UnconventionalResource DevelopmentandtheEnvironment: TheCuriousSituationinNewYork

JohnP.Martin,Ph.D. JPMartinEnergyStrategyLLC SaratogaSprings,NY12866 Director ShaleResourcesandSocietyInstitute UniversityatBuffalo,SUNY and SeniorAdvisor EcologyandEnvironment,Inc. 2ndUnitedStatesIndonesiaEnergyInvestmentRoundtable Jakarta,Indonesia February6,2012

Background FractureStimulationand UnconventionalDevelopment

Increasing Complexity

EarlyDevelopment:

ModernDevelopment:

StateoftheArt:
Complexengineered systemsrequiring significantplanning, qualitycontroland monitoring

NaturalFractureSystems InducedFractureStimulations 1820s:1st well,Fredonia,NY 1950s 1990s: Napalm,Nitrogen,Nuclear 1860s:ExplosiveFracturingwith verticalandlimitedhorizontal Nitroglycerin(PA, BarnettShale,Texaswaterfracs NY,KY,WV) 2000 Present: 1880s:1st Marcellus HighVolumeHydraulicFracture wellsinNY stimulationusingwater,propane 1890s:OhioShale,BigSandy, andrecentlyCO2 WestVirginia Shaleplayson6ofthe7continents 1930s:acidizing

Slide courtesy of Ecology and Environment, Inc.

ShaleWellLifecycleSynopsis

Top: Sierra Club Middle: Grant Jacobs, Southwestern Energy, 2010 Bottom: USDOE, Shale Gas Primer, 2009

FirstofThreeCriticalInnovations: MultiwellPads
Keycostreductionfactor. Usedasearlyas1970inthe PrudhoeBayField,Alaska. Flexibledrillingsitethatcan accommodatemultiple wellheads. Centralizedsiteoperations eliminatesduplicativeancillary activitiessuchasdrillingrig mobilization/demobilization.
AlaskaOilandGas Conservation Commission

MultipleWell Pads:1970

PotentialEnvironmentalIssues
Therearefewenvironmentalimpactsthat differfromthetypicalsitingoperationforthe industry. Seismicoperations:disturbanceandnoise Sitedevelopment:
erosion habitatfragmentation dust soilcompaction

Well Pad Under Preparation (PA) Source: www.naturalgas.psu.edu

Ultimately,centralizedmultiwellpads REDUCEoveralldisturbanceandimpact

Top: NYSDEC Middle: Grant Jacobs, Southwestern Energy, 2010 Bottom: Star-Telegram/Joyce Marshall, 2010

Innovation#2:HorizontalDrilling
Wellisturned toparallel formationrather. Firsthorizontalwell:1929 Firsthorizontalshalewell:1986 (Devonian,WV,USDOEresearch well) Firstcommercialhorizontalshale well:1988(MichiganAntrimShale) Today,about2/3rdsoftheU.S.rig countisnonvertical,andcloseto 50%oftherigcountisdrilling National Energy Board (Canada), A Primer for horizontalwells. (Triepke2010) Understanding Canadian Shale Gas November 2009
Triepke, Joseph, Land Rig Review: Rebound Predicated on Oil/Horizontal Drilling, Rigzone, March 8, 2010 (http://www.rigzone.com/news/article.asp?a_id=88967). Image: Blue Flame Energy Corp.

EnvironmentalIssues
Undergroundfluidandgasmigrationdueto drillingpractices(welldesign,casing, cementing) Noiseandairemissions Visualimpact Onsitespills
Insulation blankets used to deaden noise from drilling operations

Top: Grant Jacobs, Southwestern Energy, 2010 Middle: NTC Consultants Bottom: USDOE, Shale Gas Primer, 2009

Innovation#3:HydraulicFractureStimulation
Firsthydraulicfracturing:1903(granitemining) Firstcommercialoilandgasfrac:1949 Firsthorizontalshalefrac:1995(BarnettShale,Texas,USA) Estimated35,000wellsannuallyinUSA.(APIHF22010) Over1millionwellsofthe2.5milliondrilledinUSAsince1949 havebeenhydraulicallyfractured.(APIHF22010andEIA) Horizontalhydraulicfracturingcanbeequatedtoaseriesof verticalwellscalefracstagesincreasingproductionsubstantially.

Image: Blue Flame Energy Corp.

