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Houston, 1 June (Argus) — Rebounding natural gas output from the Haynesville shale has added a nearby supply option for growing demand in the southern US.

Gross production from the Haynesville, a gas-rich formation deep underneath parts of east Texas and northern Louisiana, has increased each month since November 2016 as producers such as Chesapeake Energy, Comstock Resources and Exco Resources deployed rigs to exploit advanced drilling and completion techniques and capture higher profits. Haynesville output in April hit about 6.2 Bcf/d (176mn m³/d), up by about 3pc from year earlier, and production there shows no immediate signs of slowing.

The US Energy Information Administration (EIA) sees production rising by another 4pc this month and the energy consulting firm BTU Analytics predicts 1 Bcf/d of growth over the next 12 months.

The potential surge in Haynesville output pits those supplies against gas production from the Permian basin in west Texas and southeastern New Mexico and the Marcellus shale in Pennsylvania and West Virginia. Those fields will compete to feed power plants in the southeast as well as export terminals and petrochemical facilities on the US Gulf coast. The Haynesville may even have a leg up on the Marcellus and Permian because it is closer to that emerging demand and does not face the pipeline constraints that could hinder near-term production growth elsewhere.

"We are going to have a potential battle" as Haynesville production ramps up, more gas from the Marcellus makes its way to the southeast and the associated gas from Permian basin oil wells comes on line, Kathryn Downey Miller, a partner at BTU Analytics, said. But she noted a mix of production from all three regions will likely be needed.

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