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Appalachian shale drilling moving closer to new pipes, Pa. permit data reveals

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Appalachian shale drilling moving closer to new pipes, Pa. permit data reveals

Drilling activity in Pennsylvania is shifting more heavily into the counties surrounding Pittsburgh in the wetter portion of the Marcellus Shale, according to July 2017 permitting data from the Pennsylvania Department of Environmental Protection.

Shale gas producers are looking to fill a number of new pipelines out of Appalachia that come into service in 2017 and 2018, notably Energy Transfer Partners LP's 3.25-Bcf/d Rover Pipeline LLC. The new pipeline activity in the southwest Marcellus contrasts sharply with the lack of activity to service the northeast part of the state, as pipeline projects sponsored by National Fuel Gas Co., Cabot Oil & Gas Corp. and Williams Cos. Inc. stay blocked at the New York border until the courts decide they can proceed.

Four of the five top counties for new horizontal drilling permits surround or include Pittsburgh, with producers filing the most permits statewide to drill in Washington County, directly to the city's south. Allegheny County, which includes the city, had the third-highest number of permits, at 12. The city of Pittsburgh banned shale gas drilling in November 2010, and the most famous "Pittsburgh" gas project, CONSOL Energy Inc.'s wells at the international airport, actually lie on Allegheny County land miles outside the city limits.

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"The basis differential outlook also continues to improve due to the momentum on pipeline infrastructure in the northeast United States," Southwestern Energy Co. President and CEO William Way said on his company's Aug. 4 earnings call. The basis differential is the difference between local prices and benchmark pricing at larger hubs such as Louisiana's Henry Hub. "We now have a quorum at the FERC, and this quorum should facilitate the approval of certificates to initiate construction on approximately 10 Bcf per day of new takeaway capacity in addition to the 5 Bcf per day of capacity that is currently under construction, increasing the total takeaway from the Northeast region by approximately 15 billion cubic feet per day between now and 2020."

"By year-end, we should have access to additional natural gas transportation projects to take our production out of local Appalachian markets and directed to the Midwest, Gulf Coast regions," southwest Marcellus producer Range Resources Corp. CEO Jeff Ventura said on an Aug. 2 call. For pipelines with in-service dates before 2018, he said, "the combination of these projects and strengthening local pricing will be drivers of our expected improvement in natural gas differential for 2018."