Oil and Gas Lawyer Blog

The Wall Street Journal published a front-page article in its December 6 edition, "Oil's Growing Thirst for Water," that highlights issues with the oil and gas industry's demand for water in the Eagle Ford and other shale plays. The article quotes Darrell Brownlow, a hydrologist and geochemist and a landowner in South Texas about whom I have written previously. The WSJ article highlights the coming conflict between the oil and gas industry's demand for water and the growing demands on groundwater in Texas.

According to Dr. Brownlow, it makes simple economic sense to use groundwater as a resource for oil and gas exploration: The WSJ says: "Mr. Brownlow ... says it takes 407 million gallons to irrigate 640 acres (one square mile) and grow abaout $200,000 worth of corn on the arid land. The same amount of water, he says, could be used to frack enough wells to generate $2.5 billion worth of oil. 'No water, no frack, no wealth,' says Mr. Brownlow, who has leased his cattle ranch for oil exploration."

Most of the Eagle Ford lies above the Carrizo aquifer, which stretches from Webb County on the Rio Grande River up through Fayette County. Dr. Brownlow, a hydrologist, concludes that there is plenty of water in the Carrizo, in most places, to meet the demands for frac water. His estimates:

• There are about 6 million acres in the Eagle Ford play, and a possible 20,000 oil and gas wells (one well per 300 acres).
• An average frac job uses 15 acre-feet of water (4,887,765 gallons, or 115,375.5 42-gallon barrels).
• So, the frac jobs on those 20,000 wells would use about 300,000 acre-feet of water over the life of the play.
• Current withdrawals from the Carrizo Aquifer are about 275,000 acre-feet per year; so the entire demand for frac water from Eagle Ford wells would equal about one year's withdrawal of water from the aquifer.  At a rate of withdrawal of 275,000 acre-feet per year, groundwater management studies estimate that the Carrizo water table will drop an average of 30 to 35 feet by 2060.

Dr. Brownlow says that, if a successful Eagle Ford well makes 300,000 to 400,000 barrels of oil at $80/bbl, the return to the landowner would be $520,000 per acre-foot ($1.60 per gallon). In contrast, the return to a farmer using  the same acre-foot of water to irrigate corn, peanuts or coastal hay would be $500 to $1,000 per acre, or about $250 per acre-foot of irrigation water. "The point here is that using groundwater from the Carrizo for hydraulic fracturing in the Eagle Ford Shale has enormous economic potential for landowners, oil production companies and the entire region. Moreover, from a geologic and water planning perspective, additional impact on the aquifer appears minimal," says Dr. Brownlow.

Below is an analysis of data from the Texas Water Development Board, done by the WSJ:

The oil and gas industry uses only 1.6% of the water consumed in the state. But this use is concentrated in areas where drilling activity is located, often in arid portions of the state, and the use is growing rapidly. As can be seen from the above graph of one water well, if your well is the one affected, it is an important issue. And the water used for fracing in the Eagle Ford is not returned to the ecosystem; it either remains in the formation, or if it returns to the surface, is it reinjected into licensed disposal wells.

In Texas, the oil and gas industry is exempted from regulation by local underground water districts, which have authority to permit and regulate withdrawals from underground aquifers. Those water districts are now in the middle of establishing "desired future conditions" for the aquifers within their jurisdiction and rules to assure that withdrawals are regulated so that those desired future conditions are met. Because those water districts have no authority to regulate wells used for oil and gas exploration, they cannot predict or control the effect of industry uses on their future supplies of water.

The issues raised by industry use of groundwater just go to prove the old Texas saying, "Whiskey's for drinkin', water's for fightin'."

 

The staff of the Texas Railroad Commission has proposed to the Commision rules to implement House Bill 3328, passed by the last Legislature, requiring the disclosure of chemicals used in frac fluids. The rules will be subject to a period for public comment, and a hearing will be held on the rules, now proposed for Wednesday, October 5.

