I was recently contacted by a resident of New York State who was concerned about Marcellus Shale gas drilling moving into his area. He found a report by geologists Dr. Gary Lash from SUNY – Fredoinia and Dr. Terry Engelder from Penn State that showed the shale layer thinning substantially as it heads north across the Pennsylvania-New York border.

What’s more, this report breaks up the Marcellus Shale into several substrata, including the Union Springs shale and the Oatka Creek shale, which are separated by a thin and intermittent layer of limestone.

On a cursory level, the thickest parts of the Union Springs substratum of the Marcellus Shale seemed to correspond with the highest production areas in Bradford and Susquehanna Counties. Even though there was another high production area in Southwestern Pennsylvania in a relatively thin portion of the Union Springs (and Marcellus Shale in general), it seemed like a reasonable hypothesis to explore. Does the thickness of the shale layer effectively predict the production values from wells in those areas?

Thickness of the Union Springs substratum of the Marcellus Shale and daily production values. As the shale layer gets thicker, it is represented by darker brown bands, while production values range from blue (lowest production) to red (highest production). For more information and a dynamic view, click the image to visit our DataTool.

Karen Edelstein, FracTracker’s New York Liason, digitized the Union Springs thickness map from the Lash-Engelder report, and then I was able to correlate the production values of all Marcellus Shale wells to the average thickness of each category. For the purpose of this exercise, only wells reporting positive (non-zero) production values between July and December 2011 were included. To account for wells in production for only part of that period, I calculated the average daily production in thousands of cubic feet (Mcf) per day.

Thickness of the Union Springs substratum of the Marcellus Shale in feet versus average daily production in thousands of cubic feet (Mcf) per day.

Overall, the correlation isn’t very strong. While the trend line does show moderate increases in production as the Union Springs shale layer thickens, the low R-squared shows that there is a good bit of randomness involved. Part of this was expected, due to the large number of productive wells in Southwestern Pennsylvania, where the formation is quite thin. This would be the notable bump in the plot chart above between 20 and 60 feet of thickness.

Thickness of the Union Springs substratum of the Marcellus Shale and average daily production values. Click the image for more information and a dynamic view.

However, there is another factor that contributes to the poor correlation. As I mentioned above, the trendline does indicate that on average, wells in the thicker formations produce more gas than those in thinner formations, but there are also a large number of duds from the most robust parts of the Union Springs. That is to say, there are a lot of blue dots in the dark brown regions of the map below.

It is likely that if the whole thickness of the Marcellus Shale were considered, the results would have been even worse. In fact, some of the thickest parts of the whole Marcellus, at least according to Lash and Engelder, are in Pike County, which drillers have left alone so far.

So we have not cracked the nut of predicting which areas will yield the highest production returns, but at least we have good company in that regard. Despite the huge amount of data that the oil and gas companies possess, the results that they report to the Pennsylvania Department of Environmental Protection show that they still don’t really know what they’ll find at the bottom of a hole until they drill it.

Although there is clearly more to gas yields than thickness of the shale, it was an interesting exercise, and if the industry ever does figure it out, it will be a multi-billion dollar discovery–keep in mind that each of the thousands of wells planned cost at least $5 million to drill. Here’s hoping that they do figure it out someday, and not just because of the economics. If drilling wildcat wells can be minimized, then many of the significant adverse effects of the industry would also be mitigated as well, at least in areas where production values were estimated to be low.

Between January and May 2011, the Pennsylvania DEP conducted 977 inspections on oil and gas operations, issuing 1,751 violations to drilling and pipeline operators, and 311 enforcement actions. These totals are for all oil and gas operations, including the Marcellus Shale.

Most inspections by operator, January – May 2011

Two of these entries are similar:  “Incomplete Data” and “Unknown Operator”.  All but one entry listed as having an unknown operator involved failing to plug and abandoned well, and was issued either on the 17th or 18th of February.  Everything else where the operator is unknown is listed as “Incomplete Data”.

Most violations by operator, January – May 2011

Although this particular analysis does not include details about the wells which were flagged for violations, many of the operators on this list are focused on Marcellus Shale operations in Pennsylvania, including Cabot, Chief, Chesapeake, Anadarko, Range, and XTO.  In May, I discussed how there was little overlap between Marcellus and non Marcellus drillers. At that point, the distribution of the only seven companies that drilled one or more of each kind of well in Pennsylvania was as follows:

Operators with at least one Marcellus Shale and non Marcellus Shale well between January 1 and May 18, 2011.

