Recently in Marcellus Shale Category

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.

December 23, 2010

Update on EPA Order Against Range Resources, Parker County

EPA's order against Range Resources for allegedly charging groundwater with gas from its Barnett Shale wells has caused quite a stir.

The Texas Railroad Commission has issued two news releases, one on December 7 and one on December 8.  Commission Chairman Victor Carrillo said that he has told EPA Regions 6 Administrator Al Armendariz that "EPA's actions are premature as the Railroad Commission continues to actively investigate this issue and has not yet determined the cause of the gas. This EPA action is unprecedented in Texas, and commissioners will consider all options as we move forward." Commissioner Michael Williams said "this is Washington politics of the worst kind.  The EPA's act is nothing more than grandstanding in an effort to interject the federal government into Texas business." The December 8 press release said that the Commission has called a hearing for January 10 and "expects both parties, the EPA as well as Range Resources representatives, to appear before Hearings Examiners and testify as to the allegations made yesterday." Range has said it will attend the hearing, but it understands that the EPA will not.

Continue reading "Update on EPA Order Against Range Resources, Parker County" »

November 3, 2010

Arthur Berman Does It Again

Arthur Berman, a geological consultant, has once again blasted the economics of gas shale plays -- this time the Marcellus.  At the annual conference sponsored by the Association for the Study of Peak Oil & Gas - USA, held on October 7-9 in Washington, D.C., Mr. Berman made a presentation: "Shale Gas--Abundance or Mirage? Why the Marcellus Shale Will Disappoint Expectations."  His power-point from that presentation may be found here:  Arthur Berman on Marcellus.pdf  Mr. Berman argues that only a small percentage of the areas now being touted as productive in shale plays -- the "core areas" are economic at any price; that even within the core areas, performance is not uniform and the geology is complex; that the wells are very expensive and the break-even gas price is as high as $8-$12/mcf; that reserves have been overstated by the companies in the plays; that the industry is not properly estimating estimated ultimate recoveries from the wells; that changes in reporting rules recently adopted by the Securities and Exchange Commission allow companies to "book" estimated reserves prematurely; and that the economies of the plays will ultimately be reflected in lower share prices of the companies participating in the plays. 

For the Marcellus in particular, Mr. Berman asserts that infrastructure limitations -- lack of pipeline and gas processing capacity -- will slow development, that environmental issues -- fears about groundwater contamination, proximity to urban areas, and regulatory restraints -- will not go away, and that economics for drilling in the Marcellus Shale are no better than in the Barnett Shale. Mr. Berman says that shale gas is the nation's next speculative bubble likely to burst.

Mr. Berman created a stir just a year ago when he published a similar gloomy analysis of the Barnett Shale, at the ASPO conference in October 2009.  At that time he was a contributor to a trade publication called World Oil, which is sent free to top oil & gas E&P executives. In early November 2009, World Oil was about to publish another article by Mr. Berman critical of shale plays, but the president of the publication ordered that it not be published. Mr. Berman resigned, and his editor Perry Fischer, who insisted that the article be published, was fired. All of this created a stir in the blogosphere. Fischer contended that World Oil executives were pressured by CEOs of two public E&P companies not to publish any more of Mr. Berman's critiques. Tudor Holt & Pickering, who analyze the oil and gas industry, published a critique of Mr. Berman's analysis, and two oil executives from Devon and Chesapeake wrote newspaper op ed pieces critical of his work. Chesapeake CEO Aubrey McClendon said at the time that he expected gas prices to continue to rise, which would lead to an increase in drilling and production in the shale plays. "We think all of the elements are in place for gas prices to be higher in 2010 than they are today," McClendon said.

McClendon's predictions have not held true. Gas prices have continued to slide, although drilling in the shale plays has continued. Particularly in the Haynesville, wells are being drilled that are surely not economic at current prices. The only explanation I know of for this continued drilling is that the companies who paid $10,000 to $25,000 per acre for leases in the play must drill the wells to prevent the leases from expiring. The result is that gas production and drilling remains high despite lower prices, resulting in a continued glut in supply, further reducing prices.  In the meantime Mr. McClendon, always quick on his feet, has moved to the Eagle Ford Shale play, a "liquids-rich" play, because oil prices, unlike gas, have not declined. Chesapeake acquired a large position in the "oil window" of the Eagle Ford and quickly made a deal with China's national oil company to sell them one-third of its acreage for $10,000 an acre. If indeed, as Mr. Berman believes, the shale plays are the next speculative bubble, maybe it will be national oil companies like China's who are left holding the bag.