PotentialEnvironmentalIssues
Trucktraffic noise,emissions,roaddamage Waterqualityimpacts:
ecosystemandaquiferimpactsassociatedwithwaterwithdrawals for hydraulicfracturing Watercontaminationduetowellborefailure,spills,disposal

Naturallyoccurringradioactivematerials Airemissions:
Greenhousegases Volatileorganiccompounds

Lifecycle Fluid Management

InducedSeismicity
Stimulation no Disposal maybe

AndOnethatisLikelynotanIssue
Oneofthecommonlyperceivedrisksfromhydraulicfracturingis the possibilityofleakageoffracturingfluidthroughfracturesintodrinkingwater. Regulatorsandgeophysicalexpertsagreethatthelikelihoodofproperly injectedfracturingfluidreachingdrinkingwaterthroughfracturesisremote wherethereisalargedepthseparationbetweendrinkingwatersourcesand theproducingzone. SecretaryofEnergyAdvisoryBoardSubcommittee90Day ReportShaleGasProduction,August18,2011

Fisher, Kevin, Data Confirm the Safety of Well Fracturing, American Oil and Gas Reporter, July, 2010

PotentialLifeCycleImpacts
PotentialPositive Impacts:
Jobs
Directandindirect

PotentialNegative Impacts:
Surface
Sitedisruption,spills,water management

incomeandtaxrevenue
Company,landowner, associatedservices,local andstatetaxcollections

Subsurface
Drinkingwatertable, chemicals

Communityand CumulativeImpacts:
Economicdevelopment
Infrastructure,growth

CommunityandCumulative Impacts:
Changeincommunity character,growth? Cumulative
air,water,noise,visualand ecological(includingclimate change)

Energyforsocietyandall itsramifications
Domesticallysourced, multipurposefuel

EnvironmentalIssues:NewYorkStyle!
Oil,GasandSolutionMiningLaw NYSEnvironmentalQualityReviewAct
encourageproductiveandenjoyable harmonybetweenmanandhis environment Identifypotentialadverseimpactsand waystomitigatethem(thinkNEPA).

Surfacewaters,groundwater, agriculture,historical&archeological sites,significanthabitats,floodplains, wetlands,statelands,coastalzone, streams,generalhabitatloss

NewYorkPolicyActions
July21,2008:Shalewellspacinggoesineffect. July22,2008:Amediareportcriticalofhydraulic fracturingandNYSregulationreleased. July23, 2008:Whileannouncingsigningthenew spacinglaw,theGovernorrequestsnew environmentalreviewofdrillingpractices. Startsevaluationofhighvolumehydraulic fracturestimulationandmultiwellpads. BIGISSUE:NewYorkCitywatershed

TheSGEIS ReviewProcess: AVeryPublic Debate

(clever title: are they cutting in on your lawyers action?) Note liberal use of celebrity/ environmental activist. And tree.

Understanding Context
Onceagainrequisiteuseof celebrities
waterthatcanbelitonfire rightoutofthesink

Butthatsnotsounusual..Thisphoto fromSaratogaLakepublishedinthe DailyGazette,July13,1997

Photo Credit: Geraint Lloyd

SGEISandJobs:EcologyandEnvironmentStudy VersusJOBS

Opponents of natural gas hydrofracking take part in a rally at the Legislative Office Building on Monday, Jan. 23, 2012 in Albany, NY. Opponents held the rally prior to meeting with legislators to press for a ban on hydrofracking in the state. (Photos: Paul Buckowski / Times Union)
Read more: http://www.timesunion.com/local/articl e/Fracking-foes-push-drilling-ban2681557.php#ixzz1kPb5Pf1h Nearing, Brian, Fracking foes push drilling ban, Times Union, January 23, 2012

Frackings Future in the U.S. Comes Down to Upcoming New York State Decisions
By Mark Fischetti | January 11, 2012| 10

NewYorkStateisthekey battlegroundthatwilldeterminethe futureoffrackingintheU.S.,and January11,2012,isaturningpoint.

RealizingaRisk:IsthisRegulatoryFailure?
Since2008,>3,500Marcelluswellshavebeendrilledin Pennsylvania withlessthan25majorimpactevents.* PerrowsNormalAccidents:Thereisnosuchthingasa systemthatistotallyriskfree.Nomatterhowwework toreducethelikelihoodoffailure,thereisalwayssome minimalprobabilitythatsometime,someplace,there willbefailure** BetrayalAversion:Themerepossibilityofbetrayal threatensthesocialorderthatenablesustotrustthe safetyinfrastructureofoursociety,causingintense visceralreactionsandnegativeemotionstowardthe betrayer(KoehlerandGershoff2003).***
*Considineetal.2012inreview.**fromMikeUretsky,Ph.D.unpublishedmanuscriptusingtheframeworkdevelopedinPerrow,Charles, NormalAccidents:LivingwithHighRiskTechnologies,NewYork,BasicBooks,1984.***Gershoff,A.andJ.Koehler, SafetyFirst?TheRoleof EmotioninSafetyProductBetrayalAversion,JOURNALOFCONSUMER RESEARCH,Vol.38,June2011

ThankYou