Signs of the anticipated slowdown in the Appalachian Basin were evident in Pennsylvania during the first quarter, as data recently released by the state’s Independent Fiscal Office (IFO) shows sequential natural gas production was essentially flat during the period.
Based on data collected by the Pennsylvania Department of Environmental Protection, the IFO said unconventional gas production was about 1.655 Tcf during the first three months of the year. While year/year volumes increased by 14.7%, they were nearly flat from 4Q2018, when the IFO said 1.651 Tcf was produced, or about 5% more than in 3Q2018.
Horizontal wells accounted for the bulk of 1Q2019 production, or about 1.654 Tcf. Vertical wells drilled to unconventional formations accounted for the remaining output. All of the quarter’s production growth was from wells spud in 2017 and 2018, IFO said.
Over the last two years, from 1Q2017 to 1Q2019, production has increased by 26.3%. It’s no surprise either that wells have grown increasingly more productive as operators improve efficiencies. Over the same time frame, average production per well increased by 56.4% to about 496 MMcf, according to IFO.
As the pipeline build-out slows, operators face pressure from investors searching for capital discipline and the outlook for natural gas remains weak, spending is expected to decline. As a result, volumes are expected to increase by single-digits in the coming years compared to the more robust double-digit growth witnessed across the basin over the last decade or so.
Production topped 6.1 Tcf in the Keystone State last year, an increase of 14.2% from 2017. Between 2011 and 2018, IFO noted, production increased at an average annual rate of 28.6%.
Across the key Appalachian gas producers of Ohio, West Virginia and Pennsylvania, production has jumped 16-fold to more than 32 Bcf/d from 2 Bcf/d in 2010, according to data from the Energy Information Administration.
The IFO’s latest report also showed that there were 8,765 producing horizontal wells in Pennsylvania during the first quarter, a 10.7% year/year increase. Since 1Q2017, IFO said total producing wells have increased by 20.1%, while nonproducing wells have climbed by 2.4%.
The state’s well inventory, which IFO defines as those shut-in or drilled but uncompleted, also increased sequentially during the first quarter to 1,484 from 1,460.
In order, the state's top producing counties were again Susquehanna, Washington, Greene and Bradford, accounting for more than two-thirds of statewide production.