production. With nearly 1.7 billion cubic feet of natural gas production in first quarter 2016, DeSoto parish accounted for over 27 percent of the Haynesville's output.[2]

Location of the Haynesville Shale Gas Production Zones in Haynesville Shale

Notes

  1. The Energy Information Administration also includes two Arkansas counties in the Haynesville Shale: Columbia, AR and Lafayette, AR. These counties are outside of the Eleventh District. Thus, they are excluded from this analysis.
  2. For more information on the computation of county-level production, see Energy Data Explanatory Notes and Resources.

History

The Haynesville Shale underlies a 9,000-square-mile area straddling East Texas and northern Louisiana.[1] The area has produced natural gas and oil through conventional wells for decades. These wells draw oil and gas from part of the Texas-Louisiana-Mississippi Salt Basin. Over the last decade, drilling activity has focused on both the salt basin and the unconventional resources of the Haynesville Shale.

Before the Shale Boom

In the conventional deposits of the Texas-Louisiana-Mississippi Salt Basin, oil and gas pool under ceilings of impermeable rock that were pushed up by a rising column of salt.[2] Drillers have used vertical wells to tap these reservoirs since the beginning of the 20th century.[3] In the decades preceding the shale boom, local drillers endured several boom-and-bust cycles (Chart 1). Most recently, drilling activity increased from 2002 until the start of 2008, spurred by higher natural gas prices. This led to production growth in many counties in the area.

Well Permits in Louisiana's Haynesville Parishes, 1919-2012

The shale boom opens a new chapter in the area's long history of fossil fuel extraction. In contrast to the conventional deposits associated with the salt basin,[4] the unconventional natural gas deposits in the Haynesville Shale remain trapped in a 250-foot-thick layer of rock that lies 2 miles or more below the earth's surface.[5]

Chesapeake Energy began drilling exploratory wells in the Haynesville Shale in 2006. Combining recent advances in hydraulic fracturing and horizontal drilling, the company successfully extracted natural gas from the dense rock. Chesapeake released its findings in March 2008. Shortly thereafter, a gold rush atmosphere hit the area, with significant increases in drilling. At the peak in 2010, drillers spudded 875 wells in the Louisiana portion of the Haynesville Shale (Chart 2). Natural gas production skyrocketed in a short period of time, with the increases concentrated in four counties in Louisiana and two in Texas.

New technology extracts gas from shale

The Shale Bust?

In recent years, area activity has fallen significantly from its 2010 peak. In one sense, the Haynesville has been a victim of its own success (and that of other shale plays). Production of natural gas in the U.S. increased so much that natural gas prices plummeted, remaining depressed for several years. This discouraged drilling for new natural gas wells, not only in the Haynesville but also elsewhere.

The Haynesville Shale also has two characteristics making it less attractive than other shale plays. First, the shale is unusually deep, where drilling becomes relatively expensive. Second, the Haynesville produces primarily natural gas while other plays, such as the Eagle Ford in South Texas, also contain crude oil and natural gas liquids (NGLs).[6] Both crude oil and NGLs currently sell for more than natural gas (Chart 3).

Prices for crude oil, natural gas liquids and natural gas

In spite of recent declines in activity, natural gas production remains significantly elevated compared with the pre-boom period, and the area still has plenty of potential for future growth. Geologists estimate that the play still contains roughly 75 trillion cubic feet of technically recoverable natural gas.[7] In addition, drillers in the area enjoy a dense network of pipelines and close proximity to refineries and petrochemical plants on the Gulf Coast. This suggests the area could see renewed activity if natural gas prices sufficiently rise in the future.

