1 How to Secure Both Energy and the Environment for Economic Benefit: A Practical Geologic Foundation The American Chemical Society and the American Institute of Chemical Engineers Rayburn House Office Building 2325 February 23, 2012 Ohio Oil & Gas Association
Energy consumption by source, US 2 Fossil fuels provide nearly two-thirds of the world s energy, and 85% of the US energy needs. A Quad is 8 billion gallons of gasoline, 300 billion Kilowatt hours, 36 millons tons of coal, 1 trillion cubic feet of natural gas Consumption (Quadrillion Btu) 10 9 8 7 6 5 4 3 2 1 U.S. Energy Consumption by Source (Source: U.S. EIA Annual Energy Review) 0 1973 January 1975 January 1977 January 1979 January 1981 January 1983 January 1985 January 1987 January 1989 January 1991 January 1993 January 1995 January 1997 January 1999 January 2001 January 2003 January 2005 January 2007 January 2009 January Renewable Nuclear Petroleum Natural Gas Coal Date
Dry natural gas reserves, US 3 350,000 Technology and Ideas 300,000 Reserves (Bcf) 250,000 200,000 150,000 100,000 Unconventionals 50,000 Tinker, UT-A 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
4 Natural gas pipelines, US
5 Shale Growing Impact
Shale, Natural Gas: Geology 101 6 Black Shale is a dark-colored mudrock containint organic matter and silt and clay-size mineral grains that accumulate together. Methane: A colorless, odorless inflamable gas, the simplest paraffin hydrocarbon, CH 4. It is the principle component of natural gas and is also found associated with crude oil. A naturally occurring byproduct of the decay of organic matter So we should expect shale and methane to be found together; Where else might we expect to find methane?
Shale Growing Impact: Drilling and producing from organic-rich shales represents a large paradigm shift for the oil and gas industry. 7 From Kostelnick (2010), modified from Schmoker and Oscarson (1995). Prior to the late 1990s these shales were thought of principally as the source of oil and gas that Prior would to the then late migrate 1990s slowly these over shales time were into thought conventional of principally reservoirs. as the source of oil and gas that would then migrate slowly over time into conventional reservoirs.
Well Types 8 Notes: Horizontal/vertical Depth relationship overburden, isolation Frac controls (restricted to target formation) Successful oil an gas well: Porosity and Permeability Often productive wells have good porosity but poor permeability. HF created the necessary perm.
9 Elements of a frac
Hydraulic Fracturing 10 This is not new technology Fracing has been a standard practice for over 60 years. First well frac d Kelpper # 1, Kansas - 1947 1989 SPE over 1 million frac jobs (SPE) 600 trillion cubic feet of natural gas and 7 billion barrels of oil have been captured thanks to hydraulic fracturing energy that would not have been acquired without it. Fracing is responsible for 30 percent of America s recoverable oil and natural gas 90 percent of wells currently operating today have been fractured American operators now frac 35,000 wells each year Not a single case of drinking water contamination has ever been recorded. Not one. Hydraulic fracturing has been aggressively regulated by the states. In that time a staggering record of safety has been amassed.
