Haynesville Activity ‘Soft’ as Permian Associated Natural Gas Supply Competes, Says Patterson-UTI CEO
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Mergers by exploration customers and low natural gas prices continue to be a headwind in the Lower 48 for the oilfield services sector, but impacts may begin to ease later this year, according to completions expert Patterson-UTI Energy Inc.
U.S. land activity “continues to be cautious and reflects slightly lower activity than we saw to start the year,” CEO Andy Hendricks said during the recent first quarter conference call.
“So far, activity in natural gas basins has held up better than we had anticipated, particularly in the Northeast. But we are seeing more natural gas activity reductions continuing in the second quarter.”
[Data Center Demand: How is the growth in artificial intelligence and data centers expected to impact the natural gas industry? What obstacles and opportunities lie ahead to serve the power-hungry facilities? Tune in to NGI’s podcast to learn more.]
Activity by the exploration and production (E&P) customers in the gassy Haynesville Shale dipped early this year more than anticipated. Hendricks said the decline was the result of the Haynesville gas competing with Permian Basin associated gas output.
This year, “we’re supposed to get another 1 Bcf on the Permian pipelines,” the CEO said. That gas is “competing against gas essentially in the Haynesville, which is why we’ve seen the Haynesville continue to stay soft. We don’t today have visibility on any increase in natural gas for the end of ’24.”
Domestic gas activity is likely to remain at “second quarter levels through the rest of the year,” Hendricks said. “Nevertheless, our long-term positive view on natural gas is unchanged.”
Increased U.S. LNG capacity into 2025, as well as “growing demand for power in the U.S., will require increased production, with natural gas remaining part of the industry growth narrative for 2025 and beyond,” he said.
More Gas Rigs?
“We do have some natural gas customers that have been talking to us about adding a rig or increasing activity to start to plan for things in 2025. I think we’re all just trying to understand right now, what does it look like in terms of more pipeline capacity coming from the Permian and how does that compete against Haynesville gas.”
Some E&Ps also “have natural gas takeaway over to California at the same time,” Hendricks said. “So not all the associated gas is coming from the Permian to the Gulf Coast and hitting Henry Hub. And California is still going to have strong demand for utilities with natural gas. And that gets into the whole data center discussion.
“Over 2025 and going forward, the U.S. is going to be exporting” additional liquefied natural gas. “There are contracts in place for the new plants coming online, especially on the Texas coast. The Texas coast is going to require more natural gas. It’s not apparent that there are enough pipelines coming from the Permi...