State of the shale: Pa. gas production up; new drilling down

Pennsylvania’s natural gas industry produced a record 5.1 trillion cubic feet of gas in 2016, up 11 percent over the previous year, though the number of new wells drilled has declined to levels not seen since 2008, before the Marcellus Shale gas boom took off.

“Unconventional” natural gas production — shale-gas — was 65 times greater last year than in 2009, when 78.4 billion cubic feet were produced, according to the state’s annual oil and gas report, released this week by the Department of Environmental Protection. Pennsylvania ranks second behind Texas in total volume of natural gas production.

New well-drilling permits declined sharply last year, for the second consecutive year, to 1,321 wells, down 37 percent from 2015. New permits peaked at 3,560 in 2011.

Pa.’s Soaring Gas Production

Unconventional natural gas production — shale gas — increased 11 percent in 2016 over the previous year. It’s now 65 times greater than 2009.
In billions of cubic feet.
Staff Graphic

The decline in new well drilling reflects a reduction in capital investment caused by the low price of natural gas, which is a result of the abundance of production from a surplus of wells drilled in previous years, say industry experts. It’s also influenced by the state’s large inventory of drilled-but-incomplete wells.

Additionally, new wells tend to produce more gas because they are larger and capture a greater amount of the resource than wells drilled just a few years ago, so the shrinking number does not necessarily translate into a drop in production.

Washington and Greene Counties in Southwestern Pennsylvania, and Susquehanna and Tioga Counties on the state’s northern border, had the greatest number of new permits.

The number of violations at well sites increased last year, and the amount of fines and penalties increased dramatically last year to $9.7 million, up from $3.4 million in 2015. The previous high was $7.1 million in fines in 2014, the final year of the Corbett administration.

DEP said the large amount of fines collected in 2014 and 2016 “are a result of significant violations observed at a relatively small number of enforcement actions. For example, in 2016, nine violations resulted in the levy of about $8.4 million of the $9.7 million collected in total during 2016.”

Though conventional wells — mostly vertical wells that tap into pockets of oil and gas rather than shale — account for a small amount of gas production, they generated four times more violations than unconventional or shale-gas wells.

More than half of the 1,834 citations at conventional wells were administrative violations for failing to have proper signage, failing to submit annual reports, and failing to promptly notify DEP of a transfer of ownership.

Of the 456 violations at unconventional wells, 438 were environmental health and safety-related violations. Ninety-one violations were for “failure to fill all pits used to contain produced fluids or industrial wastes and remove unnecessary drilling equipment not needed for production within nine months from completion of drilling a well.”

For the first time, DEP published the 2016 report in an interactive, electronic format to improve public access to well information. Data are geolocated in GIS maps and real time, drawing from DEP’s daily electronic compliance tracking system updates.

“Pennsylvania is the second-largest producer of natural gas in the country and one of the most transparent states in making oil and gas data publicly accessible,” said DEP acting Secretary Patrick McDonnell. “Making the annual report completely digital is just the next step in our continued effort to share as much information as possible.”