Water Management Barnett Shale November 21, 2008

Transcription

1 Water Management Barnett Shale November 21, 2008

2 Today s Discussion Hydraulic fracturing & water use Saltwater disposal Water transport options Brentwood water pipeline systems Recycling technology Questions 2 A salt water disposal well in Cleburne.

3 Chesapeake s Water Use in the Barnett Shale Drilling a well Completing a well (including fracing process) About 5,000-7,000 barrels About 70,000 barrels Total usage per well: About 75,000-77,000 barrels Chesapeake s water use in the Barnett Shale, based on 600 wells drilled annually*, is about 45 million barrels. (One barrel = 42 gallons) *Chesapeake s water use in the Barnett Shale 2.5 county area. Estimate based on 2008 proposed usage. 3

4 Chesapeake s Current Water Sources Surface water sources 35% Brazos River Authority Trinity River Authority U.S. Corp of Engineers Private water sources 25% Private lakes and ponds Stock tanks Water supply wells 25% Chesapeake owns 3 water supply wells Majority of water wells used already exist Municipal water purchases 15% Arlington Burleson Cleburne Crowley Keene Fort Worth Grand Prairie Trinity River near University Drive in Fort Worth Reuse / waste water Less than 1% Cleburne Future plans include Village Creek 4

5 Water Use in the Barnett Shale Annual water consumption for all users across the Fort Worth Basin Municipal uses 80.4% 10 billion barrels Electric generation 5.7% 800 million barrels Irrigation 5.4% 650 million barrels Manufacturing 3.9% 500 million barrels Livestock 2.3% 300 million barrels Mining 1.8% 200 million barrels Oil & gas operations.5% 55 million barrels (One barrel = 42 gallons) 5 Source: Fort Worth Basin/Barnett Shale Natural Gas Play: An Assessment of Present and Projected Fresh Water Use, by L. Peter Galusky Jr., Texerra, April 3, 2007

6 Water Use Comparison Drilling vs. Golf Course One natural gas well, during its projected 20-year lifespan, uses about 80,000 barrels of water Fort Worth s 10 public golf courses, during a span of two days, use about 94,000 barrels of water* (One barrel = 42 gallons) 6 *Source: Colorado State University Agricultural and Resource Policy Report, April 2004

7 Water Use Comparison Local Business Use University of Texas at Arlington uses 7 million barrels per year General Motors uses 6 million barrels per year Hurricane Harbor uses 2.9 million barrels per year Texas Rangers use 1 million barrels per year One 12-well drillsite uses 960 thousand barrels in 20 years (One barrel = 42 gallons) The Ballpark in Arlington UTA campus 7 Hurricane Harbor in Arlington

8 Ellenburger Formation In the Barnett Shale, flowback and produced water is injected into the Ellenburger formation using saltwater disposal wells. Ellenburger formation is more than a mile and a half below the earth s surface The formation consists of a porous rock containing naturally occurring saltwater Ellenburger is separated from freshwater formations by impervious rock beds 8

9 Class II Injection Wells Injection Wells Licensed to dispose of waste water and materials associated with the production of oil and natural gas Almost 144,000 operating in the United States More than 50,000 in the state of Texas** Salt Water Disposal Wells Subset of Class II injection well licensed for disposal of water generated from the production of oil or gas Ellenburger: a porous strata which absorbs the water, located underneath the Barnett Shale 11,700 active SWD wells in Texas*** 9 * Environmental Protection Agency, February 12, 2008 ** Railroad Commission of Texas, September 2008 ***John Tintera, RRC, 2008

10 7 Layers of Protection Wellbore Integrity Texas Railroad Commission Monitoring & Testing (1) Surface Casing (2) Surface Casing Cement (3) Production Casing (4) Production Casing Cement (5) Packer (6) Steel tubing (7) Plastic coating Drilling and Completion Casing* Impervious Cementing* Tubing* Packer Testing Prior to Service Impervious Cement Bond Log Pressure Testing Operations Continuous Monitoring* Annual Integrity Testing* Reporting Prior to Placing in Service Monthly Injection Date Pressure Volume 10 *Areas in which Chesapeake exceeds Railroad Commission of Texas standards Plus 1.5 miles of impermeable rock

11 7 layers of protection Wellbore Integrity 1. Surface casing run between feet below deepest aquifer 2. Surface casing cemented back to surface 3. Production casing through 1.5 miles of rock between the groundwater sands and the Ellenburger formation 4. Production casing cemented back to surface in three stages 5. Packer located at 7,600 feet (RRC: less than 100 feet from formation top) 6. Steel tubing to the Ellenburger 7. Internal plastic coating on tubing to prevent corrosion Other Safeguards: Injection limited into the Ellenburger formation at 7,649 feet Mechanical integrity testing annually (RRC: 5 years) Pressure monitored continuously (RRC: monthly) 11

12 Salt Water Disposal Injection Facility Mann SWD - Cleburne 12

13 Water trucks transport between 5,040 6,300 gallons of water per trip Water pipeline systems reduce the need for water trucks, resulting in reduced emissions and less road wear Some trucking is inevitable Water Transport Options Two ways to transport produced water to saltwater disposal wells: truck and water pipeline 13

