APRIL 16, 2014 SPE GCS FACILITIES & OPS GEORGE E. KING, P.E.

Transcription

1 AVOIDING PITFALLS IN SHALE OR OTHER OIL & GAS DEVELOPMENTS APRIL 16, 2014 SPE GCS FACILITIES & OPS GEORGE E. KING, P.E.

2 PROJECT DEVELOPMENT COMMANDMENTS I. Establish realistic expectations. II. III. IV. Communicate at all levels. Ask questions & listen to concerns. Educate & learn at all levels. V. Return $$s to the community VI. Live there. VII. Live technical excellence VIII. Be proactive. IX. Deliver on promises. X. Control costs. Projects are long term and communities must be a part of the development for any development to succeed. 2

3 SEQUENCE OF EVENTS IN A DEVELOPMENT 3

4 4 UNCONVENTIONAL PLAYS ARE TECHNOLOGY DRIVEN

5 MY THOUGHTS ON PERCEPTION AND REALITY Reality is reality. It is Just the Facts but, which are often in scarce supply and can be twisted. Perception is a measure of our ignorance on any given subject at a point in time. Perception can be changed with education, but education takes time and is a better preventative than a cure. Educate early! HOWEVER if perception is not treated with education, it can become a long term reality, nearly always in a detrimental way. 5

6 ESTABLISHING EXPECTATIONS From the Community Are there jobs? How long will this last? (benefit vs. congestion) How much will it disrupt our lives? Will it tie up traffic? What are the hazards? Can you put it somewhere else? To Management & Workers Who benefits? How many wells will it take to work? What is the market & what will competitors do? What technology is needed? How to control costs? 6

7 7 HIGH LEVEL REGIONAL CHECKS

8 COMMUNICATION ISSUES Opposition and proponents can the gap be bridged? What fuels the anti-crowd? Local with real concerns or paid and imported? Educate and listen to concerns address them. Recognize communication gaps early and move quickly to educate, solve problems and engage. Lease holders and surface owners (separate concerns) Community perception Local government Educators and thought/reaction leaders Regulators Management The best spokespeople you have are an educated and involved local workforce. 8

9 WHAT ARE THE PUBLIC S MAJOR ISSUES IN OIL AND GAS DEVELOPMENTS? 1. Traffic Congestion and Trucks. 2. Water Usage and Consumption. 3. Seismic Disturbances (Earthquakes). 4. Chemicals. 5. Groundwater Protection. 6. Methane Migration. 7. Emissions. 8. Spills. 9. Climate Change. 10. Delays Alternate Energy Development. 9

10 WHAT ADDRESSES THE ISSUES? 1. Trucks temporary pipelines, On-site recycle, dust control, scheduling 2. Water put water use in perspective & stop using fresh water for fracturing 3. Seismic pre-lease investigation & lessen disposal needs by recycling. 4. Chemicals limit use to EPAs D.F.E. or North Sea Gold Band products. 5. Groundwater protection prevent spills, pre-lease review of pay zone depth and barriers. Know the barriers and warning signs. 6. Gas Migration highly localized, educate and work through gas issues. Limit air drilling. 7. Emissions no venting, minimize flaring, use air for controls, not gas. 8. Spills transport changes, who is driving the trucks? 9. Climate change educate, gas use reduces all pollutants. 10. Alternate energy explain cyclic problems of alternate energy sources & how to use it in combination with your development (recycling, powering pad equipment, etc.). 10

11 WHAT & WHO IS INVOLVED IN FRACTURING? Large Producers (top 50) ~ 50% of U.S. Fracs ~ 50% of U.S. Fracs Small Producers (~1500?) Prospect Analysis Leasing & Permits Seismic & Evaluation Drilling Location Exploratory Drilling Development Drilling Pumping Service Providers (Big 5) Pumping Service Providers (mid 10) Pumping Service Providers (~50) ~ 700 frac fleets active Water Supply-recycle Trucking Water Transfer Proppant Suppliers Chemical Suppliers Produced Water Treating Tank Suppliers Treated Water Storage HSE equip. Flowback Monitoring Produced Water Re-injection (floods) Operations Pipelines, Refinery, Processing, Distribution, Manufacturing 11 Produced Water Disposal? Or recycle instead.

