PA Oil and Gas

Pennsylvania has been a leader in the production of oil and natural gas, dating back to the world’s first oil well, drilled by Col. Edwin Drake near Titusville, Venango County in 1859. This first well was called “The Pennsylvania Start-Up that Changed the World” by a Forbes Magazine columnist in 2009. The state’s independent oil and gas industry has provided tens of thousands of good-paying jobs and contributed billions of dollars to local economies for decades, while producing an indigenous source of energy.

(Photo courtesy of the Drake Well Museum).

Providing jobs, producing energy, supporting communities for over 150 years.

The world’s first commercial oil well was drilled in 1859 in Titusville, Venango County, and natural gas production in Pennsylvania dates back to 1881. Over the years, the industry has provided good jobs and contributed significantly to local economies while safely and successfully producing the crude oil and natural gas that is essential to our way of life.

Thanks to technological advances in finding and producing natural gas, Pennsylvania again is playing a key role in meeting the nation’s energy needs. A rock formation approximately a mile below the surface known as the Marcellus Shale has become one of the world’s largest natural gas fields, containing over 500 trillion cubic feet of natural gas. A significant portion of Pennsylvania is underlain by the Marcellus Shale, and drilling activity targeting this formation is taking place in more than 25 counties. A few thousand feet below the Marcellus is another formation called the Utica Shale that could ultimately become another huge natural gas resource for Pennsylvania, as could Upper Devonian formations just above the Marcellus.

The real story of oil and gas in Pennsylvania is much broader, however. Businesses ranging from small family operations up to huge multinational corporations drill for and produce crude oil and natural gas in about half of the state’s 67 counties. Most of the crude oil comes from the counties of McKean, Warren, Forest and Venango in northwest Pennsylvania, with additional production in the counties between Butler and Greene in the southwest part of the state. Natural gas also is produced in a wide swath of Pennsylvania: Draw a diagonal line from the very northeast tip of the state down to Somerset County in the southwest, and nearly everything north of that line is a part of the Commonwealth’s gas- producing region.

In 2012, operators drilled 2,383 oil and gas wells. Of that total, 1,359 were in “unconventional” shale formations such as the Marcellus, while 1,024 were drilled in shallower “conventional” formations. The most active counties for Marcellus Shale drilling were Lycoming (203 wells), Washington (195) and Susquehanna (192) counties, and Warren (370), McKean (260) and Venango (129) counties for conventional wells. Here’s a closer look at the Keystone State’s oil and gas production:

  • Natural gas. Producers operate in excess of 55,000 wells to deliver over 2 trillion cubic feet (tcf) of gas to the market annually, making Pennsylvania the nation’s fifth-largest natural gas-producing state in 2012. Our state’s wells yield twice the volume of natural gas needed just for Pennsylvania’s own consumption. Natural gas is used to heat homes and businesses, generate electricity, power vehicles ranging from transit buses to family cars, and by industries to create a wide variety of consumer products. Additionally, natural gas is being increasingly recognized as a clean-burning fuel. The U.S. Environmental Protection Agency reports that between 2010 and 2012 carbon pollution from power plants declined 10 percent due to the growing use of natural gas.
  • Crude oil. Pennsylvania oil producers operate more than 11,000 wells to produce over 2 million barrels of Pennsylvania Grade crude oil each year. Penn Grade Crude is a superior quality, paraffin- based crude oil that is refined primarily into lubricating base stocks. Lubricants made from Pennsylvania Grade crude oil have been the choice of equipment manufacturers and consumers more than 100 years.
  • Coalbed methane. Pennsylvania producers are also involved in developing coalbed methane resources in the state. Coalbed methane, the natural gas from underground coal seams, is an energy source that rivals conventional natural gas in composition and heating value. Coalbed methane is commonly used like other natural gas supplies for domestic, commercial and industrial fuel. There are approximately 1,000 coalbed methane wells in Pennsylvania.

What is the difference between “conventional” and “unconventional” wells?

Pennsylvania law defines an unconventional gas well as a well drilled into a shale formation below the base of the Elk Sandstone or its geologic equivalent where natural gas cannot be produced by horizontal or vertical well bores except when stimulated by hydraulic fracturing. Essentially, these wells are drilled into a shale that is so dense that the gas trapped inside cannot be released except by cracking the rock by means of hydraulic fracturing.

A traditional, conventional well is usually drilled into a sandstone formation that can range from as shallow as 1,500 feet to as much as 21,000 feet deep. Oil and gas are able to pass through these formations without hydraulic fracturing, but nearly all wells are stimulated through fracturing to improve production. Conventional wells have been drilled vertically, although a few operators are experimenting with horizontal drilling techniques in conventional formations. An estimated 350,000 conventional oil and gas wells have been drilled in Pennsylvania over the years (most of which were plugged and abandoned as their useful lives came to an end), compared to in excess of 6,000 unconventional wells.

Conventional oil and gas wells can be found in parks and on public land, along highways, even in residential neighborhoods. A well pad cleared for a conventional oil or natural gas well is smaller than that of a deep well and requires a smaller drilling rig to drill vertically and reach the targeted formation. It typically takes less than two weeks to drill these wells, with a few additional days required to stimulate and complete the well. Since the number of fractures into the rock are fewer than those of a horizontal well, the scope of the well stimulation operation is not as significant and does not require as much equipment or water.

The average conventional gas well in Pennsylvania produces less than 13 thousand cubic feet (mcf) per day, compared against 2,000 mcf for the average unconventional well. A typical oil well yields about one-third to one-half a barrel or crude oil daily. Consequently, even though conventional wells cost a fraction of unconventional wells to drill, the lower production rates mean a smaller rate of return on investment. This translates into reduced profitability from these wells, and the influence that oil and natural gas commodity prices and other market forces have on their viability. If either the cost to drill these wells increases, or if the cost of oil and gas decreases, to certain levels, conventional wells become less viable.

(Information sources: US Department of Energy, Energy Information Administration and the Pennsylvania Department of Environmental Protection)

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