What s the Story With Fracking?

Transcription

1 August 21, 2012 Sutton, MA What s the Story With Fracking? Presentation to: NGA s Sales & Marketing Seminar Stephen Leahy Northeast Gas Association

2 Continued on NGA web site

3 U.S. DOE: Shale Gas Primer Modern Shale Gas Development in the United States: A Primer U.S. Department of Energy (DOE), April 2009: "The primary differences between modern shale gas development and conventional natural gas development are the extensive uses of horizontal drilling and high-volume hydraulic fracturing. The use of hydraulic drilling has not introduced any new environmental concerns...while some challenges exist with water availability and water management, innovative regional solutions are emerging that allow shale gas development to continue while ensuring that the water needs of other users are not affected and that surface and ground water quality is protected. Taken together, state and federal requirements along with the technologies and practices developed by industry serve to reduce environmental impacts from shale gas operations." (p. ES-5).

4 Comparing the Tone If I compare the tone the level of vitriol, the level of sharp elbowedness, if that is a word, of those two hearings, I would say that the one we did in Pennsylvania which wasn t dealing with an ongoing ecological disaster was much stronger, much sharper, than the one that we had done a couple of years prior in the Gulf of Mexico. DOE official speaking at NARUC conference, quoted in Gas Daily,

5 Shale Gas Basins, U.S. and Canada Map: International Energy Agency (IEA) 25.

6 Shale Production Up, Price Down Source: U.S. EIA, 7-12 and 8-12

7 BENTEK: Northeast Production Can Grow by 8.0 Bcf/d by 2017 Source: BENTEK Energy. Presented at NGA Market Forum, April 25, 2012.

8 Environmental Issues & Concerns

9 Hydraulic Fracturing Process Images: ANGA

10 Questions Is the process safe? What are the environmental impacts? Who is regulating what? Where is the debate heading?

11 Environmental Issues Associated with Shale Water consumption Chemical additives Fluid handling, disposal, treatment Methane migration Air emissions Local impacts Seismic activity

12 Issues & Answers Topic Concern Response Water Consumption Chemical additives Fluid handling, disposal, treatment Hydraulic fracturing requires large quantities of water millions of gallons. Level of concern also varies somewhat depending on region of country. ~ 99% of injection in fracturing is water and sand. Concern about small injection of chemical additives. Primary concerns relate to surface spoils of fluids, well control and lost containment of flowback water on the surface. While large, volumes of water needed are quite small compared to other industrial and power gen demands. PA estimates Marcellus gas wells use 0.2% of state s daily statewide total water consumption. Proper handling and casing addresses risk of leakage. Many states now require that well operators disclose chemical additives including PA, TX, etc. Mitigation measures and proper handling, through recycling, proper underground injection, waste water treatment facilities. Methane migration/leakage Methane leakage from production process. Gas migration is a result of poor well construction not the process itself. Also migration of naturallyoccurring methane from wetlands, landfills, etc. Based on more than 1 million wells drilled with fracking, there is little evidence that fracking directly causes groundwater contamination Air emissions Shale gas production results in air emissions. Industry emphasis on green completion to reduce loss of methane. Replacement of diesel fuel at well sites urged. Application of technologies. Local impacts Industrialization of landscape. Trucks, roads, noise, surface disruptions. Emphasis on preventing, mitigating and remediating surface impacts and community impacts.

13 How much water does this process take?

14 Water Usage Compared to Other Demands Source: Chesapeake Energy presentation at NGA Forum, 4-10

15 Water Consumption PA Governor s Marcellus Shale Advisory Commission, July 2011 Marcellus Shale natural gas wells use 0.2% of the daily statewide total water withdrawn at 1.9 million gallons per day. This is in stark contrast to electric generation power plants, especially nuclear generation, which use 6.43 billion gallons per day. (report, p. 66) NY DEC Draft SGEIS, July 2011 At peak activity high-volume hydraulic fracturing would result in increased demand for fresh water in New York of 0.24%. Thus, water usage for HVHF represents a very small percentage of water usage throughout the state. (Exec. Summary, pp. 9-10)

16 Why are they adding chemicals, The Good and Story isn t that harmful?

17 Chemical Additives Image: U.S. EIA

18 Chemical Additives 99% of injection components are water and sand, but small portion of chemical additives is needed to achieve fracture DOE report, Aug. 11: Regulators and geophysical experts agree that the likelihood of properly injected fracturing fluid reaching drinking water through fractures is remote where there is a large depth separation

19 FracFocus.org: Increasing Transparency on Additives Last April, the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC), with funding support from the United States Department of Energy (DOE), unveiled a web-based national registry disclosing the chemical additives used in the hydraulic fracturing process on a well-by-well basis. The information on the website covers wells drilled starting in The initiative provides energy companies involved in oil and gas exploration and production a single-source means to publically disclose the chemical additives used in the hydraulic fracturing process. The web address is:

20 The Good Story Isn t this fracking polluting groundwater?

21 Water Handling, Disposal, Treatment National Regulatory Research Institute, paper on Hydraulic Fracturing, October 2011 Based on more than one million wells drilled with fracking, however, there is little evidence that fracking directly causes groundwater contamination...[r]eports show that these incidents resulted from surface spills, poor cementing jobs in wellbores, ad other operational failures. (paper, p. 12) PA Governor s Marcellus Shale Advisory Commission, July 2011 Wastewater treatment and disposal is a significant issue facing Marcellus Shale operations. Operators report that approximately 15% of the 5 plus million gallons of water used to fracture a well is returned to the surface during the initial flowback period. (report, p. 67) The primary concerns regarding hydraulic fracturing relate to surface spills of fluids, well control and lost containment of production and flowback water on the surface. (report, p. 74)