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13 LOCAL SETTING: SHALES, EVEN IN A PLAY ARE NOT EQUAL Critical Needs? Significant Needs Important Needs? Manageable Needs? A major step in reducing environmental footprint is to improve the technology for selecting the right areas in which to drill. 13

14 THE 1/3 : 1/3 : 1/3 CLASSIFICATION & HOW TO IMPROVE THE ODDS AND LOWER RISK. Of the shale wells drilled to date, an estimation can be made that: 1/3 rd of shale wells are not economical mostly older wells 1/3 rd of shale wells are marginally economical. 1/3 rd of wells are so economical that they carry the development. We could possible achieve ~33% or more savings in shale development, reduce water & chemicals by half and slash emissions, if we could eliminate the bottom 1/3 rd of wells and improve the marginal characteristics of the middle third of shale wells. 14 Nature controls location, hydrocarbons in place, depth, pressure & natural flow paths. Operators control drilling and completion, stimulation and production. Politicians control regulations and taxes.

15 FINDING THE SWEET SPOT LOWERS RISK OF POOR WELLS. Focusing the drilling using technology is the best way to maximize economics and minimize the number of wells. 15

16 16 HOW DO FLUIDS TRAVEL IN THE ROCK?

17 IDENTIFYING AND MANAGING RISK (FROM SPE ESTIMATING AND EVALUATING FRACTURING RISK) The Red / Yellow / Green designations are an attempt at comparison bracket of operational states of must avoid / caution / acceptable risk measurements. 1.Spill clean fresh or salt water 2.Spill biocide 3.Spill dry additives 4.Spill of diesel from truck wreck 5.Spill of diesel -wrecked re-fueler 6.Spill frac tank water, no adds 7.Spill frac tank water w/adds 8.Spill diesel fuel while re-fueling 9.Spill of frac tank -flowback water 10. Frac press ruptures surface casing 11. Cooling pulls tubing out of packer (casing maintains integrity) 12. Mud channel, well < 2000 ft 13. Mud channel, well > 2000 ft 14. Intersects well in the pay zone 15. Intersect properly abandoned well 16. Intersects improperly abandoned well 17. Frac to surface through rock, well greater than 2000 ft deep. 18. Earthquake, mag. > Frac intersects a natural seep 20. Emissions > background 21. Normal frac operation no problems.

18 Know the territory you want to develop. What are the hazards? 18 Many oil & gas wells penetrate major and minor aquifers. Longstanding (Texas) History: Freshwater protection regulations (depth, cement surface casing, pressure test) starting in the 1930 s and sharply tightened in late 1960 s. Approximately 300,000 producing wells including 50,000 injection wells Approximately 500,000 fracturing operations since 1950 AQUIFERS Texas Water Development Board OIL & GAS FIELDS Bureau of Economic Geology, UT Austin

19 IMPROVE ISOLATION - WELL CONSTRUCTION Barriers & Containment What is required? Well Design Basics & Complexities Drilling What is involved, how long does it last? Casing Basic calculations & design for different Geo-Technical Settings One size does not fit all Cement How much depends on the area, how to place, Cement tests and monitoring methods their specific accuracy. Mud and Gas-cut channels How long will it last? Problems annular pressure, methane in fresh water Early Warning Signals Must be Handled. 19

20 CEMENT SEAL IS IMPORTANT CEMENT TOP IS EVEN MORE IMPORTANT IF IN DOUBT - RUN MORE CEMENT THAN REQUIRED AND DO MORE TESTING. 20

21 MULTI-FRACTURED HORIZONTAL WELLS ARE ACTUALLY MORE ENVIRONMENTALLY SOUND. Each horizontal well can replace 10 to 30 vertical wells. Horizontal & extended reach wells can often be grouped into pad developments. 12 wells on one 6 acre pad drain 6000 acres of reservoir. Footprint reduced by 93% over vertical well development Apache Canada Shales are so low permeability that the gas inflow is controlled by the area of the shale that is actually stimulated and contacted by the fracturing treatment.