11 Frac Constituents
12 Frac Geometry and Proppants
Utica/Point Pleasant Recoverable Reserve Potential Estimate for Ohio 13 IF we assume 1/3 of volume will be gas and 2/3 is oil %R = 1.2 percent recoverable from the interval Qt = 1.96 billion barrels equivalent = 3.75 TCF gas and 1.31 Billion barrels oil %R = 5 percent - recoverable from the interval Qt = 8.2 billion barrels equivalent = 15.7 TCF and 5.5 Billion barrels oil
14 Oil and Gas Wells, Ohio
Annual Gas Production in Ohio 15 ANNUAL GAS PRODUCTION BY INTERVAL Billion Cubic Feet 180 160 140 DEEP (TRENTON, KNOX, ETC.) CLINTON SANDSTONE (CLINTON, MEDINA, ETC) SHALLOW (COW RUN, DEVONIAN SHALE, BEREA, ORISKANY, BASS ISLAND, NEWBURG, ETC.) UNKNOWN FORMATION 120 NATURAL GAS 100 80 60 40 20 75% of the reported natural gas produced in Ohio (1985-2009), 2 TCF, is from the Clinton Sandstone. 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 YEAR 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Economic Impact 16 Independent oil and gas companies average 15 employees 14,400 jobs (4,000 direct, 10,400 indirect/support) Keeps $1 billion per year in the state, buying local Ohio consumers save $60 million, buying local Industry generates $1.5 billion in gross state product and an output (sales) of $3.1 billion per year Paid more than $202 million in royalties and provided $84 million in free gas to landowners with wells. Source: Kleinhenz & Associates, Economic Impact Study, Ohio s Natural Gas and Crude Oil Industry
The Utica Three Areas of Focus 17 The Utica has three windows of maturity Oil Wet Gas / Condensate Dry Gas
American Chemical Council 18 A 25 percent increase in ethane supply generates: 17,000 new jobs in the U.S. chemical industry $32 billion increase in U.S. chemical production $16.2 billion in new capital investment by the chemical industry 395,000 new jobs outside the chemical industry, including: 165,000 jobs in supplier industries, as a result of increase in U.S. chemical production 230,000 jobs from new capital investment by the chemical industry
19 What Really Matters - Well Construction
Hydraulic Fracturing in Ohio 20 1953 First Ohio frac job 1958 Study - as a result of fracturing, the Clinton dry hole rate of 42% in 1951 decreased to 15% by 1957 and that, as a result of the success of hydraulic fracturing, many submarginal areas which would have been economically undesirable, are now being produced profitably. Today over 80,000 wells have been frac d in Ohio oil and gas formations ranging from 1,000 to 10,000. After 25 years of investigating citizens complaints, DMRM (ODNR) geologists have not documented a single incident involving contamination of ground water attributed to hydraulic fracturing Scott Kell, deputy chief, ODNR/DMRM in testimony submitted to the Committee on Natural Resources, Energy and Mineral Resources Subcommittee, U.S. House of Representatives, June 4, 2009.
What Regulators Are Saying 21 I m not aware of any proven case where the fracking process itself has affected water, although there are investigations ongoing US EPA Administrator Lisa Jackson, May 24, 2011 There is no way that the fracking process is going to affect ground water." Chief, Ohio Geologic Survey Larry Wickstrom Though hydraulic fracturing has been used for over 50 years in Texas, our records do not indicate a single documented contamination case associated with hydraulic fracturing. Victor Carrillo, Chairman, Texas Railroad Commission There have been no instances where the Division of Oil and Gas has verified that harm to groundwater has ever been found to be the result of hydraulic fracturing. Indiana Department of Natural Resources There is no indication that hydraulic fracturing has ever caused damage to ground water. Michigan Department of Environmental Quality we have found no example of contamination of usable water where the cause was claimed to be hydraulic fracturing. Mark Fesmire, Director, New Mexico Oil Conservation Division
What Regulators Are Saying 22 He said he has been examining the science of hydrofracturing the shale for three years and has found no cases in which the process has led to groundwater contamination. As it turns out hydraulic fracturing itself appears to be safe. Taury Smith, New York State s top geologist It s our experience in Pennsylvania that we have not had one case in which the fluids used to break off the gas from 5,000 to 8,000 feet underground have returned to contaminate ground water. - Former PA DEP Sec. and Former PennFuture CEO John Hanger The [2004 EPA] study determined that fracturing posed little or no threat to groundwater. U.S. EPA There have been no documented cases of drinking water contamination that have resulted from hydraulic fracturing. - Association of American State Geologists President
What Regulators Are Saying 23 No documented cases of groundwater contamination from fracture stimulations. Wyoming Oil and Gas Conservation Commission In the 41 years that I have supervised oil and gas exploration, production and development in South Dakota, no documented case of water well or aquifer damage by the fracking of oil or gas wells, has been brought to my attention. Nor am I aware of any such cases before my time. South Dakota Department of Environment and Natural Resources We have no documentation of such an instance. - Oklahoma Corporation Commission
Contact information 24 Peter MacKenzie, CPG Vice President, Operations Ohio Oil & Gas Association P.O. Box 535 Granville, OH 43023 o: 740.587.0444 c: 614.204-3534 pete@ooga.org www.ooga.org