Earlier this year, the 82nd Texas Legislature passed HB 3328, requiring the RRC to adopt rules requiring disclosure of chemicals in frac fluids. The draft rule would require operators to disclose chemical content of frac fluids on FracFocus, a website developed by the Ground Water Protection Council and the Interestate Oil and Gas Compact Commission. (The website contains a lot of good information about hydraulic fracturing and its benefits and risks.)  FracFocus was launched on April 1, 2011. As of August 16, 2011, according to RRC staff, operators had registered 950 Texas wells on the website, including wells drilled by Anadarko, Chesapeake, Chevron, Conoco-Phillips, Devon, El Paso, Energen, EOG, Forest, Newfield, Occidental, Penn Virginia, Petrohawk, Pioneer, Plains, Range, Rosetta, Shell, Williams, and XTO. You can search for a well near you by using FracFocus's search feature. An example of the information disclosed can be found here:  4243935364-3212011-10792272-CHESAPEAKE[1].pdf The disclosure includes the percentage by mass of each chemical used in the frac fluid.

Under the proposed rule, an operator must also provide the same information with its completion report for the well, as part of the completion report. The completion report for all Texas wells can also be found on the RRC's website.

RRC's staff's discussion of the proposed rule estimates that 13,000 wells undergo frac treatment in Texas each year -- 85% of all wells drilled in Texas.

A supplier, service company or operator is entitled under the draft rule to claim trade-secret protection for a chemical additive. If such protection is claimed, the particular chemical and its concentration need not be provided, but the operator must disclose the chemical family of the ingrediant and the properties and effects of the chemical. The claim of trade-secret protection may be challenged by the landowner on whose property the well is drilled or any adjacent landowner, or by any state department or agency with jurisdiction over issues related to health and safety. Any such challenge must be filed within 2 years after the claim of trade-secret protection was filed. If a challenge is filed (with the RRC), the RRC refers the matter to the Texas Attorney General who makes a determination, based on evidence submitted by the person claiming trade-secret protection, of whether the identity of the chemical is in fact a trade secret under Texas law. The AG's determination may be appealed to a state district court. If a trade-secret exemption is claimed, a health professional or emergency responder may still obtain the information but must keep it confidential except to the extent it must be disclosed to protect health and safety.

An operator who fails to disclose as required by the rule may have its operating permit revoked.

Continue reading "Texas Railroad Commission Staff Proposes Draft Rule for Disclosure of Frac Chemicals" »

The New York State Department of Environmental Conservation (DEC) has been engaged in a comprehensive review of the potential environmental impacts of development of the Marcellus Shale in New York since 2008. The DEC is the regulatory agency in New York responsible for issuing drilling permits and regulating oil and gas exploration and production. The DEC had previously studied the environmental impacts of hydraulic fracturing in 1992, at which time it issued a Generic Environmental Impact Statement recommending certain safeguards in that practice. In 2009, the DEC issued for public comment a "Draft Supplemental Generic Impact Statement" analyzing the impact of hydraulic fracturing of horizontal Marcellus wells. As a result of comments received, the DEC has issued a revision of that draft report, which will be finalized later this year and again issued for public comment. During this study, New York has imposed a moratorium on issuance of any permits for horizontal wells in the Marcellus Shale.

The Marcellus extends over a huge area from West Virginia through Pennsylvania and covers a substantial part of New York State. Potential Marcellus reserves in New York are huge, and exploration companies have leased huge areas in New York for exploration. New York landowners have watched impatiently as wells have been drilled in Pennsylvania, while environmental activists in New York have opposed any drilling in that state.

The most recent version of the New York DEC's study and recommendations is several hundred pages and provides a thorough study of the potential impacts of drilling Marcellus wells on the environment, including impacts on groundwater, surface water, air quality and wildlife. The report proposes many revisions to DEC's existing regulations concerning the construction of well pads, the drilling and casing of horizontal wells, the handling and disposal of frac fluids and chemicals, the disposal of returned frac water and drill cuttings, the use of best available technology to reduce emissions from equipment during drilling and completion operations, and the protection of groundwater and surface water. The report discusses the current state of technologies for use of fluids other than fresh water for hydraulic fracturing and for the recycling of frac water. The authors also discuss recent incidents in Pennsylvania of groundwater and surface water contamination from drillsites and their cause. There is a comprehensive summary of the geology of shale formations and water resources in New York.

