An up and down year

Shale gas hit a few peaks in 2015, but drillers mostly pulled back

Shale gas companies pumped the brakes in 2015 after years of rapid increases in the amount of natural gas they pulled from Pennsylvania’s Marcellus and Utica shales, new production data released by the state shows.

Unconventional gas production in Pennsylvania this year hit its highest point in March then dipped to its lowest point in June during a three-month slide, according to monthly figures that shale operators reported to the Department of Environmental Protection. Production rose in July, August and September before dropping off again in October.

The October figures, the most recent available, were released by DEP last week. Average gas production in October — 12.5 billion cubic feet per day (Bcf/d) — was 1 percent lower than September and roughly on par with January.

The stuttering production volumes are evidence of companies drilling and completing fewer wells, and choking back the flow of gas at wells already connected to pipelines. Several companies announced their intentions to curb production in response to low prices, oversupply and tepid demand amid warmer-than-normal temperatures.

“By our estimates, there is up to almost 1.5 billion cubic feet of choked production in the Northeast alone,” said Sami Yahya, an energy analyst with Platts Bentek. “A lot of producers are saying, we’re going to wait until the first quarter of 2016 to come back into the game. They are just waiting for better demand, better prices to bump it out again.”

Chesapeake Energy, Cabot Oil and Gas, and Southwestern Energy — shale operators focused on the dry gas region in Pennsylvania’s northeastern counties — led production for the first 10 months of 2015, although Chesapeake and Cabot both showed signs of pulling back after years of nearly uninterrupted production increases. Both companies reported producing less gas in October than they did in January.

Of the state’s top 10 producers for the year so far, Woodlands, Texas-based Anadarko Petroleum showed the biggest drop in production compared to the first month of the year, reporting 62 percent less production in October than in January.

Other companies continued to post production gains each month or they cut back mid year only to rebound in the fall. Five of the top 10 producers showed double-digit production growth in October compared to January, with Cecil-based Consol Energy producing 51 percent more and Chief Oil and Gas, Chevron, Range Resources and Southwestern showing increases of between 21 and 36 percent.

This was the first year that gas companies reported monthly production to the state. Previously, companies reported their production in six-month blocks.

Some growth on the horizon

The U.S. Energy Information Administration predicts that natural gas production from the broader Marcellus region will drop from 15.6 Bcf/d in December to 15.4 Bcf/d in January, as production from new wells won’t be enough to offset declines in older wells. The agency expects Utica production to grow from 3.1 Bcf/d in December to 3.2 Bcf/d in January.

In its most recent short-term energy outlook, the statistics agency forecast that natural gas production will grow nationally in 2016, despite low natural gas prices and declining rig activity, because companies continue to become more efficient at drilling wells quickly and getting more gas out of fewer wells.

“Most of the growth is expected to come from the Marcellus Shale, as the backlog of uncompleted wells is reduced and as new pipelines come online to deliver Marcellus natural gas to markets in the Northeast,” the EIA said.

Mr. Yahya said efficiency improvements were a defining trend this year. The number of active drilling rigs in the region has been cut in half since this time last year, he said. “And yet our production grew significantly and we’re still producing over 21 billion cubic feet per day. Which is a testament to the efficiency gains and the resilience of producers.”

The northeast region also has a backlog of wells — Platts Bentek puts the number at close to 2,800 — that have been drilled and are waiting for better prices or a connecting pipeline to arrive. Some of the wells have also been completed, which will make unleashing their gas that much easier when the time is right.

“Basically it’s a matter of flipping a valve to bring those volumes on line,” Mr. Yahya said.

Laura Legere:

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