Reports posted by the Pennsylvania Department of Environmental Protection (DEP) indicate that the state saw substantial growth in natural gas production during the first half of 2012, perhaps more than 82%, although production totals from some operators are missing from the latest report and the reporting criteria had changed.
Meanwhile, the DEP received a wave of criticism from energy analysts over the way the agency handled the production reports last week, when data from Chesapeake Energy Corp., the state’s top producer, was omitted due to technical problems.
The DEP reported that during 1H2012, unconventional wells in the state produced 793.1 Bcf, which came out to an average of 4.36 Bcf/d. Those figures represent an 82.3% increase over the 435.1 Bcf, or 2.4 Bcf/d, that was reported for 1H2011.
But the latest production figures are incomplete. DEP spokesman Kevin Sunday told NGI’s Shale Daily on Tuesday that Calgary-based Talisman Energy Inc. erred after submitting its production figures in gallons, not barrels.
“Their data is off the report until we get it back in barrels,” Sunday said, adding that since there are 42 gallons in a barrel, Talisman is “essentially showing 42 times more production than they really had. That would skew any analysis made at the time [the report was posted online]. They reported in gallons for the waste, but having to pool the waste off pulled the production data down, too.”
Sunday added that the DEP was still waiting for production figures from several small operators, which operate an additional 42 natural gas wells. “But unless they have something astounding, I wouldn’t expect any of those 42 wells are going to dramatically change the production data,” Sunday said.
Chesapeake spokesman Rory Sweeney told NGI’s Shale Daily that the Oklahoma City-based company had submitted its production figures for 1H2012 early in the morning of Aug. 15, the day of the DEP’s deadline for submission, “in the same manner as previous reporting periods.
“After several attempts to submit, it became obvious that there was a technical issue that was not allowing the upload to proceed successfully,” Sweeney said Tuesday. “Still on the 15th, Chesapeake staff sent an electronic copy of the required information to the DEP separately and sought assistance from the department to resolve the problem with their database.
“Chesapeake has met the regulatory requirement for sharing the data and has been working with the department’s staff since last Wednesday to resolve the issue.”
Commenting on the Chesapeake matter, Sunday pointed out that operators have a 45-day grace period to submit their data so errors can be corrected before publication. He said the DEP waits until the end of the grace period to publish the data.
“Although Chesapeake did ultimately provide its required report to DEP in a timely manner (with data entry errors), the company waited until about 2:30 p.m. on Aug. 15 to begin its data reporting to DEP,” Sunday said. “Had Chesapeake started the data entry process even a few days prior to the submittal deadline, the errors in its data would have been corrected prior to publication on Aug. 16.
“It is also important to note that DEP’s production database functioned exactly as designed by rejecting reports that contain obvious data entry errors. Chesapeake attempted to report production information on wells with no spud date; attempted to report more producing days than the number of days in the reporting period; attempted to report spud wells as wells that were not drilled; and attempted to report well information in a manner that violated the database’s rules. With the exception of the automatic rejection of production reports for wells with no spud date, these are the same rules that have been in place for the past several reporting periods, and Chesapeake is familiar with them.”
Nevertheless, the omission of Chesapeake’s data wasn’t caught by some media outlets and energy analysts. On Friday, the Pittsburgh Post-Gazette reported incorrect production figures.
“This is totally unprofessional,” Fadel Gheit, an oil and gas analyst with Oppenheimer & Co., told the Associated Press. “That’s very bad. Ethically they are obligated to conduct themselves in a better way.”
Although Tom Murphy, co-director of the Penn State Marcellus Center for Outreach and Research, declined to level any criticism at the DEP, he conceded that not having a complete set of data to work with was problematic.
“I think it’s pretty safe to say that without all of the current information in there, it clearly leaves some holes,” Murphy told NGI’s Shale Daily on Tuesday. “Those people who are trying to make financial decisions around that same information would have less than all of the facts they need to make strong decisions to move forward.”
But Sunday pointed out that the DEP’s website contains a disclosure statement: “All information presented is as reported by the industry in accordance with Pennsylvania law.”
“We report the data online as it comes in,” Sunday said. “We have an obligation under the law to post the data online. We’re not going to not follow through with that obligation.”
The DEP’s Office of Oil and Gas Management currently has annual oil and gas production reports, which include the Marcellus, dating back to 2000 available for download from its website. The first Marcellus-only report covered a 12-month period from July 2009 to June 2010. Subsequently, the department released Marcellus-only reports that covered three six-month periods: July-December 2010, July-December 2011 and January-June 2011.
But a fourth six-month report, which covers January-June 2012, includes all “unconventional wells” and is not broken down by shale play.
Sunday said Act 13, the state’s omnibus Marcellus Shale law, required the change in reporting criteria. Accordingly, he said the latest six-month report includes about 40 wells targeting the Utica Shale.
“Act 13 anticipates that the Marcellus won’t be the only horizontal, hydraulically fractured formation,” Sunday said. “There will be this broader term toward unconventional wells. But by and large, what’s on our production reports for unconventional is going to be about 99% Marcellus. There are a small number of other formations that fit the definition of unconventional, but for the most part [the one besides the Marcellus] would be the Utica.”
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