Marcellus Shale in Our Community:Marcellus Shale in Our Community:WhatWhat’’s in it for All of Us?s in it for All of Us?
Joint Landowner Coalition of NY Inc.February 25, 2011
Source MIT Study of the Future of Natural
Energy Today: New York State Energy Energy Today: New York State Energy Consumption Pattern, 2008Consumption Pattern, 2008
37.4%
30.0%
6.0%
24.6%
Σ 98%!
Shale has always been the Shale has always been the hydrocarbon source rockhydrocarbon source rock
New technologies make shale New technologies make shale a viable drilling target for a viable drilling target for natural gas.natural gas.
Tightening North American Tightening North American supply is making supply is making ““unconventional resourcesunconventional resources””more attractive.more attractive.
The Barnett showed us that The Barnett showed us that shale can be exploited.shale can be exploited.
Numerous domestic shale Numerous domestic shale opportunities existopportunities exist
Where Can We Get the Natural Gas ?Where Can We Get the Natural Gas ?Unconventional Resource PlaysUnconventional Resource Plays
5
Lewis & Mancos: 97 TcfNew Albany: 86-160 TcfBarnett: 25-252 TcfAntrim: 35-76 TcfUpper Devonian: 225-248 Tcf
How Much
Source: NYSERDA
New York New York StratigraphyStratigraphy
The popular shale
New York’s other shale
Herkimer Sandstone
Oneida Sandstone
Marcellus Structure Contour Map
Unconventional Gas Accumulation
Occurs over lager areas
Source-USGS
Characteristics of unconventional gas Characteristics of unconventional gas shalesshales
Usually the source rock for other reservoirsUsually the source rock for other reservoirsOrganic richOrganic richLess permeableLess permeableNuisance gas shows while drilling through the Nuisance gas shows while drilling through the formationformationUnusual pressure regimesUnusual pressure regimesProduced over larger areasProduced over larger areasproduce natural gas by stimulation produce natural gas by stimulation --HydrofracturingHydrofracturingEconomically produced by using horizontal drilling Economically produced by using horizontal drilling technologytechnology
DispersedOrganicMatter:
the “source”of
oil + assoc. gas
Rock Sample
TOC
Live Carbon
Organic Matter (Kerogen)Oil
Gas
Total Organic Carbon (T.O.C.)
Dead Carbon
Dead Carbon
Rock-Eval Terminology(Jarvie, 1991)
TOC (Total Organic Content)
Utica SEM
Porosity is very small and the void are not well connected
Oneida thin section
Porosity here is about 10% and the voids are connected
Regional cross section
The Devonian Marcellus ShaleThe Devonian Marcellus Shale
Primarily interested in Union Springs and Lowermost Oakta Creek Members
(Rickard, 1989)
Marcellus Union SpringsMarcellus Union Springs
Organic rich thinly bedded blackish grey to Organic rich thinly bedded blackish grey to black shale with thin silt bandsblack shale with thin silt bandsThe member is between the Cherry Valley The member is between the Cherry Valley and Onondaga limestoneand Onondaga limestoneCharacterized as a Characterized as a pyritiferouspyritiferous, further east , further east the Union Springs becomes the the Union Springs becomes the BakovenBakovenmember that becomes grayer, less organic member that becomes grayer, less organic and has few limestone membersand has few limestone membersLenses in and out in localities in far Western Lenses in and out in localities in far Western New YorkNew York
Marcellus Union SpringsMarcellus Union Springs
Union Springs with vertical calcite filled fractures in the OnesquethawCreek, Albany County, NY
Marcellus Cherry ValleyMarcellus Cherry Valley
Consists of skeletal Consists of skeletal limestoneslimestones and and shalyshaly intervalsintervalsWestward thinning of the Marcellus Westward thinning of the Marcellus Formation in western and central New Formation in western and central New York leads to the condensation and York leads to the condensation and union of the Cherry Valley union of the Cherry Valley limestoneslimestoneswith with limestoneslimestones in the upper part of the in the upper part of the Union SpringsUnion Springs
Marcellus Cherry ValleyMarcellus Cherry Valley
Cherry Valley dark shaly interval and limestone near Cherry Valley, NY
Marcellus Chittenango MemberMarcellus Chittenango Member
• Upper member of the Marcellus Formation in Western and central New York
• Becomes Cardiff and Chittenango members in Central and Eastern New York
• Is confined in Western New York by Stafford and Onondaga limestones
• Further east it is between the Stafford and Cherry Valley limestones when it is present
• Dark grey to black organic rich shale
Marcellus Marcellus OatkaOatka Creek Creek
Oatka Creek shale in Oatka Creek, LeRoy, NY
Marcellus (Cherry Valley Marcellus (Cherry Valley IsopachIsopach))
?
