Presentation on theme: "State Regulation of Hydraulic Fracturing April 12, 2011"— Presentation transcript:
1State Regulation of Hydraulic Fracturing April 12, 2011 Aurana Lewis, MEMNicholas School of the EnvironmentBill HolmanDirector of State PolicyNicholas Institute for Environmental Policy Solutions
2Our MissionTo help decision makers create timely, effective and economically practical solutions to the world’s most critical environmental challengesWe engage faculty & students at Fuqua School of Business, Duke Law, Nicholas School of the Environment, Pratt School of Engineering and Sanford School of Public Policy.
3Dan River BasinDeep River BasinUS Energy Information Admin with Dan River and Deep River Basins added to show location and size.
4US Energy Information Administration This graph shows production.
5Shale Basins in North Carolina ChathamLeeReid, J.C and R. C. Milici, 2008US Geological Survey and NC Geological Survey are completing a resource assessment in Spring 2011.NCGS has estimated 59,000 acres may have gas resources.(See Last Slide for ‘Natural Gas Well Types’)Vertical wells have an average spacing of 40 acres per well, single wells per pad, estimated: 1,475 wellsvertical wells: 2-3 acres per well, estimated 3,687 acres disturbance. (using 2.5 acre avg.)Horizontal wells have an average spacing of 640 acres per well, multiple wells per pad, estimated: 92 wellMulti-well horizontal pads: 4-6 acres per pad, estimated 461 acres disturbance (using 5 acres avg.)Source: NY State Draft Supplemental EIS: Chapter 5 Natural Gas Development Activities and High Volume Hydraulic FracturingThe exploratory wells have been drilled primarily by private companies. The report is from the USGS, based on “previously unpublished organic chemistry data” from “87 samples from 28 drill holes.”This report was published in 2008, Reid and Taylor came out with a new map in 2010 reviewing the information from the Sanford and sub-basin and the Deep River Basin, but it is not available online.MooreReid, J.C. and R.C. Milici “Hydrocarbon Source Rocks in the Deep River and Dan River Triassic Basins, North Carolina”
6States Take the LeadLimited federal role due to executive and congressional actionsIndustry prefers state regulationState experience with conventional oil & gas development predates national environmental lawsInterstate Oil & Gas Compact Commission -- STRONGER
7Shale Gas Production Well Pad and Road Construction Drilling Hydraulic FracturingProduction/Partial Well Pad ReclamationRe-Fracturing/ Well ClosureThis slide depicts activities associated with development. Producing shale gas is an industrial process.
8Well Pad and Road Construction Time:7 – 28 Days(Bradford County, PA)Lease the mineral rightsChoose a location3 – 5 acresDetermine restricted areasObtain appropriate permitsFollow state and local setback requirementsConstruct well padEngineer well pad and roadsPlan for chemical and waste storage onsite /prevent spills and leaksControl sediment and erosionManage stormwaterHorizontal drilling generally requires a larger well pad than vertical drilling. This also may extend the time for some of these steps. Mostly, the multi-well pads are drilled and fractured several times so the middle steps (drilling and fracturing) multiply over several times before reclaiming part of the well pad.Thompson Bros, “Nexen Well Pad 9111 and Access Road.”
