DEP annual report reveals Pennsylvania’s changing Oil and Gas landscape
A new DEP report says two local counties led much of the state in conventional or shallow well oil and gas production in 2014, while the region continued to lag behind others in newer Marcellus Shale activity.
The department's annual oil and gas report for 2014 has McKean County ranked third in the state in conventional well permits issued with 252 of a state total 1,269. Elk County ranked fifth with 61. Neither Potter nor Cameron County claimed any conventional well permits issued last year.
As for conventional wells drilled, McKean County ranked second in the state with 214, nearly one-third of a state total 791 shallow wells drilled in 2014, while Elk County ranked fifth with 32 that year.
But neither county ranked in the top ten for unconventional or Marcellus Shale gas wells drilled or permitted.
While McKean, Cameron and Elk County were home to double-digit Marcellus Shale gas wells drilled and permitted in 2014, other Pennsylvania counties continued to climb well into the triple digits, led by Greene County with 255 unconventional wells drilled of a state total 1,372, Susquehanna County with 238 and Washington County with 229.
In unconventional well permits issued, Bradford County led the state in 2014 with 540 of a total 3,203 permits issued, followed by Susquehanna County with 462 and Greene County with 458.
Overall the number of unconventional wells drilled and permitted rose last year after peaking in 2011 and dropping in 2012.
But sharp declines are expected with the release of DEP’s oil and gas report for the current calendar year, one which saw marked declines in Shale gas production due to a nationwide supply glut, lagging energy prices and a lack of available pipeline infrastructure.
But the conventional or shallow well industry’s decline is expected to be even more pronounced.
Mark Cline of Cline Oil in Bradford, a fourth-generation conventional well producer,
acknowledges that some of his counterparts left for the unconventional well industry at the height of the Marcellus Shale boom leading to a drop in shallow well production.
But he also blames a lingering price slump and new regulations being eyed by the state for both classes of driller, ones he says the smaller conventional producers are unable to afford and fighting tooth and nail to prevent.
Cline, who also serves as president of the Pennsylvania Independent Petroleum Producers (PIPP) and on the state’s Conventional Oil and Gas Advisory Committee, said he expects even greater declines in conventional production to be revealed for this year, citing only 133 conventional wells drilled in the state as of July.
“We’re probably not going to hit 200 or 250 this year for the whole industry,” he said.
Last year, 791 conventional wells were drilled in Pennsylvania, down from a 10-year high of 4,836 in 2007, DEP reports. Additionally, 1,269 conventional well permits were issued in 2014, down from a high of 8,234 in 2008, considered by many to be the beginning of Pennsylvania’s Marcellus Shale boom.
Cline blames possible changes to Chapter 78 of Pennsylvania’s Oil and Gas Act for much of the decrease, saying many producers fear they won’t be able to afford the cost of compliance if the new rules are enacted.
“Some of the bigger companies switched from conventional to unconventional production but most of it (the slowdown) is because since those regulations were proposed in 2012 a lot of people are waiting to see what happens,” Cline said.