Natural gas prices in Pennsylvania have fallen steeply, after spiking last year.
In a recent report, the state’s Independent Fiscal Office said the average price for natural gas from April to June of this year fell to $1.45 per million British thermal units.
That’s down from $2.25 per MMBtu in the previous quarter, and from $6.70 at the same time the previous year.
And the price continues to fall. Data from July and August shows the average price was $1.16 per MMBtu.
The IFO says the drop is due to the mild winter leaving a glut of gas inventory.
The amount of impact fees the state collects from drillers depends on both the number of wells drilled and the price of gas. Communities where drilling happens use the money to offset the effects of the industry.
The IFO said there’s been a significant slowdown in new unconventional well drilling since the middle of last year.
In the 2nd quarter of 2023, companies drilled 94 wells. That’s a 29% decrease from the same period in 2022, when 133 wells were spud.
Pennsylvania operators ramped up drilling last year as prices spiked and following disruptions related to the COVID-19 pandemic.
But the rate of production growth has not kept pace with the new wells.
Between April and June, drillers pulled 1,859 billion cubic feet of gas from the ground, an increase of 0.3% from the previous year. It was the first quarter without a year-over-year production decline since the 2nd quarter of 2022.
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