22 DEVELOPMENT BY VERTICAL OR HORIZONTAL WELLS? 9+ SQ. MILE AREA (6000 ACRES) 6000 acres: Items Vertical Wells Horizontal Well Pad Wells (80 acre spacing) >75 12 Roads (miles) 28 2 Gas/Oil Pipelines (miles) 30 4 Frac Water supply pipeline (miles) 30 2 Facility Pads 8 1 Trucking Miles (on pad) (or 1400 with water pipeline) Rig Mob/De-Mob 75 1 Fresh water monitor area 6000 acres 8 acres Pad Footprint (acres) Total Development Footprint 566 acres 45 Total Production Footprint 491 acres Horizontal well advantages: Less land used Agreed upon pad placement Less traffic, Less dust, Less urban / wildlife disturbance, Less air pollution. All wells penetrate the ground in the same area can be easily monitored Sharply lower methane vapor loss (low press capture and compression)

23 Sand System Wellheads HP Frac Manifold GORV Debolt Water Pipeline Automated Refueling System Acid Pumping Kit MCC Pumpdown Kit Slick-Cable Trucks CT Pumpers P Tank(s) Facility Installation 23 Over 100 people on site 24/7 Learning: Both Surface and Sub-surface simultaneous operations plans are mandatory. Safety training updates are required to enter site and monitored by continually updated entry passes. Improvements in economics and safety seen year-on-year

24 Frac Jobs Use Millions of Gallons of Water and this can total 50 to 100 billion gallons per year in Texas (home to half of all US wells & fracs in 2013). But in perspective: City of Houston loses ~22 billion gallons of drinking 24 ARE WE REALLY RUNNING OUT OF WATER FOR FRACTURING? PUT IT IN PERSPECTIVE. water per year from line leaks (Houston Chronicle). Municipal water losses from 54% of cities in TX were 225 billion gallons in 2010 (TX Water Development Board). Just 2 of the 19 coal fired TX power plants use twice the water than Eagle Ford Fracturing Uses in a Year. For 2011 thru 2013, for all 3 years total, Fracturing used 25% of 1 day s water use in the US. Americans use 9 trillion gallons watering lawns & golf courses every year (EPA). In TX, that s 18 times more water on lawns than in a year of Fracs every year. In many areas, Apache is using 100% brackish water and virtually no fresh water.

25 PRODUCED WATER RECYCLE PILOT (NEWFIELD) Net cover not visible but it is there. Courtesy Newfield Energy 25

26 APACHE FRACTURES WOLFCAMP WELLS WITHOUT FRESH WATER IN DRY BARNHART PROJECT AREA Photos from Oil & Gas Journal- 12 Feb 2014 Produced and brackish waters used for fracturing. 26

27 FRESH WATER IS ACTUALLY PRODUCED WHEN METHANE IS BURNED AS A FUEL. Average gas shale frac uses 5,000,000 gallons of water (salt water is replacing some fresh water as fracturing fluid). When methane is burned as a fuel: CH 4 + 2O 2 => CO 2 + 2H 2 O 100,000 BTU of methane => 9.41 lb of water 100,000 BTU (methane) = 100 scf of methane 1 mmscf of methane produces [(1,000,000/100 * 9.41)/8.33 lb/gal] = 11,300 gal 1 bcf produces 11,300,000 gallons of fresh water Gas shale wells produce 1 to 10+ bcf over their lifetime. 27

28 FRACTURING FLUIDS WHAT ARE THEY? WHAT IS THE RISK? Slick Water Fluids salt or fresh water with friction reducer & biocide. 0.05% to 0.2% total additives. Risk level v. low chemically, fractures are small Hybrid or Gelled Fracs salt or fresh water with polymer, x-linker, biocide, acid, scale inhibitor, breaker, etc to 0.1% additives. Risk level low chemically, fractures wider, taller & longer. 28

29 29 HOW CLOSE DOES THE TOP OF A FRAC COME TO GROUND WATER?

30 30 HOW CLOSE DOES THE TOP OF A FRAC COME TO GROUND WATER?