The Cherry Valley Limestone Member also thickens to the east
Marcellus (Union Springs Marcellus (Union Springs IsopachIsopach))
?
The Union Springs Member thickens to southeast
Net Thickness of Organic Rich Section of Marcellus
(Piotrowski & Harper, 1979)
Shale is Source, Seal and Lately … Reservoir Rock
Picture and text from Robert M. Reed, Bureau of Economic Geology | John A. and Katherine G. Jackson School of Geosciences, The University of Texas at Austin, Austin, TX | Robert G. Loucks , Bureau of Economic Geology, The University of Texas at Austin, Austin, TX | Daniel Jarvie , Worldwide Geochemistry, Humble, TX | Stephen C. Ruppel , Bureau of Economic Geology, University of Texas at Austin, Austin, TX
“More mature samples show well-developed nanopores concentrated in micron-scale carbonaceous grains. Large numbers of subelliptical to rectangular nanopores are present, and porosities within individual grains of as much as 20% have been observed. Shallowly buried, lower thermal maturity samples, in contrast, show few or no pores within carbonaceous grains.
These observations are consistent with decomposition of organic matter during hydrocarbon maturation being responsible for the intragranular nanopores found in carbonaceous grains of higher maturity samples. As organic matter (kerogen) is converted to hydrocarbons, nanopores are created to contain the liquids and gases. With continued thermal maturation, pores grow and may form into networks. The specific thermal maturity level at which nanopore development begins has not been determined. However, current observations support nanoporeformation being tied to the onset of conversion of kerogen to hydrocarbons.”
Picture and text from Robert M. Reed, Bureau of Economic Geology | John A. and Katherine G. Jackson School of Geosciences, The University of Texas at Austin, Austin, TX | Robert G. Loucks , Bureau of Economic Geology, The University of Texas at Austin, Austin, TX | Daniel Jarvie , Worldwide Geochemistry, Humble, TX | Stephen C. Ruppel , Bureau of Economic Geology, University of Texas at Austin, Austin, TX
Mihai A. Vasilache, 2010
HORIZONTAL DRILLINGHORIZONTAL DRILLING
Combined with Stimulation byCombined with Stimulation by
HYDRAULIC FRACTURINGHYDRAULIC FRACTURING
Multiple Wells from One Drill Pad
6 to 9+ Wells on One Pad
Long Laterals
1,000 to 8,000 feet
HORIZONTAL DRILLING
Innovation: Horizontal DrillingInnovation: Horizontal Drilling
First horizontal well: 1929First horizontal well: 1929First horizontal shale well: 1988 First horizontal shale well: 1988 (Antrim Shale in Michigan)(Antrim Shale in Michigan) First NYS horizontal: 1989 (and First NYS horizontal: 1989 (and hundreds drilled since)hundreds drilled since)““Today, about 2/3rds of the U.S. Today, about 2/3rds of the U.S. rig count is nonrig count is non--vertical, and vertical, and close to 50% of the rig count is close to 50% of the rig count is drilling horizontal wells.drilling horizontal wells.”” ((TriepkeTriepke2010) 2010) Makes Makes multiwellmultiwell pads possiblepads possible
National Energy Board (Canada), A Primer for Understanding Canadian Shale Gas November 2009
30
Fresh water aquifers are generally less than 500 feet deep
Every casing string is cemented to surface by pumping cement down pipe and circulating back up between the outside of pipe and the wellbore
More than a million pounds of steel casing in each well
200 - 500’
400 - 1,200’
2,000 - 2,500’
To total depth 30Source: Range Resources
Ver
tical
dep
th 5
,000
–9,
000
feet
Horizontal lateral length
3,000 – 5,000 feet
Fresh Water Aquifers
Marcellus Shale (100 – 300 feet thick)
Drilling Rig
Deep Below the Freshwater Aquifers, protected by multiple layers of steel casing cemented into the ground, water, sand and chemicals are pumped to create fractures allowing the natural gas within the shales to flow into the wellbore and up to the surface through the steel casing.
