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1 The Path and Safety Challenge Associated With the Marcellus Shale in Pennsylvania Stephanie Catarino Wissman Executive Director Pennsylvania Governors.

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Presentation on theme: "1 The Path and Safety Challenge Associated With the Marcellus Shale in Pennsylvania Stephanie Catarino Wissman Executive Director Pennsylvania Governors."— Presentation transcript:

1 1 The Path and Safety Challenge Associated With the Marcellus Shale in Pennsylvania Stephanie Catarino Wissman Executive Director Pennsylvania Governors Occupational Safety & Health Conference February 19, 2013

2 300 North Second Street | Suite 902 | Harrisburg, PA | Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute The American Petroleum Institute (API) is the only national trade association that represents all aspects of Americas oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry. Although our focus is primarily domestic, in recent years our work has expanded to include a growing international dimension, and today API is recognized around the world for its broad range of programs. Who We Are

3 300 North Second Street | Suite 902 | Harrisburg, PA | Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute What We Do Advocacy We speak for the oil and natural gas industry to the public, Congress and the Executive Branch, state governments and the media. We negotiate with regulatory agencies, represent the industry in legal proceedings, participate in coalitions and work in partnership with other associations to achieve our members public policy goals.

4 300 North Second Street | Suite 902 | Harrisburg, PA | Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute What We Do Standards For more than 85 years, API has led the development of petroleum and petrochemical equipment and operating standards. These represent the industrys collective wisdom on everything from drill bits to environmental protection and embrace proven, sound, engineering and operating practices and safe, interchangeable equipment and materials. API maintains more than 600 standards and recommended practices. Many have been incorporated into state and federal regulations; and increasingly, theyre also being adopted by the International Organization for Standardization.

5 300 North Second Street | Suite 902 | Harrisburg, PA | Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute What We Do Research and Statistics API conducts or sponsors research ranging from economic analyses to toxicological testing. We collect, maintain and publish statistics and data on all aspects of U.S. industry operations, including supply and demand for various products, imports and exports, drilling activities and costs, and well completions. This data provides timely indicators of industry trends. APIs Weekly Statistical Bulletin is the most recognized publication, widely reported by the media.

6 300 North Second Street | Suite 902 | Harrisburg, PA | 6 Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute What We Do Certification Each day, the oil and natural gas industry depends on equipment to produce, refine and distribute its products. The equipment used is some of the most technologically advanced available in the search for oil and gas and allows the industry to operate in an environmentally safe manner. Designed for manufacturers of production, drilling, and refinery equipment, the API Monogram Program verifies that manufacturers are operating in compliance with industry standards. API also provides quality, environmental, and occupational health and safety management systems certification through APIQR.

7 300 North Second Street | Suite 902 | Harrisburg, PA | 7 Associated Petroleum Industries of Pennsylvania A Division of the American Petroleum Institute What We Do Education API organizes seminars, workshops, conferences, and symposia on public policy issues. Through API University, we provide training materials to help people in the oil and natural gas business meet regulatory requirements and industry standards. To prepare the next generation of Americans to make informed decisions or pursue careers in our industry, we work with the National Science Teachers Association and other educational groups to impart scientific literacy and develop critical thinking skills in the classroom. Resources developed specifically for teachers and students include Energy & Society, and informative and interactive educational resources in one easy-to-use location.www.classroom-energy.org

8 300 North Second Street | Suite 902 | Harrisburg, PA | 500 corporate members include large corporations, smaller independents, service and supply companies throughout the US and the world Largest, oldest, and most diverse association of oil and gas businesses with over 900 members in PA

9 300 North Second Street | Suite 902 | Harrisburg, PA | The Keystone Energy Forum was formed through a partnership of two major oil and gas trade associations in Pennsylvania. The American Petroleum Institute and the Pennsylvania Independent Oil & Gas Association represent over 95% of operators in the Commonwealth. REACH OUT, INFORM, EDUCATE