31 USING TECHNOLOGY: FRAC MONITORING METHODS EDUCATE YOURSELF AND THE COMMUNITY ON HOW TO MONITOR YOUR WELLS. SHOWCASE YOUR OPERATIONS. Frac Monitoring Technique Frac Loc. in Well Frac Direction Frac Height Frac Length Investigation Timing Surface Pressure No No Indirect No Real Time Downhole Pressure No No Indirect No Post Frac or Real Time Comments More accurate than surface pressure Fiber optic, (temp, Yes No No No Real Time Run on casing press, sound) Microseismic Yes Yes Yes Yes 5 min. delay Tilt Meters Yes Yes Yes Yes 5 min. delay Temperature Logging Yes No Vert. wells No Post frac Vert. Wells Tracer Tagged Proppant Yes Transverse or longitudinal Only in vertical No Post Frac Investigation to a few inches Chemical Tracers in No No No No Post Frac Tag water or oil frac fluid Production Log Yes No Only in No Post Frac Vertical Pressure Build Up, Production Tests & Interference tests No Indirect Indirect Indirect Post Production 31

32 SO WHAT ARE RISKS TO GROUNDWATER BY OIL & GAS ACTIVITIES? Major Risk Poor performance by the few. Not understanding the ABSOLUTE importance of cement and coupling performance in establishing isolation. Lack of effective maintenance. Moderate Risk Transport wrecks & spills of on-site stored chemicals Poor cementing practices and improper coupling selection and make-up Minor Risks Drilling phases (generally not on shales: low perm) Well construction (early leaks) & older era or vintage wells. Thread leaks (connections) Near zero risks Properly placed and test cement in producing wells, regardless of age The specific act of fracturing rock 32

33 Why is gas in my water well?? Gas migration >>200+ yrs. old, highly regional, many causes, 1000 s of natural seeps. Are there areas that you shouldn t drill? High Risk SPE , Barrier vs. Well Failure, King Low Risk

34 Methane Seepage from Soils Oil & Gas Seeps are indicators of oil & gas beneath the surface. Gas and Oil seeps in PA & New York were mapped by explorers in the 1600 s. First gas well in NY was 28 ft deep, Drake s oil well in PA was 69 ft deep. How deep are the fresh water wells there? Many natural seep flows diminished as wells were drilled & produced. Coal Point Seep (Santa Barbara Channel, CA) is an example. SPE , Barrier vs. Well Failure, King

35 35 First it is Produced Fluid not a waste. It has value. Returning Fluid Composition: FLOWBACK WHAT IS IT? HOW LONG DOES IT LAST? Frac base water and frac additives Waters from one or more formations A variety of salts and ions some stable, some not. Isotopes that can range from benign to low dose radioactive Solids of silica and many other minerals Hydrocarbon gas and liquids Other gases Consistency highly variable Early time gaining salinity Late time less saline? Experience with large developments shows total cost of water (acquiring, treating, trucking and disposal or recycle), shows recycled water much cheaper than fresh water without recycle.

36 Comparing Spills & Seeps Natural seep volumes of oil into the Gulf of Mexico alone total about ¼ of the volume of the Macondo spill every year! Lakeview Gusher, CA Onshore, 1910 Santa Barbara Blowout, CA, 1969 Tanker Grounding, MA, 1976 Tanker Grounding, AK, 1989 Tanker Grounding, TX, 1990 Sabotage, Kuwait, 1992 Tanker Grounding, LA, 2000 Pipelines Ruptured by Hurricanes, Barge Collision, LA, 2008 Tanker Collision, TX, 2010 Pipeline Corrosion, MI, 2010 Macondo Blowout, GOM, 2010 Natural Seeps, Coal Point, CA, Yearly Natural Seeps, GOM, Yearly Single Estimate High Value Range Various sources data in SPE ,000 10,000 BARRELS 100,000 1,000,000 10,000,000

37 COMMON CHEMICALS USED IN ACIDS Most Common Frac Additives Friction Reducer Composition CAS Number Total amt. in avg frac (10k bbl) Polyacrylamide to 200 gallons. Used in recycled water? 50k to 70k ppm is upper limit Alternate Use baby diapers, floc for drink water Biocide Glutaraldehyde 50 to 100 gallons. decrease w/ increasing salinity Alternate Biocide Scale Inhibitor (if needed) Gellants (hybrid / gel) Ozone, Chlorine dioxide UV, Phosphonate & polymers Guar & Cellulose & others 10 to 100+ gallons depends on local Depends on frac type ~1000 to 2000 lb. Turbidity & v. high salinity hindrances. Specific ions like calcium are a problem. Ca ++, Fe x & TDS problem. Medical disinfectant Disinfectant in municipal water Some cleaners and medical treatment Thickening ice cream / soup Acid 5% TO 15% hydrochloric ~0 to 2000 gals not universally Yes food prep, mfg, swim pools, Acid Corrosion inhib. Quat. Ammonium salts, Coa Coa Amines, etc. Various 2 to 40 gals if acid is used Yes 37 Industrial

