Marcellus Shale: A Backgrounder. Barbara Sexton Chesapeake Energy Corporation David Callahan Marcellus Shale Coalition. 1 I MARCELLUS SIIALE COALIllON

Transcription

1 .. Marcellus Shale: A Backgrounder Barbara Sexton Chesapeake Energy Corporation David Callahan Marcellus Shale Coalition 1 I MARCELLUS SIIALE COALIllON

2 About Us - Founded in More than 170 members strong - From producers to suppliers Our Focus - Long-term development of resource - Protecting the environment and responsible use of water resources - Addressing landowner, government and public issues - Benefits to our region's future 2 I MARCELLUS SHALE COALITION

3 ./ We provide the safest possible workplace for our employees, with our contractors, and in the communities in which we operate;./ We implement state-of-the-art environmental protection across our operations;./ We continuously improve our practices and seek transparency in our operations;./ We strive to attract and retain a talented and engaged local workforce;./ We are committed to being responsible members of the communities in which we work;./ We encourage spirited public dialogue and fact-based education about responsible shale gas development; and./ We conduct our business in a manner that will provide sustainable and broad-based economic and energy-security benefits for all. 3 I MARCELLUS SHALE COALITION

4 Three Phases Upstream: bringing natural gas to the surface (drilling) Midstream: storing and transporting natural gas (pipelines, etc.) Downstream: selling and distributing natural gas (your supplier) The Marcellus Shale Coalition (MSC) is comprised of members from all three - especially upstream and midstream. Types Dry Gas: Home, business heating and fueling Wet Gas (Natural Gas Liquids, or NGLs): Raw material for other products (polymers, paints, plastics, fertilizers, etc.) 4 I MARCELLUS SHALE COALITION

5 The Future V'Traditional uses (home heating, fueling) V' Electricity generation V' Raw materials for other products V' Natural gas vehicles (NGVs)

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8 PA Marcellus Wells Drilled By County. \' MARCELLUS SHA L E COALITION Number of ~\.2,'" f J \ ,", 165 ~ (1\.,n Put!. ~ 'I> k- "-.. " n. 3 Marcellus Wells ~ - Vf; ''r'f'i' '! 7 ---f - 16 bycounry 'I.-It 23 9' \ 18. W" ~ 'l'1l'i 1 /" m,on 147 I, i!n ' I,> ? 6 ~ "',' ~ l. 3 \.. / n 8 \.. 1 ~1 nl \..---I 7 \,r'ok;rr'".b, '. \ I S4,:J.., fl~ l I SO \L.~ ~ ~ ( 49 j ~ ~ - V "<). / n I ft.lm fi._ 9 2 -~ ~.>' o -r' 7 J ~ - "- \., a ',~r,-- \ ~ 0., I 3, / /" ~ y~ J " l... I ,. 4,, 1 -" <0 4 ( / // A '/"- ) ?. r ~ / 5-. \ " I" ;,rl,. r... ",:.,-, }- ~ ~ ~ "" \' ~50 rl\/y y., J 1 I,~~ \ I ' 7 B 'f, d/. j/ ' ~ <pm<l3~t I / \ I 'ISO- SOO Tota l: 2,3 13 Marcellus Wells J.S1 31 I ;j l ~:i oop-r < MARCELLUS SHALE COA LI TION

9 Drilling Vertical or, more commonly, horizontal. Horizontal drilling allows for more efficient production, smaller footprint. First step is securing the well's integrity with a string of conductor casing, followed by a string of surface casing to protect underground sources of drinking water. Remainder of well is drilled vertically and horizontally as much as 5, 000 feet. Each hole drilled is approximately 20 inches in diameter at its widest, becoming smaller as drilling progresses downward. 9 I MARCELLUS SHALE COALITION,

10 Organized Development means Environmental Stewardship,,~ MAR eel L U S. SHALE COALITION New Technologies Allow for Increased Production, Reduce Aboveground Disturbance n R R R J p I I I I I I I _ J o Well s that did not need to be drilled, thanks to horizontal technolog y.

