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Local oil & gas operators squeezed out of Haynesville Shale

Published: Aug. 8, 2008 at 9:11 PM CDT|Updated: Feb. 16, 2010 at 10:20 PM CST
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by Jeff Ferrell

SHREVEPORT, LA (KSLA) - It's already 'game over' for most local oil and gas companies in the modern-day gold rush of the Haynesville Shale.  Market forces are squeezing-out the backbone of the local oil and gas industry.

And it's little wonder, considering the potential for trillions of dollars worth of recoverable natural gas trapped inside rock known as shale two miles under northwest Louisiana.  Industry leaders point to multi-billion dollar companies, gobbling-up all the property for lease agreements, as the reason for skyrocketing costs.  Local operators simply don't have that kind of cash.

The very latest estimate about the size of the Haynesville Shale tops 240-trillion cubic feet of natural gas.  If true, money will flow into this part of the Ark-La-Tex for years;  but not for everyone.  "We're talking about the local independents who have been here for years and supported the oil and gas industry in the Ark-La-Tex area," revealed Ray Lasseigne.

Lasseigne chairs LOGA, the Louisiana Oil and Gas Association.  He points to 50-local oil and gas companies that face tough challenges, first with lease contracts.  "The lease costs, the bonuses, have gone so high that they cannot compete for drilling in their conventional prospects."  Lease bonuses can now vary from 55-hundred to 20-thousand dollars per acre, or more.

Lasseigne then gave an example of the other costs involved:  "One unit, 640-acre unit, to drill one Haynesville Shale well is going to cost about ten million dollars."  And the costs don't end there.  "And you tack onto that about seven million dollars up in well costs, a 17-million dollar upfront investment before you ever sell the first puff of gas," added Lasseigne.

He conceded that his own company, TMR Exploration in Bossier City, is among the 95-percent of local oil and gas operators who just can't compete with such costs.

"It's unprecedented as far as how much money is passing hands," described Bill Pittman.  He's a former landman who created a web site called myoilpro.com, offering his services as a consultant for oil and gas leases.  As for Pittman's 'take' on the local industry:  "The game is largely over if you don't figure out another way to get into this action because you can't compete with multi-billion dollar corporations."

Pittman's advice for local oil and gas producers:  "Go to Mississippi! (laugh)  Move!  Not kidding."  Pittman is also quick to point out that market forces will force these local businesses to adapt or die.  He said quote, "there's a lot of facets to oil and gas, where a person could exploit what they know."  He declined to elaborate.