While overall shale gas permitting activity changed little in Pennsylvania between September and October, a couple big producers pulled substantially more permits to drill in October and may be breaking with the pack to chase higher winter gas prices.
Pennsylvania producers pulled 72 permits in October, according to the state Department of Environmental Protection. The number was roughly flat compared to the month before and a 9% increase over October 2020.
The state's five largest exploration and production companies, or E&Ps — EQT Corp., Chesapeake Energy Corp., Coterra Energy Inc., Range Resources Corp. and Southwestern Energy Co. — spent another quarter keeping drilling and spending at low levels and counting the cash windfall from higher prices.
This conservative approach may be ending. EQT and Spanish supermajor Repsol SA substantially increased their permitting activity in October, according to the state data. EQT pulled 20 permits to drill, compared to four in September and 10 a year ago. Half of the new permits were for wells on Westmoreland County, Pa., acreage that the company bought from Chevron Corp. a year ago.
Repsol pulled 19 permits to drill in Tioga County, Pa., helping to make the north central dry gas county the most active in the state in October with 25 new permits. Repsol pulled no permits for gas wells in September 2021 or October 2020. Repsol said it was adding rigs in the Marcellus and Texas' Eagle Ford Shale to capture high commodity prices.
"The recent price escalation has continued in October, with some regional references achieving or soaring to record-setting levels," CEO Josu Jon Imaz San Miguel told analysts on an Oct. 28 earnings conference call. "Gas accounts for around 60% to 65% of our production, so this price environment is beneficial for us."
EQT needed to fill new westbound capacity that it booked on Tallgrass Energy LP's Rockies Express Pipeline LLC system starting Sept. 1.
Four of the five top producing counties in Pennsylvania — Susquehanna, Bradford and Lycoming in the northeast part of the state and Washington in the southwest — were not among the most active counties for permitting in October. They were shouldered aside by Repsol and National Fuel Gas Co. in Tioga County.
National Fuel's upstream unit, Seneca Resources Corp., pulled 12 permits in October for wells in Tioga and north central Cameron County. Like EQT, National Fuel is digesting and adding acreage it bought from a supermajor, Royal Dutch Shell PLC, when gas prices seemed to be stuck between $2/MMBtu and $3/MMBtu in 2020.
