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Independent Fiscal Office Reports Slight Increase In PA 3rd Quarter Natural Gas Production; Lowest Number Of New Shale Gas Wells Drilled Since 2008

On December 3, the Independent Fiscal Office reported third quarter natural gas production increased slightly from the second quarter to 1,838 billion cubic feet, but remains 1.7% below production in the third quarter of 2023-- 1,871 billion cubic feet.

There were 63 new shale gas wells drilling in the third quarter which matches the second quarter as the lowest number of new wells drilled since 2008, according to the IFO.

Natural gas prices increased 9.8% from 2023, but "Regional and national prices have been constrained in recent quarters due to unusually high storage levels."

"Based on futures contracts for December, the IFO projects that the average Henry Hub spot price for 2024 will barely exceed $2.25, the cut off for the lowest [Act 13] Impact Fee schedule.

"The higher fee schedule implies an increase of $30 million in Impact Fee revenues."

In June, the IFO projected another drop in Act 13 impact revenue of $114 million to from $165 to $170 million for calendar year 2024. Read more here.

In 2023, impact fee revenue was $179.1 million, down over $100 million from the record revenue in 2022 of $278.9 million.

In September, the Pittsburgh-based Allegheny Institute for Public Policy published a policy brief on the steep decline in revenues from the Act 13 impact saying counties and municipalities should “begin lowering their expectations: on the amount of support they receive from the shale gas industry. Read more here.

Click Here for a copy of the full IFO report.

Big Hole In DEP Funding

On December 5, DEP told the Oil and Gas Technical Advisory Board there is a “very significant budget gap” in the funding needed for the Oil and Gas Regulatory Program again this year and that how to fund the program will be a serious topic of discussion in 2025. Read more here.

DEP is potentially looking at permit application fees covering only 25% of what’s needed to fund the program for a year.

“You don't have to do very hard arithmetic to be able to figure out that that leaves us with a very significant budget gap,” said Kurt Klapkowski, DEP Deputy Secretary for Oil and Gas Management. “I would say that we're pretty close to the bone in terms of staffing and other things that we've been able to cut.” Read more here.

PA Oil & Gas Industry Public Notice Dashboards:

-- PA Oil & Gas Weekly Compliance Dashboard - Nov. 30 to Dec. 6 - Abandoned Shale Gas Wells Doubled From Last Year; Failure To Comply With Court Order To Plug Conventional Wells; Abandoned Waste Injection Well [PaEN]

-- PA Oil & Gas Industrial Facilities: Permit Notices, Opportunities To Comment - December 7 [PaEN]

-- DEP Posted 91 Pages Of Permit-Related Notices In December 7 PA Bulletin [PaEN]

Related Articles This Week:

-- DEP Sees ‘Very Significant Budget Gap’ In Funding Oil & Gas Regulation Program Due To Reduced Permit Fee Revenue [PaEN]

-- Baker Hughes: PA Natural Gas Drilling Rigs Up 1 To 16 From Last Week; 21 On Aug. 23

-- DCED PA Crude [Oil] Development Advisory Council Meets Dec. 12 To Discuss Road Dumping Oil & Gas Wastewater; New EPA Methane Emissions Reduction Program; Other Updates [PaEN]

-- What Will Shale Gas Leave Behind? DEP Issues 10 Violations To Big Dog Energy, LLC, Diversified Production LLC For Abandoning Shale Gas Wells; Violations For Shale Gas Abandonments More Than Doubled In 2024 [PaEN]

-- DEP: Horizontal Exploration LLC Failed To Comply With State Court Order To Plug 6 Conventional Wells In McKean County [PaEN]

-- DEP Issues Abandoned Well Violation To Oil & Gas Wastewater Injection Well With Nearly Full Storage Tanks, Expired EPA Permit In Venango County [PaEN]

-- Apply Now! DEP Conventional Oil & Gas Methane Reduction Well Plugging Grant Applications Due Dec. 16; $44.4 Million Available - Only 10 Applicants Applied For 77 Wells So Far [PaEN]