Strong Natural Gas Production Continues in Pa.

Natural gas production in Pennsylvania continued to show strong 2025 results, as a recent Independent Fiscal Office report showed an increase in both the amount produced and new wells drilled.

Production volume during the third quarter showed a 5.1% increase from the previous year, and overall production for the year so far is up 5.7% from 2024. “This would be the strongest increase in annual production since calendar year 2021 (6.9%) if it holds up,” the report states.

The state is the second-largest gas producing state in the country after Texas, straddling the Marcellus shale play. In fact, a recent U.S. Energy Information Administration analysis showed that three regions of the U.S. are in the top 10 natural gas-producing areas in the world, and each produces more than many gas-producing countries. The Appalachian region, which takes in the Marcellus and Utica plays, is the second-largest producing area, ranking behind only Russia.

Pennsylvania’s natural gas production is up in 2025, likely due to rising prices and increasing demand, after declining the previous year. Prices in 2024 reached a low of $1.44 per thousand BTUs (MMBtu) but have rebounded this year and now stand at $2.18 per MMBtu.

The number of new wells spud, or drilled, was also up significantly from last year, with 116 new wells begun in the third quarter. Drilling has continued to be on the rise in October and November.

These numbers are good news for the Pennsylvania counties and municipalities that receive annual impact fee payments from natural gas drilling. The impact fee was instituted in 2013 as part of Act 13 after the rise of unconventional drilling in the state. It is based on a formula that takes in the average annual price of natural gas, production amounts, and the age of the well, with new wells being taxed at a higher rate than aging wells.

 In 2024, $163.8 million in impact fees was collected, down $15.8 million from the 2023 total of $179.6 million. The drop was attributed to natural gas operators pulling back on drilling due to continuing low prices. However with improving prices and more drilling, the impact fees for 2024 are likely to be higher when the final numbers are announced. That will mean more money for counties and municipalities to add to their coffers.