Pa. shale gas production eclipsed 4 trillion cubic feet in 2014
Persistent low prices didn’t put a crimp in shale gas production in Pennsylvania during the second half of 2014, as drillers set a record and expect to continue the increases.
Shale companies produced more than 2 trillion cubic feet of gas in the second half of the year, bringing the state’s year-end total to more than 4 trillion cubic feet of gas, according to figures released Tuesday by the state Department of Environmental Protection. The 30 percent annual increase over 2013’s record continues a trend of significant year-over-year increases.
“It’s rates that a few years ago nobody really thought possible,” said David Yoxtheimer, a researcher at Penn State University’s Marcellus Center for Outreach and Research. “Basically, we’re seeing a trillion cubic feet of growth per year. I think if you were to even ask the industry if they were to be expecting that…they would not have guessed those kinds of rates of increase.”
Several gas companies have said they will spend less on drilling this year yet produce as much as 30 percent more gas than last year. It’s a feat made possible through increased technological efficiencies and nearly 3,000 wells in the state that companies drilled but haven’t fracked or connected to a pipeline, Yoxtheimer said.
“That’s going to keep production stable if not increased,” he said.
Production could be imperiled by two new taxes proposed by Gov. Tom Wolf, along with depressed prices, industry groups warned.
“Reports like this should serve as an important reminder to policymakers that we must continue to pursue solutions aimed at creating new jobs, not higher energy taxes,” said Dave Spigelmyer, president of the North Fayette-based Marcellus Shale Coalition.
America’s Natural Gas Alliance, a national industry lobbying group, echoed the concern.
“We hope the story continues, and that the next few chapters include sensible tax policy and new infrastructure so that Pennsylvania residents can fully benefit from the commonwealth’s abundant natural gas supplies,” said Frank Macchiarola, executive vice president for government affairs with the group.
The top five producing companies remained unchanged from the first half of 2014. Oklahoma City-based Chesapeake Energy led the way with about 388 billion cubic feet from 712 producing wells, followed by Houston-based Cabot Oil & Gas.
“It’s a combination of that geology, the strength of it,” said George Stark, a spokesman for Cabot, which drills mostly in Susquehanna County. “It really gets down to how strong each individual well is.”
Cabot was followed in production by Fort Worth-based Range Resources, Houston-based Southwestern Energy and Downtown-based EQT Corp.
Susquehanna and Bradford counties led the state in production. Susquehanna wells yielded 478 billion cubic feet and Bradford, 406 billion cubic feet. Washington County was third in the state and led Western Pennsylvania with nearly 252 billion cubic feet.
As unconventional shale drilling rose last year, the production of conventional gas drillers, also stymied by low prices, was cut nearly in half from the year before.
Production from 55,000 shallow conventional gas wells dropped to 114.6 billion cubic feet of gas in 2014, down from 214.4 billion the year before. The drop is expected to continue through 2015, said Lou D’Amico, president of the Pennsylvania Independent Oil and Gas Association in Marshall.
“There is virtually no new conventional drilling going on at this time, and the reason’s pretty simple — the economics just don’t warrant it,” he said. “It’s difficult enough with the big Marcellus players with larger volumes of gas to attempt to make a dollar in today’s environment. For the conventional operators, it’s totally impossible.”
Most of the production is coming from the Marcellus shale that run beneath about half the state and was first tapped 10 years ago in Washington County. Companies have started drilling into the deeper Utica shale in Pennsylvania with great success.
Despite depressed natural gas prices, companies increased the number of shale wells they brought online during the period. There were 5,965 active wells in production during the second half of the year, according to the state, about 565 more wells than the previous six months. Companies connected fewer than 500 wells during the first half of the year.
Companies including Range, Cecil-based Consol Energy (the 11th-largest shale producer) and State College-based Rex Energy (No. 17 on the latest list) have said they will reduce capital spending by between 27 and 43 percent because gas prices recently hit their lowest level since 2012, but they still plan to increase production by up to 30 percent. Cecil-based Rice Energy on Tuesday said it will produce up to 72 percent more gas this year compared to last, even as it cuts capital spending by nearly 20 percent.
Staff writers David Conti and Chris Fleisher contributed to this report. Katelyn Ferral is a staff writer for Trib Total Media. She can be reached at 412-380-5627 or [email protected].