Status of Shale Gas Development in New Brunswick. Habitation 2012

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Transcription:

Status of Shale Gas Development in New Brunswick Angie Leonard, Senior Advisor, CAPP Habitation 2012 St. Andrews, New Brunswick February 9, 2012

What Is CAPP? CAPP s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public and stakeholders in the communities in which we operate. CAPP represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP s member companies produce more than 90 per cent of Canada s natural gas and crude oil with revenues of about $100 billion-a-year.

New Brunswick Oil & Natural Gas Association In 2011 the NBO&NGA was formed to facilitate the effective exploration, development, production, transmission and distribution of New Brunswick s hydrocarbon resources in an environmentally safe and sustainable manner In December, 2011 the NBO&NGA and CAPP joined to form a Task Group The Task Group's objective is to engage with communities, business leaders, governments and people interested in an open, fact-based dialogue about natural gas and oil development

Advancing the 3Es Generating Economic Benefits Jobs and revenues across North America Providing Energy Security Safe, secure and reliable energy Large energy resource potential Providing Environmental Stewardship Strong regulations Technology advances

Global Primary Energy Demand Significant energy demand growth: Population, standards of living Need all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons Increasing role for nonconventional crude oil & natural gas Technology is a key lever for sustainable growth Production Cost competitiveness Environmental performance

How will demand be met? 2010 2000 Produced Offshore Northern Existing Conventional (WCSB) Produced Shale Gas Existing Conventional (WCSB) Northern Offshore Coalbed Methane 390 TCF* 70 years of supply Tight Gas 700-1300 TCF* 100+ years of supply Technological advances have unlocked vast unconventional gas resources. Resource assessments are ongoing (GSC, NEB, and others) in many new areas, and new opportunities continue to emerge (Eastern Canadian shale gas, etc.) *Estimated Recoverable Marketable Gas

North American Shale Gas Play

Economic Impacts: ARKANSAS: Source: State of Arkansas 2011 Market Value (2010) - $13.1 billion Employment(2008) 9,164 ONG industry Industry average salary $72,579 state average $36,800 (2010)

NB Proven and Potential Resources: Source: DNR NB

Current Natural Gas and Oil Industry in New Brunswick: First oil well drilled at Dover in 1859 300 wells were drilled in NB by 2010 Since 1990, 40 Oil wells drilled and 40 Natural Gas wells 30 Natural Gas wells are currently producing 9 wells have been horizontally drilled, 5 gas and 4 oil Since 1990 49 wells have been fraced in NB

Exploration Process: Normally 4 Stages: 1. Initial exploration airborne techniques such as gravity gradiometry, this covers large areas and seeks significant geological structures, which have the potential to contain hydrocarbons. 2. Geochemical surveys on the ground may be conducted, such as soil gas hydrocarbon geochemistry. 3. Geophysical surveys (seismic) looking for specific locations where hydrocarbon may exist in significant quantities (hydrocarbon traps) 4. Drill exploration wells If successful the wells would be prepared for production, if not the company would move to another target.

Geophysical Exploration (Seismic): 1. Used to identify underground geological structures such as faults, fractures and petroleum bearing formations and aquifers. 2. A seismic wave is created on the surface of the ground using a controlled energy source (Vibroseis truck, or small explosive charge). Vibroseis truck Seismic charge

Geophysical Exploration (Seismic): 3. Seismic wave travels into the earth and is reflected off of subsurface formations back to surface where it is recorded by receivers (geophones). 4. Analyzing the time it takes for the seismic waves to reflect off of subsurface formations and return to the surface, a geophysicist can map subsurface formations and anomalies.

Drilling Operations: Shale zone accessed through vertical, then directional or horizontal drilling Shale gas formations are deep in NB (1500m to greater than 2000m) Water aquifers are typically 100-250m deep 3 layers of steel casing and grout: Surface casing Intermediate casing Production casing

How does hydraulic fracturing work? Approximately 4,000 cubic meters (4 million litres) of water is used to fracture each stage of a well Total water used at the 4 major Shale Plays in the US is less than 1% of total water usage in each state Fracing fluid consists of 99.51% water and sand and 0.49% chemical additives All chemical additives are disclosed by industry to regulators before fracing occurs

Hydraulic Fracturing (Fracing) - con t Flow back water is recycled for reuse in other fracs or sent to designated, regulated waste disposal centers Time to build a well pad, drill well, frac and complete well is generally 6-8 weeks Once well is in production the well head and water storage tanks are left on site and the remainder of the well pad is reclaimed Each well pad is approximately 3-5 acres and can accommodate up to 20 wells

Multi-Well Pads: Vertical Well Pad Horizontal Well Pad Advantages of Multi-Well Pads: Source: ERCB 2011 Reduction of land use for the pad, access roads & pipelines Easier monitoring of site and enforcement of regulations Conducive to establishing and enforce traffic/trucking corridors Optimization of location Establish and enforce noise, light, air emission and water plans

Types of Economic Benefits: Direct Benefits: the spending by natural gas companies and other sectors of the economy that are also stimulated by these expenditures Indirect Benefits: supply chain opportunities Induced Benefits: rounds of transactions throughout the economy set of by workers, hired directly or indirectly, spending their wages on goods and services

Canadian Jobs created by Upstream NG Industry in British Columbia (thousands) Incremental 110,000 jobs! Social infrastructure concerns (schools, hospitals) Training requirements (highly specialized and technical) Could be more factoring in pipelines and LNG infrastructure. Source: CERI:Economic Impacts of Drilling and Operation of Gas Wells in Western Canada June 2011

