Transcript HYDRAULIC FRACTURING

HYDRAULIC
FRACTURING
“FRACKING”
IN ILLINOIS
Dan Eichholz, Illinois Petroleum Council
WHAT IS HYDRAULIC FRACTURING?
• Hydraulic Fracturing is a proven oil
and gas well completion process. It
uses water pressure to create tiny
cracks in deep underground
hydrocarbon formations that allow oil
and natural gas to flow.
WHY THE HYSTERIA?
SCENE FROM “GASLAND”
IS HYDRAULIC FRACTURING NEW?
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First used in 1947
First used in Illinois in the 1950’s
Safely performed thousands of times in Illinois
Safely performed over 1.2 million times in the
United States
SO WHAT IS THE BIG DEAL?
• The combination and refinement of
two existing technologies when
used to extract resources from shale
deposits, has transformed the U.S.
oil and gas industry:
1. Horizontal Drilling
2. Hydraulic Fracturing
NEW TECHNOLOGY ALLOWS FOR
ADDITIONAL ACCESS TO RESOURCES
HYDRAULIC FRACTURING -VIDEO-
WHAT IS INVOLVED IN COMPLETING A WELL FOR
PRODUCTION?
COMPLETED PRODUCTION SITE
GAME CHANGER
• The United States has surpassed
Russia as the worlds largest natural
gas producer
• The International Energy Agency
forecasts that the United States will
become the world’s leading oil
producer by 2017
WHY WE NEED MORE ENERGY?
World’s Growing Population
Increasing Global Energy Demand
9
900.0
8.5
800.0
700.0
7.5
Quadrillion BTU
People in Billions
8
7
6.5
6
5.5
5
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Reuters.com and US Census Bureau, United Nations, Socioeconomic Data and
Applications Center, and Populationaction.org
600.0
500.0
Oil
Natural gas
400.0
300.0
Coal
200.0
Nuclear
100.0
Renewables
0.0
1990 1995 US
2000
2005 2010 2015 2020 2025 2030 2035
Energy Information Administration – Global Outlook 2011
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WHERE ARE SHALE DEPOSITS?
Shale Resources, Lower 48 States
Current Shale Resources
Prospective Shale Resources
Basins
Stacked Resources
Shallowest/ Youngest
Mid-Depth/ Mid-Age
Deepest/Oldest
CURRENT AND PROSPECTIVE RESOURCES AND BASINS IN THE CONTINENTAL US
Source: EIA based on data from various published studies – updated May 9, 2011
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JOBS!!
AMERICAN JOBS supported by shale
energy development in 2012 !
(IHS Global Insight)
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Average hourly pay of workers associated with shale
energy development – 34% greater than average
wages
(IHS Global Insight)
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The Oil and Gas
industry is responsible
for 37% of all jobs
created in the last
decade.- Moodys Analytical
EVERY TYPE OF
ENERGY
PRODUCTION
COMES WITH
CHALLENGES
Source: energytomorrow.org: Big
Screen Energy: A Fracking Film
Festival
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PROPER WELL CONSTRUCTION KEEPS GROUNDWATER SAFE
HOW MUCH WATER DOES HYDRAULIC FRACTURING USE?
WASTES FROM PRODUCTION ACTIVITIES ARE MANAGED
RESPONSIBLY
NUMBERS DON’T LIE!!
U.S. greenhouse gas (GHG)
emissions in 2011(Latest
Available Data) were down 6.9
percent from 2005 - source
U.S. EPA
SEISMIC ACTIVITY
• Seismologists and geologists across the country have
determined that hydraulic fracturing does not produce
vibrations of noticeable size and there are no cases of
damage as a result of the very low level of “seismicity”
associated with fracturing.
• While the injection of wastes into disposal wells can
trigger seismic activity, these events are rare and
typically a magnitude 3 or less on the Richter scale.
According to the U.S. Geological Survey, a magnitude 3
earthquake on the Richter scale is similar to the
vibrations felts by a passing truck.
ON SEISMIC ACTIVITY
“[E]xtremely small microseismic events
occur during hydraulic fracturing
operations. These microseismic events
affect a very small volume of rock and
release, on average, about the same
amount of energy as a gallon of milk falling
off a kitchen counter.”- Mark Zoback, Stanford
University geophysics professor, adviser to U.S. Energy Secretary
Steven Chu, 6/19/2012
PROTECTING OUR GROUND WATER
• “I am not aware of any
proven case where the fracking
process itself has affected the water” – Lisa Jackson,
President Obama’s Environmental Protection Agency
Adminstrator (U.S House Testimony)5/24/11
• “One of the primary areas of concern which has been
raised about state regulation is in the area of
groundwater and drinking water protection. There has
been a misconception that the hydraulic fracturing of
wells can or has caused contamination of water wells.
This is false.” - Pennsylvania Department of
Environmental Protection Secretary Michael Krancer,
5/31/2012
ON THE SAFETY OF THE TECHNOLOGY
“There’s a lot of hysteria that takes place
now with respect to hydraulic fracking…
My point of view, based on my own study
of hydraulic fracking, is that it can be done
safely and has been done safely hundreds
of thousands of times. - Ken Salazar, President Obama’s
Interior Secretary 2/15/2012
WHAT ABOUT ILLINOIS?
• Illinois has largely been just an observer
of the transformation of the oil and gas
industry….until now
• More than 500,000 acres have been leased
in Illinois with a conservative estimate of
more than $200 million invested as
