Still under pressure from investors to throttle back spending in the face of low natural gas prices, Pennsylvania shale gas drillers pulled 23% fewer permits for new wells in August compared with 2018 and 14% fewer permits compared with July.
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The single biggest drop-off in activity occurred in Greene County in the gas- and liquids-rich portion of the Marcellus Shale south of Pittsburgh. Neighboring Westmoreland County saw an uptick in activity-driven super major Chevron's 11 permits in the county southeast of Pittsburgh.
Another global oil and gas producer, Spain's Repsol, joined with National Fuel Gas drilling unit Seneca Resources to almost triple the number of August permits year over year in northeastern Tioga County, presumably to take advantage of the increase in outbound pipeline capacity spurred by Williams.
The decline in permitting activity statewide is directly reflected in the falling rig count in the Appalachian shales and low nationwide gas prices from huge supplies of gas coming onto the market, analysts said. Activity is expected to slacken throughout the second half of this year.
"The real problem is that the SW Marcellus and Haynesville have continued to grow rapidly, even at a lower price than we anticipated," Sanford C. Bernstein & Co. analyst Jean Ann Salisbury told clients July 24. "The Marcellus/Utica added 5.3 Bcf/d year over year and the Haynesville an astounding 2.7 Bcf/d. We believe that price must force these two basins to not just stop growing, but decline from today to their beginning-of-year level and keep them there going forward to make storage balance."
"Low gas prices are clearly having an impact on the rig count, with gas rigs at the lowest level since April 2017, though supply has yet to be affected," Jefferies shale oil and gas analyst Zach Parham told clients September 5.
-- Bill Holland, S&P Global Market Intelligence, email@example.com
-- Edited by Zac Aiuppa, firstname.lastname@example.org