Three Shale Formations: Part Two, Permian & Haynesville
An earlier post here discussed the Marcellus Formation, the standout in the natural gas market, and its long (human) history since a 27’ well dug in 1821. Today’s subjects: the Permian and Haynesville formations, with histories that are not quite as long but that constitute distinctive pieces of the same mosaic.
The History of the Permian Formation
As the 20th century got underway in West Texas, where surface water is almost a nullity, ranchers and farmers increasingly dug wells to sustain themselves, their produce, and their livestock. They often found evidence of oil and gas in the process. So it didn’t surprise too many of them when, in 1921, a commercial oil well was completed in Mitchell County (the east side of the Permian basin). That success at a depth of 2,498 feet encouraged other attempts. Soon there was a hit at the World field in Crockett County, the McCamey field in Upton and Crane counties, and the Yates field in Pecos County.
None of these strikes was at a depth deeper than 4,500 feet. Given the lack of pipelines at this time and the distance that had to be covered in trucking the oil to market, it wasn’t economical to attempt deeper drills.
In 1928 an in-depth test was finally successful at Big Lake Oil Field in Reagan County. But that was so soon followed by the stock market crash and depression that there was no follow up for years until the US entered the Second World War, and crude oil became a vital strategic commodity. The region has never looked back.
The Permian region is well represented in the pie chart below, under two headings (both Spraberry and Bone Spring). Other plays within the vast state of Texas are also represented by Eagle Ford and Austin Chalk.
Source: EIA, measured in millions of barrels per day as of March 1, 2020.
The History of the Haynesville Formation
The last formation is named for the town of Haynesville, Louisiana, just south of that state’s border with Arkansas. Its exploitation has a much shorter history than does that of either of the above-described formations.
The play includes southern Arkansas, northern Louisiana, and a healthy portion of eastern Texas. This area was seldom contemplated in the same sentence as the phrase “natural gas” until a strike, by Chesapeake Energy, in late March 2008. Even after the strike had occurred and had begun reverberating in the region, there was no sense of how big it was.
Yet for some residents and landowners, it soon seemed that money was falling from heaven. Acres that had been worth a few hundreds of dollars were suddenly worth hundreds of thousands, and parishes were getting checks for $30 million for drilling rights, with promises of royalties as far as the eye could see.
Production more than justified those prices. In November 2011, Haynesville gas production was at 7.2 billion cubic feet per day. In January 2013, (although it was by this time a little lower at 6.2 billion cubic feet per day), the region accounted for 9.3% of all the gas produced in the United States.
More recently, the US Geological Survey has estimated total mean resources in the Haynesville region at 1.1 billion barrels of oil, 195.8 trillion cubic feet of gas, and 866 million barrels of natural gas fluids.
A Final Thought
Every shale play develops its own story, though each passes through stages of development that have a rough familiarity. Further, there are several plays operating, and the oil and gas industry in the United States has proven so resilient, that even the worst busts help lay the groundwork for following booms. Each of the three plays just discussed is in a position to participate in booms yet to come.
Source: EIA Figures, for domestic shale gas production by play, measured in billion cubic feet per day as of April 1, 2020.