Pennsylvania gas production continues to climb

Growth rate of gas production in Pennsylvania.

Pennsylvania gas companies produced a total of 1863 Bcf in Q1 2021, up 5.4% from the same period one year earlier. Not only has gas production climbed, but the rate of growth has accelerated from the previous four quarters, according to recent statistics from the state’s Department of Environmental Protection.

Gas producers have consistently put out growing amounts of gas over the last four years, but that rate of growth has fluctuated over time. The growth rate of Pennsylvania’s gas production reached a peak of 18.6% in Q3 2018 and gradually fell from then through 2020. Last year, growth was around 3% for most of the year, but began to climb again at the start of 2021.

The state reported the industry spud 133 new horizontal wells in the first quarter of 2021, a decline of 20 wells, or 13.1% from the same period one year earlier. Despite the year-on-year decline in new wells, the trend was up 34 wells from the previous quarter and the first quarterly increase since the first quarter of 2020. New wells slowed dramatically last year because of the decline in prices and weak demand for gas.

At the end of March, the state reported a total of 10,438 producing wells. Horizontal wells account for 99% of the production in the state. That total was up 4.9% from the previous year, the smallest year-over-year growth rate on record. The growth rate in producing wells has slowed as producers drill fewer wells and shut in or plug existing wells, the state reported.

Without a significant uptick in new wells, new gas production will likely slow or even stagnate, the state reported.

Gas wells in Susquehanna, Washington, Green, Bradford counties account for nearly 69% of the state’s production, with Bradford county showing the largest growth in production. Pennsylvania’s total annual production was 7290 Bcf in 2020, second only to Texas, which produced 10,291 Bcf in 2020.

The average price for Pennsylvania gas was $2.53/MMBtu in Q1, 2021, a significant discount to the price of gas at Henry Hub, which was $3.44/MMBtu. That average price was the strongest in more than five quarters, and the growth rate was steeper than the growth rate of prices at Henry Hub, the state reported.