9Drilling Drilling, either vertical or horizontal Time:21-24 Days (Chesapeake Energy)Drilling, either vertical or horizontalConstruct casing for groundwater protectionStore drill cuttingsGranberg, A “Anatomy of a Gas Well”
10Hydraulic Fracturing Withdraw freshwater Time:2 – 5 Days40 – 100 Hrs(Pumping)Withdraw freshwaterTransport chemicals and proppants to siteMix and inject high pressure solution into the wellCollect, store and dispose of flowback water and wastesNew York Department of Environmental Conservation, 2009 “Draft Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, Chapter 5”
11Partial Well Pad Reclamation Production/Partial Well Pad ReclamationTime:7-10 years(Harper, 2010)Produce gasProcess gas to remove waterCompress and pipe gas to processing plantsCollect and dispose of produced water and wastesReduce the size of the well padRemove well equipmentClose pits and tanks storing waste fluidsReclaim a portion of the well padVeil, J “Water Management Technologies Used by Marcellus Shale Gas Producers”
12Re-Fracturing/ Well Closure Well re-fracturing7-10 years after initial hydraulic fracturingImpacts similar to original fracturingWell PluggingPlug well to prevent gas releases, surface contamination, and groundwater contaminationRestore siteWell re-fracturing would require similar amounts of equipment, water and chemicals as the initial fracturing process.https://docs.google.com/viewer?a=v&pid=gmail&attid=0.1&thid=12e d6eb&mt=application/pdf&url=https://mail.google.com/mail/?ui%3D2%26ik%3D0f95c11480%26view%3Datt%26th%3D12e d6eb%26attid%3D0.1%26disp%3Dsafe%26realattid%3D289e aefeb_0.1%26zw&sig=AHIEtbRXCf_jQNWHGnpKm2N0RYutsbdUHQSource: Harper, J. and Kostelnik, J. “The Marcellus Shale Play in Pennsylvania.” ref: Dewitt, 2008.
13Cost Estimates for Production Well Costs in the MillionsRoyaltiesFinding and Development Cost (per Mcfe)Haynesville$7.2025%$1.48Marcellus$4.5015%$1.26Barnett$2.80$1.41Fayetteville$3.1017%$1.50Colony Granite Wash$6.2520%$1.37TX PH Granite Wash$1.18Average$4.71The finding and development costs cover exploration. I am unclear whether these well costs cover production costs.The royalties are paid to the mineral rights owner, whether private or the state.Mcfe = million cubic feetIOC = International oil companies. Several of the shale gas producers are being acquired by international oil companies (ExxonMobil and StatOilHydro). Chesapeake sold 32.5% stock to StatOilHydro, and XTO energy was bought by ExxonMobil.Kulkarni, P “Arrival of IOCs and increasing legislative interest signal critical mass for Marcellus” ref. Chesapeake Energy
14Public Health & Environmental Concerns New demand for surface and groundwater resourcesSedimentation & erosion from pads, roads & pipelinesWastewater treatment and disposalLeaks and spillsPotential groundwater contaminationPotential air emissionsManagement of solid, hazardous and radioactive wastesReporting requirementsPlugging wells“Adaptation in Fractured Appalachia” Hannah Wiseman Villanova Environmental Law Journal 2010“NC’s Natural Gas Reserves: Are We Ready for the Boom” John Noor UNC Law Student April 5, 2011
15State & Local Concerns Permit and inspection fees Expertise Royalties Financial assuranceLocal zoning? State role? Local role?Property rights of neighborsTruck trafficTerms of leases
16Water QuantityDOE National Energy Technology Laboratory “Modern Shale Gas Development in the United States: A Primer”
17Water Usage Data for 494 Haynesville (TX-LA) Shale Gas WellsTypical Aquifer – Keithville CompactorFracturing Source Aquifer – South CampWater StatsTwo separate sets of information, both in the the Haynesville Shale:1) Welsh gives average water usage in the Haynesville to give a sense of all water usage across the different wells using data from both TX and LA.2) Lewis and Hanson studied water usage in two aquifers in the Louisiana Haynesville : Keithville Compactor and South Camp.Oct 2009 – Aug 2010Average Water Use per Well – 4,828,464 gallonsSource: Welsh, 2010 “Creating Successful Community Partnerships –Carrizo-Wilcox Aquifer Collaboration in Louisiana”Source: Lewis and Hanson, “A Watershed Approach”
18Water Quality Fracturing Fluids TotalEstimated Chemical Usage/Fracture:14,700 gallonsActual chemical mixture considered proprietary by gas companies. Some states, such as WY, OH and Delaware River Basin Commission, require release of specific chemical mixture. Most gas companies have disclosed their fracture fluid chemicals to EPA and States.EPA, “Draft Hydraulic Fracturing Study Plan”
