Sustainable Shale Gas Development Lessons From North American Appalachian Shales

Transcription

1 Sustainable Shale Gas Development Lessons From North American Appalachian Shales

2 Research Marcellus Center for Outreach and Research Down Hole Technical Issues Water quality induced seismicity NORM Methane migration Environmental Well design Abandoned wells Emerging geology Well yield trends Decline curve analysis Regulatory Above Ground Risk Fugitive methane Community impact(s) Socio-economic Agriculture --Tourism Water lifecycle impacts Workforce Business Development Regulatory Governance Social license

3 Outreach Marcellus Center for Outreach and Research Science-based information Rapid response Localized outreach Current materials Rapid evolution of info Broad range of views Access to regulators Positive link between stakeholders, researchers, industry, and elected officials Translational Outreach --Creating advocates of science

4 Water Quality Research 14,000+ shale wells Pre-existing issues Well bore integrity Hydraulic fracturing fluid migration Methane migration Primary concern Surface spillage Offsite spills w/trucks

5 Evolution of BMP Technologies --Redundant systems for fluid control --New storm water and erosion controls --Transparent evolution of regulatory protocols --Trend towards closed loop on fluids and drilling wastes --Greater use of vertical equipment reducing pad footprint --New sound and light mitigation

6 Reuse Trends of Waste

7 Year Inspections Wells inspected Inspections with Violations Total Violations Enforcements % Inspections with violations % Inspections with enforcements 2016* 6,959 4, % 0.7% ,167 5, % 0.9% ,533 5, % 1.4% ,470 5, % 1.6% ,706 4, % 2.1% ,569 3, , % 2.4% ,248 2, , % 6.8% , % 9.4% , % 12.9% * 6/13/16

8 Strong Global Shale Interest Expanding interest in repeating North America shale energy New global energy paradigm emphasis since Paris. Gas?? New markets for U.S. gas pipeline & ship Greater pairing with renewable technologies

9 Shale Energy Developments Geopolitical -- 80% of shale gas is in locations with 30% of conventional gas resources EU diversification shale development(uk), LNG Commercial production in Argentina and China In U.S., increasing quantities of NGLs and dry nat gas Substantial increase in reserves and utilization New exports of NGLs --Propane/Ethane 74 Bcf/d Tcf/yr Currently 50%+ of dry gas production from shale Large need for infrastructure midstream/roads/people U.S. -commercially predictable regulatory environment

10 Global Shale Gas Trends

11

12 Shale Gas Trends

13 Marcellus Shale one of the largest shale gas reservoir in the world with an estimated 500 TCF of recoverable gas a 20-year supply for the entire US

14 Utica Shale

15

16

17 Wells 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1, , , Pennsylvania Shale Well Inventory, Production & Consumption Summary 3, , , , , , , , Trillion Cubic Feet of Natural Gas 0 1,219 1,642 2,255 2,555 3,142 4,213 4,901 5,388 6,063 6,173 6, H H H H H H H H H H H2 Producing Wells Estimated Well Inventory PA Production PA Consumption 0.0

18 Utica Shale Volumes

19

20 PA Production Declines

21 Drilling Trends in North America Shorter time to drill a well Months to weeks to days(currently) -30 to 50% increase in efficiencies Costs decreasing Water transport and remediation Move to walking rigs built for purpose Longer wellbores meter lateral in OH More frac stages and move to target best rock(40% yields 80%) More proppant almost doubled from recent past Every frac is a unique effort matching pressures to rock Upgrades to subsurface technical expertise/technology Increased gas volumes per lateral Increased IPs/EURs/ROR flatter declines

22 Conveying Benefit vs. Risk What are the reasons for producing the energy Demand for all energy Economic rewards New commercial and industrial development --utilization Workforce opportunities Bridge to something else Fossil vs. renewables all the above strategy Geopolitical opportunity Environmental climate What are the risks Separating possible vs. probable risk with all energy dev l Wellbore integrity Water contamination Chemicals Methane Air emissions Health Climate Gaps in research??

