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Pa. shale gas activity moving southwest, according to May permitting data

Permitting for shale gas wells in Pennsylvania's dry gas northeast corner dropped precipitously during May, while the total number of monthly permits pulled statewide increased 10% from last year, state data showed.

May's numbers from the Department of Environmental Protection show a continued shift to the southwest portion of the state as more pipeline capacity becomes available with the startup of Energy Transfer Partners LP's Rover Pipeline LLC in the region.

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Producers in the northeast part of Pennsylvania, particularly Susquehanna County, are awaiting the full startup of Williams Partners LP's 1.7 Bcf/d Atlantic Sunrise pipeline. As recently as February, Susquehanna drillers, primarily Cabot Oil & Gas Corp., Southwestern Energy Co. and Chesapeake Energy Corp. were pulling dozens of permits for new wells. That activity has tailed off with Susquehanna, Bradford and Wyoming issued a collective 11 permits, with Chesapeake pulling none. Lycoming County to the west had 10 permits issued as Alta Resources LLC continues to work on leases it bought from Anadarko Petroleum Corp. in 2016 for $1.24 billion.

The story is reversed in the liquids-rich gas area in the southwest corner of the state below Pittsburgh. The nation's largest gas producer, EQT Corp., continued to lead the state in permits pulled, with 26, focusing its efforts on Washington County. Joining EQT in Washington is rival Range Resources Corp., with 19 permits. Range split its remaining five permits between Pittsburgh-area counties Allegheny and Beaver. The southwest's wet gas allows drillers to process NGLs out of the natural gas stream and sell them separately.

The north central part of the state where the Utica and Marcellus shales are stacked and both are thick enough to drill saw a significant upturn in permitting activity led by National Fuel Gas Co.'s upstream unit Seneca Resources Corp. Seneca pulled 14 permits to drill in Elk County where it says it owns, not leases, the mineral rights so production is royalty free. Seneca says it currently produces 320 MMcf/d of gas in the area that is profitable at $2/Mcf prices. It just signed an agreement with Transcontinental Gas Pipe Line Co. LLC to develop 300 MMcf/d of additional takeaway its Western Development Area, or WDA.

"This new firm transportation capacity provides a path from the WDA Clermont/Rich Valley gathering system to premium markets connected to Zone 6 of Transco's interstate pipeline system," Seneca President John McGinnis said on National Fuel's May 4 earnings conference call. "The transportation path allows flexibility on how we fully utilize the capacity. We can flow our production from both the [Clermont-Rich Valley] gathering system and our Lycoming County acreage into this new firm capacity, our two largest and economic development areas."

Activity in Tioga County to the east of Elk is being driven by Spanish gas company Repsol's U.S. unit, Repsol Oil & Gas USA LLC, which pulled five of the 10 permits issued in the county, according to the data on June 7.