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Will the Haynesville Shale, potentially one of the largest natural gas finds in Louisiana’s history, turn out to be a boon—or a boondoggle?

Don Briggs, president of the Louisiana Oil and Gas Association, says it’s too soon to tell. But in the past two years, Oklahoma-based Chesapeake Energy Corp. has quietly leased 200,000 acres in five northwest Louisiana parishes atop what has been called the Haynesville Shale formation.

Chesapeake, the nation’s third-largest producer of natural gas, plans to lease as much as 500,000 acres in an area described as potentially the largest natural gas find in the company’s 19-year history. If Chesapeake’s data is proven correct, the current acreage could ultimately yield 7.5 trillion cubic feet of gas; that increases to 20 trillion cubic feet if the half-million-acre goal is reached.

Smaller competitors—Petrohawk Energy Corp., Winchester Energy Co., Goodrich Petroleum, Encana, Questar, Camterra, Fossil Operating, and Shell Western Goodrich Petroleum—all have leases, too. They’re drilling through shale and hitting gas at 11,500 to 12,500 feet, which would typically be too costly for exploration were it not for today’s higher prices.

Tim Price Jr., Chesapeake’s senior vice president of corporate development, was tight-lipped about the company’s current operation in Bossier, Caddo, DeSoto, Red River and Webster parishes.

“We are very excited about the Haynesville Shale in Louisiana,” he says. “Although for competitive reasons we have not yet disclosed any detailed information about the play, we believe the Haynesville Shale represents a potentially significant energy development program for us that could bring positive long-term economic impact regionally and statewide.”

The company declined to detail results of its four vertical and three horizontal wells there, but did say the results have been “very encouraging.”

Texas-based Encore Acquisition Co. also has leased 10,000 acres in what it describes as “the prolific Haynesville discovery” in Bossier Parish. It has two wells in production.

Encore Acquisition also has quietly leased 208,000 acres in southeast Louisiana [East and West Feliciana, Pointe Coupee, St. Helena, Tangipahoa and Washington parishes] and southwest Mississippi [Amite, Pike and Wilkinson counties] in the past two years for one of its newest potential oil finds. According to the company’s first quarter earnings report, the area “could be a substantial new area of growth.” Two wells have been drilled, and one is producing an estimated 200 barrels of oil a day, a figure the company expects to substantially grow.

Seismology on both areas indicated they were potential energy sources years ago, but the areas weren’t economical or accessible to produce. That’s changed with today’s market spinning with uncertain world supplies and skyrocketing energy prices, but new technology, particularly horizontal drilling and fracturing, has made it possible to tap these difficult potential finds.

“Unconventional shale plays throughout the United States have produced a recent frenzy of oil and gas activity,” says Dan Collins of Dan Collins and Associates, which specializes in land research and mineral consulting and has organized area landowners to lease land in the Florida Parishes. “Horizontal drilling and hydraulic fracturing have made zones once thought to be non-productive worth a second look.”

What’s at stake?

“It’s like really big, bigger than anything we’ve ever seen,” Briggs says. Landowners are getting $4,000 to $5,000 an acre in leases, a figure that was only around $200 a year ago. Drillers are investing around $6 million in these deep wells, although an advantage is horizontal drilling lets them drill multiple wells from one platform.

“When you look at the immense investment going into leasing in the Haynesville and north Louisiana, one has to assume there’s a pretty good chance it will be a very successful venture, and a lot of people are betting on that,” Briggs says. “It could potentially be a gigantic windfall for Louisiana. I think there are lot of landowners up there buying houses in Las Vegas.”

In the Florida Parishes, Collins says a 1997 abstract from LSU indicates the Tuscaloosa Marine Shale could ultimately yield 7 billion barrels of oil. Still, in this already notoriously boom-or-bust business, energy exploration has become an even higher stakes game in the global economy.

Chesapeake has four producing wells there, but Briggs says everyone is taking a wait-and-see attitude about the discovery because natural gas wells can abruptly fizzle out, and some shale plays require years of development before their full potential is known.

“They’re hitting, and we’re waiting to see how the wells hold up,” he says. “Sometimes the gas will come in big and then suddenly disappear. They started making the first finds a couple of years ago and they’re doing well, which is why the area is drawing more companies.”

With the Tuscaloosa Marine Shale located nearly two miles below the surface, Collins says drilling that deep also is risky business. But he says technological advances like horizontal drilling, fracturing and 3D seismic exploration technology is making it possible to find and tap once inaccessible reserves like this one.

In Louisiana’s overall picture, Briggs says this expanded drilling is translating into still more substantial economic impact. One rig directly supports about 180 jobs. Multiply that by 47 rigs in the Haynesville Shale area, a figure that will likely grow if the infant field develops into a major find.

Briggs says natural gas is growing in Louisiana. For example, Caddo Parish, one of the state’s oldest oil fields in play [nearly 100 years], is now being drilled for natural gas.

Of today’s 1,815 drilling rigs in the U.S., 355 of them are drilling for oil and 1,451 for natural gas. Of those totals, 60 rigs are drilling in the Gulf of Mexico, one rig is drilling for oil and 59 drilling for natural gas.

There are 47 natural gas rigs in north Louisiana, while Briggs says the historical average rig count there has been 12 to 22 rigs. With recent announcements, Briggs says that figure could climb to 70.

“As much as I dislike the word ‘boom,’ there are likely the beginnings of one in north Louisiana,” he says. “Just how vast an area the Haynesville Shale covers, I don’t know. The economic impact on the state and north Louisiana from the Haynesville Shale play could be very big. Time will tell just how big.”