Continue reading "New York Issues Revised Study of Fracing in the Marcellus" »

WSJ Weighs In On Fracing Controversy

The Wall Street Journal gives its opinion on the dangers of hydraulic fracturing, siding with the industry: "The shale gas and oil boom is the result of U.S. business innovation and risk-taking. If we let the fear of undocumented pollution kill this boom, we will deserve our fate as a second-class industrial power."

Powell Shale Digest Issues Report on Eagle Ford

The Digest reported on wells drilled so far in Eagle Ford fields in Texas. Enough information is now publicly available to begin to see where the play is headed, and where it's most successful.

The counties with highest oil and gas production are Dimmit, Karnes, Webb and La Salle. The counties with the best results per well are Karnes and DeWitt:

Baker Hughes' oil rig count reached 1,000 for the first time since it began tracking oil and gas rigs separately in 1987. 843 oil and gas rigs are currently located in Texas. 

 

Continue reading "Recent News: EPA Fracing Study, Report on Eagle Ford, Frac Water Recycling, Range v. EPA, " »

Fracking has become more and more a topic in the general media and part of the state and federal environmental energy agenda, with new stories appearing daily. A sample:

Secretary of Energy Steveb Chu has appointed an advisory panel, officially called the Secretary of Energy Advisory Board's subcommittee on natural gas, to study the environmental issues around hydraulic fracturing and shale gas production.  Members of the subcommittee are John Deutch, former head of the CIA during the Clinton administration, in the Department of Energy during the Carter administration, now a professor at MIT, and former board member of Schlumberger, Ltd.; Daniel Yergin, IHS Cambridge Energy Research Associates Chairman; Susan Tierney, Chair of the board of the Energy Foundation; Stephen Holditch, chair of the Department of Petroleum Engineering at Texas A&M; Fred Krupp, President of Environmental Defense Fund; Kathleen McGinty, former head of Pennsylvania's Department of Environmental Protection; and Mark Zoback, geophysics professor at Stanford University. Steven Chu, Secretary of Energy, has charged the subcommittee to make recommendations on ways to improve safety of fracking in 90 days, and offer advice to other agencies within six months on how they can better protect the environment from shale gas drilling.  http://thehill.com/blogs/e2-wire/677-e2-wire/164057-overnight-energy-fracking . Beginnings of the subcommittee's work have not shown promise: at the first meeting of the committee, Dusty Horwitt of the Environmental Working Group said its chairman John Deutch should resign because of his former ties to Schlumberger and Cheniere Energy. On the other side, Republicans including Darrel Issa (R-Calif), chair of the House Oversight and Government Reform Committee, have said that Chu's subcommittee is composed primarily of Democratic appointees hostile to drilling interests. 

Continue reading "Discussion and Debate Increase on Environmental Hazards of Fracking" »

Researchers at the Nicholas School of the Environment at Duke University have written an article published in the Proceedings of the National Academy of Sciences titled "Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing," which finds "systematic evidence for methane contamination of drinking water associated with shale-gas extraction" in the Marcellus Shale in Pennsylvania and New York. The article has already elicited a strong response from the industry. To my knowledge, this is the first scientifically based study finding a correllation between the drilling of shale wells and the contamination of aquifers.

 

Continue reading "Duke University Researchers Find Correlation Between Marcellus Shale Drilling and Methane-Contaminated Drinking Water" »

The April issue of Discover, published by Kalmbach Publishing Co., contains an article on the potential environmental effects of hydraulic fracturing in gas shales, "Fracking Nation," by Linda Marsa. Much of the article simply repeats allegations being made by environmental groups and landowners of alleged groundwater contamination by shale wells. But the article mentions four newer topics and recent allegations being made by opponents of shale gas development:

 

Continue reading "Hydraulic Fracturing Controversy Makes Discover Magazine" »

The EPA has issued its draft plan to study the impacts of hydraulic fracturing on drinking water in the U.S. Two state regulatory authorities have absolved frac'ed wells from responsibility for contaminating drinking water in Colorado and Texas. Maryland's top einvornmental regulator urged lawmakers to impose a two-year moratorium on frac'ing, as Maryland's legislature considers additional laws to regulate the practice. Meanwhile, the boom in shale gas drilling continues.

