WATER AND SHALE GAS DEVELOPMENT J. Daniel Arthur, P.E., PE SPEC Jon W. Seekins, Env. Sc. ALL Consulting National Association of Royalty Owners Annual Conference Pittsburgh, PA October 7, 2010 1
OVERVIEW Introduction Water Use & Concerns Shale Gas Groundwater Protection History HVHF Safeguards Plays Fracturing Fluid Projections Chemistry Laws and Regulation Water Sourcing Water Disposal/Reuse Summary 2
INTRODUCTION Shale gas holds tremendous potential for U.S. energy supply. Environmental considerations, especially those related dto water use for high h volume hydraulic fracturing (HVHF), have generated spirited debate among all stakeholders. Many of the concerns raised by the public seem to stem from a lack of technical awareness of how shale gas development occurs. 3
DEVELOPMENT IS HAPPENING Shale gas development presents opportunities to mineral rights owners. Educated participation will ensure e a voice at the table and an ability to influence how development takes place. It is important to understand what development means: Process Technologies Impacts Mitigation 4
SHALE GAS HISTORY First Commercial Gas well Fredonia, NY (1821) Production from Dunkirk Shale at a depth of < 30 feet Ohio Shale Big Sandy Field (1880) Barnett Shale Ft. Worth Basin development (1982) Horizontal wells in Ohio shales (1980s) First use of HVHF in Barnett Shale (1986) First horizontal well drilled in Barnett Shale (1992) Horizontal drilling in Appalachian Basin, Devonian and Marcellus Shales (2006) 5
THE SHALE GAS TRIFECTA Three factors made shale gas production economically viable: Advances in horizontal drilling Advances in hydraulic fracturing Increases in natural gas prices 6
U.S. SHALE GAS PLAYS 7
EIA - SHALE GAS OUTLOOK 2008: shale gas = 8.5% of onshore production 2011: most reserves growth will come from shale gas 2035: more than 35% of domestic gas production will come from shale gas United States Unconventional Gas Outlook (bcf/day) Source: EIA Annual Energy Outlook 2010 8
SHALE GAS BENEFITS The United States: national energy security, the economy, environment Individual States: the economy, tax revenues, local resources, jobs Mineral Rights Owners and Land Trusts: royalties, property values 9
LAWS AND REGULATIONS Shale gas development is subject to a number of federal laws, such as: Clean Water Act Clean Air Act Safe Drinking Water Act CERCLA States are the principal regulators of gas activities and imposes environmental protection requirements on every phase of development. 10
REGULATORY DEVELOPMENTS Delaware River New York Draft Supplemental Generic Environmental Impact Statement Fracturing Responsibility and Awareness of Chemicals Act (FRAC Act) EPA Study of Hydraulic Fracturing and Drinking Water 11
EPA STUDY Request by Congress: carry out a study on the relationship between hydraulic fracturing and drinking water. Conducted by EPA Office of Research and Development A research study Not a policy study EPA s draft scope is very broad $4.4 million budgeted thus far Research plan scheduled for September 2010 Initial research products by the end of 2012 12
WATER USE & CONCERNS Groundwater Protection HVHF Safeguards Fracturing Fluid Chemistry Water Sourcing Water Disposal/Reuse 13
GROUNDWATER PROTECTION Christmas Tree Cement Cement Tubing Well Fluids Pipeline to Flow Process and dst Storage Surface Casing Intermediate Casing Production Casing Cement Oil or Gas Zone Perforations 3,5 500 to ~8,000 0 Hydraulic fracturing occurs: Over a short duration With considerable vertical separation (thousands of feet of confining strata) between the shale and shallow USDWs. Further protection is provided by multiple casing strings and cement coupled with construction requirements 14
GROUNDWATER RISK A 1989 API & DOE study determined that in basins with reasonable likelihood of corrosion, the risk probability of injectate reaching a USDW ranged from 1 in 200,000 to 1 in 200,000,000000 000 for UIC wells Injection is on a continuous basis Shale Gas Hydraulic Fracturing Differences Very short in duration Within multiple installed concentric casing strings and cement Risk is very low 15
HIGH VOLUME FRACTURING Necessary due to low matrix permeability Fractures created must remain in the target zone Fracturing out of the target zone is not cost effective: Adds extra cost to stimulation job Could adversely affect productivity of the well 16
HVHF OPERATIONS Fracturing a horizontal well uses 3 to 5 Million gallons of water Delivered by truck or temporary pipeline Stored in tanks, or local or centralized impoundments Fracturing job takes a few days 15% to 30% of the fracture fluid is recovered as flowback Produced water may continue long term. 17
Hydraulic Fracturing Safeguards HVHF Operations Extensive up front modeling to design stimulation job Monitoring i of fracture propagation during the stimulation job - Micro-seismic acoustic fracture mapping - Tiltmeter measurements - Treatment pressure analysis 18
Fracture Fluids 98-99.5% of slickwater fracturing fluid is water Each additive has an engineered purpose Proppant (sand) 19
HF FLUID COMPOSITION r Source: Compiled from Data collected at a Fayetteville Shale Fracture Stimulation by ALL Consulting 2008. 20
HF FLUID CHEMISTRY TRENDS Concern over proprietary status of some chemicals Several regulatory agencies are pressing for disclosure (e.g. AR, NY, PA, TX, WY, and others) Trend toward reduction in the number of chemicals used in a given fracturing fluid Service industry looking for alternatives: Green chemicals Non-chemical treatments e.g. UV light treatment to reduce the use of biocides 21
SOURCING CONSIDERATIONS Multiple jurisdictions: Other considerations: State River Basin Commission Permitting/reporting requirements based on: Location Volume withdrawn Passby flow Alternative Sources Acid mine drainage (AMD) WWTP effluent Stream designation Water quality Fisheries management Cumulative withdrawals v. project withdrawals Water quality requirements at low flow Invasive Species Endangered Species Entrainment/impingement 22
