Aug 2, 2016 5 min read

Despite a downturn in prices for natural gas and fewer wells drilled, Pennsylvania’s production of the fuel continued to rise in 2015 to 4.6 trillion cubic feet, nearly five times as much as was produced in the state in 2011.

That’s one of the findings noted in the 2015 Oil and Gas Annual Report from the state Department of Environmental Protection released Monday.

The DEP also found despite the record output of gas from both shale and conventional wells, violations continued to decline.

The report notes Pennsylvania is now the second-largest supplier of natural gas in the nation, behind Texas.

“As the report shows, despite the reduction in the number of natural gas that were drilled in Pennsylvania during 2015, the overall volume of natural gas produced continued to increase to a record level,” said Acting Secretary Patrick McConnell.

The report is created to provide information about DEP’s oil and gas permitting, inspection and compliance programs. In addition, it provides insights of ongoing data trends, outlines significant accomplishments and provides a view of what to expect from the agency during the coming year.

The report notes that since 2008, Pennsylvania’s natural gas production has increased dramatically, resulting in increased energy security because of less dependence on fossil fuels from other parts of the world.

The reason for the abundant and continually growing production is because of gas produced from a dozen geologic formations below Pennsylvania’s land surface, most notably, from the Marcellus shale formation, from which nearly 4.5 tcf was generated in 2015 alone.

Of the top 25 natural gas producers operating in the state, Chesapeake Appalachia led in volume produced, with 675.87 million cubic feet; followed by Cabot Oil & Gas Corp. with 636.02 mcf; Range Resources Appalachia (415.05 mcf); EQT Production Co. (380.91 mcf); and Chief Oil & Gas (271.54 mcf).

During the year, DEP issued a total of 2,520 well drilling permits including both conventional and unconventional wells in the state. Of this amount, the agency issued 2,081 drilling permits for the construction of unconventional wells and 439 permits for conventional wells.

The agency noted that the number of unconventional well drilling permits it issued have increased significantly from 2007 until it reached its height in 2011. After a market pullback in 2012, the number of permits continued to move upward through 2014, reaching 3,182, but in 2015, the number of issued permits decreased to 2,081.

DEP noted that the reduction is primarily due to the overall curtailment of oil and gas drilling operations in Pennsylvania, and expects the number of unconventional well drilling permits during 2016 to remain low.

Washington County led in the number of unconventional drilling permits issued at 361, with Greene County a close second with 325 permits. The next closest county was Susquehanna, with 288.

There were a total of 1,070 wells (both conventional and unconventional) drilled in the Keystone state in 2015, of which 785 were unconventional and 285 conventional. That number was 1,093 fewer than in 2014, a 50 percent reduction.

Washington County led the state in the number of wells drilled in 2015, at 160 units, followed by Susquehanna at 153 and Greene at 103.

Of conventional wells drilled, the highest number was in Warren County, with 107.

While the number of wells drilled was down from the previous year, DEP noted compliance inspections, which stood at 34,604 (including 13,185 unconventional wells and 13,556 conventional as well as 7,962 classified as “well site and administrative” inspections), resulted in 404 unconventional well violations and 1,024 conventional well violations.

While those numbers have been declining for both types of wells, the DEP notes that violations at conventional wells consistently exceed the number of violations at unconventional wells.

According to DEP, the Unconventional Well Report Act requires unconventional operators to report natural gas production on a monthly basis, while the state’s Oil and Gas Act requires conventional operators to report production on a annual basis.

In the fall of 2015, the Office of Oil and Gas Management conducted an enhanced inspection and enforcement initiative that focused on administrative violations. Specifically, the agency conducted enforcement and outreach to operators that failed to submit their 2014 production data and annual well integrity reports as required by law. The agency issued 3,363 notices of violation to conventional operators and 83 notices of violation to unconventional operators that did not submit production reports.

Additionally, DEP issued about 400 notices of violation to unconventional and conventional operators for failure to submit well integrity reports.

Since 2009, DEP has collected about $23.2 million as a result of noncompliance at oil and gas sites. The fines are used to reimburse operating costs incurred by DEP in the oversight of oil and gas and related environmental programs.

While it collected $3,414,102, the amount was nearly half of the amount of fines collected in 2014 ($7,138,908), the highest amount since 2009.

Looking forward, The agency said it is implementing Gov. Tom Wolf’s plan to reduce methane leaks and emissions from natural gas well sites by requiring leak detection and repair measures, efficiency upgrades for equipment, improved processes and implementation of best practices. It also said it is planning to develop and deploy an oil and gas “water supply complaint tracking system” to provide for a more expansive variety of data than the information that is currently collected in its general complaint tracking system.

“We will continue to work with all of our stakeholders to balance the needs of our new energy economy with the imperative that we protect our resources,” McConnell said.

David Spigelmyer, president of the Marcellus Shale Coalition, said the report details “a number of the collaborative successes that our industry, working closely with key stakeholders including regulators, continues to make as it relates to protecting our environment while producing prolific amounts of clean-burning American natural gas.”

Spigelmyer noted that despite “harsh market challenges,” the soaring production has resulted in lower consumer energy costs and enhanced air quality.

“At the same time, while DEP’s performed a record number of inspections, overall regulatory compliance is at a five-year high and trending in the right direction.”