 

Continue reading "More About Hydraulic Fracturing in the News" »

Here is the closing statement of Range Resources filed with the Texas Railroad Commission after its hearing on complaints that Range's Barnett Shale wells in Parker County have contaminated groundwater.  It provides a good summary of the events to date and the evidence produced at the hearing.  Range Production Company Closing Statement.pdf

Here is a link to a summary of the Range dispute prepared by Gene Powell, Editor of the Powell Barnett Shale Newsletter.

Josh Fox's movie Gasland has been nominated for an academy award for best documentary. Gasland, widely criticized by the oil and gas industry, alleges that hydraulic fracturing is the cause of contamination of underground water resources across the country. (See my previous post about controversy surrounding the movie here.) The nomination, and the Fox's movie about the alleged dangers of frac'ing, have made him into a celebrity.

In response to the Oscar nomination, Energy in Depth, a website sponsored by oil and gas associations including the Independent Petroleum Association, Texas Independent Producers and Royalty Owners' Association, the Independent Oil & Gas Association, and Colorado OIl and Gas Association, has published a letter (Energy In Depth letter.pdf) addressed to the Academy of Motion Picture Arts and Sciences. In the letter, Energy in Depth calls the film an "expression of stylized fiction" not meeting the Academy's criteria for a documentary. The letter says that the movie misstates the law and the rules, mischaracterizes the frac'ing process, and "flat-out makes stuff up."

Josh Fox does not take this lying down. He has published a detailed rebuttal of Energy in Depth's letter.  Josh has own his own website, www.gaslandthemovie.com, and his own facebook page about the movie and the frac'ing debate, and he was even awarded the Yoko Ono "Grant for Peace." Clearly, he is enjoying his celebrity. Josh's rebuttal is no small refutation. It runs to 38 pages and contains responses from his "amazing team of experts," including Ron Bishop, PhD, lecturer in chemistry and biochemistry at SUNY Oneonta, Anthony Ingraffea, PhD, the D.C. Baum professor of engineering at Cornell,and Weston Wilson, a retired EPA engineer.  Energy in Depth's letter to the Academy is not likely to lessen Josh's time in the limelight and may actually increase his chances of grabbing that Oscar.

Clearly, the controversy over frac'ing is not going away soon. The Washington Post reported on Monday that the county commissioners of Garrett County, Maryland, denied a permit to Carrizo Marcellus Inc. to drill a well in the county, citing concerns about pollution from frac'ing, and the State of Maryland recenlty declined to issue permits to Chief Oil & Gas and Samson Resources to drill in Garrett County, opting to wait for improved drilling technology to protect the environment, even though, according to a spokesman for the Maryland energy department, 1800 gas wells have been frac'ed in neighboring Virginia with no reports of well water contamination.  The controversy has even reached Texas, where Range Resources is in the middle of a fight with the EPA over alleged contamination of groundwater in the Barnett Shale. If the industry wants to fight with Hollywood, it will have to do better than Energy in Depth's effort.

 

Last week, a hearing was held before examiners at the Texas Railroad Commission to determine the source of water well contamination in Parker County. The Environmental Protection Agency had previously entered an emergency order finding that Range Resources was responsible for charging rural water wells with natural gas in Parker County, a finding that Range has vehemently denied. The Railroad Commission called the hearing after the EPA issued its order, to receive facts and testimony on the source of the contamination.

I have posted previously about this controversy, here, here, and here.

Range contends that the water wells are contaminated from gas migrating from a shallow gas-bearing formation just below the water table, the Strawn formation.  The EPA's order says that it did an isotopic fingerprint analysis of the gas found in the water wells matched the gas from Range's nearby wells producing from the Barnett Shale.