COMPETING WATER USES Electrical power generation Industrial and mining Cooling uses Electrical power generation Process uses Dust suppression and coal washing Public water supply Agricultural uses Projected Maximum Future Use Shale Gas: 0.8% Marcellus Area Case Study: 85 Billion Barrels per Year Power Generation 71.70% Industrial and Mining 16.13% Public Supply 11.97% Irrigation 0.12% Notable Other Use- Livestock: 0.01% Sources: 1) USGS Estimated Use of Water in US, County Level Data for 2000; 2) Shale Gas water use based on one operator s peak year projections o for basin-wide activity. ty ALL Consulting, 2010 23
TOTAL WATER USE SHALE PLAYS Shale Play Public Supply Industrial and Mining Power Generation Irrigation Livestock Shale Gas Total Water Use (bbl/yr) Barnett Fayetteville Haynesville Marcellus 82.70% 4.50% 3.70% 6.30% 2.30% 0.40% 11.15 2.30% 1.10% 33.30% 62.90% 0.30% 0.10% 31.9 45.90% 27.20% 13.50% 8.50% 4.00% 0.80% 2.15 11.97% 16.13% 71.70% 0.12% 0.01% 0.06% 85 Shale Gas water use based on one peak year projections. 24
WITHDRAWAL CHALLENGES The source: Volume Location Main stem river, Tributary, or Lake Timing/Storage Year-round Dry seasons and drought Wet seasons Selective withdrawal & Storage Cumulative Impacts Regulatory structure is complex 25
WATER IS EXPENSIVE Water withdrawal location on the Susquehanna River Not necessarily directly, but indirectly Often, transportation is the primary expense associated with water sourcing Therefore, it is important to consider the proximity of source to user location 26
MARCELLUS WITHDRAWAL Surface Withdrawal Requirements West Virginia: if >750K g & HVHF, reporting required Pennsylvania: if >10K gpd, Act 220 and Water Management Plan required New York: if >100K gpd, 30% of ADF or AMF passby flow (dsgeis) DRBC: if >100K gpd reporting, Susquehanna River limited to Q7-10 passby flow SRBC: if >100K gpd, approval required, limited to Q7-10 passby flow 27
WATER DISPOSAL ISSUES WWTP options limited Requirements for POTWs Limited number of commercial plants on-line Reuse/recycling is a growing option UIC options limited An established and preferred disposal method Nearest commercial disposal wells Source: John Perez, Copyright, 2008 28
BASIN VARIATIONS Water production varies from basin to basin and within basins Fayetteville shale operators moving toward underground injection and reuse/recycling Regulated by Arkansas Department of Environmental Quality 12 commercial and 100+ single use permits issued Produced water from the Barnett and Haynesville shales is primarily disposed of via Class II injection wells Reuse/Recycling continues to be explored to compliment existing water management practices. Marcellus shale operators are exploring Class II injection options, reuse/recycling, and municipal and industrial water treatment facilities for water management. 29
Basin Disposal Options Basin Class II UIC Water Treatment Reuse/Recycle Barnett Local No Yes Fayetteville* Distant Evaluating Evaluating Haynesville Local No No Marcellus Limited/Exploring Yes Evaluating * Previously used land application under permit from Arkansas DEQ 30
MARCELLUS DISPOSAL OPTIONS Currently, most PA produced d water is disposed of through commercial wastewater treatment plants. The nearest commercial brine disposal wells are in eastern OH. Marcellus shale operators are exploring reuse/recycling of produced water as an alternative. 31
UIC DISPOSAL WELLS Limited availability: 1 commercial well in PA (7 private) but not permitted for Marcellus waters None in NY (6 private) Several in OH and WV New opportunities may be limited: Played out fields may offer best opportunity But there are few old fields in the Marcellus play area EPA and state permitting process is lengthy and demanding Barnett Injection Wellhead ALL Consulting 2009 32
TREATMENT AND REUSE Many operators and service companies now considering viability of partially treating flowback water sufficient for reuse in the next fracture job Controlling factors may include: TDS Scale producing sulfates Chemical requirements of next fracture job 33
Treatment Option Limitations All approaches have limitations,,primarily: Quality and quantity of water that can be treated Waste volumes and management: Concentrated brine from D/E and RO Salt crystal from D/E Economic viability Generally, as the TDS of the produced water increases, the volume of useable treated water decreases and waste increases. 34
REUSE/RECYCLING Avoids WWTP discharge concerns. Reduces transportation. Reduces volume disposed. Driven by current and future regulatory limits. 35
LAND AND ROYALTY OWNERS Become and stay informed Learn from others Have a plan for your land Collect baseline data Monitor impacts Communicate with the producer and all the players 36
SUMMARY Water resources are protected through stringent federal, state t and local l laws and permitting processes. Natural gas production uses significantly less water per BTU of energy produced than other fuel sources such as coal, oil or ethanol. Water is essential for deep shale gas development. Deep shale gas drilling and hydraulic fracturing uses a small amount of water compared to other uses, and does not represent a long-term commitment of the resource. 37
INVITATION TO READ http://www.all-llc.com/page.php?92 38
CONTACT INFORMATION J. Daniel Arthur, P.E. SPEC ALL Consulting, LLC 1718 S. Cheyenne Avenue Tulsa, Oklahoma 74119 www.all LLC.com LLC CITATION INFORMATION Arthur, J. Daniel (ALL Consulting). Water and Shale Gas Development. National Association of Royalty Owners (NARO), National Convention, Pittsburgh, PA, October 07, 2010. 39