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It’s true that potential millionaires were made in late 2007 and early 2008 regarding the Haynesville Shale natural-gas swath, which consists of seven north Louisiana parishes as well as counties in east Texas and southwest Arkansas. Some owners leased their lands early and made out like proverbial Jed Clampetts; others now feel burned.

Those $30,000-per-acre stories of grandeur earlier this year led national media outlets such as The New York Times and MSNBC—as well as acerbic bloggers curious about an area with higher-than-average poverty rates in the 20th percentile—to express shock at the millionaire “hillbillies” springing up overnight as leasing numbers went ballistic in the hilly areas of northwest Louisiana.

Haynesville, optimistic experts noted, potentially could be the largest natural-gas field in the nation—300 trillion cubic feet, with a “t”—and perhaps the fourth largest in the world.

Lately, though, the numbers have been falling, in some cases fizzling like a dry hole, with some property owners who had historically been leasing for $100 per acre fully expecting their own riches but now facing a reality check — with others getting no checks at all.

Baton Rouge geologist-engineer Bill Hise of Pennington Oil and Gas says people are now “pulling their horns a little bit” on the Haynesville issue. Hise, who hasn’t had direct work with Haynesville interests but keeps up with the play, says, “About three months ago, we were sick we didn’t [get involved]. Now, we’re not so sick about it.” Baton Rouge is more of a refinery town anyway, he says.

But also witness the September-October State Mineral Board leasing sale, which garnered about $43 million for state coffers, most of it in the Haynesville Shale “play” area. That figure was about half gleaned only a few months ago. At the meeting, others apparently received the unwelcome oil shaft and are considering lowering their minimum bids at the November and December meetings.

“We have not had any offers” on 500 acres, says Dwayne Woodard, secretary-treasurer for the Claiborne Parish Police Jury. “We’ve had lease activity here, but it’s not the $30,000 per acre they got in DeSoto.”

Jerry Moncrief, District 1-A DeSoto Parish police juror, confirms that number. “We did get $27.8 million off of about 1,245 acres of land we leased,” he says. “That’s not even royalty money. Like all small parishes, it is a bonanza for us.”

A landowner himself, Moncrief leased his property a year ago at $200 an acre just before the five-figure numbers appeared. “But the salve on that wound,” he says, “is that my royalties, potentially, will far outweigh any lease money.”

Meanwhile, Bienville Parish Secretary-Treasurer Rodney Warren says that parish’s 700 acres have not been leased. Webster Parish also has about 700 acres, and Rhonda Carnahan, secretary-treasurer, says she’s “a little envious that some parishes like DeSoto did real well. We advertised ours, but got no bids.” Red River Parish has “not yet” leased its 300 acres, President Jessie Davis says. Bossier Parish offered a few thousand acres at the October board meeting. “With the economy the way it is, we have not leased any lands as of this time,” Bossier Police Jury secretary Cindy Dodson says.

Haynesville is definitely not a WAG, an old oilman’s term for “wild-ass guess.” Caddo Parish Commission Clerk Jerry Spears says his parish “did pretty well. We got about $18 million.” But Spears says those who are leery about the latest downward trend should note what current companies are doing. “I live right in the middle of what they call the sweet spot,” Spears says. “Chesapeake’s the big player, and I can tell you that Haynesville Shale is a huge monolithic formation that not only contains gas, but generates gas. The point is, Chesapeake Energy is so confident that the gas is there that they’re running the pipelines to these things before they’re drilling. I’m serious.”

Chesapeake now has 14 wells online, Corporate Development Director Kevin McCotter confirms, adding: “I hope people are good stewards of their income.”

“A lot of people became millionaires overnight,” says U.S. Sen. Mary Landrieu’s regional representative, Jeffrey Everson. “People who used to be ‘thousandaires’ went out and spent big money, not realizing they had to pay taxes on their new money. They just need some guidance at this point.”

Landrieu, who was speaking in DeSoto Parish in early October in a speech called “Shale Shock,” says the big money is a boon — with caveats.

“It’s not going to make every single solitary person wealthy, but it should enrich everyone if the money is spent well and wisely,” she says to a group of DeSoto Parish officials and Mansfield residents.

How big is it?

To put Haynesville in perspective: About 10,000 to 12,000 feet below the clay- and sand-heavy ground, the Haynesville Formation could have up to 300 trillion cubic feet of natural gas ensconced within its 150-million-year-old, Jurassic period-borne, shale-rock sediment. Think 300 trillion basketballs filled with a vital, clean and cheap alternative-energy source. The nearest play to that is the 30 trillion cubic feet of gas gleaned in the past half-decade in the adjacent Barnett Shale field of east Texas.

Haynesville is something never witnessed in the state before, though other “plays” [so named because of the risks involved] have piqued interest in the past, Department of Natural Resources Secretary Scott Angelle says.