22 Water Handling, Disposal, Treatment (cont d) DOE Subcommittee report, Aug possibilities for disposal of return water: 1. Reuse as fluid in new well; 2. Underground injection into disposal wells; 3. Waste water treatment; 4. Surface runoff (which is forbidden). NY DEC Draft SGEIS, July 2011 Mitigation measures have been identified that would eliminate any potential significant adverse impact from flowback water or treatment of other liquid wastes associated with HVHF. (Exec. Summary, p. 12)

23 Water Handling, Disposal, Treatment (cont d) U.S. EPA completes review of water quality in Dimock, PA no contaminant levels of concern On July 25, 2012, the U.S. Environmental Protection Agency announced that it has completed its sampling of private drinking water wells in Dimock, PA. Data previously supplied to the agency by residents, the Pennsylvania Department of Environmental Protection and Cabot Oil and Gas Exploration had indicated the potential for elevated levels of water contaminants in wells, and following requests by residents EPA took steps to sample water in the area to ensure there were not elevated levels of contaminants. Based on the outcome of that sampling, EPA has determined that there are not levels of contaminants present that would require additional action by the Agency.

24 The Good Story Isn t the gas underground seeping through?

25 Methane Migration NY DEC Draft SGEIS, July 2011 Well construction associated with HVHF presents no new significant adverse impacts with regard to potential gas migration. Gas migration is a result of poor well construction (i.e., casing and cement problems). (Exec. Summary, p. 11) Migration of naturally-occurring methane from wetlands, landfills and shallow bedrock can also contaminate water supplies independently or in the absence of any nearby oil and gas activities. (Exec. Summary, p. 11)

26 The Good Story Sure it s cleaner - but it s polluting the air!

27 Air Emissions DOE Subcommittee report, Aug Shale gas production, including exploration, drilling, venting/flaring, equipment operation, gathering, accompanying vehicular traffic, results in the emission of ozone precursors (volatile organic compounds (VOCs), and nitrogen oxides), particulates from diesel exhaust, toxic air pollutants and greenhouse gases (GHG), such as methane. (report, p. 15) The Subcommittee recommends that industry and regulators immediately expand efforts to reduce air emissions using proven technologies and practices. (report, p. 18) Replacing diesel fuel with natural gas or electric power for oil field equipment will decrease harmful air emissions and improve air quality. (report, p. 24)

28 Air Emissions (cont d) U.S. EPA, April 2012 updated EPA standards released today include the first federal air rules for natural gas wells that are hydraulically fractured, specifically requiring operators of new fractured natural gas wells to use costeffective technologies and practices to capture natural gas that might otherwise escape the well, which can subsequently be sold. PA DEP, July 2012 initiated one-year study in Washington County to measure ambient airborne pollutants in an effort to determine potential air quality impacts associated with the processing and transmission of unconventional natural gas. Green Completion process

29 It s changed everything The Good Story trucks and noise everywhere...

30 Local Impacts DOE Subcommittee report, Aug The combination of impacts from multiple drilling and production operations, support infrastructure (pipelines, road networks, etc.) and related activities can overwhelm ecosystems and communities. (report, p. 25) The Subcommittee believes that each relevant jurisdiction should develop and implement processes for community engagement and for preventing, mitigating and remediating surface impacts and community impacts from production activities. (report, pp )

31 Who is regulating what? The Good Story

32 Federal and State Environmental Reviews U.S. EPA studying the potential adverse impact that hydraulic fracturing may have on drinking water. Initial report due later this year, final report in 2014 U.S. DOE established subcommittee in 2011; it released report in Dec with recommendations that it believes if implemented, would assure that the nation s considerable shale gas resources are being developed responsibly. NY DEC released revised draft Supplemental Generic Environmental Impact Statement (SGEIS) in Sept 2011.

33 U.S. DOE Task Force: Recommendations Improve public information about shale gas operations; Improve communication among state and federal regulators; Improve air quality; Protection of water quality; Disclosure of fracturing fluid composition; Reduction in the use of diesel fuel; Managing short-term and cumulative impacts on communities, land use, wildlife, and ecologies; Organizing for best practices; and Research and Development needs. Source: U.S. Department of Energy

34 IEA: Golden Age Depends on Golden Rules International Energy Agency (IEA) released report in May 2012 entitled Golden Rules for a Golden Age of Natural Gas. Exploiting the world s vast resources of unconventional natural gas holds the key to a golden age of gas, but for that to happen governments, industry and other stakeholders must work together to address legitimate public concerns about the associated environmental and social impacts.

35 IEA s Golden Rules They are Golden Rules because their application can ensure operators have a social license to operate, paving the way for a golden age of gas. 1. Measure, disclose & engage 2. Watch where you drill 3. Isolate well & prevent leaks 4. Treat water responsibly 5. Eliminate venting, minimise flaring & other emissions 6. Be ready to think big; 7. Ensure a consistently high level of environmental performance. Source: International Energy Agency (IEA), May 2012

36 Can We Reach Consensus? Fred Krupp, President, Environmental Defense Fund, in Wall Street Journal, To be blunt, the natural gas industry has a credibility problem. Natural gas is a growing and increasingly significant part of our nation s energy economy, but many Americans don t believe that this resource can be safely tapped. I believe that the [DOE] panel s recommendations if put into place by state and federal regulators and the natural gas industry could help lead the way forward."

37 Industry Responsibilities Best practices Communications and transparency Safety and operational security