Today, the Haynesville shale is the largest producing gas play in North America. It produces some 6.5 Bcf/d, a remarkable rise from zero production in 2007. Indeed, this upstart shale gas play now accounts for 10% of total daily US gas production.

And yet the book on the Haynesville is that it is uneconomic in today’s gas market. It is a dry gas play, and the deep, hot, and highly pressured formation requires very costly wells. Rigs have been relocated from the North Louisiana and East Texas environs of the Haynesville to such liquids plays as the South Texas Eagle Ford.

Not everyone shares a dim view of the Haynesville, however. A major proponent of the play is Calgary-based Encana Corp. The Canadian senior has applied its skillset to its prime Haynesville land position, and it claims that the results speak for themselves. In an early November 2011 conference call with investors and shareholders, Encana talked up the Haynesville and perhaps changed a few minds about the realities of this prolific resource play.

The Haynesville has led Encana’s recent corporate production growth. “For 2011, we expect to average 505 MMcfd, more than 50 times what we were producing just three short years ago,” said Eric March, Encana executive vice president. “The Haynesville shale represents extraordinary opportunity.”

Engineering efficiency, advanced horizontal drilling and completion technologies, and lower cost structures are making the Haynesville a highly competitive, economically robust resource play that has a long-term future, he said.

In recent years, Encana worked to retain its core leasehold. The company has 250,000 net acres in the heart of the Haynesville and mid-Bossier plays, and the majority of that is now held by production (HBP), said Paul Sander, vice president, Midcontinent business unit. Now that the HBP grind is largely behind it, Encana is applying its resource play hub development strategy to the Haynesville.

Haynesville map

The Haynesville is an Upper Jurassic-age shale in northern Louisiana and eastern Texas, situated between the Cotton Vally sandstone group and Smackover limestone formation. There were more than 2,000 Haynesville wells drilling, permitted, or waiting on completetion as of March 2012. (Map and data courtesy of Louisiana Department of Natural Resources)

The approach calls for drilling fewer, longer laterals at optimum spacings and employing lower cost, higher recovery completions. Already, Encana has driven costs down to US $3.70/Mcf in the Haynesville , a remarkable drop from more than $5.50/Mcf in 2008. Going forward, Encana targets supply costs of less than $3/Mcf.

“We expect to achieve this through a combination of improved well performance and reduced cost structures, primarily through the implementation of our resource play hub model,” Sander said.

Pad drilling and increased efficiencies are pillars of Encana’s program. In its Credence area, where it owns 100% working interest, Encana has reduced drill times by 38% and drill costs by 30% since 2009. Completion efficiency and costs also have improved even as well lengths and completion intensity have increased.

Since the first quarter of 2010, the number of frac jobs Encana has pumped per month has doubled. “Most recently, we pumped as many as 145 completion stages from a single crew in a single month,” Sander said. “And more stages mean lower average costs.”

The wells also are getting better. Encana has tweaked its designs to place more sand in the completions network to reduce the impact of embedded proppant, and that has translated to improved well performance. Declines also have moderated. According to Sander, it is less costly for the company to invest in bigger completions on fewer wells than it is to drill more wells with smaller completions. “Ultimately, we are heading to 106-acre spaced wells or even 160-acre spaced wells,” he said.

On the production front, Encana has had good success with slowback, a practice that limits a well’s production rate to keep the surface pressure drop to less than 25 psi per day. Wells produced with the slowback method appear to have higher estimated ultimate recoveries on the order of 5%. “Around one-half of our wells employed this practice in 2011, and it is now our standard practice,” Sander said.

The upshot of all Encana’s engineering, innovation, and best practices is an affirmation that the Haynesville is truly a top-tier, highly competitive asset, said the company.

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