A close analysis of Pennsylvania production data by Barclays Capital shows that Marcellus operators are more focused on the state’s southwest wet gas window, indicating that, for now, the stubborn number of backlogged wells in the northeast's dry-gas window is likely to remain high.
The analysis, released on Friday, expands on a commodities research note the bank issued in March (see Shale Daily, March 3) after looking at year-end production data from the Pennsylvania Department of Environmental Protection (DEP).
Despite a state report that showed 3.3 Tcf of natural gas was produced in the state last year (see Shale Daily, Feb. 20), at the same time as significant infrastructure was brought online (see Shale Daily, Feb. 25), Barclays said in its March note that operators were only marginally able to reduce a backlog of wells that have been drilled and not completed or shut in across the state.
A separate analysis of DEP data by Pennsylvania State University's Marcellus Center for Outreach and Research found that there were 4,917 horizontal Marcellus wells producing in the state last year. In its March note, Barclays said 1,336 wells still remained backlogged in the second half of 2013, down by 227 from the 1,563 backlogged wells reported in the first half of 2013. Not surprisingly, a closer look by Barclays found that four of the five counties with the greatest number of backlogged wells are in northeast Pennsylvania.
Operators in the state have set their sights on a wet gas window in the southwest part of the state that in addition to higher value, affords stacked pay opportunities with the Marcellus, Utica and Upper Devonian shale formations (see Shale Daily, April 28; March 26). In recent years, a widely-reported bottleneck has shaped up in the northeast, which also helped prod operators to markedly shift the trajectory of the Marcellus to the southwest (see Shale Daily, Dec. 12, 2013)
A frenzy of drilling in the wet gas counties of the southwest, however, is also evident in the fact that the number of backlogged wells did increase there by 59 during the second half of 2013, while in the northeast backlogged wells declined by 152 over the same period, according to Barclays.
Still, Pennsylvania's area of focus is clear in that Tioga, Bradford, Susquehanna and Lycoming counties -- all in the northeast dry gas window -- each have more than 100 backlogged wells remaining, while areas of heavy drilling in the southwest, such as Greene, Fayette and Westmoreland counties each have more than 10, but fewer than 100 backlogged wells.
Washington County, at the heart of the southwest's wet gas sweet spot, appears to be the exception, with more than 100 backlogged wells.