companies have looked to Illinois for the
next big oil and gas development
WHY ARE COMPANIES LEASING IN ILLINOIS?
• The oil is here
• The Illinois Basin has produced more than 4
billion barrels of oil.
• ISGS estimates the remaining resource is
equivalent or more.
ILLINOIS SHALE PLAY
Today I am aware of
leasing in 17 counties
(there are probably more)
•Edwards
•Effingham
•Franklin
•Gallatin
•Hamilton
•Jasper
•Jefferson
•Johnson
•Lawrence
•Marion
•Pope
•Richland
•Wabash
•Washington
•Wayne
•White
•Williamson
HISTORY OF ILLINOIS HYDRAULIC
FRACTURING LEGISLATION
• SPRING 2011- Legislation initiated by Faith-in-Place
passed Senate/held in House
• SUMMER 2011- Leasing begins in southern Illinois
• SPRING 2012• Agreed bill passed Senate / held in House
• Overly burdensome & prohibitive proposal floated by the house
speaker
• Legislation to impose moratorium introduced
• SPRING 2013• Extensively negotiated, comprehensive legislations passed into
law
• Moratorium legislation re-introduced
• SUMMER 2013- Regulatory process begins
THE LEGISLATIVE PROCESS WAS
CONTENTIOUS
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
SETBACKS AND PROHIBITIONS
• 500’ from schools, houses and hospitals
Setbacks from mapped aquifers deleted
• 1,500’ from any public water intake point
• 300’ from streams, rivers, lakes and ponds
• 750’ from any nature preserve
• 500’ from any water well serving humans or
livestock
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
PERMIT REQUIREMENTS – SECTION 35
• Completion activity requires a permit
• Operators engaging in HVHHF must register with the state and
provide proof of environmental liability insurance and summary
of any violations of an HF related statute incurred in the last five
years (nationwide)
• Application must include list of chemicals “anticipated” to be used
• Operator must submit a report to the local county identifying the
primary roads that will be used by truck traffic servicing the well
site
• Plan identifying how flowback will be managed and disposed
• Permit application fee - $11,000 to IDNR; $2,500 to IEPA
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
PERMIT PROCESSING
• Permits must be processed and approved/denied within 60
days of submittal (excluding delays attributable to public
hearings)
• Notice of application must be sent to all property owners
within 1,500’ of well site; Notice must direct them to
website where details of permit application can be found
• 30 day public comment period per each well application;
Public comment period occurs during IDNR 60 day review
period
• Individuals “adversely affected” by the well site can request
a public hearing to protest the permit
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
BONDING REQUIREMENTS
Operator must maintain a $500,000 statewide bond;
Bond can satisfy all other bonding requirements if the
$500,000 level exceeds the level of other
requirements
WELL CONSTRUCTION REQUIREMENTS – SEC. 70
Prescriptive well construction and operation
standards must be adhered to
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
HF OPERATIONS – SEC. 75
• Use of tanks required for managing all wastes; Use of unlined
pits allowed for fresh water and non-oil based cuttings only
• Flowback must be tested once per well site for VOCs, metals,
etc.
• Secondary containment for well sites and facilities required
• Report on how flowback was transported and disposed must
be included in the well file; Annual report on how produced
water is managed must be filed with IDNR
• Emissions must be minimized during flowback in
accordance to USEPA green completion requirements (apply
to oil and gas wells); Production flares must meet 98%
efficiency standard per CFR 60.18 by 2015
HYDRAULIC FRACTURING REGULATORY
ACT P.A.98-022
WATER TESTING – SECTION 80
• Pre and post activity water testing required
• Work plan must be submitted to IDNR
• Testing required for all water resources within 1,500’ of well site
• Post activity testing required 6, 18, and 30 months after HF
operation is completed
Reclamation
• Surface reclamation and removal of all facilities must be
completed within 12 months of plugging the last well on a well
site
• Prior to conducting HF operations, operator shall cause any
unplugged well to be plugged if it is within a 750’ radius of the
well site and the bottom hole location occurs within 400’ of the
stimulated zone
GOVERNMENT OVERSIGHT
REGULATED BY STATES AND UNDER THE FOLLOWING FEDERAL
LAWS:
– CLEAN WATER ACT – surface water discharge, storm water runoff
– CLEAN AIR ACT – air emissions associated with processing equipment and
engines
– SAFE DRINKING WATER ACT –underground injection disposal/reuse of
produced waste and flowback fluids
– FEDERAL LAND POLICY AND MANAGEMENT ACT – permitting for
federal onshore resources
– NATIONAL ENVIRONMENTAL POLICY ACT – permits and environmental
impact statements
– OCCUPATIONAL SAFETY AND HEALTH ACT – requires information about
chemicals used at every site
– EMERGENCY PLANNING AND COMMUNITY RIGHT-TO-KNOW ACT –
annual reporting to emergency responders of chemicals stored and used
above certain quantities
FEDERAL REGULATIONS
PROVIDE A BROAD REGULATORY FOUNDATION
Key federal regulations governing shale
development include:

