From Argus Media

Pennsylvania issued 146 drilling permits in November, down by 42pc from a year earlier as producers pursued higher output from fewer wells.

The number of permits issued in November was also down from the 210 issued in October, signaling a shift to less drilling as the weather in Appalachia turns colder. Pennsylvania had below-freezing temperatures on the US Thanksgiving holiday, resulting in limited freeze-offs in the production region.

The Pennsylvania Department of Environmental Protection in November issued 130 permits for gas wells and 15 permits for oil wells. The department also issued one permit for a waste disposal well. Gas well permits in November showed a 45pc drop from the 238 gas permits issued a year earlier.

The state in October had issued 210 drilling permits, of which 197 were for gas wells, five were for combined oil and gas and eight for oil. October’s total permits showed a 29pc rise from the month earlier, likely on the 6 October start-up of Williams’ 1.7 Bcf/d (48mn m³/d) Atlantic Sunrise pipeline expansion, which funnels gas produced in northeastern Pennsylvania to markets on Transcontinental Gas pipeline’s mainline and to the Cove Point LNG export facility in Maryland. Gas permits in October were up by 46pc on the month.

Pennsylvania sits atop parts of the Marcellus and Utica shales, which make up the Appalachian shale region. Appalachia is the top production region in the US by volume, and Pennsylvania produces more than half of Appalachia’s gas.

October production from Appalachia topped 29.6 Bcf/d, according to the most recent data from the US Energy Information Administration (EIA). Regional output in October was up by 1pc from September and more than a fifth higher than a year earlier. The agency sees output in November climbing to more than 30 Bcf/d.

Gross production from Pennsylvania alone topped 17.7 Bcf/d in September, according to the EIA’s most recent production data by state.

Spot natural gas prices at Dominion Transmission South in November averaged $3.78/mmBtu in November, 74pc higher than a year earlier. Argus forward prices show Dominion South averaging $4.04/mmBtu in January, suggesting tighter supply next month.

November drilling permits in neighboring Ohio also fell on the year, according to that state’s data. Ohio issued 26 permits last month, down by 26pc from November 2017.

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