38 WATER MANAGEMENT: QUANTITIES FLOWED BACK IN SHALE RESERVOIRS (RANGES) Basin or Area % Frac Water Recovered Typical Frac Volume Used (Gal.) Typical Chemical % in Frac Barnett 30 to 50% 4 to 5 mm 0.2% <0.05% Devonian 40 to 50% 4 to 5 mm 0.2% <0.1% Eagle Ford 5 to 10% 4 to 5 mm 0.3 to 0.4% (Hybrid Frac) Fayetteville 30 to 60% 3 to 4 mm 0.2% <0.05% Haynesville 5 to 15% 4 to 6mm 0.3% (Hybrid Frac) Horn River 30 to 50% 10 to 12mm (salt water Supply wells) <0.1% (Apache) <0.05% Woodford 30 to 50% 4 to 5 mm 0.2% <0.05% 38 Chemical % in Flowback (Gross Est.) <0.2% (polymer dominated) <0.1% (polymer dominated) Sources: SPE , SPE , communication with operators in these basins. Also SPE papers on produced water treating.

39 DOES FRACTURING CREATE EARTHQUAKES? 39

40 ENERGY LEVELS - QUAKES RISK FROM FRACS VERY LOW. MAIN MAN MADE RISKS ARE DAMS, MINES AND INJECTION WELLS. 150,000 US INJECTION & DISPOSAL WELLS ABOUT 15 MAY BE RELATED TO 3.0 TO 5.0 QUAKES (1/100 TH OF 1% OF TOTAL WELLS) WATER RECYCLE SHARPLY LOWERS QUAKE RISK. Felt Seismic Normal Fracturing Energy Energy levels of largest moment magnitude measured in normal fracturing, even with engagement of local, small faults is on the order of one million times smaller than a felt earthquake and 40 approximately one billion times lower than a damaging earthquake.

41 EARTHQUAKES ~7 quakes each day felt in U.S. Small quakes are common & swarms of ~20,000 in a few months are not unusual (Example 19,000 tremors in Eola AR, 3,000 in Mamoth Lake CA, and 500 in Moodus CN in 1982/83). Most high mag. earthquakes predate shale development & frac invention. For a damaging quake (6.0 or higher), stresses rip 100 s of miles of major faults. Major quake depths are 2 to >7 miles beneath the surface. State Magnitude Date Alaska Arkansas California California Colorado Louisiana Montana N Mexico New York N. Dakota Ohio Oklahoma PA TX Virginia W. Virginia Wyoming

42 EARTHQUAKES ARE NOW MORE EASILY RECORDED AND ANNOUNCED. MORE SEISMIC STATIONS AND FASTER DATA ACQUISITIONS INCREASED NUMBERS OF SMALL QUAKES IN RANGE OF SENSORS. WW Magnitude 8+ US 8+ WW 7 US 7 WW 5 & 6 US 5 & 6 WW 4 US

43 43 PRE-DRILL TEST: EVALUATE GROUND WATER (GW) QUALITY ~ 40% of wells have measurable methane regardless of drilling history. 96% of natural seep methane is thermogenic same composition as gas reservoir. Fingerprint (isotope) of gas is often misleading. Water sample and test offset water wells, water quality trends are valuable, single point tests are problematic. Water quality changes with: Rock type of the aquifer Gas generation or trapping within the aquifer prior to drilling Location in aquifer both aerially & vertically (often salty deeper) Recharge (source, rate, season, surface pollution factors) Withdrawal rate (expect more free methane at higher withdrawal) Video road conditions work with communities to offset damage you do. Locate abandoned & orphaned wells, seeps, natural CH 4 & NORM levels Pre-existing pollution - Most common GW contamination is gasoline & diesel from underground storage tanks at gas stations, second is sewage leaks, third is agriculture sources.

