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Pa. January shale gas production grows moderately as producers conserve cash

Pennsylvania's shale gas production in January picked up nearly 1% from the previous month as drillers moderated their pace in keeping with promises they made to Wall Street to spend less by drilling wells that produce more.

The state's shale producers reported 18.2 Bcf/d of gas production in January, according to the latest figures from the state's Department of Environmental Protection, or DEP.

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Much of the month-over-month volume increase can be attributed to Range Resources Corp.'s nearly 11% increase in gas production when compared to December 2018. Range executives recently told Wall Street to expect much of the company's 2019 capital spending to occur during the first quarter.

"Q1 is going to be front-end loaded ... with Q1 being around 35%. It could be just a little bit less than that, actually, but close to 35% for the quarter," Dennis Degner, senior vice president for operations, said of Range's capital expenditure plans during the company's Feb. 26 earnings conference call.

As in any year, he said, the company aims to maximize efficiencies with longer laterals and fewer wells.

Pennsylvania's top two drillers, EQT Corp. and Cabot Oil & Gas Corp., accounted for most of Pennsylvania's nearly 15% increase in gas volumes when compared to January 2018, according to DEP data. The state's top five producers accounted for nearly two-thirds of Pennsylvania's total production.

Three-quarters of Pennsylvania's shale gas production continues to come from five counties in the northeast and southwest corners of the state. Greene County in the far southwest saw the largest year-over-year increase of volumes with a 46% rise, according to the DEP's data. Greene County is where EQT picked up more wells in its merger with Rice Energy in November 2017, creating the country's largest natural gas producer by volume.

Counties in the dry gas, northeastern portion of the Marcellus Shale saw double-digit percentage volume growth in January, according to DEP data. The rise was spurred by the opening of Williams Cos. Inc.'s 1.7 Bcf/d Atlantic Sunrise pipeline along with additional sources of gas demand opening inside the basin.

Cabot CEO and Chairman Dan Dinges told analysts on his company's Feb. 22 earnings conference call that he expects to see even more demand for gas in the near future. "I'm optimistic that there is going to be another 3 or 4 Bcf/d going offshore by commissioning of the LNG facilities. We're seeing incremental demand that is needed ... up in New York and up in the Boston area. When utilities now in Boston are talking about not taking applications for new natural gas hookups, that means that demand is increasing, and there's a need for additional natural gas up there."

"I also think that natural gas plays a role on any of the renewable footprint out there. Natural gas better be part of the equation," Dinges added. "Otherwise, your responsiveness to the insecurity of the delivery of energy is going to be challenged."

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