Good wells are being reported from Shelby, Nacogdoches, Harrison and Panola counties.

The Haynesville fairway is expanding, with wells of more than 20 million cubic feet a day being reported from the Holly/Caspiana area by Chesapeake Energy Corp. and Exco Resources Inc.

“Much of the early drilling was in the Elm Grove Field area. That’s where some of the highest-rate wells have been drilled to date,” says Dr. Joel Walls, vice president and chief petrophysicist with Houston-based Object Reservoir Inc., which is leading the 12-producer Haynesville Collaborative Exploitation project.

“More recently, we’re seeing some very good wells in the Holly/Caspiana area. Moving closer to the border, in the Logansport area, there was a report by Comstock Resources Inc. of a 17 MMcf/d well, and going into Texas into Shelby, Nacogdoches, Harrison and Panola counties, we’re seeing some very good wells in that area, although not at the same initial rates as the wells in the Elm Grove area.”

Walls is among presenters in the Aug. 20 webinar “The Haynesville Bottom Line: Leasing, Take-Away, Well Results” now available for viewing on demand, including presenters’ slides.

“There certainly is an expanding Haynesville development in progress. And we’re seeing lots of good wells being drilled and completed outside of what was originally considered the core of the play,” Walls says.

Is leasing expanding the same way? Ramona Hovey, senior vice president, product management for DI Energy Strategy Partners, a unit of DrillingInfo, which develops leasing and other industry intelligence, says, “Leasing concentration is still in the core areas but there are certainly producers that are starting to move out and test the water in the other area.”

The most unleased acreage in the expanding area that is considered potentially prospective for economic Haynesville gas production is just north of Shelby County, she says. “There is still some open acreage there and, certainly as you get to the fringes, such as Sabine Parish, quite a bit is open there but it does not appear the sweet spot is down there yet.”

The greatest leasing activity has been in Shelby County, Texas, and Caddo, Bossier and De Soto counties, Louisiana. Those are “all pretty tight,” she says.

“The greatest new leasing activity will come from Harrison and Rusk counties—and then from expiring leases in the next year or two.”

New-lease terms, which averaged a primary term of three years in 2008, now average a four-year primary term. The terms are going to continue to extend because of the uncertainty of forward gas prices and when producers can really drill the acreage.

The average royalty remains high, “and I think this is reflective of a royalty-resource play.” The average royalty was less than 20% in 2003 and was pushing 25% in 2008; it was about 22% in first-quarter 2009.

“In Shelby County,” she adds, “there is not a lot of open acreage left to be leased…Shelby is pretty cooked for the moment.”

Walls says key points about findings from the Haynesville play thus far are:

-- There is a wide variability among wells from the Haynesville. “Data available is only to about 12 months for even the oldest producing wells.”

-- Some wells (old and new) are/were pipeline constrained, “so some of them are choked to the point at which they are not producing at the maximum rate possible.”

-- “Many operators are drilling to hold leases, which means they’re not necessarily always drilling where they think the very best rocks are going to be.”

-- “Detailed, realistic models are needed that account for structure, completions and rock properties. Model reliability increases with the number of wells and a longer production history.”

And take-away capacity? Justin Carlson, senior energy analyst for Denver-based energy-research firm Bentek Energy LLC, says, “There is ample capacity to move that gas.” More pipe has been financed and is under way.

“You can see growth from 10 Bcf/d now to approximately 18 Bcf/d of new capacity that will be available for Haynesville producers to put their gas on. Now, it seems like a little bit of an overbuild…but these pipelines are important, some are essential…We can’t view Haynesville in a vacuum.

“The Haynesville area also has gas coming (through) from the Barnett, the Anadarko Basin, South Texas and the Gulf (Coast and Gulf of Mexico)…It’s important that these pipes get built…so Haynesville producers can gain a share of the U.S. natural gas market.”

The Aug. 20 webinar is now available on demand at OilandGasInvestor.com, including presenters’ slides: “The Haynesville Bottom Line: Leasing, Take-Away, Well Results.”

--Nissa Darbonne

–Nissa Darbonne (ndarbonne@hartenergy.com), E-Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week, OilandGasInvestor.com Today, OilandGasInvestor.com, A-Dcenter.com, UGcenter.com.