Pennsylvania Natural Gas Production Up 62% y/y to 3.3 Tcf, NGI Reports
DULLES, Va.--(BUSINESS WIRE)--Producers in Pennsylvania, boosted by new pipeline takeaway capacity, produced 3.3 Tcf of unconventional natural gas last year, up from 2.04 Tcf in 2012, according to data compiled by Pennsylvania State University's Marcellus Center for Outreach and Research (MCOR).
“One reason production increased so much is a lot of new pipeline capacity came online, which allowed a flood of wells to be connected to pipe at the same time”
The new record topped the old by 1.3 Tcf, a 62% gain, NGI's Shale Daily reported. Pennsylvania, which encompasses much of the Marcellus Shale, is now the second largest natural gas producing state in the country, behind Texas, which produced 6.8 Tcf last year. MCOR provided its latest review of the numbers after analyzing the raw production data operators submit to the Pennsylvania Department of Environmental Protection on a six month basis.
"Early on in the play a lot of wells were being drilled. From about 2008 to 2010 there was a ramp-up in the number of wells drilled," said Matt Henderson, MCOR's shale gas asset manager. "There were far more wells being drilled than were put online. They are tapping into those wells now that were drilled in previous periods and we're starting to see a decrease in the well inventory."
The latest data set, derived from production that occurred from July-December 2013, shows that operators produced 1.7 Tcf of natural gas in the last six months of the year, or roughly 283 Bcf more than they did from January-June.
Producers added 700 new wells in the second half of 2013. During the first half of the year, there were 4,200 producing wells in Pennsylvania, Henderson said. By the end of 2013, there were 4,917 producing wells. Another 1,225 wells are currently waiting for pipeline connections and they represent 225 Bcf of untapped gas, according to MCOR’s calculations.
“One reason production increased so much is a lot of new pipeline capacity came online, which allowed a flood of wells to be connected to pipe at the same time,” said Patrick Rau, NGI’s director of strategy and research. “There is still some drilling to hold acreage going on. But the Marcellus is also one of the only dry gas plays that has had returns comparable to oil/liquids plays lately.”
Major expansions by Tennessee Gas Pipeline, Transcontinental Gas Pipeline and Columbia Gas, plus others went on line during the year, adding 1.8 Bcf/d of capacity to the Northeast megapolis and Canada. A large expansion by Spectra Energy's Texas Eastern Transmission was the first new pipe going into Manhattan in 40 years, according to reports by NGI's Shale Daily.
MCOR estimates that Marcellus production could climb even higher in 2014. Officials there project it will reach between 3.8 and 4.5 Tcf by the end of the year. Unconventional production in the state includes early shows from the Upper Devonian and Utica Shales. West Virginia also produces from the Marcellus formation, but its production figures for 2013 are not yet available.
Pennsylvania's top five producers were Chesapeake Energy Corp., Cabot Oil and Gas Corp., Range Resources Corp., EQT Corp. and Southwestern Energy Co., respectively. Together, they accounted for 60% of the state's overall production last year.
Cabot Oil and Gas Corp. owned and operated the great majority of the state’s top 20 producing wells during the second-half of the year.
MCOR experts said that 87% of the flowback and production water produced in the state last year was reused for fracking.
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NGI has been an independent voice delivering real-time news and price survey reports for the natural gas market since 1981 in its publications: Natural Gas Intelligence, Daily Gas Price Index, Weekly Gas Price Index and NGI's Shale Daily. Relied on by industry and government since 1988, NGI data is the industry's lowest cost essential data available on conventional and unconventional natural gas pricing.