44 GLOBAL EMISSIONS WHY NATURAL GAS IS DESPERATELY NEEDED. China passed the US in CO2 emissions 8 years ago and if we cut out all emissions today, if China doesn t switch to gas, the reduction would be erased in 4 years are current rate of their emission increase. 44

45 Shale Gas Basins and Pipeline Systems Slide from Talk by Rich Muller Coal Power Pollution in China 45

46 FRAC SITE & WELL OPERATION EMISSIONS WHAT CAN WE DO? Power frac spread with dual-fuel or electricity. Substitute 60% of diesel with natural gas. Generate electricity from field gas on-site. Operate pad equipment with compressed air or solar. Documented tests of actual well sites show methane leak rates are below 1% (UT/EDF, 2013) Methane venting common in 2007/8 (Yale/NOAA study) has been stopped. 46 Remaining areas of work are pneumatic operated equipment and other small volume but regular releases need to be replaced with solar or air operated controls and/or low pressure gas recovery systems.

47 NEGATIVES FOR LARGE SCALE WELL DEVELOPMENTS Well development can be a traffic nightmare in urban environments. Road damage is significant in areas with roads not meant for industrial use. Dust, noise, spills, wrecks, soil disturbance & people activities increase during development Areas not accustomed to oil & gas developments usually lack infrastructure to minimize many of the large well development problems. 47

48 CAN & SHOULD EVERY WELL BE FRACTURED? No. Some wells don t need fracturing. Some wells cannot be fractured safely. Some geology makes gas migration more likely. Rules of Thumb: Fracturing in deeper wells poses less risk (>2000 ft). Stand off from bottom of fresh water ~1000 ft (safety factor varies). Need two cemented barriers between fluid flow path & fresh water. Fracturing in older wells is higher risk (test & derate max. pressure?). Well construction best practices are required. A pop-off or pressure release valve is good insurance. Set below the minimum burst pressure of the pipe. A line from the valve to a tank prevents spills in event of a over-pressure. Odds against a pipe rupture are about 50,000:1 to 100,000:1. Areas with gas seeps & historical near-surface gas more likely to see gas migration before & after well development. 48

49 THE FRACTURING DEBATE! MASSIVE COVER-UP OR MASSIVE FEAR-MONGERING? Some Truth on Both Sides.. Follow the money & agenda of the position supporters Let s look at a few statements: 1. Fracturing is new!...fracturing is 60 yrs old! 2. Multifrac horizontals are new. 40 yrs old & 1 million fracs in MFH 3. Gas emissions are high!...actual measured emissions are low! 4. My well has gas in it!. Some areas have natural seeps of gas! 5. Water usage is huge!. 2% of all water use & less than leaks 6. Fracturing causes quakes! no, a few disposal wells did! 7. Fracs pollute groundwater! no traces of frac water in GW! 8. Wells don t leak! some wells do leak! 49

50 What is safe? Slide 50 Risk = Frequency of Occurrence vs. Impact Risk exists in every action. What is operationally safe? Occurrence & impact create a threat level that we can understand & accept or reject based on what we believe: hopefully on assessment of facts. What does the public think is safe? SPE , Barrier vs. Well Failure, King

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52 DEAL BREAKERS MY OPINION (MAYBE JUST MORE DIFFICULT?) Some forget it Factors (and some tempering) Gas in place too low Maturity out of range TOC (total organic content) too low (but check TR!) Too shallow and/or too low pressure Bad Lease terms Delay Red Flags Market and transport not ready Disposal, permits, regulations, access problems Infrastructure limited or absent 52

53 REDUCING THE IMPACT OF SHALE GAS DEVELOPMENT IS CRITICAL Questions? More Information at 53 Restored shale drilling site - Chesapeake

54 QUESTIONS I WOULD ASK. 1. Will everything be on 2. Minimum distance - -water to frac be > 1500 ft? 3. Will green completions be used? 4. Is the Fracturing water source sustainable? 5. Can multi-well pads be used? 6. Does the company have a list of chemicals they will not use? 7. What are your questions? 54

55 ECONOMIC FACTORS Completion Optimization Expertise local knowledge often better than books Infrastructure? Cost to do first few jobs? Water supply (cost in $ and community displeasure) Disposal cost (trucking and disposal) Lease factors Bonus Percent Continuous drilling Damages Water rights (AND responsibilities) 55