Cratering oil prices may convince some energy companies that drilling for natural gas is a more profitable venture, and the Haynesville Shale in north Louisiana is already seeing more activity, Louisiana Oil and Gas Association President Don Briggs says.
Comstock Resources has already announced it will move rigs from other oil formations back to the Haynesville, Briggs says in his weekly column. There are three additional reason that other drillers may join Comstock:
--The first U.S.-based liquefied natural gas export facility, Sabine Pass Liquefaction in Cameron Parish, is expected to begin operations by the end of the year. The $20 billion project will be capable of exporting 3 billion cubic feet of gas per day. Several other LNG export facilities are planned in Louisiana.
--Louisiana’s manufacturing sector continues to grow, with dozens of new facilities locating to the state. Those projects involve as much as $100 billion in investment over the next three to five years, and all depend on natural gas. “As flour is to a baker, so natural gas is the feedstock to this petro-chemical and manufacturing sector,” Briggs says.
--Several coal-fired power plants are converting to natural gas. The conversions take about a year to complete and cost around $1 billion.
Those three factors will drive demand for natural gas, which means drills will be turning in the Haynesville for many years to come, Briggs says.