July 2012 Archives

July 26, 2012

New Energy Documentary by Scott Tinker

A new documentary by Scott Tinker and Harry Lynch is now being rolled out at select screenings. http://www.switchenergyproject.com/aboutfilm.php#about Dr. Tinker was Director of the Bureau of Economic Geology, a joint organization of the University of Texas and the State of Texas, and a professor at UT's Jackson School of Geology, as well as the State Geologist of Texas. Their film has won the award as best film at the Colorado Environmental Film Festival, and other film recognition. It is now being screened at selected cities across the country, and in Canada and Australia. I have heard Dr. Tinker speak, and he has a wide knowledge of energy issues. The film took three years to make. There are other good films at the Switch Energy Project website: http://www.switchenergyproject.com/topics/alltopics

Be sure to see the film if you get a chance.

 

July 23, 2012

Overview of Shale Development in US and Texas

I recently spoke at a Continuing Legal Education Program for Texas real estate attorneys about regulation of hydraulic fracturing. My job was to give a short overview of the development of fracing and horizontal drilling in the US and its impact on production and the economy. Here are some slides I used in the presentation.

Below is a photo of a well during the process of fracing. The trucks are big hydraulic pumps, all hooked up to a manifold that is hooked to the well. The earthen tank in the picture is filled with fresh water used in the fracing operation. The water is mixed with sand and chemicals and pumped into the well under high pressure to "frac" the formation. Note that these pad sites are larger than for conventionally drilled wells. One pad site may be used to drill three or six or more wells. The horizontal lateral of the well will be 5,000-8,000 feet.

Frac picture.jpg

 

Below is a schematic for a horizontal well, intended to show the distance horizontally between fresh water aquifers and the depth at which the well is completed, and the multiple layers of casing installed between the well and the aquifer to protect fresh water.  The distance between fresh water zones and the producing formations varies by field. For the Barnett Shale, fresh water is at about 1,200 feet, and the Barnett Shale is it about 6,500-8,000 feet. For the Haynesville Shale in Lousiana and East Texas, fresh water is at about 400 feet and the formation is at 10,500 to 13,500 feet. For the Marcellus Shale in Pennsylvanie, freshwater is at about 850 feet, and the formation is between 4,500 and 8,500 feet. Here is a video from Chesapeake showing how wells are drilled horizontally.

Horizontal well schematic.jpg

 

Horizontal wells are frac'ed in "stages." Segments of the horizontal leg of the well are isolated, holes are punctured or "shot" through the well casing, and frac water is pumped into that segment of we well, through the perforations in the casing, and into the formation, fracturing the rock to allow oil and gas to escape into the wellbore. The pressure is then released, the frac water flows back up the hole, and the process is repeated for a different segment. Wells may be shot in 12 or more stages. Here is a video showing how the process works, created by Chesapeake.

Below is a map showing the major shale plays in the US. Additional unconventional shale plays are being discovered and developed.

 

Shale Plays map.jpg

 

Below is a graph showing the number of gas wells producing in Texas over time. The number of wells increased significantly beginning in 2003, when shale drilling took off, and is approaching 100,000 wells.

Texas producing gas well count.jpg

 

The graph below shows the potential for gas production from major shale plays according to a study by MIT.

Shale Gas Potential Future Production.jpg

 

As gas production in the US increased, prices predictably declined. The result has been huge savings for US consumers, both residential and commercial. It has not been good news for the coal, nuclear and wind energy industries, which have to compete for natural gas as fuel for electric generation.

Graph NG Futures Prices.jpg

 

Another result of the gas glut is that exploration companies have moved to shale plays that produce oil and other liquid petroleum constituents, as shown by the graph below.

 

Baker Hughes Rig County Breakdown.jpg

 

One of the largest oil shale plays is the Eagle Ford in South Texas, which has commenced development only in the last couple of years. There are now some 4,000 wells producing from the Eagle Ford formation. To date, those wells have produced 37 million barrels of oil and 311 billion cubic feet of gas. (Oil wells in the Eagle Ford also produce gas, thereby adding to the gas glut and holding gas prices down.) There are 250 rigs drilling in the Eagle Ford, and there are predictions that the field will be producing 900,000 bbls/day by the end of 2012, with reserve estimates of an average of 500,000 BOE per well.

Below is a map of the Eagle Ford. The formation dips (gets deeper) from northwest to southeast. The three colors on the map represent the "oil window" on the northwest flank of the field, the "gas window" on the southeast flank, and the "liquids window" in the middle. To date, the best wells are in the liquids window, and produce both oil and gas.