Multiple zones are stimulated to maximize reservoir stimulation
During the Treatment, Micro-seismic is assisting in evaluating the results
Hydraulically created fractures
32
Large Volume Hydraulic Fracturing Treatments
50,000 to 500,000 gallons per stage
Multiple Stages
4 to 14 Stages per well
HYDRAULIC FRACTURING
Volume Comparison SRBCVolume Comparison SRBC
Comparable Water Usage Entire BasinComparable Water Usage Entire Basin
Water Water UseageUseage For Shale DevelopmentFor Shale Developmentvsvs
Total Water WithdrawalTotal Water WithdrawalAppalachian BasinAppalachian Basin
Courtesy John A. Veil Argonne National Laboratory 2010 DUG East Courtesy John A. Veil Argonne National Laboratory 2010 DUG East PresentationPresentation
WHAT’S IN THE WATER
HYDRAULIC FRACTURING
Additive Additive TypeType
Main Main IngredientsIngredients
PurposePurpose Common Use Common Use
Friction Friction reducerreducer
PolyacrylamidePolyacrylamide(non(non--hazardous)hazardous)
Reduces friction Reduces friction between fluid and pipebetween fluid and pipe
Cosmetics; soil Cosmetics; soil conditioner; some conditioner; some childrenchildren’’s toyss toys
AntiAnti--MicrobialMicrobialAgentAgent
GlutaraldehydeGlutaraldehydeEliminates bacteria in Eliminates bacteria in the water that produce the water that produce corrosive byproductscorrosive byproducts
Disinfectant; sterilize Disinfectant; sterilize medical and dental medical and dental equipment and equipment and surfacessurfaces
Scale Scale inhibitorinhibitor
Ethylene glycolEthylene glycol Prevents scale Prevents scale deposit in the pipedeposit in the pipe
Automotive antiAutomotive anti--freeze, household freeze, household cleaners, decleaners, de--icing icing agentagent
Diluted Diluted AcidAcid
7.5% 7.5% Hydrochloric Hydrochloric AcidAcid
Help dissolve cement Help dissolve cement and minerals and help and minerals and help initiate fracturesinitiate fractures
Swimming pool Swimming pool chemical and cleanerchemical and cleaner
39
Complements Atlas Energy DUG East 2010
Jobs Jobs Landowner RoyaltiesLandowner RoyaltiesLease Bonus PaymentsLease Bonus PaymentsState Income TaxesState Income TaxesLocal Property Taxes Local Property Taxes
ECONOMIC IMPACTECONOMIC IMPACT
ItIt’’s Happening in Pennsylvania Marcellus s Happening in Pennsylvania Marcellus Economic Impact Economic Impact ‐‐ 20102010
$3.9 billion in total $3.9 billion in total value added 2009, value added 2009, $8 billion 2010$8 billion 2010
$389 million in state $389 million in state and local taxes in and local taxes in 2009, $785 million 2009, $785 million 20102010
New jobs New jobs
What About Broome County, NY?What About Broome County, NY?LetLet’’s Project:s Project:
LetLet’’s use the 3 counties s use the 3 counties closest to NY in PA: Tioga, closest to NY in PA: Tioga, Bradford & SusquehannaBradford & Susquehanna
117 wells with over 100 117 wells with over 100 days production reported days production reported to PADEPto PADEP
Weighted average daily Weighted average daily production rate of 3,543 production rate of 3,543 mcfdmcfd
Assume 1 well is drilledAssume 1 well is drilled
Use NYUse NY’’s current ads current ad‐‐valorem tax structurevalorem tax structure
Use NYSORPS 2010 UOP Use NYSORPS 2010 UOP value ($10.14/mcf)value ($10.14/mcf)
Value actual sales at Value actual sales at current gas prices current gas prices ($4.77/mcf)($4.77/mcf)
For Detail Utilize Tax For Detail Utilize Tax allocation from Property allocation from Property Tax Bill Town of MaineTax Bill Town of Maine
NY Real Property Taxes Gas ProductionNY Real Property Taxes Gas ProductionProjection for Marcellus Drilling (1 Well, Town of Maine, BroomeProjection for Marcellus Drilling (1 Well, Town of Maine, Broome Co.)Co.)
