On its fifth anniversary, the Haynesville Shale is still alive but natural gas output is sputtering

— It seems like only yesterday. But five years ago this week, an announcement changed the face of the oil patch and kicked off what became the industry phenomenon of 2008 and continues even now:  the search for the next big shale play.

That year on March 24, Haynesville Shale pioneer Chesapeake Energy unveiled its discovery of the play in Northwest Louisiana and East Texas. The news, delivered solemnly and matter-of-factly, at the time felt like a bolt of lightning as the company in its debut Haynesville statement stated:

Chesapeake believes the Haynesville Shale play could potentially have a larger impact on the company than any other play in which it has participated to date.

It was a startling revelation from the world's biggest shale slugger, although the impact Chesapeake talked about was  short-lived--a casualty of supply-demand realities that caused gas prices to later plummet and made gas drilling relatively uneconomic relative to oil. But it could be argued that the Haynesville really was a victim of its own smashing success. Five years later, gas prices are still hung over from the gas drilling bacchanalia, for which the Haynesville and its horn of plenty was at least partly responsible.

While a few other companies were working the play at the time it crashed onto industry's center stage, the sheer fanfare of its unveiling made the Haynesville almost a household name. It also raised operators' appetite for shale operations and sparked a drive to make them über-economic.

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By early 2008, industry had discovered several large, profitable shale plays, most of them yielding natural gas. Dozens of companies were still producing oodles of gas from the Barnett in North Texas, the grandmother of all shales and the first developed on a wide scale. But it wasn't the only one; the Fayetteville, the Woodford and the Bakken (at the time, the only large shale oil play) were also some of the better-known shale fields.

But the Haynesville changed everything. The field spurred what was widely called the "shale gale" as a fevered search for new shale plays took on the dimensions of the California Gold Rush of 1848. It seemed every industry gathering was dominated by talk of the Next Big Shale that could mimic the Haynesville in allure and produceability. At the time, the Barnett was already producing about 4.1 Bcf/d, while that of the Fayetteville Shale was just under 1 Bcf/d, according to data supplied by Bentek Energy, a unit of Platts.

Early in what would come to be known as the Year of the Shale in 2008, companies were still widely looking for gas, at a time when that commodity was still economic and the search for still more of it from shales was on. Pioneer Natural Resources announced the Pierre Shale in Colorado and Apache Corp found the Ootla Shale in Canada's British Columbia, although these are barely remembered today.

In October of that same year, small independent Petrohawk Energy announced what it called a "significant new natural gas field" -- the Eagle Ford Shale,  located in South Texas.

It was considered impressive at the time. The initial well came online at an eyebrow-raising rate of 7,600 Mcf/d of gas and 250 b/d of condensate, or about 9,100 Mcfe/d. Soon, drilling went crazy in the Eagle Ford, not only because of high gas flow levels, but because the play contained oil and liquids too. Petrohawk became the sage of shale.  Operators increasingly sought out Eagle Ford's gas liquids and oil windows to the north and continue doing so today.

Amid the shale frenzy, oil was on an upswing. Oil prices climbed to $147/barrel in July 2008, then began a months-long plummet that eventually took it down to less than a quarter of that peak. A couple of months after the oil peak, investment bank Lehman Brothers collapsed amid the worst depression in more than 75 years. Companies immediately pulled back on drilling everything. But a year later, oil prices were at a comfy $70/b or so while gas had fallen to the $3.50-$4/Mcf level. With too much gas registered in storage bins, upstream companies began shifting to oil operations as the persistent flood of US gas--some of it from increased oil drilling--kept gas prices tamped down.

As for the gassy Haynesville, 28 rigs were drilling the field in second quarter 2008, according to Tudor Pickering Holt's Weekly Rig Roundup. By second quarter 2009 that number had more than tripled to 91 rigs, TPH said. By that time, Haynesville production had reached 2.3 Bcf/d. Over the next year the number steadily rose, reaching a peak of about 186 rigs in second quarter 2010. when Haynesville production was about 3.9 Bcf/d.

But except for some forays above $5/Mcf in late 2009 and early 2010, and above $4/Mcf since then, the price of gas never really recovered and has largely remained below $4/Mcf, a level that makes oil plays more economically alluring. Last week there were 27 rigs drilling the Haynesville,  according to rig data furnished by Global Hunter Securities/ That's about the same as shortly after Chesapeake's dramatic announcement.

Meanwhile, the Haynesville continues to produce gas in quantities; so far in March production has been about 5.59 Bcf/d, having gradually wound down from a peak of about 7.34 Bcf/d in November 2011. If nothing else, the giant play appears to have a lot of staying power.

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