Articles Posted in Hydraulic fracturing

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The E&P industry is continuing to face public criticism of its use of fresh groundwater in fracing wells and its failure to disclose the chemicals added to frac water.

On February 5, the Investor Environmental Health Network (IEHN) issued a press release announcing that shareholders have filed resolutions with Cabot O&G, Chevron, Exxon Mobil, EOG Resources, ONEOK, Pioneer Natural Resources, Spectra Energy, Range Resources and Ulta Petroleum challenging the companies “to quantifiably measure and reduce environmental and societal impacts” of their exploration activities. The resolutions focus on water issues, asking the companies to disclose the amount and sources of water used, how they track and measure naturally occurring radioactive materials (NORM) in frac water, whether and to what extent the companies use closed-loop systems in handling frac water, and what efforts are being made to reduce the amount of fresh water used. Shareholder proposals were filed by Calver Investments, Green Century Capital Management, the New York City Office of the Comptroller, the New York State Common Retirement Fund, the Sisters of St. Francis of Philadelphia, and Trillium Asset Management. IEHN and the Interfaith Center on Corporate Responsibility published a report in 2011, “Extracting the Facts: an investor guide to disclosing risks from hydraulic fracturing,” intended to list and encourage best risk management practices by E&P companies, including reducing and disclosing all toxic chemicals, minimizing fresh water use by substituting non-potable sources, and using closed-loop systems to store waste waters.

Last week, New York Comptroller Thomas DiNapoly announced that the state’s pension fund had reached an agreement with Cabot O&G to disclose its practices for minimizing the use of toxic chemicals in frac fluids. DiNapoli withdrew his shareholder proposal submitted for Cabot’s upcoming proxy statement. DeNapoli has negotiated similar agreements with Hess, Range Resources and SM Energy.

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Here are two good websites that provide interesting and balanced views about energy production and consumption:  The Rational Middle, and Think Progress. The Rational Middle is a series of films by the people that produced the movie Haynesville – A Nation’s Hunt for an Energy Future. Its goal is to encourage rational thinking about our energy future and establishing achievable goals toward sustainable energy. The films about unconventional resources and the risks of hydraulic fracturing are worth looking at.

 

Think Progress’s climate page introduces thought-provoking statistics about our nation’s energy sources and uses. For example:

56.2% of the nation’s energy is wasted each year – from the Lawrence Livermore National Laboratory:

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The University of Texas withdrew a study published earlier this year by UT Austin’s Energy Institute, “Fact-Based Regulation for Environmental Protection in Shale Gas Development,” after review by an independent commission appointed by the University. That review was prompted by a report of the Public Accountability Initiative, a non-profit watchdog group, which revealed that Dr. Charles Groat, professor at the Jackson School of Geosciences at UT and director of the study, sits on the board of Plains Exploration and Production Company and received cash and stock compensation from Plains of more than $1.5 million since 2007, but did not reveal that relationship in connection with the report. Dr. Groat has since retired, and the Head of the Energy Institute, Dr. Raymond Orbach, has resigned as head of the institute.

The independent review commission found that Dr. Groat’s failure to disclose his ties with Plains was “very poor judgment,” and that UT’s conflict of interest policy should be strengthened (UT has done so). The commission also found several other faults with the report:

  • The report was presented as having scientific findings, but most of it was based on “literature surveys, incident reports and conjecture,” and was not in fact “fact-based”.
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This summer, the Department of Interior’s Bureau of Land Management issued proposed rules relating to disclosure of the content of frac fluids and handling of frac fluids used in wells drilled on puclic lands managed by the BLM. Last week a group of Congressmen led by Congressman Edward J. Markey, D. Mass., head of the House Natural Resources Committtee, have submitted an extensive letter commenting on the proposed rules.

The letter criticizes BLM’s rules for (1) not requiring disclosure of chemicals in frac fluids prior to drilling of a well rather than after the fact, (2) proposing to use FracFocus as the method for disclosure of frac fluids, (3) allowing flowback fluids to be stored in earthen pits, (4) not imposing requirements for proper well construction, cement and casing design and installation, and (5) not establishing minimum setbacks between wells and public buildings to minimize harm from air emissions during well completions.

As I have reported earlier, the Texas Railroad Commission recently published proposed rules tightening regulations on well construction and cementing, as well as more stringent regulation of disposal wells, to better protect against contamination of groundwater.

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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.

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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.

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The Pacific Institute has issued a study of issues related to hydraulic fracturing and water resources: Hydraulic Fracturing and Water Resources: Separating the Frack from the Fiction. The Pacific Institute is a non-profit research and policy organization based in Oakland, California. The study is largely a summary of interviews of environmental and industry experts and of research in the area; it provides a good summary of the present issues surrounding fracing and the literature on the subject.

The authors comment on the debate of whether hydraulic fracturing is the cause of any groundwater contamination by characterizing it as an issue of definition: those in the industry, they say, define the term narrowly as including only the actual process by which fluids are injected into the wellbore under pressure to fracture the formation. The authors elect to define the term more broadly, “to include impacts associated with well construction and completion, the hydraulic fracturing process itself, and well production and closure.” It is true that people outside the industry have tended to use the term “fracing” to include anything that can go wrong in the process of drilling, completing and producing a well and cause contamination. It is a mistake, however, to use the term to include risks of contamination from well construction, production and closure; those risks occur with all wells, whether they are vertical or horizontal and whether they are completed in shale or conventional formations.

The authors discuss the following issues surrounding “fracing,” as they broadly define it:

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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:

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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.

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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.

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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.

Powell Eagle Ford Map.jpg

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:

Powell Oil Prod.jpg

Powell Gas Prod.jpg

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. 

 

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