What does this mean for Canada? Jobs (Upstream from Western Canada Natural Gas) 317,000 the number of jobs natural gas sector is expected to provide (direct, indirect and induced) across Canada by 2035 9,693,000 number of person years of employment provided by natural gas industry between now and 2035 $339 billion amount natural gas employees will earn over next 25 years Revenue, Royalties, Taxes (To all Canada from Western Can. NG) $15.1 billion amount natural gas provided in export revenue $1.5 trillion natural gas expected to contribution to Canada s GDP over the next 25 years $199 billion natural gas industry will generate in royalties $170 billion natural gas industry will generate in federal taxes $130 billion natural gas industry will generate in provincial taxes

Natural Gas Workforce Information: (Marcellus Shale Education and Training Center) Each well requires 420 individuals working in 150 different occupations to complete and produce gas from one well Each well creates approx 13 Direct FTE s per year If you include Direct, Indirect and Induced jobs the estimates are 32 58 FTEs per well, varies by jurisdiction If 200 wells per year 2,600 Direct jobs per year and 6,400 to 11,600 total jobs per year, supported by the natural gas industry

McCully Field, Sussex

McCully Field, Sussex

McCully Field, Sussex

McCully Field, Sussex

Supply Chain Opportunities: Construction, manufacturing and transportation Drilling, completion and production Geological and geophysical Pipeline and associated infrastructure Environmental & other consulting services Legal & land Natural gas distribution Service industries, logistics & distribution Retail, food, health, education & financial services

Not Just Traditional NG Businesses: Work boots, uniforms & uniform cleaning Well pad cleaning Alternate housing RVs, mini-homes Fencing Concrete Landscaping & irrigation Security, EMTs Engineers, lawyers, accountants, surveyors, etc Home sales, hotels, restaurants, entertainment, retail, auto sales (especially pickup trucks) Catering

Impressions of Energy Sources Positive Neutral Negative Solar 90% 7% 3% Wind 82% 12% 6% Hydro electricity 75% 21% 4% Bioenergy made from household garbage 72% 21% 7% Bioenergy made from animal waste 57% 31% 12% Bioenergy made from forest residues 49% 39% 12% Bioenergy made from crops 45% 30% 25% Canadian natural gas 44% 39% 17% Natural gas 38% 39% 23% Hydrogen 34% 51% 15% Oil from Canadian sources 29% 33% 38% Nuclear 29% 31% 40% Oil from Canada's oil sands 23% 27% 50% Shale or unconventional gas 12% 47% 41% Coal 5% 18% 77% Oil from imported sources 2% 18% 80% 0% 20% 40% 60% 80% 100% Harris Decima, June 2011

Responsible Energy Development New Brunswickers & Canadians want to know that: Can shale gas be developed safely Will shale gas be developed safely Need to deliver fact-based, scientific proof shale gas development is safe Strong regulation that has worked successfully in Canada can provide framework for emerging provinces Companies are committed to responsible energy development and abide by own codes of conduct that provide further support to strong regulation Government plays key role in overseeing regulations are strictly enforced

Guiding Principles for Hydraulic Fracturing 1 2 3 4 5 We will safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical. We will measure and disclose our water use with the goal of continuing to reduce our effect on the environment. We will support the development of fracturing fluid additives with the least environmental risks. We will support the disclosure of fracturing fluid additives We will continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmntal risks of hydraulic fracturing.

Operating Practices for Hydraulic Fracturing

Policy Priorities Embrace natural gas as a foundation for Canada s future energy mix Applicable to all aspects of the natural gas value chain Enhance competitiveness of the sector and ensure sound environmental policy and regulation Especially important for upstream sector given abundant supply but increasing competitiveness and social license challenges Pursue regulatory reform in the near term Need for competitive and balanced regulatory review processes for all aspects of the value chain, particularly upstream and pipelines Support environmental performance and technology development Important to broaden downstream use of natural gas in key market segments residential/commercial, power generation, transportation

Summary Huge opportunity for New Brunswick Need to be competitive Social License to Operate Principles and Practices: Guide development Inform and complement regulations Consistently deliver responsible operations across Canada Continue to develop the resource safely

THANK YOU QUESTIONS? Angie Leonard Senior Advisor, NB Angie.Leonard@capp.ca www.capp.ca

Practices put Principles into Action 1 Fracturing Fluid Additive Disclosure Publicly disclose all information on fracturing fluid additives

Practices Put Principles into Action 2 Fracturing Fluid Additive Risk Assessment & Management Create demand for more environmentally sound fracturing fluids Assess potential risks and mitigate these risks Make processes for developing wellspecific risk management plans publicly available

Practices Put Principles into Action 3 Baseline Groundwater Testing Baseline groundwater testing prior to development and monitor over time Sourcing freshwater alternatives and recycling Share data collected as legally permitted

Practices put Principles into Action 4 Wellbore Construction and Quality Assurance Ensure wellbore integrity Make wellbore construction and assurance practices publicly available Surface Casing (Conductor) Cement Base of Ground Water Protection Production Casing Not to Scale Graphic from Shell Canada

Practices Put Principles into Action 5 Water Sourcing, Measurement and Reuse Reduce overall use of freshwater Measure water quantity Monitor water sourcing Make water sourcing, measurement and reuse practices publicly available

Practices Put Principles into Action 6 Fluid Transport, Handling, Storage and Disposal Mitigate potential risks of accidental spills Ensure quick response to accidental spills Make fluid transport, handling, storage and disposal practices publicly available