Pennsylvania oil and natural gas drilling this week fell to the lowest in 17 years, signaling dimming producer sentiment in the second-largest US gas producing state.
The number of rigs drilling for oil and gas in Pennsylvania this week fell to 12, the lowest since July 2007, as the state's rig count lost one from a week earlier and fell by 10 from a year earlier, according to oil field services company Baker Hughes.
There were 101 gas-directed rigs in the US this week, down by 16 from a year earlier, implying that the majority of the gas-rig decline was due to the drop in Pennsylvania, where wells produce plentiful dry gas but little crude and natural gas liquids (NGLs).
The 17-year-low rig count in the regional gas-producing powerhouse, home to the prolific Marcellus shale, is due to three factors: expectations of lower US gas prices after the 2024-25 winter heating season, a lower share of currently more profitable crude and NGLs in Pennsylvania's output compared to nearby West Virginia and Ohio, and the June start-up of a new gas pipeline in West Virginia, where some Pennsylvania production may have shifted.
Rig counts reflect expected prices roughly six months in the future, accounting for the lag between when the drilling of a well begins and when its production is sold. The April 2025-March 2026 strip price at the Leidy Line trading hub, a bellwether for Marcellus shale output in northeast Pennsylvania, was $2.63/mmBtu, according to Argus forward curves.
Prices for crude and NGLs in 2024 have been more resilient than US gas prices, which have languished after a warmer-than-normal 2023-24 winter left the US gas market oversupplied. This price dynamic may be why the other two main Appalachian gas producing states have not mirrored Pennsylvania's drilling slowdown. The Ohio rig count rose by one this week to 10, the same number as a year earlier, while the West Virginia rig count was unchanged at 10, up by three from a year earlier.
Drilling productivity has also improved dramatically in the past 17 years, surging to 21 Bcf/d (595mn m³/d) in July from 471mn cf/d in July 2007, according to the US Energy Information Administration.
Above-average temperatures were expected to blanket the US from November to January, according to the National Weather Service, portending another winter with lower gas demand.