Notes

  1. Modern Shale Gas Development in the United States: A Primer, U.S. Department of Energy, Office of Fossil Energy, April 2009.
  2. For more information on how oil and natural gas pool in a salt dome, see geology.com.
  3. "Discovery of Natural Gas Recalled," Shreveport Times, Dec. 5, 1976, 2-C. Louisiana State University in Shreveport Noel Memorial Library, Archives and Special Collections.
  4. The Energy Information Administration's Energy in Brief describes the differences between conventional and unconventional natural gas deposits.
  5. Haynesville Shale Fact Sheet, Institute for Energy Research, August 2012.
  6. Natural gas liquids refer to several compounds, such as ethane, propane or butane, that are commonly produced with natural gas. For more information on natural gas liquids and their many uses, see What Are Natural Gas Liquids and How Are They Used?, Energy Information Administration, April 20, 2012.
  7. Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays, Energy Information Administration, July 2011.

Natural Gas Production

Production Before the Shale Boom

Highlights (Pre-Boom)

In the years preceding the shale boom, the Haynesville Shale experienced notable increases in natural gas production. As a result of these gains, the share of U.S. natural gas produced in the Haynesville region ticked up 2 percent.[1]

Production increased faster in Texas than Louisiana in these years, with Nacogdoches and Harrison counties recording the most significant increases. From first quarter 2002 to first quarter 2008, natural gas production increased by over 900 million cubic feet per day in the Texas Haynesville counties and by 600 million cubic feet per day in the Louisiana Haynesville parishes.[1]

Natural Gas Production in Haynesville Shale, 2000-2007 Share of U.S. Natural Gas Production in Haynesville Shale, 2000-2007 Change in Natural Gas Production in Haynesville Counties Texas Natural Gas Production in Haynesville Shale and Rest of State, 2000-2007 Louisiana Natural Gas Production in Haynesville Shale and Rest of State, 2000-2007

Production after the Shale Boom

Highlights (Post-Boom)

With the start of the shale boom in 2008, natural gas production in the Haynesville skyrocketed. Production across the Haynesville has declined in recent years, but the formation still produces 7.5 percent of all U.S. natural gas.[1]

Louisiana has recorded the strongest natural gas production gains since the shale boom. Even with the recent declines in production, the Louisiana Haynesville parishes produced around 2.2 billion cubic feet more natural gas in first quarter 2016 than in first quarter 2008. DeSoto parish alone accounted for almost 67 percent of this increase.[1]

Natural Gas Production
Third quarter 2017
  Cubic feet per day
(billions)
Year/year change
(percent)
Texas
Haynesville counties 2.5 3.4
Rest of Texas 19.3 –4.0
Louisiana
Haynesville parishes 4.3 21.0
Rest of Louisiana 1.5 27.6
SOURCES: Energy Information Administration; Railroad Commission of Texas;
calculations by Federal Reserve Bank of Dallas.
Natural Gas Production in Haynesville Shale, January 2000 to Sept 2016 Share of U.S. Natural Gas Production in Haynesville Shale, January 2000 to Sept 2016 Change in Natural Gas Production in Haynesville Counties, 2008: Q1 to 2016: Q1 Texas Natural Gas Production in Haynesville Shale and Rest of State, 2008: Q1 to 2016: Q1 Louisiana Natural Gas Production in Haynesville Shale and Rest of State, 2008: Q1 to 2016: Q1

Note

  1. For more information on the computation of natural gas production, see Energy Data Explanatory Notes and Resources.

Drilling Activity

Highlights

Data showing the number of rigs operating in each U.S. county became readily available in 2011. Since the start of that year, most drilling activity in northern Louisiana and Texas Railroad Commission District 6 has focused on the Haynesville shale; however, the number of active rigs has declined sharply.[1]

Horizontal drilling dominates activity in the Haynesville shale, typically accounting for around 90 percent of all rigs.[2]

Rig Count in Haynesville
December 2017
  Number of rigs Year/year change
(rigs)
Horizontal 48 23
Vertical 1 0
Directional 0 –1
SOURCE: Baker-Hughes.
Rig Counts in Haynesville Shale, Northern Louisiana and Texas Railroad Commission District 6 Rig Count in Haynesville Shale, by Type

Notes

  1. The Louisiana Department of Natural Resources illustrates the dividing line between north and south Louisiana. Texas Railroad Commission District 6 covers 23 counties in northeast Texas, 13 of which are part of the Haynesville shale formation.
  2. Vertical rigs drill straight down through the earth. Directional rigs can drill horizontally, but they can take several hundred feet to change from vertical to horizontal. In contrast, horizontal rigs can drill straight down and make a 90-degree turn in just a few feet.