10 300 North Second Street | Suite 902 | Harrisburg, PA | A New - Yet Old- PA Industry 1859: Drake Oil Well 1878: Haymaker Well in Murrysville. First commercial natural gas well in U.S. 150 YEARS of drilling history, 60 years of hydro fracturing. 350,000 vertical wells 60,000 still in production

11 300 North Second Street | Suite 902 | Harrisburg, PA | Shale Formations in Pennsylvania

12 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Formation Geological formation created about 380 million years ago in Middle Devonian age As formation aged and decayed, natural gas trapped in the shale Formation rests a mile or more below surface, thickness between feet Approximately size of 95,000 square miles

13 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Formation Estimated recoverable reserves: 500 trillion cubic feet (tcf) –Current U.S. natural gas demand is 23 tcf per year –Marcellus has potential to serve not only Pennsylvania, but can meet 25 percent of total U.S. natural gas demand –Natural gas prices would increase without current Marcellus Shale production Economically feasible as a result of: –Horizontal drilling –Proximity to northeastern population centers

14 300 North Second Street | Suite 902 | Harrisburg, PA | The Competition U.S. Department of Energy, U.S. Shale Basins

15 300 North Second Street | Suite 902 | Harrisburg, PA | …to the largest oil and gas fields in the world How the Marcellus compares… Marcellus reserves could exceed those of the largest oil field in the world (Saudia Arabia) and be the 2 nd largest natural gas field (largest in Qatar/Iran) (Bubble size approximates reserves)

16 300 North Second Street | Suite 902 | Harrisburg, PA | Utica Shale Formation The Utica Shale formation lies a few thousand feet below the Marcellus shale and covers most of Pennsylvania. The Utica Shale is thicker than the Marcellus, it is more geographically extensive, and it has already proven its ability to support commercial production. The potential source rock portion of the Utica Shale is extensive. In the United States it underlies portions of Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, West Virginia and Virginia. If the Utica Shale is commercial throughout this extent it will be geographically larger than any natural gas field known today.

17 300 North Second Street | Suite 902 | Harrisburg, PA | Utica Shale Formation The United States Geological Survey (USGS) recently released its first estimates of undiscovered, recoverable natural gas and natural gas liquids, like ethane and propane, in the Utica Shale formation. The USGS estimate covered parts of Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia. Natural Gas – 38 trillion cubic feet Oil – 940 million barrels Natural Gas Liquids – 208 million barrels The Utica Shale formation is in its earliest stages of development in northwestern Pennsylvania with exploratory wells being drilled in Crawford County. The pace is a little higher in Ohio, where 19 rigs are currently operating.

18 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development

19 300 North Second Street | Suite 902 | Harrisburg, PA | Phases in Marcellus Shale Development 1.Pre-Drilling –Exploration –Leasing 2.Drilling –Construction –Horizontal Drilling –Casing and Groundwater Protection 3.Completion –Hydraulic Fracturing/Well Stimulation –Flow-Back 4.Production –Post-Production –Site Reclamation

20 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Extensive review of geologic conditions completed prior to drilling Wealth of state and federal geological data available Two- and three- dimensional seismic testing completed to better identify formation details Exploration

21 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Two and Three-dimensional seismic Seismic trucks send shock waves into the ground - waves bounce off the rock and reflect back to the surface Geophones record vibrations Computer processes vibrations and develops geologic picture Small charges placed ft below surface in grid pattern, fired in succession Geophones record vibrations from charges Computer displays images of rock below Improves probability of successful well development Seismic activity has no impact on property/environment Exploration

22 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Producers conduct title search for mineral rights holders Land professionals work with property owners to establish lease agreements Leases give developers approval to explore for natural gas Leases reflect current market values and geologic conditions Property owners urged to contact attorney prior to entering lease Leasing

23 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development First focus is protection of groundwater Compressed air is circulated down drill pipe to lift rock cuttings past deepest groundwater zone Steel casing cemented in place along vertical wellbore Cemented casing isolates wellbore from groundwater Casing process continues vertically with smaller-diameter steel pipes Increased regulations to protect groundwater Groundwater Protection

