EIA: Pennsylvania Natural Gas Production Rose 69% in 2012 Despite Reduced Drilling Activity

Natural gas production in Pennsylvania averaged 6.1 billion cubic feet per day (Bcf/d) in 2012, up from 3.6 Bcf/d in 2011, according to Pennsylvania Department of Environmental Protection (DEP) data released in February 2013. This 69% increase came in spite of a significant drop in the number of new natural gas wells started during the year.

Several factors contributed to the production increase. While accelerated drilling in recent years (primarily in the Marcellus Shale formation) significantly boosted Pennsylvania's natural gas production, increases were restricted by the state's limited pipeline and processing infrastructure. This created a large backlog of wells that were drilled but not brought online. As infrastructure expanded, these wells were gradually connected to pipelines, sustaining natural gas production increases through 2012 despite the decline in new natural gas well starts. Data from DEP show that a significant portion of wells that began producing in 2012 were drilled earlier.

 

Improved drilling and well completion techniques can reduce drilling time and lead to higher production per well. The increased use of horizontal drilling (see graph) and hydraulic fracturing, particularly in the more geologically favorable portions of the Marcellus, allows for more production per well. As operators continue to improve well completion techniques, they are achieving higher initial per-well production rates and boosting overall production.

Pennsylvania typically releases major production data twice a year for unconventional (horizontal) oil and natural gas wells and once a year for conventional oil and natural gas wells. With rapidly increasing natural gas production in Pennsylvania, EIA has proposed to add Pennsylvania (and at least 11 other states) to its monthly EIA-914 natural gas production survey, which would provide more timely reporting of Pennsylvania's rising production.

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Video: Horizontal Drilling Boosts Pennsylvania’s Natural Gas Production

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Between 2009 and 2011, Pennsylvania's natural gas production more than quadrupled due to expanded horizontal drilling combined with hydraulic fracturing. This drilling activity, which is concentrated in shale formations that cover a broad swath of the state, mirrors trends seen in the Barnett shale formation in Texas.

The animation illustrates Pennsylvania's relatively recent transition from conventional vertical wells (black diamonds) to horizontal wells (red diamonds), drilled mostly in sections of the Marcellus, Utica, and Geneseo/Burket shale formations located in the northeast and southwest portions of the state. The animation also shows that as horizontal drilling increased, the number of vertical wells—which are typically less productive—fell, resulting in an overall decline in the state's new well count.



Historically, natural gas exploration and development activity in Pennsylvania was relatively steady, with operators drilling a few thousand conventional (vertical) wells annually. Prior to 2009, these wells produced about 400 to 500 million cubic feet per day of natural gas. With the shift to and increase in horizontal wells, however, Pennsylvania's natural gas production more than quadrupled since 2009, averaging nearly 3.5 billion cubic feet per day in 2011. Natural gas wells accounted for virtually all (99%) of the horizontal wells started over this period.

Source: U.S. Energy Information Administration (2005-2010); Pennsylvania Department of Environmental Protection (2011).

         

Drilling programs in Pennsylvania's shale formations, like those in other, more established plays such as the Barnett and Eagle Ford in Texas, are migrating to more liquids-rich areas due to the price premium of crude oil and natural gas liquids. The effect of low natural gas prices is apparent in Pennsylvania's 2012 well count for the first third of the year. From January through April, drilling began on 618 new natural gas wells; over 700 new natural gas wells were started over the same period in 2011. In contrast, 263 new oil and "combination" (oil and natural gas) wells were started in Pennsylvania from January through April 2012, well above the 164 new wells that began drilling during the corresponding period in 2011.



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Top 5 Producing States Combined Marketed Natural Gas Output Rose in 2011

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Combined marketed natural gas production from the top five natural gas producing states...Texas, Louisiana, Wyoming, Oklahoma, and Colorado increased by about 7.5% in 2011, although their share of total U.S. natural gas output fell slightly to about 65%.

Marketed natural gas production from these states in 2011 totaled 15.7 trillion cubic feet (Tcf), according to annual data from the U.S. Energy Information Administration. The drop in their combined share of total U.S. production reflects increased contributions from other states, particularly those in which operators significantly expanded development of shale gas formations. Shale gas production from states such as Pennsylvania helped boost overall U.S. natural gas output by almost 8% in 2011.

Source: U.S. Energy Information Administration, Marketed Natural Gas Production, and Colorado Oil and Gas Conservation 

Due primarily to drilling programs in the Marcellus shale formation, Pennsylvania's marketed natural gas production in 2011 more than doubled to nearly 1.3 Tcf, according to preliminary estimates from Pennsylvania's Department of Environmental Protection. Arkansas has also seen strong growth in its marketed natural gas production, with output more than tripling since 2007 due mainly to increased production in the Fayetteville shale play.

Alaska is the country's second leading natural gas producer in terms of gross withdrawals, but most of the state's production is not brought to market, as production volumes far exceed local demand and there is insufficient pipeline capacity to transport the gas to distant markets. Most of Alaska's natural gas not brought to market is re-injected into existing oil fields to provide sufficient pressure to maintain oil production rates.

Highlights from the top marketed natural gas producing states in 2011.....

Texas: Natural gas production increased 4.5% from the year before to the highest level since 1980, due in part to growing output from the Eagle Ford shale formation where drillers who are aggressively pursuing high-value liquid hydrocarbons are also producing growing amounts of natural gas.

Louisiana: Natural gas production increased 38% as the Haynesville shale gas formation in the northwest part of the state was one of the biggest shale gas producing plays in the United States.

Wyoming: Natural gas production fell 5.6% to the lowest level since 2007, as lower natural gas prices made coalbed methane gas that accounts for almost two-thirds of the state's natural gas production less profitable because high-priced gas liquids aren't normally found in coal seams.

Oklahoma: Natural gas production increased 3.9% to the second highest annual output since 1994 due to higher output in the Woodford shale play.

Colorado: Natural gas production grew about 1.4% as output increased for the 25th year in a row to break another record output high. The Niobrara shale play in the northeast corner of the state helped raise Colorado's natural gas production.

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States Wait to Act on Aging Gas Lines....Some 120 Years Old

Some of Pennsylvania's natural gas pipelines are 120 years old. Portions of lines also date to the 1800s in Massachusetts. And hundreds of miles in New York state are made of leak prone cast iron. Tens of thousands of miles of pipelines that run beneath communities nationwide are old or decaying, and an Associated Press survey found that no states in the parts of the country with the greatest concentration of people and pipes have ordered a safety review in the week since a deadly explosion in California raised public awareness of potential problems.

Officials from Massachusetts to Texas say their inspections are adequate, and they are waiting for federal investigators to determine the cause of the Sept. 9 gas line explosion that killed four in San Bruno, Calif., before deciding what to do. Consumer advocates and plaintiffs' lawyers say the response fits a familiar pattern: Utilities and customers won't pay the millions of dollars needed to replace corroded pipes, the lines fail and regulators act only after a disaster.

Massachusetts is ahead of most states, in part because it reviewed its system after several natural gas explosions during the winter of 2008-09. About one third of the state's 21,000 miles of distribution lines are cast iron or bare steel. The cast iron pipes were laid from the late 1800s to the 1940s and the bare steel between the 1930s to the 1960s. Other states, however, are not acting as swiftly.....Read the entire article.

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