19Health Effects from Hydraulic Fracturing Chemicals with CAS Numbers Cardio. and BloodEndocrine DisruptorsEcologicalMutagenCancerOtherPercent of Total Reviewed ChemicalsSkin, Eye and Sensory OrganGastrointestinal and LiverBrain and Nervous Sys.RespiratoryImmuneKidneyCAS = Chemical Abstract Service, a division of the Am Chemical SocietySource: Colburn, T “Natural Gas Operations from a Public Health Perspective”
20Water & Air QualityWell casing and cementing are critical to prevent groundwater contamination by migration of methane and other pollutants and to prevent explosionsHarrison, S “Evaluating System for Ground-Water Contamination Hazards Due to Gas-Well Drilling on the Glaciated Appalachian Plateau”
21Water Quality Constituents in Flowback Water EPA Drinking Water Quality StandardsMinMedianMaxUnitsTDS (Brine)153093200337000mg/LNAMetals*Barium0.553661.5157002 mg/LStrontium0.5018215841RadiationAlpha Radiation22.411414.518950pCi/L15 pCi/LBeta9.6813957745OrganicsBenzene15.7479.51950ug/L5 ug/LEtylbenzene3.353.6164700 ug/LTouluene2.383331901000 ug/LXylenes16487267010,000 ug/LFrom 56 flowback samples taken from PA and WV* These are the metals limited by the PA DEPThese are picked from a much larger table of chemicals. Note only 56 samples.The PA Dept of Environmental Protection is regulating these two metals, barium and strontium, with the TDS level.NYSERDA, "WATER-RELATED ISSUES ASSOCIATED WITH GAS PRODUCTION IN THE MARCELLUS SHALE"
22Water & Air Quality Prevent spills and leaks PitsLining FailuresPit overflowsIncompatible liner/fluid storageVolatile chemical releasesTanksTank leaksIncompatible chemical storageSecondary containment failurePedler, 2010 Allegheny Defense Project; Lustgarten, 2009, Propublica
23Air Quality Issues Fugitive Emissions Dehydration Vehicles Flaring EnginesPitsVentingParticulate MatterxDustHydrogen SulfideOzoneoCarbon MonoxideNitrogen OxidesSulfur DioxideVOCsBTEXPAHsMethanex = Directly Emitted Emission o = Indirectly Generated EmissionEarthworks 2010 “Sources of Oil and Gas Air Pollution”
24Wastewater Treatment High Total Dissolved Solids >100,000ppmNot removed during treatmentHigh Naturally Occurring Radioactive Material (NORM)Not tested during disposalNot fully removed during treatmentTDS = total dissolved solidsPolicy question: treat, dispose of on-site or truck to wastewater treatment plants.ChlorideSulfateTDS500 mg/L (TDS Limit)TetraTech, 2009 “EVALUATION OF HIGH TDS CONCENTRATIONS IN THE MONONGAHELA RIVER”
25Underground Injection Wastewater Disposal Most common disposal methodPossible risks of seismic activityArkansas,Texas, 2008Ohio, 1986NC General Statute (b) prohibits the discharge of any wastes to the subsurface or groundwater of the State by means of wells.15A NCAC 02C .0213US DOE, 2009 “Modern Shale Gas: a Primer"
26Recycling and Reuse of Wastewater Commonly used in the Barnett Shale, TX, Fayetteville Shale, AR and Marcellus Shale, PAEnergy intensiveLimits truck travel by treating on siteConcentrates RadioactivityRigzone Staff, 2010 “Water Treatment Key to Hydraulic Fracturing's Future”
27Local Regulation by Ft Worth Exposure to contaminatesAir EmissionsNoise and lightScenic EffectsTruck TrafficThe Barnett Shale in Texas produced about 2 trillion cubic feet of gas in 2010. This is just under ½ of the 4.5 trillion cubic feet of gas produced in 2010.City of Fort Worth, 2010 “City of Fort Worth Gas Wells”; Fort Worth City Managers Office, “Environmental Impacts of Gas Drilling”
28Local Impacts: TrucksRequires between 4,300 to 6,500 truck trips per wellDamage to roads & bridgesEmissions & dustCongestionHeavenrich, S. Oct 06, “FrackWaste Truckers Rack up 959 Safety Violations in Three Days”Marcellus-shale.us “Our look at Road Damage from heavy truck traffic”
29Leasing & Royalties for Property Owners Avg. Lease LengthEarly Leasing LevelLeasing LevelYearBonus (per acre)RoyaltiesRoyalitiesNew York3-5 years1999$512.50%$3,00015%-20%Pennsylvania5-7 years2002$12$2,90017%-18%West Virginia---2007$1,000-$3,00016%-18%Texas2000$1,00020%-25%$10,000-$20,00025%-28%Congressional Research Service:Note these are the levels for private land owners. Levels are slightly different for state lands (both higher and lower)Andrews, A, et al “Unconventional Gas Shales: Development, Technology, and Policy Issues”