11 Marcellus Shale: Steps in Production, \ MAR eel L U S t SHALE COALITION Well Casing Ocncralllllcx;l 'C;I!Slng desh;llf'i lor f' MorcellUtS SI'1t;)fo g~s w~ 1 to p r ot cc~,he Oif1 l1lronmcnl Metal casing shores up the drilled area (wellbore), both vertically and horizontally, assuring long-term integrity of the well from end-to-end. Cement seals the steel casing throughout the entire well, preventing the release of hyd rocarbons. F'tClt Il w.:i l tu ~ 1I 1)f. SI1NI&N.lIi'ttl~~ ~ rf. h l'lfq& 10:11. ~ hfinj)? ~ (~... Ao""""IIf.t_ 1JQ4CI 1e-t1 -,..., ~ roy... J... ~"'~.~I'~... tti...-o- ~,."..... tao.,.,. fli(ji'fui... ~,.,~I~~ 1 W.n l ~f1 u. fohn ~...".., IIJNt IID'noI w...:1f'iiui

12 Hydraulic Fracturing (HF) For more than 60 years, more than 1 million wells hydraulically fractured in 27 states 90 percent of oil and gas wells use HF technology What's in HF Fluid? percent water/sand mix - Other 0.5 percent consists of other compounds Steel and Cement Casing Protect Drinking Water/Ecosystems - 25 PA Code Chapter 78 upgrades reflect best practices in well casing 12[ MARCELLUS SHALE COALITION

13 f 1 if H II ' P i! 1,! I l' ~ 1 ~ < " i;!, l,f i.' _" j- _-, 'I n t it H I i ~. ~ li!- J I J. i ~ r ~ c '., ~.!=I i r ~ l! 't

14 M II Sh I. St. Pdt, \ MAR eel L U S arce US a e. eps In ro uc Ion '~ SHALE COALITION Hydraulic Fracturing: No Impact on Deepest Aquifers Marcellus Shale Mapped Fracture Treatments (TVD) 0 _ DoOPOSi Aqulfier ,000,,- 1- porftop - Dopth frnctqp - POll Mldpalnl -- porlbtm - fr.. cbtm g ~ 8-0 5,000 6,000 I.ODO 8,000 9, Frac Siages (Sorled on Perf MIdpoint) Source: The American Oil and Gas Reporter, July 2010 OH PA VN

15 Less Reliance on Water Resources Gallons per million BTU Range Mid-point Deep shale natural gas Nuclear Conventional oil Coal Fuel ethanol from corn 2,510-29,100 15,800 Biodiesel from soy 14,000-75,000 44,500 Source: Ground Water Protection Council, U.S. Department of Energy 15 I MARCELLUS SHALE COALITION

16 Marcellus Shale: Steps in Production '~ ~H~L~ ~~}LILT~O~ Site Restoration Involves landscaping and contouring the property as closely as possible to pre-drilling conditions. Property owners generally see: - Small wellhead on a level concrete pad - Small amount of equipment - Two to three water storage tanks - Metering system to monitor gas production

17 Economic Value Added: $3.87 billion $8.04 billion $18.85 billion State/Local Taxes: $389 million $785 million $1.87 billion Cumulative Employment: Wells Drilled: 44, ,588 1,743 Output (bcfe/day): I MARCELLUS SHALE COALITION

18 30% domestic gas production growth outpaces 16% consumption growth, leading to declining imports u.s dry gas trill ion cubic feet per year 30 History 2009 Projections Consumption Domestic supply ~ ~~ ~ 101<.. ~ _ ~ ~} 6% - ~. ' ~ * - *, AE020H Reference case..., AE Reference case Source: Energy Information Administration DRAFT Annual Energy Outlook, November 2010

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