Pa. Moves into Second Place in Gas Production

8/31/2013 7:00 AM
By Philip Gruber Staff Writer

Pennsylvania continued its meteoric rise among shale gas-producing states in the first half of 2013, topping Louisiana to become the second largest producer in the country.

The Keystone State, the heart of the Marcellus shale formation, produced 1.4 trillion cubic feet between January and June, trailing only Texas in output over that time.

“In terms of total production, it’s a new record for Pennsylvania,” said Matt Henderson, shale gas asset manager at Penn State Extension’s Marcellus Center for Outreach and Research. Henderson spoke on DEP’s semiannual shale gas report in an Aug. 22 webinar attended by 110 government and industry representatives from around the state.

Pennsylvania now has 6,261 active wells, up from 4,312 wells at the same time two years ago.

“Louisiana,” by contrast, Henderson said, “has been decreasing some of their shale plays.”

Pennsylvania beat the Bayou State by 100 billion cubic feet in the half-year covered by the report.

Pennsylvania ranked 14th in production just three years ago. In a feverish period at the beginning of the Marcellus rush, many wells were spud, or started, but few were put into commercial production.

That backlog has decreased significantly in the past two years, as the percentage of wells in production has jumped from 38 to 67.

In another sign of the industry’s maturation, only 27 wells are waiting for pipeline to be built out to them. The average drilling lateral has also surged over time to almost two miles, Henderson said.

While demand has been fairly steady, production has shot from 426 billion cubic feet in the second half of 2010 to just over 1,400 billion cubic feet in the first half of this year.

The Marcellus formation is putting out more than 9 billion cubic feet of gas per day, which accounts for a third of all shale gas output in the country. Among all U.S. natural gas plays, only the Marcellus and Texas’ Eagle Ford formation increased production this year.

Oklahoma City-based Chesapeake Energy still owns the most wells and has the most wells online in the Marcellus play. Chesapeake has a strong presence in Bradford County, Henderson said.

Cabot Oil & Gas, meanwhile, has found its “sweet spot” in Susquehanna County, he said. While the drilling companies are generally producing more gas, sixth-place Talisman Energy has cut back in Pennsylvania.

Cabot lays claim to the highest-producing wells in the state over the past six months. Two wells on the Flowers pad site in Susquehanna County combined for more than 9 billion cubic feet of natural gas. Cabot operates seven of the top 10 wells from the reporting period.

Cabot may not want to rest on its laurels with those wells, however, considering most of the top-producing wells from the second half of 2012 have seen their outputs drop 40 to 50 percent since December, and most no longer rank among the top 10.

About 250 wells topped 1 billion cubic feet of gas over six months, and 24 produced more than 2 billion cubic feet. About 125 wells were gushing 10 million cubic feet a day, and seven produced 20 million cubic feet.

Henderson estimated that an average well produces 3 million to 5 million cubic feet of gas a day.

The bulk of the drilling is occurring in six counties: Bradford, Susquehanna, Greene, Lycoming, Tioga and Washington.

The operations in those counties have also produced big money for mineral-rights owners. Henderson estimated Bradford and Susquehanna wells both created more than $300 million in royalties since the start of the year. The other four top-producing counties had royalties in excess of $100 million.

Washington County produces 99 percent of the natural gas condensate and Marcellus shale oil in the state. Two pads in the county account for nearly all of that production.

Henderson said that drillers have not had many dry wells, even compared with the Utica formation in Ohio, which has a success rate around 85 percent.

“The success rate is rather high” in the Marcellus, but the reason for that is not clear, he said.

Henderson cautioned that the data collected by DEP are all self-reported by the gas companies. While the companies are required to give accurate numbers, DEP does not double-check the industry’s information.

While companies are required to list the state of a well’s completion with its final lateral length, some companies may start reporting a well before it is drilled to depth, while others may not start until they are extracting natural gas, he said.

DEP does not collect data on whether the wells are running at full capacity, but it does note when wells are abandoned or put on hold for future exploration.

“To my knowledge, there is no penalty for underreporting or overreporting” production, Henderson said, although he noted that DEP has latitude to block drilling permit applications for malfeasance.

The DEP’s semiannual report is available on its website. Readers may use this shortened link to access the information: http://bit.ly/W2r6WY.


Would you allow a natural gas pipeline to cross your farm?

  • Yes
  • No
  • Unsure

User Submitted Photos

View photos      Submit your photos

10/24/2014 | Last Updated: 8:15 AM