30Selected State Responses to Hydraulic Fracturing Colorado2009 – House Bill 1292 regulates hydraulic fracturing impacts.Ohio2010 – Senate Bill 165Amendments made to many of Ohio’s oil and gas regulations to include provisions for hydraulic fracturing.PennsylvaniaJuly Changes to well casing and cementing rules to prevent blowouts and contamination.June 2010 – Limits for total dissolved solids, barium, strontium, chloride and sulfate in wastewater.Nov Changes to erosion and sediment control plans for sites greater than 5 acres.WyomingJune 2010 – Updates oil and gas regulations to require identification of hydraulic fracturing chemicalsAmendments also include handling of well stimulation fluidsThe industry has developed rapidly. States have struggled to keep up, but States have taken the lead in regulating hydraulic fracturing. Most states with shale gas resources have existing oil and gas industries and expertise with oil and gas exploration & development.
31Alabama Arkansas Louisiana Texas New York 2000 – Extensive changes to oil and gas regulation, partly to regulate hydraulic fracturing in coal bed methane wells.2007 – Passed the rule Hydraulic Fracturing of Coal BedsArkansasAdded rule B-19 “Requirements for Well Completion Utilizing Fracture Stimulation”2010 – Moritorium on injection disposal, extended and expanded in Jan 2011Louisiana2009 – Order No. U-HS laid out rules regarding urban development of Haynesville Shale2009 – Oil and Gas amendment encouraging the reuse of flowback and produced waterTexas2001 – Fort Worth sets city ordinances regarding natural gas production in the city area.New YorkGeneric Environmental Impact Statement on Oil and Gas Solution Mining Regulatory ProgramRevised Draft Supplemental Generic Environmental Impact Statement in 20102011 Maryland General Assembly is debating a moratorium on fracking and a study.
32North Carolina Law Oil & Gas Conservation Act of 1945 Permits vertical drillingProhibits horizontal drillingEstablishesPermit $50/well$5000/well$0.005/mcf (1000 cubic feet)Article 27, NC GSPermit fees, bonding, and private & state royalties in other states are much higher. State regulation of oil & gas development in most states is receipt supported. Most NC counties levy higher permit fees for domestic wells than $50.
33Policy OptionsStudy economic and environmental advantages and disadvantages of developing shale gas in North CarolinaUSGS/NCGS Resource Assessment, Spring 2011Learn from other States, the industry, EPA, and the publicStates are primary regulators of this industryDevelop a comprehensive regulatory program/avoid inefficient, fragmented regulatory program
34Policy Options2010 UNC-CH-Duke Water Allocation Study recommended a moratorium on water withdrawals for shale gas until the Division of Water Resources completes hydrologic models for the appropriate river basins to ensure that water withdrawals will not adversely impact other water usersCollect baseline data before development
35Resources for StatesState Review of Oil and Gas Environmental Regulations (STRONGER):Hydraulic Fracturing Guidelines, 2010America Petroleum Institute (API) releases :Hydraulic Fracturing Operations - Well Construction and Integrity Guideline, 2009Water Management Associated with Hydraulic Fracturing, 2010Practices for Mitigating Surface Impacts Associated with Hydraulic Fracturing, 2011US Environmental Protection Agency (EPA)Potential Impacts of Hydraulic Fracturing on Drinking Water Resources – due 2012State Review (STRONGER) was formed in 1999 to strengthen state regulation of hydraulic fracturing. The process started in 1988 between the EPA and Interstate Oil and Gas Compact Commission (IOGCC). In 1998 the EPA decided to continue to exempt oil and gas production waste from federal regulation, but worked to strengthen state oil and gas regulation.EPA has recently started a study. Funding was set aside in the 2010 fiscal year. The draft of the EPA study plan was released in February EPA’s study takes a cradle to the grave approach to water use during hydraulic fracturing, but is limited to ‘the relationship between hydraulic fracturing and drinking water resources.’ EPA plans to finish its study in 2012.
