The folks at Argus Media have done an analysis of the number of shale well permits issued in Pennsylvania for January 2019. The numbers show the number of new permits issued during January were up 72% from the number issued in December 2018, but down 11% from the number of permits issued in January 2018, one year earlier. Can we divine anything from this mixed bag of numbers?
In January 2019, the state Dept. of Environmental Protection issued 219 permits for new gas wells, and 33 permits for new oil wells, for a total of 252 permits issued. In December 2018 only 146 permits were issued, so January was a huge 72.6% jump in a single month. But PA issued 246 gas well permits in Jan. 2018, vs. 219 in Jan. 2019, an 11% drop year over year.
Yet production continues to climb each month.
Our conclusion: Year after year it takes fewer wells to produce higher quantities of gas. And although the price of gas influences how much companies are willing to drill, price doesn’t seem to influence how much is produced. Production is skyrocketing regardless of how high or low the price of gas goes.
Pennsylvania issued 252 drilling permits in January, down by 8pc from a year earlier amid lower prices and as producers pursued higher output from fewer wells.
The number of permits issued in January was up by 72pc from the 146 issued in December as producers worked to take advantage of increased takeaway capacity from Appalachia.
The Pennsylvania Department of Environmental Protection in January issued 219 permits for gas wells and 33 permits for oil wells. Gas well permits in January showed an 11pc drop from the 246 gas permits issued a year earlier.
The state in December had issued 146 drilling permits, of which 141 were for gas wells and five for oil. December’s total permits were flat from the month earlier.
Pennsylvania sits atop parts of the Marcellus and Utica shales, which make up the Appalachian shale region. Appalachia is the top production region in the US by volume, and Pennsylvania produces more than half of Appalachia’s gas.
December production from Appalachia topped 31.1 Bcf/d, according to the most recent data from the US Energy Information Administration (EIA). Regional output in December was up by 1pc from November and 16pc higher than a year earlier. The agency sees output in January climbing to more than 31.3 Bcf/d.
Gross production from Pennsylvania alone topped 18.2 Bcf/d in November, according to the EIA’s most recent production data by state, up by 15pc on the year.
Spot natural gas prices at Dominion Transmission South in January averaged $2.85/mmBtu, 10pc lower than a year earlier. Argus forward prices show Dominion South averaging $2.42/mmBtu in March, suggesting lower demand next month.*
*Argus Media (Feb 6, 2019) – Pennsylvania well permits down by 8pc
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