OPERATING IN THE EAGLE FORD SHALE Henry Wood South Texas Electric Cooperative

Identify importance of coordinating Remedial Action Plans OBJECTIVES Identify the types of reactive resources to regulate transmission voltage and reactive flow as necessary Identify entities a transmission operator is required to contact under TOP-001-R5 Identify the purpose of ERCOT’s evaluation of requests for approval of Transmission Facility outages Identify importance of coordinating Remedial Action Plans Identify a purpose of NERC COM-002-2 Operating in Eagle Ford

What is the Eagle Ford? Shale oil extraction and hydraulic fracking First oil from shale - 10th Century in Europe Increased interest with shale extraction in 2003 with an Energy Policy Act that followed in 2005 2010 is considered the beginning of the first large scale underground extraction of oil from shale Process developed and patented in – 1684 Shale oil extraction slowed significantly in 1920’s only to see a rebirth in the mid 2000’s Operating in Eagle Ford

What is the Eagle Ford? The first commercial wells drilled using hydraulic fracturing were completed in 1949 Pressures and flow rates for fracking vary but may reach as high as 15,000 PSI and 100 barrels per minute Hydraulic fracturing is a method of propagating fractures on reservoirs having low permeability to increase the flow of oil and/or gas from shale formation, which eventually improves exploration and production activities. Fracturing fluids are pushed through well casings with high pressure, which allows oil and/or gas to flow from the wellbore. Operating in Eagle Ford

What is the Eagle Ford? It is estimated 40% of location production occurs in the first 5 years Production may last as long as 30 years As production slows processes change and may include a dry gas injection According to the industry the energy demands of the Eagle Ford will be here at least another 15-20 years. Operating in Eagle Ford

Background Eagle Ford Shale exploration and production is rapidly increasing in South Texas Oil reserves estimated at 3 billion barrels and trillions of cubic feet of natural gas May be sixth largest oil field discovery in U.S. In the three county area of Dimmit, La Salle and McMullen Counties the load in 2012 was 28 MW It is projected to reach 247 MW by 2016 The projection may be low. Cooperative load in and around the Eagle Ford, mainly the blue area, has grown from 231 MW in 2010 to 441 Mw in 2014. Roughly 91% increase! Please note this is slightly higher than the normal 3 to 4 % ERCOT plans for. Operating in Eagle Ford

How will we serve the load? First projects were submitted for RPG Review in April 2012 In a large area of the of load additions transmission either does not exist or is mainly made up of 4/0 conductor 69 kV lines (40 MVA) New transmission lines needed along with significant upgrades to existing system Where drilling started in 2010, the commercial loads did not start approaching TDSPs until 2011. Operating in Eagle Ford

Projects to serve a three county area of the Eagle Ford Addition of the Tilden – Fowlerton – Reveille 138 kV double circuit line (approx. 47 miles on new R.O.W.) each circuit is a minimum of 240 MVA Addition of a 138 kV substation near the STEC 69 kV Cotulla substation and loop the AEP Dilley – Cotulla 138 kV line into it Addition of a (138/69 kV) auto-transformer (with reverse power relays) in Cotulla a minimum of 150 MVA Addition of a 138/69 kV BEVO substation near the LCRA Asherton – Conoco Chittam Tap 138 kV line crosses the STEC Carrizo Springs – Brundage 69 kV line. Loop these lines into BEVO and add a (138/69 kV) 150 MVA auto-transformer Addition of a 9.6 MVAR capacitor bank at George West 69 kV substation Addition of 19.2 MVAR capacitor banks at Tilden, Fowlerton and Jardin 138 kV substations Addition of a 9.6 MVAR capacitor bank at Freer 69 kV substation Addition of a 9.6 MVAR capacitor bank at BEVO 69/138 kV substation Addition of a 9.6 MVAR capacitor bank at Brundage 69 kV substation Addition of a 345/138 auto at Fowlerton This is part of a list that ERCOT presented to the RPG for a three county area. Some of these projects are in service, some are under construction and more are yet to come. Operating in Eagle Ford

Projects under construction in a three county area of the Eagle Ford Diagram of the RPG projects. Operating in Eagle Ford

Impact to operations Load growth is immediate 2010 – 2014 load growth in the area = 210 MW A 91% increase ….and they are still coming! A 91% increase on the same transmission that 2 years ago was serving less than 50 MW. Someone asked the other day What is the Eagle Ford? The reply I heard given was an area of Texas that has created 155,000 jobs! Operating in Eagle Ford