 

Eagleford Map.jpg 

 

The graph below shows the increase in production from the Eagle Ford over the last 3 years, and the increased number of rigs in the field, over time.

 

Eagle Ford Graph Well Counts and Production.jpg

 

Fracing of wells uses a lot of fresh water -- from 3 to 5 million gallons per well. But the industry points out that this water use is a small percentage of the total water used in the areas of the shale plays:

 

Comparative Water Usage in Major Shale Plays.jpg 

July 11, 2012

Another Duke Study of Risks of Hydraulic Fracturing

Last year, researchers at Duke University published a controversial study of groundwater in Pennsylvania showing that water wells in close proximity to Marcellus Shale gas wells had higher concentrations of natural gas in the water than more-distant water wells in the same aquifer. (See my prior post here.) The same authors have now published a new study, "Geochemical evidence for possible natural migration of Marcellus Formation brine to shallow aquifers in Pennsylvania," in the Proceedings of the National Academy of Sciences. The study concludes that the data "suggests conductive pathways and specific geostructural and/or hydrodynamic regimes in northeastern Pennsylvania that are at increased risk for contaminaion of shallow drinking water resources, particularly by fugitive gases, because of natural hydraulic connections to deeper formations."  The authors suggest this as a reason that gas can be found more abundantly in water wells near recently completed Marcellus wells.

The study analyzed chemical content from 426 samples of groundwater and compared the salts present in those waters to the salts contained in brine water from the Marcellus formation. For some wells, they found that the salts in the groundwater had the same chemical composition as the salts in the Marcellus formation, indicating, they say, that the groundwater must be contaminated with saline water that migrated over time from the Marcellus. The authors suggest that, because there is no correlation between the salinity of these water wells and proximity to Marcellus gas wells, "it is unlikely that hydraulic fracturing for shale gas caused this salinization and that it is instead a naturally occurring phenomenon that occurs over longer timescales." They conclude that, because of the "longer timescales" for migration of salt water into the aquifers, "the possibility of drilling and hydraulic fracturing causing rapid flow of brine to shallow groundwater in lower hydrodynamic pressure zones is unlikely but still unknown. By contrast, the time scale for fugitive gas contamination of shallow aquifers can be decoupled from natural brine movement specifically when gas concentrations exceed solubility ... (i.e., bubbles)." The authors conclude: "the coincidence of elevated salinity in shallow groundwater with a geochemical signature similar to produced water from the Marcellus Formation suggests that these areas could be at greater risk of contamination from shale gas development because of a preexisting network of cross-formational pathways that has enhanced hydraulic connectivity to deeper geological formations."

The authors cite two studies that they say document cross-formational pathways allowing deeper saline water to migrate into shallower aquifers in western Texas: Metha S, Fryare AE, Banner JL (2000 Controls on the regional-scale salinization of the Ogallala aquifer, Southern High Plains, Texas, USA. Appl Geochem 15:849-864; and Hogan JF, et al. (2007) Geologic origins of salinization in a semi-arid river: The role of sedimentary basin brines. Geology 35:1063-1066.

Terry Engelder is a noted professor of geosciences at Penn State and an expert on the Marcellus. He reviewed the paper prior to its publication. He was quoted as saying that he had no problems with the scientific methodology of the study, but he was not comfortable with the larger conclusions of its authors.

July 2, 2012

Vacation in Carrizo Springs!

A new industry has sprung up in the metropolis of Carrizo Springs, Texas, in the heart of the Eagle Ford Shale Play: lodging for oil field workers -- and lodging in style. In an attempt to keep workers in the field, companies are putting up their workers in plush hotel-like "lodges." Amenities include three meals a day, laundry and dining facilities, media and recreation rooms, 24-hour business centers, free Wi-Fi, Blu-ray players and flat-screen TVs in all rooms, microwaves and movie rentals. Operators of these facilities rent out blocks of rooms to operators and their vendors, sometimes keeping different companies' employees together and away from their competition, to lessen the risk of raiding competitors. One facility has a 2,000-seat cafeteria, broken up into four separated dining areas with the kitchen in the middle, allowing one company to have a dining room all to itself, to keep out rival companies' employees. Check out these new examples of "remote workforce housing":

http://www.oasislodgetx.com/Accommodation.aspx 

http://www.remotelogisticsinternational.com/camps/carrizo-springs-lodge

http://south-texas-lodge-carrizo-springs.magnusonhotels.com/

http://www.cottoncompanies.com/TH-carrizo-springs.html 

Similar facilities are opening up all across South Texas. Maybe living in the South Texas desert away from friends and family for weeks on end has its compensations.