Despite numerous layoffs and realignments in the Pennsylvania gas industry in 2016, the year is ending with more drill rigs operating in the state than at the same time last year.
The number of active gas drill rigs in Pennsylvania went up from 26 in December of 2015 to 31 in 2016. The increase comes at a time when the number of active rigs nationwide is down more than 10 percent – down to 637 in 2016, versus 709 in 2015.
Michael Connelly, a lawyer who represents natural gas pipeline companies, said recent growth in mid-stream drilling infrastructure, including pipelines and compressor stations could be driving the increase.
“That’s kind of been the missing piece in the region,” Connelly said. “We’ve known that the commodity, or the molecule, was here and how to get it out of the ground but the missing piece has been getting it to the market where it’s needed.”
Among the regions seeing the largest decrease in the number of rigs is the Bakken formation in North Dakota. The shift could be related to the need to get the most out of every well in a tight market.
“Pennsylvania is a more mature play,” Connelly said. “They’ve been drilling it for a good many years now so I think folks have a good understanding of where the reserves are and well to drill.”
Wholesale prices are still the biggest driver in drilling activity, according to Connelly. Prices have dropped steadily from a high in 2005, selling for as much as $16 per Million Btu, or British thermal units. The rate bottomed out at $1.92 in May of this year. Since then, there has been a slight uptick.
Connelly said that has built some guarded optimism in the industry.
The U.S. Energy Information Administration Natural notes that while U.S. natural gas production fell by 1.3 billion cubic feet per day, or Bcf/d, in 2016 to average 77.5 Bcf/d, it is expected to increases by an average of 2.5 Bcf/d in 2017.