Most enforcement actions by operator, January – May 2011

I’m not sure what the point of issuing an enforcement action is when the well operator is not known.  There are 187 rows of incomplete data, detailing 178 violations, and 55 enforcement actions.  The following columns are missing data for every single row:  operator, permit number, county, municipality.  It does, however, include penalty amounts issued and total amounts collected, which means that the DEP does have information about at least some of these wells, they just neglected to share it with the rest of us.

Most violations per inspection by operator, January – May 2011

The list of most violations per inspection is dominated by small, non Marcellus Shale operators, with relatively few inspections.

Most enforcement actions per violation by operator, January – May 2011

Similarly, the companies with the most enforcement actions per violation involve those with relatively low sample sizes.

It isn’t clear to me though, what constitutes an enforcement action, and when such an action is deemed appropriate.

Land of Confusion

The last time I checked on Consol, for example, they had no violations.  This time, not only is there a violation, but an enforcement action as well.  That doesn’t mean that they were given a fine, however–their enforcement description reads, “Notice of violation”.  And yet, according to the report, there are 1,751 violations issued but only 311 enforcements, or roughly 18 percent.  So when do they get the enforcement of “Notice of violation”?

Curious.  But it gets more confusing than that.  Although there are only 311 enforcements, there are 729 instances of “notice of violation”, 43 counts of “administrative orders”, 48 instances of “consent assessment of a civil penalty”, and “consent order and agreement” came up four times.  That totals 824 enforcement descriptions for only 311 enforcements.

How can this be?

This is an example of what the violations report looks like.  The report is set up so that a particular inspection is listed just once, even thought there might be multiple violations that occurred as a result, as is the case for rows 1048-1050.  Additionally, multiple violations from different inspections might be covered by the same enforcement ID, as is the case for rows 1058-1065.  Although not shown here, there are also instances where the same Violation ID is used more than once, non consecutively.

Location of oil and gas violations in PA, January to May, 2011. Click the “i” icon then any map feature for more information.

From my perspective, each row of data should be complete, not only because it is needed for our DataTool to associate all of the information with each map feature, but it also allows for looking deeper into the patterns of where the problems are.

For example, how many of the violations were for non Marcellus Shale wells? The report itself doesn’t say, although there is a separate Marcellus-only report, so you could subtract the total of that from the overall list. But what about horizontal wells? What if you want to know which companies have the worst record at certain types of violations? What if you want to compare the number of violations issued on a monthly basis?

Violations issued by month, January – May, 2011. Values are between 4 and 6 percent overstated on average.

If you want to dig deeper, there is no choice but to fill in the blanks. When I did that for this five month period, however, the values for violations were increase by between four and six percent over the totals that the DEP provided, due to the factors stated above.  While that may be a tolerable difference, the same process increases the number of enforcements by 165 percent.  Both of these inflated numbers represent actual events.  The differences arise more from the standpoint of how violations and enforcement actions are applied.

I applaud the DEP for releasing its oil and gas violation and inspection data so willingly and so thoroughly.  At the same time, it could certainly stand to be simplified.  As it stands, it isn’t enough to proclaim that “Operator A has seven violations” without answering whether there are any blanks in the data to be filled in, or whether any of the violations included multiple enforcement actions.

I am often asked how many Marcellus Shale wells or permits there are in Pennsylvania at the moment. The answers to these queries are growing all the time, and while I try to keep these datasets current on our DataTool to allow for mapping, the quickest way to find these answers is to look on the Well Permit Workload Report at the DEP website.  The workload report is updated weekly, and has a variety of information about drilling and inspection activities over a variety of time frames.  Many of the basic figures that people want to know about the industry in Pennsylvania are readily available:

Data Available on Weekly Workload Report for week ending 6-17-2011

Marcellus Shale Permit Applications

Another feature of the workload report is that it breaks down the status of Marcellus Shale permit applications from 2005 through the present.

Status of Marcellus Shale Applications in Pennsylvania, as of June 17, 2011

How selective is the process? Of the permit applications received so far, 94 percent have been approved, and four percent are still in the process of being evaluated. Only 31 applications (0.4 percent) were actually denied.

Between the Marcellus Shale and other formations, the DEP has issued over 16 permits for new wells every calendar day so far in 2011.

Violations per Inspection

2011 year to date inspection and violation data for Pennsylvania

So far this year, non Marcellus Shale wells are slightly more likely to be issued a violation upon inspection than their Marcellus Shale counterparts. This is actually a fairly dramatic change from 2010 data, which is summarized below:

2010 inspection and violation data for Pennsylvania

Last year, there were more than twice as many violations per inspection from the Marcellus Shale than from other formations, while this year the non Marcellus wells are being flagged more often. This is both because the rate of violations per inspection for non Marcellus Shale wells has risen by 35 percent over last year’s figure, and because Marcellus Shale wells are being flagged 41 percent less often this year than last year.