Labor Markets

Highlights

Since 2001, mining employment in the Texas Haynesville counties has nearly doubled; the rest of Texas has also experienced robust employment growth in mining employment.[1] In Louisiana, mining employment in the Haynesville parishes grew rapidly until 2011, but it declined steeply the following two years. Mining employment in the rest of Louisiana remained flat from 2001 to 2014.[2]

In both the Texas and Louisiana Haynesville, employment in industries other than mining grew at a much slower pace. As a result of these differences in growth rates, the share of employment in mining increased markedly. The largest increases occurred from 2002 to 2008; mining's share more than doubled in some counties. Since the Haynesville boom began in 2008, mining's employment share has continued growing in some areas.

In both mining and industries outside of mining, average weekly wages in the Haynesville are lower than those in the rest of Texas and Louisiana.

Employment
Second Quarter 2017
  Employ-
ment
(thousands)
Year/year change
(percent)
Texas
Haynesville counties 315.3 –0.2
Rest of Texas 11,697.9 1.8
Louisiana
Haynesville parishes 207.0 –1.6
Rest of Louisiana 1,704.6 –0.1
SOURCE: Bureau of Labor Statistics.
Texas and Louisiana Mining Employment Growth in Haynesville and Rest of State Texas and Louisiana Mining Employment Growth in Haynesville and Rest of State, all Industries except Mining Share of Workers Employed in Mining
Wages
Second Quarter 2017
  Average weekly wage (dollars) Year/year change
(percent)
Texas
Haynesville counties $796 2.7
Rest of Texas $1,033 5.5
Louisiana
Haynesville parishes $764 1.4
Rest of Louisiana $882 2.0
SOURCE: Bureau of Labor Statistics.
Texas and Louisiana Mining Wages in Haynesville and Rest of State Texas and Louisiana Mining Wages in Haynesville and Rest of State, All Industries except Mining

Notes

  1. Mining employment refers to all employment in NAICS 21, which includes mining, quarrying, and oil and gas extraction. The Bureau of Labor Statistics offers more information on this employment category.
  2. For more information on the interpretation of an indexed series, see Energy Data Explanatory Notes and Resources.

Business Activity

Highlights

Taxable sales in the Texas Haynesville counties grew 17 percent from mid-2005 to mid-2009, compared with 14 percent for the rest of the state.[1] However, since mid-2010, taxable sales growth in these counties trailed the rest of Texas.

From mid-2005 through mid-2010, taxable sales in the Louisiana Haynesville parishes performed at least as well as in the rest of the state. After drilling activity began to weaken, however, the Louisiana Haynesville parishes' taxable sales declined, while they rose in the rest of the state.

Taxable Sales
2014 Fiscal Year
  Sales (billions $) Year/year change
(percent)
Texas
Haynesville counties 8.5 3.5
Rest of Texas 348.7 5.5
Louisiana
Haynesville parishes 4.5 5.3
Rest of Louisiana 40.0 0.3
SOURCES: Louisiana Department of Revenue; Texas Comptroller of Public Accounts.
Texas Taxable Sales in Haynesville Counties and Rest of State Louisiana Taxable Sales in Haynesville Parishes and Rest of State

Note

  1. The Louisiana Department of Revenue provides parish-level retail sales in its annual report, which only includes data for each fiscal year.

Resources

Energy in the Eleventh District