Range hired its own experts to do an analysis of gas from the water wells. They concluded that the gas came from the shallow Strawn sands, and that the "fingerprint" of the gas was inconsistent with gas produced from the Barnett Shale. They said the Strawn gas contains high levels of nitrogen not found in the Barnett Shale gas. Nitrogen levels of the gases were apparently not tested by the EPA. Range's expert report can be found here.

EPA representatives declined to attend the hearing. Instead, EPA filed suit in federal district court in Dallas seeking to enforce its emergency order. See copy of complaint here: Range complaint.pdf 

Range sought to depose EPA personnel involved in the investigation for the RRC hearing, but EPA has opposed Range's effort. It removed the motion for subpoena to federal district court in Austin. Last week, Judge Lee Yeakel ordered EPA to produce a representative to answer questions about the investigation. "I think we're dealing with parallel proceedings here [of the EPA and Railroad Commission] that are of extreme significance and will be significant around the country, based on the amount of publicity that [natural] gas and groundwater is getting in virtually every publication and every media outlet that there is," Yeakel said. "This has become a hot-button issue in the country." The RRC has held the record open in its hearing so that the EPA witness's testimony can be included in the record.

Range has also filed an appeal of the EPA emergency order with the U.S. Fifth Circuit Court of Appeals in New Orleans.

In light of the rash of cases being filed by landowners in the Barnett Shale alleging groundwater contamination, the Range-EPA fight may have significance well beyond the water wells involved in the case. Range appears resolved to prove that it is not responsible for the contamination. The case could be the first in Texas, and maybe the first in the nation, to finally have a court determine whether there is any merit to allegations of groundwater contamination being caused by fracing of wells.

Dallas attorney Windle Turley has filed three lawsuits in federal court in Dallas on behalf of landowners alleging contamination of their groundwater by Barnett Shale Wells: one on behalf of Jim and Linda Scoma of Johnson County, against Chesapeake, filed last June; one on behalf of Doug and Diana Harris, against Devon Energy, and one on behalf of Grace Mitchell against Chesapeake and Encana. The suits contend that plaintiffs' groundwater has been contaminated by drilling and hydraulic fracturing operations. A copy of the Harrises' suit can be viewed here.  Turley says more such suits will follow. Turley's website has a page dedicated to such suits, which says that, "when hydro-fracking occurs, it is possible for the property owner's groundwater to become contaminated and/or for gases to be forced into the groundwater. When this happens, the oil company may be liable to the property owner for property damages and injuries. ... The Turley Law Firm is very concerned over the damage done and future risk to property and individuals in the Barnett Shale area, and is filing damage suits on behalf of property owners." Groundwater contamination lawsuits may become new fertile ground for plaintiffs' attorneys.

Range Resources has written to Al Armendariz in EPA's Dallas office again asserting that it is not responsible for the groundwater contamination in Parker County.  Range's letter can be viewed here:  12-27 Armendariz letter.pdf  For my previous posts on this controversy, go here and here.

Range met with EPA staff on December 15, and it says that, as a result of the meeting, Range and EPA agree that "hydraulic fracturing in the Barnett Shale cannot be the cause of natural gas occurring in the domestic water wells identified by the EPA."  Range also made clear in the letter that, while it was complying with the requirements of EPA's order, it did not believe that the EPA had authority to issue its order, since Range was not responsible for the pollution and the order was issued "without any prior notice or opportunity for Range to present important objective facts."

Darell T. Brownlow, Ph.D, has published an article giving his analysis and opinion of the ability of the Carrizo Aquifer to supply water demands caused by fracing of wells in the Eagle Ford play.  The article was published in the newsletter of the Texas Ground Water Association, Fountainhead, and can be found here: Brownlow Article.pdf

Dr. Brownlow, a hydrologist, concludes that there is plenty of water in the Carrizo, in most places, to meet the demands for frac water. His estimates:

• There are about 6 million acres in the Eagle Ford play, and a possible 20,000 oil and gas wells (one well per 300 acres).
• An average frac job uses 15 acre-feet of water (4,887,765 gallons, or 115,375.5 42-gallon barrels).
• So, the frac jobs on those 20,000 wells would use about 300,000 acre-feet of water over the life of the play.
• Current withdrawals from the Carrizo Aquifer are about 275,000 acre-feet per year; so the entire demand for frac water from Eagle Ford wells would equal about one year's withdrawal of water from the aquifer.  At a rate of withdrawal of 275,000 acre-feet per year, groundwater management studies estimate that the Carrizo water table will drop an average of 30 to 35 feet by 2060.

