"For the near term, it's prudent for us to reduce our capital expenditures and maintain the health of our balance sheet," said Ronald J. Tanski, National Fuel's chief executive.
Cabot Oil & Gas Corp., whose Marcellus operations are largely in Susquehanna County, also announced plans this week to cut back from two rigs to one. The Houston firm set its 2016 capital budget at $325 million, down 58 percent from last year.
EQT Corp., a Pittsburgh producer, said it would cut capital spending to $1 billion from $1.8 billion last year. Southwestern Energy Co. and Consol Energy Corp. earlier announced plans to halt new drilling.
Only 19 drill rigs were operating in Pennsylvania on Friday, down 65 percent in the last year, according to the weekly Baker Hughes rig count. Pennsylvania now has fewer drill rigs operating than in 2008, before the shale boom.
The culprits are low energy prices, the lack of pipeline infrastructure, and the companies' own zeal for drilling in recent years. Seneca says it has 70 wells drilled but is awaiting hydraulic fracturing before they are done.
"These severe market headwinds are forcing dozens of energy and supply chain companies to reduce investments, close their doors, and lay off hardworking men and women," said Erica Clayton Wright, a spokeswoman for the Marcellus Shale Coalition. "Given these market realities, it's vital we continue to focus on modernizing Pennsylvania's pipeline infrastructure network to create new market opportunities and connect more users, especially manufacturers, to our abundant natural gas supplies."
The decline in drilling activity is likely to play a role in an ongoing Harrisburg debate over whether to impose a severance tax on natural gas production. Republican legislative leaders have stymied Gov. Wolf's efforts to enact a tax, saying it would drive up costs for drillers.
Despite the slump in drilling, gas production is steady because of the queue of wells that are waiting to be linked into markets. Gas production in November was 392 billion cubic feet, or 13 billion cubic feed a day, slightly higher than the 12.6 per day that was produced in January, state figures show. It's been in that narrow range all year, and is mostly based on how much pipeline capacity there is to get the gas to market.
Most operators say they only plan to increase drilling activity in 2017, when several major pipeline projects are scheduled to go into service, reducing the bottleneck.
The number of rigs is only a rough measure of production, since drillers have become more efficient as their knowledge of the Marcellus geology has improved. Operators now typically drill a well in half the time they did a decade ago, and drill up to a dozen horizontal wells from a single location, reducing time spent disassembling and moving equipment to new locations.
Despite the gloomy outlook - National Fuel was forced to take a $252.6 million write-down of its oil and gas reserves, based upon the depressed market value of the energy - industry leaders say they are still committed to developing the Pennsylvania's Marcellus and Utica Shales.
"I've been in the industry for a lot of time and seen a lot of cycles, and we have just happen to be at the down-point right now," said Tanski, National Fuel's CEO.
Andrew Maykuth amaykuth@phillynews.com
215-854-2947@maykuth