On March 2, the Independent Fiscal Office reported natural gas production in Pennsylvania increased 3.9 percent in 2020 over 2019, the lowest rate of growth on record for a full year of production.

There were 476 new unconventional wells put into production in 2020, a 22.5 percent decline from 2019.

There were 10,332 total producing wells in the fourth quarter of 2020, an annual increase of 5.5 percent from the prior year.

Horizontal producing wells, which account for over 99 percent of production, recorded an annual increase of 5.9 percent. This growth rate is the smallest year-over-year increase in quarterly horizontal producing wells on record.

Decelerating growth in producing wells is due to less drilling activity and older wells being shut in or plugged.

The top five counties accounted for 74.6 percent of production and 67.3 percent of producing wells statewide.

The top producing county, Susquehanna, recorded a year-over-year decline in production. Bradford, Greene and Lycoming Counties accounted for nearly 65 percent of statewide production growth over the prior year.

Other counties recording significant production growth include Allegheny (31.7 percent) and Beaver (76.2 percent).

Data show that after declining for several consecutive quarters, annual growth for the Henry Hub and Pennsylvania average price moved in different directions.

The Henry Hub price increased by 5.6 percent in the fourth quarter compared to 2019, the first year-over-year price increase in two years.

Despite increasing from the third quarter, the Pennsylvania price still declined relative to the fourth quarter of 2019.

Click Here for a copy of the report.

Drilling Impact Fee

In January, the IFO reported revenue from the Act 13 drilling impact fee for calendar year 2020 will drop by over $55.5 million to $144.850 million from the 2019 total of $200.365 million as a result of natural gas price decreases.  Read more here.

Since 2018, revenue from the Act 13 drilling impact fee has dropped by $106.981 million -- by over 42.4 percent-- from $251.831 million in 2018 to $144.850 million in 2020.

In fact, the Public Utility Commission published a notice on January 30, the per well Act 13 drilling impact fees will drop in calendar 2020.  Read more here.

Drilling impact fees are used to support county and local government projects, the Marcellus Legacy Fund to provide funding for state agency environmental project funding and to county conservation districts.

DEP Permit Fees

In December, DEP told the Oil and Gas Technical Advisory Board they are projecting a a nearly 70 percent reduction in revenue from the permit application fees used to support regulatory of oil and gas well drilling. Read more here.

If revenue does not improve, DEP will be required to make a significant cut in program expenses-- 86 percent of which are the cost of personnel.

The drop in permit fees is the result of a decline in unconventional drilling activity due to natural gas price declines.

DEP just received final approval for a fee increase last year that became effective on August 1, 2020.  It was the first fee increase since 2014.  Read more here.

Related Articles:

-- PUC: Act 13 Drilling Impact Fees For Calendar 2020 To Drop; Revenue Falls By $56 Million To Record Low

-- IFO: Act 13 Drilling Impact Fee 2020 Revenue To Drop By Over $55.5 Million; Dropped By Over 42% In Just 2 Years

-- DEP Projects Nearly 70% Drop In Revenue Supporting Oil & Gas Drilling Regulatory Program Due To Downturn In Industry; Health Impacts Study Report Due This Month

[Posted: March 2, 2021]

3/8/2021