14 Increase in Truck Traffic Is Temporary Water production for one well drops significantly over time Water output drops 47% in second week Water output drops 72% after 60 days Water trucks are necessary to transport produced water First day of production, trucks are needed to remove produced water Less than one truck per day needed after three months Water trucks transport produced water to salt water disposal wells. 14 Urban residents often do not notice the delivery trucks, school buses, gasoline tankers, garbage trucks, etc. that they encounter every day. (Photo from

15 Brentwood SWD Site Close-up of Brentwood SWD well in East Fort Worth. 15

16 Brentwood SWD Site 42-acre property, located in East Fort Worth, north of I-30 near Oakland Site of Chesapeake s East Tarrant County field office 2 compressor stations: Brentwood CF and Arc Park CF 2 compressor stations: Brentwood CF and Arc Park CF 4 padsites: Brentwood A, Brentwood B, Carter State, and coming soon White Lake Hills B Brentwood SWD injection well Tank batteries at the Brentwood SWD site hold produced water until it is injected into the saltwater disposal well. 16

17 Reducing Traffic at Brentwood Long driveway improves accessibility for water trucks entering the Brentwood site, helping to minimize traffic on adjoining road Planned water pipeline system connecting drillsites to the Brentwood SWD will reduce the number of trucks needed to transport produced water 17

18 Strategically Located SWD Wells & Pipelines Success of the DFW Airport and Brentwood SWDs can be replicated all over the Barnett Shale region Strategically located SWD wells can reduce miles trucks must travel to dispose of produced water Addition of water pipeline systems can lessen truck traffic even more dramatically Result is decrease in water truck traffic, related emissions and road wear 18

19 What About Recycling? Majority of the water returned from a well (95%), with its high salt content, is too saturated to make its recycling economically viable Natural gas industry is testing the feasibility of recycling flowback water with limited success Flowback water accounts for only about 5% of water byproduct About a week after fracing, flowback salt content can reach as high as 70,000 ppm, more than twice the salinity of sea water Current recycling technologies require increased space in which to operate, translating into larger footprint on the environment Increased recycling efforts mean increased truck traffic, to move the recycled water back out into the field so that it can be used again 19

20 Evaluating Recycling Technologies Chesapeake Energy and others in the industry are constantly evaluating opportunities to treat the water generated from natural gas production, so that less of it will need to be injected using SWD wells Barnett Shale Water Conservation Management Committee meets regularly to evaluate feasible recycling options Pilot recycling projects are being undertaken by natural gas companies in an effort to increase efficiency and feasibility of current recycling technologies Chesapeake has begun a pilot program involving water evaporation system technology 20

21 Water Evaporation System Chesapeake is testing a new evaporative technology system at the Brentwood SWD site: Intevras EVRAS system. Employs natural process of evaporation to turn water into water vapor resulting in less water to be injected into SWD Uses waste heat from compressor; no need to consume fuel Clean water vapor is released into the atmosphere, where it will naturally return to the earth as rain Evaporative section 21 This nominal EVRAS unit in Cresson is half the size of each of the four units at the Brentwood SWD.

22 Why Use Intevras EVRAS System? Proximity of waste heat energy source which otherwise would go to waste Small footprint on environment: 45 x 80 x 15 deep for four units Compliant with EPA regulations Low noise runs on electricity, so no noisy combustion engines 40% efficiency rate One Intevras EVRAS unit with one evaporation section Salt water tanks store concentrated water after the evaporation process. Some of this concentrate can be used in work-over operations; most will be injected. Compressor station: waste heat source

23 Fountain Quail Distillation/ Evaporation System Currently being employed by Devon Energy In the Fort Worth Barnett Shale area 2,500 BBL/day throughput with 2,000 BBL/day of fresh water Requires approximately 100 mcf/day of natural gas to process the fluid

24 Triad Rovan Reverse Osmosis Filtration System Currently being employed by EnCana in the Barnett Shale Uses a reverse osmosis membrane system to remove salt from flowback water 10,000 bbl/day throughput with a limit of 20,000 ppm chlorides Requires approximately 100 mcf/day of natural gas to process the fluid

25 The Earth s Water Cycle Evaporated water becomes part of nature s recycling system. Clean water vapor is released and rises, to be stored in the earth s atmosphere When the air becomes saturated, what was once evaporated water will naturally return to the earth as rain 25

26 Why Use SWD Wells? Why is Chesapeake an advocate of SWD wells? Proven technology Every possible mechanical safeguard employed Injected into Ellenburger formation to depths greater than 7,500 feet Oversight and inspection by the Railroad Commission of Texas Excellent track record A salt water disposal well in Cleburne. 26

27 Moving Forward Water Resource Challenges Competition for Resources Multiple users in areas Use of water resource to produce another resource natural gas Proper planning Open communication with agencies and the public Perception of Excessive Use Transient use Education Misconceptions of Technology No magic bullet Economics

28 Moving Forward Water Resource Opportunities Identification of Non-Competitive Resources Wastewater reuse Non-potable sources Strategic capture of surface flows during wet season Use (payment) for Excess Water Rights Enhancement of infrastructure Use of treatment technologies where practical Recycling/treatment of flowback and produced waters Treatment of saline groundwaters Continual evaluation of new technologies

29 Chesapeake Energy Corporation Barnett Shale Headquarters 100 Energy Way, Fort Worth, Texas chk.com NYSE: chk 29