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Pennsylvania Natural Gas Permits Rebounded in 2017 After Hitting 2016 Lows

The number of unconventional natural gas well permits issued by Pennsylvania regulators last year bounced back after hitting an eight-year low in 2016, according to the state Department of Environmental Protection’s (DEP) annual oil and gas report.

The low point two years ago was the bottom of the 2014 commodities downturn, but as more capacity came online last year, prices improved and operators accelerated their drilling programs, it was evident by mid-2017 that more permits would be issued. The DEP said in its latest annual report, released last week, that it issued 2,028 unconventional well permits, up from 1,321 in 2016. Conventional well permits, which also dropped year/year in 2016 to 158, bounced back slightly last year to 203.

Unconventional production also increased in 2017 to 5.36 Tcf from 5.1 Tcf the prior year. The growth in output is coming as the Appalachian Basin continues to gain additional pipeline capacity, with the 3.25 Bcf/d Rover Pipeline and the 1.7 Bcf/d Atlantic Sunrise near full service, and as others including the 1.5 Bcf/d Nexus Gas Transmission system are expected to come online before the end of the year. In August alone, there was an additional 7 Bcf of takeaway capacity online compared with the same time last year in Appalachia, according to Genscape Inc.

The DEP also said in the report well site compliance inspections increased 2% year/year in 2017, reaching 36,288 for both conventional and unconventional operators. The increase in inspections resulted in more well violations. The agency said there were 3,273 conventional well violations, up from 1,834 in 2016. Unconventional well violations also increased from 456 in 2016 to 821 in 2017.

The Marcellus Shale Coalition said, however, that unconventional operators still maintained a “strong” 95% compliance rate given the record number of inspections. “As an industry deeply committed to safety above all else, we’re very pleased with this 95% regulatory compliance rate yet also focused on continuously improving our performance through training, technological innovation and collaboration with regulators and other key stakeholders,” said MSC President David Spigelmyer.

The fines and penalties collected by DEP from the oil and gas industry dropped sharply to about $3.5 million last year, compared with $9.7 million in 2016. Fines collected in 2016 resulted from a small number of enforcement actions. DEP noted that about $8.4 million of the $9.7 million collected in 2016 resulted from just nine violations.

DEP’s report is published in electronic format that includes interactive data on permit activity, inspections, operator compliance and enforcement for both the conventional and unconventional industries. The agency has been working for years to implement modern technologies that can help make the regulatory process both more efficient and transparent.

The agency started developing an ePermitting application last year to replace its old system and streamline the permitting process as the industry has stepped up complaints about how long it can sometimes take to receive an unconventional well permit. The new system is expected to be available later this year.

“As the production of natural gas in Pennsylvania reached record volume last year, DEP continued to work hard on program developments that improved customer service to industry and strengthened environmental protection,” Secretary Patrick McDonnell said.

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