36Contact InformationBill Holman Director of State Policy Aurana Lewis, MEM
38Federal Statues: Clean Water Act CERCLA Prevents discharges of oil and gas waste to waters of the US with a permitCERCLAHolds drilling companies accountable for all non-petroleum or natural gas pollution on siteHazardous Materials Transport Act and Hazardous Materials Transportation Uniform Safety ActRegulates the transport of hazardous fracturing chemicals to the siteEndangered Species ActFunctions when working on federal landWould you like a second slide showing federal exemptions? Yes
39Local Land Use Issues Restricting well development in scenic areas Requiring stormwater management plansRequiring erosion control plansSetting well spacing requirementsMandating setbacksResidencesWater bodiesRoad waysSetting Noise and Light Standards:Setting hours of operation in urban areasState policy goals could include: protection of public health and the environment, safe development of the resource, increasing the use of cleaner fuels for heating, power generation and transportation, and protection of the property rights of neighboring property ownersComprehensive regulation could include: collection of baseline data before drilling, water withdrawal permit, wastewater discharge permit, well construction permit, including identification of nearby wells and closing abandoned wells, sediment & erosion control permit, stormwater permit, waste management permit, air pollution permit, spill response plan, truck traffic, road construction, training for drillers, financial assurance, etc.
40Water Quality Issues: AR, CO, LA, OH, PA, WY Pit and Tank StorageSet standards for constructionEnsure compatible fluid or volatile compound containmentSpill Prevention*Require spill prevention and containment pollution plansIdentify chemicals used in hydraulic fracturingWell casing and cementingIdentify and test surrounding water wells before and after fracturing*Require reporting of well casing and cementing logs* Not required in all States
41Water Quantity and Disposal Water Management Plans: Ex: Delaware River Basin Commission Fresh Water ReportObtain water use permitIdentify sourcesCreate Invasive Species Control PlanSubmit hydrologic report (groundwater)Obey Pass-by flow guidelinesRecord volumes deliveredIdentify water conservation effortsWaste Water StorageStore only in enclosed tanksTest for chemical constituentsWaste Water ReportObtain waste disposal permit from approved facilityAddress all wastewater produced on siteRecord produced wastewater volumesRecord locations and volumes of disposal
42Hydraulic Fracturing Reporting STRONGER Recommendations:Identification of contaminate migration pathwaysSeveral states require identification and pre-testing of surrounding wellsReporting should be required before and after hydraulic fracturing operationsNotification should allow time for state oversight of operationsReporting should includeIdentification of the materials usedAggregate volumes of fracturing fluidsProppant usedContinuous logs of fracture pressures
43Areas for Regulatory Consideration: Truck Traffic ConsiderationAir Quality EmissionsGas ProductionDiesel Equipment UsageFugitive EmissionsChemical Transport ConsiderationsLeasing Issues
44Multiple Horizontal Well Pad Well Types:Horizontal WellSpacing: 640 AcresDisturb: 3-5 AcresVertical WellSpacing: 40 AcresDisturb: 2-3 AcresMultiple Horizontal Well PadSpacing: 640 AcresDisturbance: 4-6 acresWell Spacing Information from:Source: NY State Draft Supplemental EIS: Chapter 5 Natural Gas Development Activities and High Volume Hydraulic FracturingDOE National Energy Technology Laboratory “Modern Shale Gas Development in the United States: A Primer”StatOilHydro, “Multiple Well Pad Illustration”