Report: Record Pa. Gas Production in 2020 Despite Pandemic
Natural gas production in Pennsylvania set a new one-year record in 2020, despite an economic downturn caused by the COVID-19 pandemic and a smaller number of new wells being drilled.
The state Department of Environmental Protection reported in its annual oil and gas report that gas drillers produced more than 7.1 trillion cubic feet of natural gas in 2020, more than the previous record of 6.8 trillion Mcf produced in 2019. At the same time, just 527 new wells were drilled, 476 of them unconventional. That number is down from 787 in 2019, and well below the all-time high of 1,327 in 2014 at the height of the boom in the Marcellus region.
Pennsylvania is the second-biggest gas producing state in the U.S., behind only Texas.
The report also noted that despite the pandemic that resulted in most state Department of Environmental Protection employees working remotely, the agency was able to conduct 25,863 well inspections, which found 9,363 violations. “In order to protect the health and safety of DEP inspection personnel and the regulated community, DEP focused its inspection priorities on emergency response situations and responses to public complaints in early 2020. DEP inspectors also focused on administrative-related inspections during 2020 that could be conducted with reduced health and safety risks to its inspectors as a result of COVID,” the report states.
DEP collected $33.3 million in fines, more than seven times what is usually collects. The huge number was due to a $30.6 million civil penalty in response to the 2018 Revolution Pipeline explosion and fire in Beaver County. The penalty is one of the largest civil penalties collected by DEP in a single settlement.
The report also highlights DEP’s efforts to identify and plug orphan and abandoned wells, many of which were drilled decades ago before regulations existed. DEP estimates there are as many as 200,000 abandoned oil and gas wells in the state, which can leak methane, a potent greenhouse gas, and potentially contaminate groundwater. While DEP is working to plug some of these wells, its funding level is well below the approximately $17,000 per well cost to do so, and it may take years.
During 2021, DEP plans to work to establish a new long-term, stable source of funding for its oil and gas program. Currently, permit application fees are the primary funding source.
“Over the past several years, the number of permits submitted to DEP has been decreasing; therefore, so too has the amount of permit fees that support the DEP Oil and Gas program. Since DEP cannot predict the number of permit applications that will be received in future years, this fee structure is unpredictable and is not a viable mechanism to fund DEP’s Oil and Gas program,” the report states, adding that it needs a more sustainable funding method.
In addition, the department is continuing to work in conjunction with operators and the Pennsylvania Grade Crude Oil Development Advisory Council to develop new regulations for conventional, or vertical, wells. Conventional drilling, which has taken place in Pennsylvania for more than 100 years, involves wells that are drilled vertically into a reservoir of oil or gas, while unconventional development uses horizontal drilling and hydraulic fracturing, or fracking, to create cracks in deeper shale layers to release trapped gas.
Unconventional wells are much deeper, use large amounts of water and chemicals under high pressure and are much more expensive than conventional wells, which are usually drilled by smaller companies.
Most Appalachian natural gas producers have been in a maintenance mode for the past few years, drilling only the number of wells needed to replace aging wells and maintain production at current levels due to an oversupply of natural gas and lower prices. If prices begin to increase in the post-pandemic economy, the region could see more drilling but it is unlikely it will be at levels seen in the last decade.