Environmental and Economic Considerations for Marcellus Natural Gas Development Presented by Tom Murphy and Dave Yoxtheimer 1
Presentation Topics Marcellus Geology Water Management Hydrofracturing Process Environmental Challenges Economic Considerations Infrastructure 2
US Shale Gas Plays 3
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GEOLOGIC FACTORS CONTROLLING SHALE GAS PROJECT SUCCESS 1. THICKNESS 2. MATURITY 3. GAS CONTENT 4. ROCK PROPERTIES (SILICA CONTENT) 4. AREAL EXTENT 5. DEPTH 6. STRUCTURAL COMPLEXITY 7. LATERAL CONTINUITY 6
Where are Wells Being Drilled
Site Construction
Construction
Groundwater Protection
Groundwater/Pad Protections
Start of Drilling
Madden 2H Well Site in Operation
Hydraulic Fracturing Process
Water Use Data in Susquehanna Basin Total water use: 716.0 million gallons (6/1/08 to 5/21/10) 209.2 mgal from public water supply (29%) 506.8 mgal from surface water sites (71%) Average total volume of fluid used per well: 3.3 mgal/well 2.8 million gallons of fresh water (85%) 0.5 million gallons or reused flowback (15%) Average recovery of flowback: 10.0% (30 day) Total amount of flowback reused or sent to disposal Reuse 44.1 million gallons Disposal 21 million gallons 16
Hydrofracturing Fluid Composition 17
Water Supply Considerations Number of factors to consider: Access to water near the drilling project area (public vs. self supply) Proximity to well site: piping vs. trucking Availability-seasonal or perennial Will pass-by flows be required? Water quality Drilling schedule vs. permitting schedule Permitting complexity 18
Storage options: Centralized impoundment Single paddedicated impoundment Frac tanks Storage based on ultimate scale of operations (long vs. short term) Water Storage 19
Flowback Water Management Raw, untreated flowback from a Marcellus gas well Treated flowback ready for reuse Filtration treatment 20
Underground Injection Wells Currently 7 injection wells in PA Limited injection capacity Difficult to permit Difficult to find target injection reservoirs Prone to plugging 22
New Treatment Standards Any facility that will have a total dissolved solids TDS discharge of > 2000 mg/l will need to install advanced treatment for the following: TDS-500 mg/l Chlorides-250 mg/l New facilities must meet these standards by January 1, 2011. 23
Environmental Concerns Excessive water withdrawals Stray methane migration Flowback/frac chemical spills Forest fragmentation (pads and pipelines) Erosion and sedimentation Excess truck traffic Air quality 24
How big is the Marcellus Shale? now estimated that potential recoverable gas could be 489 trillion cu. ft. w/current technology. -Increases over time?? -Current production # s 100+ year supply World class resource Decades to drill/produce Proximity/transport
Production Data Graphic: The Scranton Times Tribune
Marcellus vs. Barnett Shale Comparison Best County Shale Production Comparison: 7/1/09 to 6/30/10 County # Wells Ave. Prod Daily Ave Months (mcf/d) Bradford, PA* 84 6 3,436 Tarrant, TX* 490 6 1,666 Marcellus exceeds Barnett by: 1,770 CHK s Clapper 2H in Susquehanna County, has produced about 2.8 BCF in only 270 days. By contrast, the top-producing Barnett well has produced about 5.1 BCF in five years. That means the Clapper 2H is producing gas at approx. three times the rate* *Analysis from Powell Barnett Shale Newsletter 9/13/10
Marcellus Shale Economics ~70+ energy companies looking at Marcellus and increasing $8 Billion+ collectively -$55B by 2014 ~ Royalties to PA landowners $250 billion? --Variable lease rates -$750 to $6500/ac --$14K+ between companies --Some selling other assets to reposition here --Large companies consolidating --International interest. --Lowest cost shale?? Other shales??
Permits & Wells Drilled (thru 9/8/10)
Bradford County Permit Applications Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2008 0 0 1 2 16 3 2 3 3 14 36 21 101 2009 33 40 3 21 86 31 9 33 38 57 54 23 429 2010 53 117 92 88 66 81 1 500
PA Rig Counts 92 rigs as of 9-10-10 vs. 54 rigs on 9-11-09 September 10, 2010
Bradford Co Pipeline Development
ROW Acquisition and Pipeline --early estimates of 10K miles of gathering lines needed for Marcellus --345 already built in Bradford alone to date. --estimated 100K of disturbed acres --other shales?? --water access points --road access --centralized ponds --other ROWs --NGL to East Coast for transport to Gulf --also Midwest & Canada
Thank y0u! Questions? 34