October 1, 2010

More On the Frac'ing Controversy

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!

 

June 29, 2010

John Hanger, Secretary of Pennsylvania Department of Environmental Protection, Comments on Movie Gasland

John Hanger, head of the agency responsible for regulating the oil and gas industry in Pennsylvania, said in an interview by the Philadelphia Inquirer that the movie Gasland, by Josh Fox, was "fundamentally dishonest" and "a deliberately false presentation for dramatic effect," and called Fox a "propagandist." Hanger was interviewed by Fox in the movie, at the end of which Hanger walked out on the interview. Hanger was formerly head of the environmental group Citizens for Pennsylvania's Future (PennFuture). He has sought stricter regulation of the industry over its objections.

Fox's movie has come under criticism by others. Energy in Depth, an industry website, calls his movie "heay on hyperbole, light on facts." Fox blames much of the pollution depicted in the movie on hydraulic fracturing. The movie shows water coming out of a faucet charged with methane and lit on fire.

Richard Stoneburner, President of Petrohawk Energy, commenting on the environmental opposition to hydraulic fracturing, has written that natural gas often occurs naturally in fresh water sands.

America's Natural Gas Alliance, another industry group, has posted an entry on its website titled "The Truth About Gasland," rebutting allegations in the film:

In the film's signature moment Mike Markham, a landowner, ignites his tap water. The film leaves the viewer with the impression the flaming tap water is a result of natural gas drilling. However, according to the Colorado Oil and Gas Conservation Commission, which tested Markham's water in 2008, at his request, methane in his water supply had "no indications of oil & gas related impacts to water well." Instead the investigation found that the cause was "biogenic" in nature, meaning it was naturally occurring due to the fact that his water well had been drilled into a natural gas pocket.

Professor Don Siegel at Syracuse University  told reporters in an interview that anti-drilling activists like Fox are distorting the facts about natural gas drilling. "As a hydrogeologist, I really am almost offended by some of the opposition that's trying to paint a picture of what groundwater resources are like that is completely wrong." He proceeded to list the "not-truths" about hydraulic fracturing.

June 10, 2010

Pennsylvania Suspends EOG's Right to Drill Wells after Blowout

The Pennsylvania Department of Environmental Protection (PDEP) on Monday ordered EOG Resources to suspend all drilling operations in Pennsylvania pending investigation of an EOG well blowout on June 3 in Clearfield County, Pennsylvania. EOG had previously said it planned to drill 40 wells in the Marcellus Shale in 2010, and it not operates about 265 wells in Pennsylvania. The blowout shot gas and drilling mud and some 36,000 gallons of frac fluid 75 feet into the air. There was no fire, and no one was hurt. The PDEP banned EOG from drilling for up to seven days and from using hydraulic fracturing techniques for up to fourteen days. EOG said the blowout appears to have been caused by leaking seals in a blowout preventer.

PDEP also ordered C.C. Forbes, a unit of oilfield services contractor Forbes Energy Services, a Canada drilling company, to stop all work on Marcellus Shale wells. Forbes provided post-hydraulic fracturing services for EOG on the well that blew out. Forbes has idled to rigs in the Marcellus Shale.

This is the second time PDEP has banned an operator from drilling wells in the Marcellus Shale.  Previously, PDEP banned Cabot Oil and Gas from conducting hydraulic fracturing operations in Susquehanna County after three spills of a chemical used in hydraulic fracturing at Cabot wells. PDEP also fined Cabot $56,650 and ordered the company to submit a new Pollution Prevention and Contingency Plan and Control Disposal Plan for its wells.

The failure of EOG's blowout preventer is reminiscent of the environmental disaster now taking place in the Gulf of Mexico.