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US gas companies refocus on Haynesville Basin, buoyed with Trump LNG plans

U.S. Natural Gas Producers and Investment Firms are preparing for increased activity in Louisiana's Haynesville Shale Basin, positioning themselves to take advantage of a boom in the exports of liquefied gas boosted by President Donald Trump's new approvals.

As the United States, the world's biggest LNG exporter, brings new projects to Texas and Louisiana, gas prices will rise. The U.S. is expected to reach record levels of gas demand in 2025 and 26.

After Trump lifted a moratorium in his first days in office, energy companies are now planning and building large-scale LNG projects. This will increase the demand for domestic LNG in the next decade.

This is prompting energy companies to revisit gas plays which may be able to supply future U.S. Liquefied Natural Gas plants.

Haynesville, located in northwest Louisiana and east Texas, is ideally situated for exports of LNG from nearby Gulf Coast projects and LNG facilities.

Gordon Huddleston of Aethon, a major gas producer in the basin, explained that Haynesville's gas is more easily converted to LNG due to its lower impurities, which can hinder the liquefaction process, like nitrogen and hydrogen sulfur. Aethon Energy is considering an IPO, or selling assets to meet the demand for their product.

George Whittington is the managing partner of Proven Resources. He told the media last week that the energy investment company is raising $25 million to buy mineral and royalty rights.

Momentum Minerals said on Monday that it is raising a new fund, in partnership with Apollo Global Management, to purchase more rights for Haynesville as well as the Permian oilfield in the United States.

Investment firms often make such moves as an early indicator of future growth. Several energy companies, including Expand Energy (the largest U.S. Gas producer), Comstock Resources, and KLX Energy Services Holdings, expressed their expectations about Haynesville in their quarterly earnings calls.

Murray Auchincloss (CEO of UK oil giant BP), which owns more than 500,000 acres in the Haynesville basin, declared "the time is now for the Haynesville", at a Houston conference earlier this month.

Tokyo Gas from Japan, a prime example of an international buyer, bought Haynesville assets actively in the past two years. Japan's largest city gas supplier is trying to minimize disruptions to its supply caused by sanctions against Russia after Moscow's invasion into Ukraine. It plans to invest at least $1.9billion in its U.S. Shale business between 2026-2029.

A LITTLE GUN SHY

Haynesville's gas production is half of that in the Permian Basin, which is a prolific area in Texas and New Mexico. However, government forecasts predict a faster growth rate.

The operators say that they will be more cautious than ever before to avoid a failure. The Haynesville Basin requires deeper wells, which can be costly and time-consuming to drill.

"Producers worry about being in front of the demand again because they did it painfully last year," Huddleston said. He was referring to an exceptionally warm winter that occurred in 2023 in the U.S., which drove down gas prices.

Everyone is a bit gun-shy.

David Seduski is the head of North American Natural Gas at Energy Aspects. He said that the breakeven price in Haynesville for new production is approximately $3.75 per Million British Thermal Units (mmBtu), although this varies by basin.

The breakeven point in the Marcellus Shale field, which includes Pennsylvania, West Virginia, and Ohio, is about $2.15.

Kevin MacCurdy of Pickering Energy Partners, the managing director, says that gas futures must stabilize at $5.00 by 2027 for large producers to be motivated to increase production.

Analysts expect prices to be below $5.00 per mmBtu in the next few years. However, LNG export demand, due to higher prices overseas, could change this equation. Gas traded at around $13 per million Btu on both the Dutch Title Transfer Facility benchmark for Europe and the Japan Korea Marker Benchmark in Asia.

James Elder, CEO at Momentum Minerals said that in the last few years, his company bought mineral and royalties rights in parts in Haynesville which were not producing gas yet because the prices were low. The firm hopes that producers will be prudent as prices increase.

He said, "We hope that operators will learn their lesson and not get ahead of themselves."

(source: Reuters)