Dr. Brownlow says that, if a successful Eagle Ford well makes 300,000 to 400,000 barrels of oil at $80/bbl, the return to the landowner would be $520,000 per acre-foot ($1.60 per gallon). In contrast, the return to a farmer using  the same acre-foot of water to irrigate corn, peanuts or coastal hay would be $500 to $1,000 per acre, or about $250 per acre-foot of irrigation water. "The point here is that using groundwater from the Carrizo for hydraulic fracturing in the Eagle Ford Shale has enormous economic potential for landowners, oil production companies and the entire region. Moreover, from a geologic and water planning perspective, additional impact on the aquifer appears minimal."

Dr. Brownlow is a resident of Wilson County, a cattle rancher in LaSalle County, serves on the South Central Texas Regional Water Planning Group (Region L), and was the governor's appointee to the Evergreen Underground Water Conservation District from 2000-2010.

Recent happenings in Pennsylvania:

• The controversy over natural gas in underground aquifers in Dimock Township, Pennsylvania continues. It was reported that private lab tests of contaminated water found chemicals used in hydraulic fracturing. Dimock resident Victoria Switzer said that the tests had found ethylene glycol, propylene glycol and toluene in her well water. The testing company said that the tests also found ethylbenzene and zylene in most of the affected water wells in the township. Read the Scranton Times-Tribune article here. The Pennsylvanie Department of Environmental Protection has fined Cabot Oil & Gas for improper casing and cementing that allegedly have caused natural gas to appear in Dimock's ground water.
• Cabot has denied that the tests show contamination of ground water by frac water from its wells. Cabot claims that it has not used xylene, ethyl benzene or toluene in its frac water. It said that the chemicals found in the ground water were present before Cabot ever drilled its wells, and Cabot notes that an automobile and truck repair garage is sited near the water wells tested and that these chemcials are primary constituents of car and truck fuel and are commonly found in gasoline spills.  See article here.
• The EPA hearing on its well frac'ing study finally took place in Binghamton, New York. After all of the concern about the crowd and security, about 700 people showed up for the hearing, while others chose to demonstrate outside the hearing. There were demonstrators on both sides, some holding signs saying "Kids can't dring gas" and "Protect our water. Stop fracking America." Other signs said "Yes to science, no to paranoia" and "Pass gas now!" See Philadephia Inquirer article here. 

Analyst Dave Pursell of Tudor, Pickering & Holt has addressed the frac'ing controversy tongue-in-cheek, inspired by Jack Nicholson's character in A Few Good Men:

You want the truth? You can't handle the truth! We live in a world that needs clean natural gas, and gas wells have to be frac'd by men with rigs and pumps. Who's gonna do it? Microsoft? Apple? The energy industry has greater responsibility than you could possibly fathom. You weep for your i-phone app, and you curse the frac crews. You have that luxury. You have the luxury of not knowing what we know. That fossil energy fuels economic growth. And the existence of frac'ing, while grotesque and incomprehensible to you, powers our economy. You don't want the truth because deep down in places you don't talk about on Facebook, you want them on that frac, you need them on that frac. We use words like pressure, proppant, conductivity. We use these words as the backbone of a life spent producing gas. You use them as a punchline. We have neither the time nor the inclination to explain ourselves to someone who takes a hot shower every morning using the natural gas that we provide, and then questions the manner in which we provide it. We would rather you just said thank you, and went on your way. Otherwise, we suggest you pick up a pipe wrench, and meet us on location. We have wells to frac!