23 Appalachian Basin Background Challenging regional dialogue Environmental Political Regulatory Public engagement Shale revolution brought energy development to non-traditional areas Heightened public awareness -- social media New advocates/opponents Opposition has migrated to larger infrastructure Public policy spanning traditional politics

24 Non Legacy Development

25 Greater Stakeholder Engagement? Community of impacted stakeholders has changed Local interest and implications global influence, distant ownership So who to engage? Who is the citizen? Social media has changed the rules, critical now Need to create social license Everyone connected in mobile world Expectations for a shorter message Need to address concerns Science-based response Transparent process

26 Social License to Operate What constitutes social license Who gives it? And who can take it away? How are unique concerns of indigenous communities addressed Increasing levels of environmental activism Social justice What is it? Maximizing benefit Misinformation via impacts of social media

27 Dialogue of Science or Politics? Importance of baseline risk assessments Environmental Socio-economic Demographics in impacted region Human health trends What order? Assessment vs. permitting. Who has the science that counts Who funds the research A new climate based threshold Do we make policy decisions on science? NY/EU

28 Eastern U.S. Multi-Well Pad

29 Mitigating Impacts

30 Power Generation Trends Coal and NG trading spots for top U.S. power gen fuel permanent?? 31.2 bcf/d of U.S. total for power(may 16) 5,000 total MW installed since 2013 in U.S. mid-atlantic PJM market 15% of coal gen offline by 4Q16 20 yr low in CO2 emissions Nat Gas paired with renewables Pipeline constraints?? Bias towards single fuel? Greater onshore production Reduced offshore extreme weather price impacts

31

32 Petrochemical Trends $164 B in new investment planned in U.S. Largely shale gas driven Recent announcement by Shell for ethylene production in Marcellus/Utica region. Large quantities of ethane New manufacturing capacities planned $105 B/yr contribution to economy predicted Significant workforce additions 700K+?? Competition with oil-linked, lower cost naphtha Low cost Middle East producers Ethane exports to Norway and Scotland New export markets needed collectively Other energy intense industrial utilization

33 Expanding Global Gas Market

34 LNG Exports

35 U.S. LNG Trends Brownfield sites vs. greenfields Lower environmental cost/capital needs Less public resistance Key components in place already, ie. pipeline, storage, piers Numerous projects through the process w/caribe All East and Gulf coasts Some expansions w/already approved units 20+ in the queue including West Coast Panama Canal expansion more LNG cargos transiting 80% of LNG carriers Expand markets in both Atlantic & Pacific basins New risk pricing portfolios --Asia Crude linked price versus newer tolling model based on U.S. Henry Hub price Canadian LNG facilities??

36 Workforce Trends The direct workforce to drill a single well 420 individuals working in 150 different occupations Each well requires FTE workers annually Overall Creates roughly 24,271 30,218 direct job FTE s by 2014 Indirect and induced are significant in shale regions (1.52X) Multi-Well pads Now standard industry practice Reduces the overall environmental footprint Reduce the number of jobs required during pre-drilling and drilling phases of development Recent Utica research shows reduced workforce due to new efficiencies in drilling, water use

37 Workforce and Business Trends Localizing the worker 75% blue collar/technical Front loaded on well s lifecycle Matching demand to availability of labor Institutional capacity to train and not overproduce Housing requirements and required infrastructure Key part of social license

38 Workforce by Type Source: PA Marcellus Shale Workforce Needs Assessment

39 Workforce Support Housing Impacts to local rents Pace of development man camps vs. more permanent housing Utilities Commercial dev l Transportation Recreation Planning and build of remote communities

40 Key Steps to Engage Stakeholders Frame business development w/local context Understand the industry and its needs in sourcing goods and services Build capacity and fill knowledge gaps Create institutional ability to train, repurpose, retool Encourage community-level participation Explain trends and demographics Create environment of reasonable dialogue Loudest voice wins?? Engage early and often Creating trust is a multi-step process, not a single event Explain true risks and mitigation strategies

41