Challenges of operating in the Eagle Ford Voltage and Reactive Thermal Limits Outage Coordination Remedial Action Plans Communications! Here are five topics I want to share with you about what we have experienced operating in the Eagle Ford. I will leave the first one for last. Operating in Eagle Ford

1. Voltage and Reactive Control The Eagle Ford has added operating challenges with voltage and reactive control Multiple TDSPs operate from line section to line section Remember pre-existing transmission built to serve less than 50 MW Even the addition of new reactive devices affects operating limits in the area Additional concerns for tripping large motor loads with voltage fluctuations The heaviest concentration of the Eagle Ford load is located in an area of what was and in some cases still is, a remote 69 KV system. As an example, we have added a total of 48 MVAR of reactive at five 69 KV stations, and there is more to be added. I hope you will take my word that the operation of these devices has a direct effect on the voltages of adjacent stations which in some cases are operated by AEP and LCRA. The same is true for the devices that AEP, and LCRA operate. Need to take an outage and feed several stations radial? Good luck! Remember these loads are not seasonal. Most have load factors greater than 80% annually so you will still need to use the capacitors. In some cases capacitors are temporarily re-configured to provide less reactive during the outage. It’s been our experience closing a 9600 KVAR bank on a radial 69 KV line just might take you outside the scheduled voltage profile! In order to facilitate outages for upgrades or to manage thermal limits some loads may be radial. Additional caution must be taken as the volage fluctuation while switching reactive devices may be outside the perimeter desired by the customer. Operating in Eagle Ford

VAR-001-4 — Voltage and Reactive Control R2. Each Transmission Operator shall schedule sufficient reactive resources to regulate voltage levels under normal and Contingency conditions. Transmission Operators can provide sufficient reactive resources through various means including, but not limited to, reactive generation scheduling, transmission line and reactive resource switching R3. Each Transmission Operator shall operate or direct the Real-time operation of devices to regulate transmission voltage and reactive flow as necessary. If we take care of scheduling reactive resources in R2 why do we need R3? R2 is forward looking and to some degree present. The tools need to be available to the operator and the operator should implement them. So Why R3? What happens in real time? Loads vary, outages occur, and we have to coordinate our devices with those we impact such as an adjacent TDSP or “LCC”. Does this take place just between LCC operators? No. ERCOT also has a role and can provide real time analsys on N-1 contingencies. So what is key to making this happen? Communications. Communications in planning, scheduling voltage profiles, scheduling or operating reactive devices, scheduling outages, and in real time. Question – Who is responsible for operating or directing the real-time operation of devices to regulate transmission voltage and reactive flow as necessary? Operating in Eagle Ford

2. Thermal Limits TDSPs and ERCOT are managing thermal limits without the assistance of Generation Elements would exceed thermal limits on just the loads ready to connect now The addition of reactive devices adds to the thermal limit concerns The Eagle Ford has little or no generation to help mitigate thermal limits or support reactive power requirements. Some load facilities are self providing until transmission facilities can be upgraded or new facilities built to prevent. Thermal limits on existing facilities are preventing those loads from even connecting to the system. N-1 voltage contingencies that could be cleared by closing normally open switches would only create new N-1 contingencies based on thermal limits. Location of Wind Generators near the area helps with some contingencies but introduces new ones when scheduled outages are needed to upgrade. Operating in Eagle Ford

TOP-001-0 R5. Each Transmission Operator shall inform its Reliability Coordinator and any other potentially affected Transmission Operators of real time or anticipated emergency conditions, and take actions to avoid, when possible, or mitigate the emergency. Keeping ERCOT informed and aware of approaching limits is critical at all times, especially when the system has become as heavily loaded as some of the elements serving the Eagle Ford. There are tools available to mitigate in the real time until system upgrades can meet the needs. Operating in Eagle Ford

3. Outage Coordination Outage scheduling in the Eagle Ford challenging Coordination attempts to address voltage and thermal contingencies with an aggressive build out time line New projects needed before upgrades can begin Coordination complicated with multiple projects and multiple TDSPs Outage scheduling in the Eagle Ford has proven to be challenging at best. New projects are needed to facilitate outages for upgrades on existing facilities, but new construction timelines and processes have pushed those project completion dates to the end of 2015 or later. AEP, LCRA, STEC and ERCOT meet on a regular basis to coordinate outages just for the Eagle Ford. Multiple temporary switching stations have been utilized to carry loads or to leave existing lines in service so that new lines can be interconnected and stations can be rebuilt. Specific line outages may last for weeks or months and have extended recall times. Significant outages require mitigation plans before than can be approved. Keep in mind all this information is being provided to ERCOT for modeling purposes at least 90 days ahead of time. Operating in Eagle Ford

