Press Release

Fayetteville Shale Expected to be a Future Natural Gas Producing Hub


January 17th, 2013

Global Information Inc. would like to present a new market research report, "Fayetteville Shale in the US, 2012 - Gas Shale Market Analysis and Forecasts to 2020" by GlobalData.

The Fayetteville shale has, in the nine years of its development, evolved to be a significant onshore natural gas producing play in the US. Total gross production from the Fayetteville shale increased from 0.1bcf (billion cubic feet) in 2004 to 944bcf in 2011 (AOGC, 2012a).

The total gross production from the Fayetteville shale play is expected to show an upward trend. During 2012, the total gross production from the Fayetteville shale is expected to increase to 971.1bcf from 944bcf in 2011 (AOGC, 2012a). The total gross production is expected to grow at a CAGR (Compound Annual Growth Rate) of 8.7% for 2011-2020, gradually reaching 2,008bcf by 2020.

The figure below shows the historic and forecast gross production from the Fayetteville shale during 2010-2020.

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Fayetteville Shale Gas Success Mandates Infrastructure Development

The state of Arkansas had not seen any major infrastructural development activities before the discovery of the Fayetteville shale in 2004. However, with the emergence of this shale, the state has witnessed significant infrastructural developments. Among the major infrastructure development plans in the shale play, the Fayetteville Express Pipeline (FEP) is being constructed to take produced gas in the Fayetteville shale play to the Midwest and Northeast regions of the US. The Fayetteville and Greenville gathering lines also transport gas from the Fayetteville shale play to the market, primarily through the existing interstate pipelines of the US.

The Fayetteville Shale Attracted Substantial Funds for the Future Development of Natural Gas Resources

The recent downturn in natural gas prices has initiated a process of consolidation in the Fayetteville shale. With small players unable to cope with the low gas price pressures opting out of the shale, large companies have been provided with an opportunity to enhance their gas portfolio through the acquisition of these small companies or their acreage in the shale. The increased initial production rates and Estimated Ultimate Recovery (EUR) from the Fayetteville shale play, along with the decreasing costs for developing wells there, makes the Fayetteville shale an attractive investment destination. Industry majors such as BP Plc, ExxonMobil Corporation, and BHP Billiton have acquired a significant acreage position in this shale play in recent years. These companies plan to make further investments in the Fayetteville shale in the future to unlock its reserve potential.

Low Natural Gas Prices have Impacted Production from the Fayetteville Shale Play

The number of producing wells in the Fayetteville shale increased from 11 in 2004 to 715 in 2008, indicating the increased interest of the companies in the shale play. The growth in the numbers of producing wells, however, started to decline after 2009 due to low natural gas prices.

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