“The state has not seen a potential play covering this amount of acreage and with the numbers of wells that have been projected to be drilled,” Angelle says. “The Tuscaloosa Trend area north of Baton Rouge in the 1970s and 1980s was a natural-gas find that drew great interest, but that involved standard vertical drilling and fewer total wells than projected for the Haynesville Shale. The Annona Chalk find in the 1990s in central Louisiana involved horizontal drilling, but that was an oil-bearing formation, covering fewer acres and with fewer wells drilled than projected for the Haynesville Shale.”

As landmen descended in record-setting, even frantic, runs on courthouses up north during 2007 into early 2008, it was clear that Haynesville was different.

“One trillion cubic feet is considered phenomenal,” landman James Hesterly says. But his question these days: “Will it be economically feasible to drill these wells at $6.50, which is what we have today?” Back in July, natural gas was at nearly $14 per thousand cubic feet. Experts generally agree that $8.50 is the price at which firms can garner a 15% return—considered the minimum—on startup investment, which, for directional wells, can hit $8 million before drilling begins.

Don Briggs, a 45-year oilfield veteran and director of Louisiana Oil and Gas Association, says Haynesville is a viable venture if one is patient. “Prices will slow it down. That’s what’s happening now,” Briggs says, adding Haynesville should offer a 30-year, “long-term” deal that will employ thousands of Louisiana residents. In a show of confidence, he recently opened an office in Shreveport.

“It’s mind-boggling,” Briggs says of Haynesville. “Remember, the Barnett Shale play eventually brought in 6,600 producing wells. They’ll literally drill thousands of wells [in Haynesville]. And we are only in the infant stage of this whole thing.”

Just starting, really

And that infancy is a key point, DNR’s Angelle agrees.

“Production from Haynesville Shale wells has barely begun,” he says, “with only a handful of wells starting to produce.” He adds “it will be some time” before exploration companies begin to provide the production information, as required by state law, to base tax or royalty estimates for Louisiana-owned properties.

One main fact here: Oilmen have known about the Haynesville Formation natural-gas deposits for at least 60 years. Haynesville itself is actually located in Claiborne Parish, only five miles from the Arkansas border, though the main “sweet spots” are also within six other parishes: Bienville, Bossier, Caddo, DeSoto, Red River and Webster. DNR also cites Texas counties such as Harrison, Marion, Panola and Shelby and a tiny portion of Arkansas.

Yet getting to this cache of gas was nearly impossible and certainly not financially feasible. But new horizontal-drilling techniques during the “fracking” process now allow workers to capture the hydrocarbon riches from the hard rock a mile or so from the initial vertical-drilling spot. Oil and gas giants such as Oklahoma-based Chesapeake Energy and Cubic Energy were playing their leasing low-key until this past March, when Houston-based Goodrich Petroleum and Petrohawk Energy publicly outed the finds. That kind of blew it for a lot of people, sources say.

Still, a firm such as XTO Energy, in early November, notes that it has spudded its first two horizontal Haynesville Shale wells on acquired leaseholds in its eastern region. And some landowners are still getting lucky. In October, Northwestern State University received $4.4 million total at up to $12,000 per acre.

Though this new gas boom is pretty well northwest of Baton Rouge, leaders expect thousands of trickle-down jobs in the next decade or three. That means up to 184 extra workers total per rig, Briggs says, with one predictor being the Barnett Shale play, which has added nearly 85,000 jobs to that area.

“Economics have changed things recently,” says Briggs, who then shakes his head in awe. “[But] I mean, $30,000 an acre? I’ve never seen that.”

Q&A WITH SCOTT ANGELLE

Writer Steven K. Landry speaks with Department of Natural Resources Secretary Scott Angelle about the Haynesville Shale:

Question: What kind of severance taxes or other monies have come to state coffers, or will come to state coffers, from the Haynesville play?

The Department of Natural Resources has already begun the process of contracting for an economic study on the impact of the Haynesville Shale activity. Plans call for a two-year study that will be inclusive of many factors involved in the exploration of the Haynesville Shale. Severance-tax collections on the Haynesville Shale wells will also be affected by the state’s “horizontal exemption” on severance taxes, exempting the type of horizontal well used in the Haynesville Shale for up to two years, depending on production levels.

Q: What kind of effect will this [Haynesville drilling] have on Baton Rouge interests?

The state will see direct benefits from the activity in the Haynesville Shale area, and every city in Louisiana will share in that. Also, with so many oil and gas service industry companies located throughout the state, every area of the state can compete to do business with some of the companies active in exploring the Haynesville Shale.

Q: The drop in natural gas prices—how will it slow down Haynesville?

The drop in natural gas prices has actually increased interest in drilling in the Haynesville Shale formation. At least one exploration company has announced it was cutting its budget back in other areas of the country to concentrate on working the Haynesville Shale. As prices have fallen, the incredible prices state and local governments have been offered for mineral leases in the area have come down, but are still far higher than anything seen for the area, or even the rest of the state, in past years. Companies may also be easing up on leasing now to concentrate on drilling the thousands of acres that have already been leased.