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Upper Devonian, Utica Shales Helped Drive Up Pennsylvania's 2015 NatGas Production

The Upper Devonian and Utica shales contributed meaningfully for the first time to Pennsylvania's natural gas output in 2015, according to an annual oil and gas report that was released on Monday by the state’s Department of Environmental Protection (DEP).

The state's shale drillers produced more than 4.6 Tcf of natural gas in 2015, up from the 4.05 Tcf they produced in the prior year and well above the 1.06 Tcf they produced in 2011. While the Marcellus Shale remained the top-producing formation, contributing 4.5 Tcf of natural gas to the unconventional total, companies reported producing 47.2 Bcf from the Upper Devonian and 53.5 Bcf from the Utica.

It was the first time the DEP has included a breakdown of production from those formations in its annual report, marking the turning point for multiple horizons in the state that came last year. About 26.7 Bcf was also reported from the Point Pleasant formation.

Upper Devonian shales, including the Burket, Genesee, Geneseo and Rhinestreet, all had reported production. The Burket produced the most last year at 21.5 Bcf. A group of shallower shales above the Marcellus, the Upper Devonian remains undeveloped by comparison. Much of the development in the state has come through wells drilled off existing Marcellus pads.

Similarly, development in the Utica outside of Ohio started to accelerate in recent years. It was in 2014 that operators began permitting wells and scheduling drilling to target the deep Utica in West Virginia and Pennsylvania (see Shale DailyMarch 26, 2014). The Keystone state's first deep Utica test happened at the end of 2014, while one of West Virginia's first commercial Utica wells was drilled that year as well (see Shale DailySept. 25, 2014Dec. 15, 2014).

Pennsylvania's leading producers remained largely unchanged last year. Chesapeake Energy Corp. produced the most at 675.8 Bcf, followed by Cabot Oil & Gas Corp. with 633 Bcf; Range Resources Corp. with 415 Bcf, EQT Corp. with 380.9 Bcf, and Chief Oil & Gas LLC with 271.5 Bcf.

The DEP issued 2,520 drilling permits last year, of which 2,081 were for unconventional wells and 439 were for conventional wells. The most unconventional permits were issued in Southwest Pennsylvania's Washington and Greene counties, where operators received 361 and 328 of them, respectively. Warren County in the Northwest part of the state led the way with the most conventional permits at 130.

The number of wells drilled in the state last year dropped significantly from 2014 as operators shed rigs, cut budgets and managed through the downturn. The DEP said 2,163 wells were drilled, of which 1,372 were unconventional.

DEP also increased its compliance inspections at well sites across the state last year to 34,604 from 14,651 in 2009, the report said. Since 2009, the DEP has collected about $23.2 million in fines and penalties from both conventional and unconventional producers. Most of the fines the agency collected during that time, or $7.1 million, came in 2014. The state collected $3.4 million in fines and penalties during 2015.

From 2010 through 2015, however, the DEP noted that the number of violations at unconventional well sites decreased from 1,280 to 404, representing a 67% reduction. The number of violations at conventional well sites over roughly the same time dropped from 2,092 to 1,024.

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