Haynesville Gas Will Have a Place to Go, for Now

DARREN HOROWITZ, Raymond James (06/01/2009)
"By our estimates, current available Haynesville takeaway capacity approximates ~3.0 Bcf/d. Assuming production from surrounding areas (Barnett, Cotton Valley, Bossier, etc.) increase in-line with market expectations, interstate pipeline constraints from the Haynesville should not be a material issue until beyond 2011. That said, in the interim, we are keeping a close eye on gathering/treating capacity additions as a potential bottleneck.

Looking forward, when reviewing the previously announced pipelines and current capacity commitments on new expansions, an estimated ~3.1+ Bcf/d of incremental capacity stands to be online by early 2011, all of which will have access to carry the gas eastward to the Perryville Hub in east Louisiana. While we believe the Perryville Hub will have the receipt capability of handling the influx of Haynesville and additional shale gas over the next couple of years, beyond 2011, we believe the hub could face delivery takeaway pipeline issues should incremental capacity not be added. Moreover, we note that should increased production push storage levels near full capacity during fill season, the potential exists for regional natural gas prices to be pressured, the magnitude/timing of which remain uncertain at this point.

Obviously, most of the midstream infrastructure needs are not an immediate concern; however, if Haynesville production continues on its current path, underscored by a relatively constructive pricing environment, we expect producer commitments for incremental midstream infrastructure to materialize."

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