24 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Marcellus wells can be drilled vertically and horizontally Horizontal drilling yields more natural gas –Multiple wells drilled from a single pad –Laterals drilled horizontally up to 5,000 feet, following natural fractures in shale –Multi-well pad: Requires 6 acres –24 vertical wells: Requires 100 acres Horizontal Drilling Line = 1,000 feet Representation of horizontal drilling unit

25 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Well typically drilled vertically to 500 above Marcellus Shale Curve from vertical to horizontal approximately 1,200 linear feet Continues horizontally for several thousand feet Final casing string cemented in place at end of well bore Approximately 15 to 30 days required to drill a horizontal Marcellus well Horizontal Drilling

26 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Pipelines required to transport gas to market Gathering lines link wells to processing facilities/ transmission lines ROW for lines is negotiated with property owners ROW re-vegetated, restored, and maintained to ensure safety of delivery system Infrastructure Improvements

27 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Vital to producing minerals from all geologic formations Proven technology, advanced over 60 years High-volume fracturing used for horizontal well development Process begins by perforating casing, cement and shale with perforating gun Charge from gun opens fissures in shale to release natural gas, sand necessary to expand and prop open fissures Water, small amount additives injected under high pressure to carry sand into fractures Hydraulic Fracturing/Well Stimulation

28 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Well Stimulation Fluids Water and sand make up 99.95% of the well stimulation Water 90% Sand 9.95% Chemicals 0.05%

29 300 North Second Street | Suite 902 | Harrisburg, PA | Flowback Water Management Most drillers have achieved or are approaching 90% recycling 98% stored in tanks, no longer open pits. Open pits are now mostly all fresh water. Final disposal only in permitted facilities Must meet drinking water standards for Total Dissolved Solids (TDS) 20-30% FLOWS BACK FROM WELL

30 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Peak water use will be 60 million gallons/day At peak, water use will remain less than ONE PERCENT of states daily water consumption Less than half the water used to irrigate Pennsylvania golf courses Water Usage

31 300 North Second Street | Suite 902 | Harrisburg, PA | Marcellus Shale Development Significant short-term transportation challenges Roadways used for drill rig, support equipment, water truck and tank, and worker access to site Producers work with municipalities to maintain, improve roads, investing millions annually Local construction companies receiving most road maintenance contracts, estimated $200 million in 2010 Infrastructure Improvements

32 300 North Second Street | Suite 902 | Harrisburg, PA | During Drilling Process Initial Reclamation Marcellus Shale Development Once well is complete and producing, restoration begins Only a small wellhead on a constructed pad, less than one acre, remains Property restored to meet owners needs Similar to home construction Restoration

33 300 North Second Street | Suite 902 | Harrisburg, PA | Multi-well Pad: Before and After Restoration Marcellus Shale Development

34 300 North Second Street | Suite 902 | Harrisburg, PA | Financial Impact of the Oil and Gas Industry

35 300 North Second Street | Suite 902 | Harrisburg, PA | Financial Impacts of Oil and Gas Development Nationwide The U.S. oil and natural gas industry supports more than 9 million jobs nationwide. The industry supports over 7% of GDP, and contributes more than $86 million to the Federal Treasury every day. Pennsylvania (Currently) 275,563 total statewide jobs provided or supported by our industry. $66,251 average salary for non-gas station oil & natural gas employees. $43,325 average annual salary in Pennsylvania across all industries and sectors. $15 billion contribution to Pennsylvania labor income. $28.4 billion contribution to Pennsylvania economy.