Outage Coordination 8.3.10 Evaluation of Transmission Facility Planned Outage or Maintenance Outage Requests ERCOT shall evaluate requests for approval of Transmission Facility Planned Outages and Maintenance Outages to determine if any one or a combination of proposed Outages may cause ERCOT to violate applicable reliability standards. In addition to the many outages being scheduled to upgrade the system, TDSPs in the Eagle Ford area are working around outages needed for maintenance and forced outages due to weather. Coordination with ERCOT is critical to ensure reliability. Operating in Eagle Ford

4. Remedial Action Plans Remedial Action Plans are a tool to avoid operating in an emergency condition Remedial Action Plans are designed to be implemented quickly Remedial Action plans necessary until upgrades completed Additional remedial action plans in place to facilitate outages Remedial Action Plans are tools that have been developed to allow the system to operate within limits by avoiding the consequence of a potential N-1 contingency. As such transmission operators and ERCOT should be familiar and ready to implement the plan without delay. Contingencies such as 15 minute or 2 hour ratings thermal ratings are considered in the development of mitigation plans, but so are cascading outages and voltage stability. No one wants to be responsible for an event that could have been avoided. To be effective remedial action plans are designed to relieve the potential constraint before reaching those limits. Because of the immediate load growth in the Eagle Ford, development of remedial action plans became necessary from the start. TDSPs are working together closely to temporarily relieve the constraints that affect serving load, both new and existing, and in some cases resources. Operating in Eagle Ford

EOP-003-2 R1. After taking all other remedial steps, a Transmission Operator or Balancing Authority operating with insufficient generation or transmission capacity shall shed customer load rather than risk an uncontrolled failure of components or cascading outages of the Interconnection. R3. Each Transmission Operator and Balancing Authority shall coordinate load shedding plans, excluding automatic under-frequency load shedding plans, among other interconnected Transmission Operators and Balancing Authorities. Coordinating RAPs with ERCOT is not only required, but essential to prevent causing addition contingencies. Loss of transmission in the Eagle Ford area also affects transmission service to the Valley, Laredo, and Corpus Christi areas. Remedial action plans may call for the opening or closing of a device or it may call for the shedding of load. Understanding the actions required for the plan to be effective in avoiding the contingency! Operating in Eagle Ford

COM-002-2 — Communications and Coordination Purpose: To ensure Balancing Authorities, Transmission Operators, and Generator Operators have adequate communications and that these communications capabilities are staffed and available for addressing a real-time emergency condition. To ensure communications by operating personnel are effective. Each of the previous items discussed depend on effective communications. The requirement points to addressing a real-time emergency, but in my opinion effective communications between operators is one of the best tools for avoiding a real-time emergency. Operating in Eagle Ford

Operating in the Eagle Ford Shale Questions? Why does the Eagle Ford Shale matter to you? As operators we can share the benefit of lessons learned. Here is a map of the shale plays in the Lower 48. Global Oil prices and technology have influences on when each shale will be pursued. Based on our experience with the Eagle Ford when the indicators are there, they will start showing up the next day. Operating in Eagle Ford

Reactive resource switching Transmission line switching Question 1 Which of the following is not a reactive resource to regulate transmission voltage and reactive flow as necessary? Reactive resource switching Transmission line switching Reactive generation scheduling Reverse power relaying

Any other potentially affected Transmission Operators Question 2 Which of the following entities is a transmission operator required to contact under TOP-001-R5? QSE Any other potentially affected Transmission Operators Balancing Authority TRE

To determine congestion pricing Question 3 What is the purpose of ERCOT’s evaluation of requests for approval of Transmission Facility Planned Outages and Maintenance Outages? To determine if any one or a combination of proposed Outages may cause ERCOT to violate applicable reliability standards. To determine congestion pricing To monitor transmission owner maintenance practices To predict future transmission cost

QSEs and Balancing Authorities Question 4 A remedial action plan should be coordinated with which two types of entities? QSEs and Balancing Authorities Reliability Coordinators and Balancing Authorities Transmission Operators and Balancing Authorities Transmission Operators and QSEs

A purpose of NERC COM-002-2 is to: Question 5 A purpose of NERC COM-002-2 is to: Specify technical equipment necessary for communications To ensure communications by operating personnel are effective To require training seminars To comply with CIP