AvgAvg Well Prod.Well Prod. 3,5433,543 McfdMcfd
Annual Prod TotalAnnual Prod Total 1,293,1951,293,195 McfMcf
NYS UOP ValueNYS UOP Value $10.14$10.14 Per Per McfMcf
Uniform %Uniform % 70%70%
Taxable ValueTaxable Value Tax Rate/m$Tax Rate/m$ TaxTax
NYS & Fed MandateNYS & Fed Mandate $9,179,098$9,179,098 11.41027811.410278 $104,736$104,736
Other County TaxesOther County Taxes $9,179,098$9,179,098 0.0000010.000001 $0$0
Town GeneralTown General $9,179,098$9,179,098 0.7498140.749814 $6,883$6,883
Town HighwayTown Highway $9,179,098$9,179,098 2.7626042.762604 $25,358$25,358
Maine FireMaine Fire $9,179,098$9,179,098 1.9328821.932882 $17,742$17,742
School TaxSchool Tax $9,179,098$9,179,098 37.39836237.398362 $343,283$343,283
TotalsTotals 54.25394154.253941 $498,002$498,002
Key PointsKey Points1 Well on Town Property In 1 Well on Town Property In
BinghamtonBinghamton$498,002 1$498,002 1stst yr Local Property Taxesyr Local Property Taxes
$771,613 1$771,613 1stst yr Royalty Paymentsyr Royalty Payments
$1,269,619 Annual Payments to Town$1,269,619 Annual Payments to Town
New YorkNew York’’s Regulatory Environments Regulatory Environment
Oil and Gas Drilling and Development has Oil and Gas Drilling and Development has been Regulated by the NYS Department of been Regulated by the NYS Department of Environmental Conservation Division of Environmental Conservation Division of Mineral Resources since its Inception Mineral Resources since its Inception around 1969around 1969
Welcome to New York RegulationWelcome to New York RegulationState Environmental Quality Review ActState Environmental Quality Review Act
Government agency must review the Government agency must review the environmental impact of its actions.environmental impact of its actions.
Issuance of a permit to drill (and Issuance of a permit to drill (and fracfrac) ) a natural gas well is an action which a natural gas well is an action which requires review.requires review.
Disclose and address the impacts that can Disclose and address the impacts that can be reasonably anticipated.be reasonably anticipated.Avoid or minimize adverse environmental Avoid or minimize adverse environmental impacts to the maximum extent impacts to the maximum extent practicable.practicable.The purpose of a SEQRA review is not to The purpose of a SEQRA review is not to ban an activity, but to identify potential ban an activity, but to identify potential adverse impacts and ways to mitigate adverse impacts and ways to mitigate them.them.
Generic Environmental Impact Statement: Evaluates separate actions having common impacts
New York RegulationNew York RegulationReview & GuidanceReview & Guidance
1992 GEIS 12 yr effort 4 Volume 937 page 1992 GEIS 12 yr effort 4 Volume 937 page document (review and study 1980document (review and study 1980‐‐1992 1992 including public hearings across state) including public hearings across state)
Supplemental GEIS 800+pages, 9 chapters, Supplemental GEIS 800+pages, 9 chapters, 26 appendices, 114 refs cited by DEC staff, 473 26 appendices, 114 refs cited by DEC staff, 473 references cited by NYSERDA consultants references cited by NYSERDA consultants (included public hearings)(included public hearings)
CurrrentCurrrent additional documentation said to be additional documentation said to be more than 1,000 pages reviewing and more than 1,000 pages reviewing and commenting on responses to SGEIS hearings.commenting on responses to SGEIS hearings.