36 300 North Second Street | Suite 902 | Harrisburg, PA | Regulation of the Oil and Gas Industry

37 300 North Second Street | Suite 902 | Harrisburg, PA | Potential Permits Required for Gas Well Well drilling permit (w/ well location plat, casing and cementing plan, PNDI for threatened or endangered species, landowner/water well owner notifications, coal owner or operator notification and gas storage field owner notification) Water management plan for Marcellus Shale wells Proposed alternate method of casing, plugging, venting or equipping a well Bond for Oil and Gas Well(s) (individual or blanket, various bond types allowed) Waiver of distance requirements from spring, stream, body of water, or wetland (to put the well closer than 200 feet) Variance from distance restriction from existing building or water supply (to put the well closer than 100 feet) Proposed alternate method or material for casing, plugging, venting or equipping a well Approval for alternative waste management practices Approval of a pit for control, handling or storage of production fluids Use of alternate pit liner NPDES GP-1 for discharges from stripper oil wells Water Quality Management Permit for treatment facilities Alternative pit liners Inactive status Roadspreading plan approval Transfer of well permit or registration Orphan well classification Off-site solids disposal Residual waste transfer stations and processing facilities Transportation of residual waste Road use permit – construction of access to state roadway Road use bond (PennDOT or municipality) Surface use permit (if in the Allegheny National Forest) PASPGP-3 or PASPGP-4 for pipelines crossing streams (if < 1 acre) Water Obstruction – Encroachment – US Army Corps of Engineers Section 404 Joint Permit Dam permit for a centralized impoundment dam for Marcellus Shale gas wells GP-11 for non-road engine air emissions GP-05 for natural gas compression facilities emissions Earth disturbance permit (if ˃ 5 acres) Erosion and sedimentation control permit (if ˃ 25 acres) NPDES storm water for construction activities Water allocation (SRBC, DRBC or DEP for Ohio River basin) GP-3 for bank rehabilitation, bank protection, and gravel bar removal GP-4 for intake and outfall structures GP-5 for utility line stream crossings GP-7 for minor road crossings GP-8 for temporary road crossings GP-11 Maintenance, Testing, Repair, Rehabilitation or Replacement of Water Obstructions and Encroachments

38 300 North Second Street | Suite 902 | Harrisburg, PA | Well Stimulation Additives Marcellus Shale Development

39 300 North Second Street | Suite 902 | Harrisburg, PA | State Law Now Requires Posting on

40 Upstream Americas Governors Occupational Safety and Health Conference Unsafe Acts are the major cause of Accidents! Robin Grouette Production Operations Manager – Shell Appalachia

41 What do we mean by Safety? 41 HSE, HSSE, Personal Safety, PSM, AI,LOTO, HAZCOM, Environment, BBSM, Security, STOP, MIE, OCA, OIA, ERP, PTW, MOC… Management of Change

42 Safety Philosophy 42 Is Safety a Priority or a Value? Why be Safe? It is humane (The Right Thing to do!) Legal Obligation Best for the Business Why do Unsafe Acts/Condition Occur Dont Know! Not Able Dont Care!

43 Appalachia TRIR YTD – It is a Journey! Copyright of Shell Exploration & Production Upstream Americas - Appalachia CONFIDENTIAL

44 Worker Safety Issues 44 Worker safety issues at a drilling and extraction sites. Discuss the problems that were encountered and how the industry responded. Trips/Slips/Falls – work surface issues (weather) Hands Falling Objectives Equipment Movements Driving People Competencies/Skills Language – Seismic High Pressure/Fire Chemicals Response Education/Train, PPE, Investigations, Modify trucking Contracts to change behaviors, Modify Designs Learn, learn, learn

45 Site Challenges 45 Reaching remote well sites, transient work, changing workplaces, transportation, challenges for training, and training program specifics. Tight roads Landowners Cultural Differences, long way from home Driving Orientation Competencies Response Open Houses/communications, road work, Education/Train, Incident Investigations, Modify trucking routes, logistic systems Communicate, communicate, communicate and learn, learn, learn

46 Other Successes 46 Other successes we have had with industry, counties, improving emergency response activities, interactions with OSHA, formation of the Pennsylvania Service, Transmission, Exploration, Production Safety (STEPS) work. Opportunity to provide education about the Industry Participate in Local Emergency Planning Commissions (LEPC) Work w/ local Emergency Management Services Road Transportation Safety Groups Contractor & Industry Forums Sharing Best Practices with Others

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