Pennsylvania had a record-breaking year for natural gas production in 2019, producing 6.8 trillion cubic feet of gas from the Marcellus and Utica shale basins, according to the recently released Oil and Gas Annual Report for 2019 compiled by the state Department of Environmental Protection. The report tracks several metrics related to oil and gas development including production values, number of violations, permitting, inspections, and other related topics.
Though Pennsylvania has both conventional and unconventional (hydraulic fracturing) natural gas extraction, and total production values combine both methods, unconventional extraction vastly dominated. In 2019 alone, unconventional gas extraction accounted for 98.96 percent of total gas production. Total production continues to increase year over year, as it has been since the beginning of the ‘shale boom’ in 2012. However, since 2012, conventional natural gas production has declined significantly, with nearly 100,000,000 Mcf less gas produced in 2019 compared to 2012.
Conventional natural gas production does beat unconventional in one category: violations. Conventional wells accounted for 1,783 violations from 12,027 wells, while unconventional wells accounted for 985 violations among its total of 18,970 wells. Total violations, and violations by extraction method, are both down from 2018 by a considerable amount. These violations were found through inspections conducted by the DEP.
According to the report, the DEP conducted a total of 35,324 inspections of both conventional and unconventional wells, which accrued $4.1 million in fines from noncompliant operators. On this front, the DEP states it is working with the PA Grade Crude Oil Development Advisory Council to develop updated and improved regulations for the industry. Among the focus areas are modeling storm water patterns for better management, geologic hazard mitigation for pipelines, and seismic monitoring for underground injection wells.
Abandoned and orphaned wells are also discussed in the report. The DEP estimates that approximately 200,000 abandoned wells exist in the Commonwealth. These inactive wells are problematic, as they release harmful methane emissions. In order to combat this issue, the DEP has teamed with the state Department of Conservation and Natural Resources (DCNR) to conduct a pilot study of the Cornplanter State Forest, measuring methane leaks at abandoned wells located in the forest. They hope the research will provide useful information in combatting the fugitive emission issue, and to ultimately mitigate the issue entirely.
While the PA Independent Fiscal Office is anticipating production continuing to grow in 2020, it noted in a recent report on second quarter activity that “year-over-year growth in production has decelerated over the last four quarters after recording very strong gains from the first quarter of 2018 to the second quarter of 2019. Furthermore, second quarter production declined from the first quarter of 2020, the second consecutive quarter-to-quarter decline. The continued slowdown in production has likely resulted from the combination of (1) a persistently low-price environment and (2) impacts from the COVID-19 pandemic on the demand for natural gas.”
Natural gas companies have slowed their drilling and some have shut in some production until prices rise. Whether the increasing production trend will continue in the coming years will likely depend on prices, demand, and finding new markets for gas produced in the Appalachian basin.