Potential Impacts not Addressed by Potential Impacts not Addressed by GEISGEIS
HighHigh--volume fluid managementvolume fluid managementWater withdrawals and consumptionWater withdrawals and consumptionTransportation of water to the siteTransportation of water to the siteAdditivesAdditivesOnOn--site facilities and handlingsite facilities and handlingFlowbackFlowback and ultimate dispositionand ultimate disposition
Multiple wells at single site, longer Multiple wells at single site, longer duration of impactsduration of impacts
Status of Hydraulic Fracturing in New YorkStatus of Hydraulic Fracturing in New York
Water useWater use Permitting statusPermitting status
Horizontal drilling, Horizontal drilling, no HVHFno HVHF
GEISGEIS--consistentconsistent Permitted under existing GEISPermitted under existing GEISFirst horizontal well drilled in 1989First horizontal well drilled in 1989Horizontal/directional wells Horizontal/directional wells
average 10% of permits per yearaverage 10% of permits per yearNo No ““moratoriummoratorium””
Conventional Conventional fracfrac(90% of wells in NY; (90% of wells in NY; 552 total permits 552 total permits issued in 2009)issued in 2009)
Up to 80,000 gallons/wellUp to 80,000 gallons/well Permitted under existing GEIS Permitted under existing GEIS finding of no significant impactfinding of no significant impact
Disclosure to DEC of water Disclosure to DEC of water source/disposal and source/disposal and fracfrac chemicals chemicals required with application to drillrequired with application to drill
HighHigh--volume volume fracfrac(HVHF)(HVHF)
Currently defined asCurrently defined as> 80,000 gallons/well> 80,000 gallons/well
Activity described in Activity described in dSGEISdSGEIS: 2 : 2 –– 8 million 8 million gallonsgallons
58 applications pending 58 applications pending completion of SGEIScompletion of SGEIS
2009 2009 dSGEISdSGEIS –– Disclosures and Mitigation (1)Disclosures and Mitigation (1)
Concern or Concern or potential potential impactimpact
2009 2009 dSGEISdSGEIS
Water Water withdrawalswithdrawals
Impacts of lowImpacts of low--flow described; passflow described; pass--by flow methodology proposedby flow methodology proposed
SpillsSpills Recognizes enhanced risks relative to highRecognizes enhanced risks relative to high--volume hydraulic fracturing volume hydraulic fracturing (i.e., larger volume of chemical additives, larger volume of (i.e., larger volume of chemical additives, larger volume of flowbackflowbackwater. Describes NYS spill reporting requirements.water. Describes NYS spill reporting requirements.Enhanced mitigation:Enhanced mitigation: Setbacks, secondary containment, Setbacks, secondary containment, stormwaterstormwater permit coverage (SWPPP, permit coverage (SWPPP, BMPBMP’’ss), review of site), review of site--layout and fluid disposal plan prior to permit issuancelayout and fluid disposal plan prior to permit issuance
Wastewater Wastewater disposaldisposal
Reiterates existing procedures and requirements for permitted Reiterates existing procedures and requirements for permitted dischargesdischargesEnhanced mitigation:Enhanced mitigation: Review and verification of fluid disposal Review and verification of fluid disposal plan prior to permit issuance; wastewater tracking to be plan prior to permit issuance; wastewater tracking to be implementedimplemented
Concern or Concern or potential potential impactimpact
2009 2009 dSGEISdSGEIS
From surface activities:From surface activities: See spills.See spills.
