Gas prices drive Pennsylvania drilling

The Associated Press

High natural gas prices are driving a record-breaking demand for well-drilling permits in northwestern Pennsylvania. Gas prices, and the demand for permits, have been increasing steadily for about the past five years.

In March 2003, the Pennsylvania Department of Environmental Protection issued 233 drilling permits for the 12-county northwestern Pennsylvania area — a monthly record that stood until 240 permits were issued in March. In the first four months of this year, 580 permits have been issued. Last year 609 permits were issued in the first four months.By comparison, 225 permits were issued in the first four months of 1999.

“I don’t think we can be any busier. There’s not the equipment out there to drill any faster,” said Paul Kucsma, the department’s northwest regional manager of oil and gas monitoring and compliance. “There just are not any more rigs available.”

Industry officials are stopping short of calling the situation a boom, however, saying that higher steel prices have driven up the cost of drilling — keeping profits from climbing as high as some drillers might like.

“The increased demand for natural gas is reflected in the increased price we’ve seen over the past couple of years, and that’s reflected in the drilling activity,” said Steve Rhoads, executive director of the Pennsylvania Oil and Gas Association. “There’s good cash flow for the producers, but I wouldn’t call it a boom.”

Gas formations in northwestern Pennsylvania are generally reached by drilling 2,500 to 6,000 feet deep. The rule of thumb is a commercial well would cost $40 per foot to drill and about $160,000 on average to complete. But those numbers are in flux because of rising steel prices.