Exploration

New fracking wells are down in Pennsylvania, but natural gas production hits record

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By: Don Hopey – The Morning Call – More natural gas was fracked from Pennsylvania wells in 2019 than in any previous year, although the number of new wells drilled declined, according to the state Department of Environmental Protection.

Meanwhile, DEP reported environmental violations in 14% of its inspections and collected fines of $4.1 million.

The DEP’s 2019 Oil and Gas Annual Report, released Monday, shows 6.8 trillion cubic feet of natural gas was produced last year from the state’s Marcellus and Utica shale gas formations, topping the 2018 production total of 6.2 trillion cubic feet and continuing an upward trend that has gone on for more than a decade.

Pennsylvania is the second-largest producer of natural gas in the U.S., behind Texas.

The department issued 1,705 drilling permits, 1,475 of those for “unconventional” or horizontal shale gas wells, and 230 for “conventional,” or shallower, vertical wells. In 2018, the state issued 2,149 drilling permits, 1,868 for unconventional wells and 281 for conventional wells.

There were 787 wells drilled in 2019, 615 unconventional, and 172 conventional. About 11,500 shale gas wells are operating in the state.

The report, which also touts departmental permitting efficiencies, states that the DEP conducted 35,324 field inspections in 2019, identified 5,496 violations and collected $4.1 million in fines and penalties. Over the past decade, the DEP has collected about $43.7 million for violations at Pennsylvania oil and gas sites.

In 2019, violations were found on about 14% of the field inspections. Half of the violations occurred at pipeline sites, where violation totals have risen steadily for the past three years, a trend the DEP noted in its report.

David Spigelmyer, president of the Marcellus Shale Coalition, a trade organization representing the shale gas industry, issued an email statement saying shale gas operations have an “exceptional inspection compliance rate.”

John Sutter, a coalition spokesman, noted the industry’s improving operational efficiencies and said the compliance rate at unconventional gas well drilling sites for 2019 was 98%.

Spigelmyer did not respond to specific questions about pipeline violations or the downward trend in well drilling.

But Rob Altenburg, energy center director for PennFuture, a statewide environmental organization, said drilling numbers are lower because the supply of natural gas is outstripping demand.

“We still have a glut of production and that’s been the case for many years,” Altenburg said in a phone interview. “What we’re seeing is a lot of drilling to secure leases before they expire, not because there’s a market for it. There’s also more pipeline construction and transport of the gas so it’s not too surprising to see higher production.

“But structurally we have overproduction, oversupply of gas and that’s why we’re seeing the industry’s push to build petrochemical plants.”

Dave Yoxtheimer, an assistant professor and extension associate at the Penn State’s Marcellus Center for Outreach and Research, agrees that economics plays a major role in the declining number of new wells. He noted that the break-even point for gas drillers in the Marcellus and Utica shales is between $2 to $3 per million BTUs, and the Henry Hub national index price for most of 2019 was below $3 per million BTUs and has been below $2 per million BTUs for much of 2020.

Another factor for fewer wells is likely the longer horizontal well laterals drilled now, Yoxtheimer said in an email. He said laterals often extend horizontally 10,000 feet from a well pad and some are as long as 20,000 feet, compared with the 5,000 foot laterals used just five years ago.

“So ultimately, production can be maintained or even increased year over year with fewer wells with longer laterals, which helps offset the marginal economics,” he said.

Altenburg said increases in pipeline violations may be a result of the DEP paying more attention to a segment of the natural gas industry that has had some high-profile problems involving landslides, stream crossings and — on Energy Transfer Corp.’s Revolution pipeline in Beaver County in September 2018 — an explosion.

The DEP report also noted that the department is continuing to identify and plug old orphan and abandoned wells. The department estimates there are as many as 200,000 such wells, which can leak methane gas into the atmosphere and contaminate groundwater.

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