From reserve pits & centralized From reserve pits & centralized flowbackflowback impoundmentsimpoundmentsEnhanced mitigation:Enhanced mitigation: Construction and liner specifications/fluid removal Construction and liner specifications/fluid removal requirements for reserve pits; double liners/leak detection/siterequirements for reserve pits; double liners/leak detection/site--specific specific engineering review for centralized engineering review for centralized flowbackflowback impoundmentsimpoundments
From wellbore: From wellbore: Reiterates existing casing and cementing practices, including anReiterates existing casing and cementing practices, including annular nular ventingventingEnhanced mitigation:Enhanced mitigation: Cement to surface required on production or intermediate Cement to surface required on production or intermediate casing; cement bond log; precasing; cement bond log; pre--fracfrac certification of wellbore constructioncertification of wellbore construction
From hydraulic fracturing in target zone: From hydraulic fracturing in target zone: Not a reasonably anticipated impact below 2,000 Not a reasonably anticipated impact below 2,000 feet or with 1,000 feet of vertical separation between target zofeet or with 1,000 feet of vertical separation between target zone and deepest fresh waterne and deepest fresh waterEnhanced mitigation:Enhanced mitigation: SiteSite--specific review at shallower depths or with less vertical specific review at shallower depths or with less vertical separationseparation
Ground water Ground water contamination, contamination, including including natural gas in natural gas in water wellswater wells
Baseline testing and ongoing monitoring of nearby water wellsBaseline testing and ongoing monitoring of nearby water wells
2009 2009 dSGEISdSGEIS –– Disclosures and Mitigation (2)Disclosures and Mitigation (2)
Concern or Concern or potential impactpotential impact
2009 2009 dSGEISdSGEIS
Chemical Chemical disclosuredisclosure
dSGEISdSGEIS lists 197 proposed additives for HVHFlists 197 proposed additives for HVHF6 service companies, 12 chemical suppliers6 service companies, 12 chemical suppliers152 with complete compositional information152 with complete compositional information260 unique chemicals with CAS #260 unique chemicals with CAS #’’s disclosed in s disclosed in dSGEISdSGEIS: includes amides, amines, : includes amides, amines,
petroleum distillates, aromatic hydrocarbons, alcohols, glycol epetroleum distillates, aromatic hydrocarbons, alcohols, glycol ethers, thers, ethoxylatedethoxylated alcohols, alcohols, microbiocidesmicrobiocides, organic acids and related chemicals, polymers, minerals, metal, organic acids and related chemicals, polymers, minerals, metals and other s and other inorganicsinorganics and miscellaneous other chemicalsand miscellaneous other chemicalsDEC is monitoring developments in other states and at the federaDEC is monitoring developments in other states and at the federal level.l level.
Potential well pad impacts: Potential well pad impacts: PM, NOPM, NO22, H, H22S, benzeneS, benzenePotential offPotential off--site compressor impacts: site compressor impacts: Benzene, NOBenzene, NO22, formaldehyde, formaldehydeMitigation:Mitigation: control technologies (fuel, equipment), stack heights, public accontrol technologies (fuel, equipment), stack heights, public access cess restrictionsrestrictions
Air qualityAir quality
Centralized Centralized flowbackflowback impoundments: impoundments: Potential HAP emissionsPotential HAP emissionsMitigation options:Mitigation options: Eliminate specific compounds (methanol, heavy Eliminate specific compounds (methanol, heavy napthanaptha, , benzene), limit duration and use, cover or use tanks instead, phbenzene), limit duration and use, cover or use tanks instead, physical barriers to ysical barriers to public accesspublic accessWill be subject to siteWill be subject to site--specific review including specific review including fracfrac & & flowbackflowback compositioncomposition
““IndustrializationIndustrialization”” (noise, visual, (noise, visual, traffic, traffic, community community impacts)impacts)
Includes descriptions of well pad & equipment size, longer duratIncludes descriptions of well pad & equipment size, longer duration of impacts at multiion of impacts at multi--well well pads; truck traffic associated with HVHFpads; truck traffic associated with HVHFMitigation:Mitigation: Visual impacts mitigation plan, noise impacts mitigation plan, rVisual impacts mitigation plan, noise impacts mitigation plan, road oad use agreement or trucking plan, review of local planning documenuse agreement or trucking plan, review of local planning documents, careful ts, careful access road access road sitingsitingDEC is reviewing many comments on this topic.DEC is reviewing many comments on this topic.
2009 2009 dSGEISdSGEIS –– Disclosures and Mitigation (3)Disclosures and Mitigation (3)
THANK YOUTHANK YOU
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