Clean Water Act

Clean Air Act

Safe Drinking Water Act

National Environmental Policy Act

Resource Conservation and
Recovery Act

Emergency Planning and
Community Right to Know Act

Endangered Species Act

Occupational Safety and Health
Act
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Shared Values
W ATER QUALITY &
AVAILABILITY
CHEMICAL
MANAGEMENT
AIR QUALITY &
REDUCED
EMISSIONS
COMMUNITY
CULTURE &
AESTHETIC
Sample Company Development Strategies
• Companies often test surface and ground water and evaluate potential water sources and
disposal options prior to drilling.
• Companies reuse fracturing water and increasingly use non-potable water sources to reduce
water use.
• Companies invest to develop “greener” additive alternatives and disclose the additives used in
fracturing fluids on www.fracfocus.org.
• Carefully trained and specialized employees manage fluids according to established protocols.
• Companies often use cleaner burning fuels or renewables to power on-site equipment.
• Emission mitigation technologies (e.g. green completion systems) separate gas and liquid
hydrocarbons to reduce greenhouse gas emissions.
• Companies hold meetings with community members before drilling begins to understand
community culture and concerns and to coordinate specific work hours to address traffic,
lighting and noise concerns.
• Companies work with local universities and vocational/technical schools to help train workers
for new jobs coming online due to shale energy and to conduct new research to continuously
improve operational practices and environmental performance.
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INNOVATIONS PROMOTE SAFE
&ENVIRONMENTALLY FRIENDLY PRACTICES
• “Pitless” drilling - use of
aboveground tanks for managing
well fluids so that there is limited
danger of well fluids getting into
groundwater
• Sound control and surface
management allows for safe drilling
in close proximity to people
• Centralized water management
systems that remove trucks from
roads
• Closed loop drilling systems; all
drilling fluid stored in steel tanks
• Whole site liners
• “Green” frac fluids (Example:
Environmentally benign
components)
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SUMMARY
• New technology (horizontal drilling and
high volume hydraulic fracturing) has
transformed the oil and gas industry in
the United States and may soon transform
the Illinois oil and gas industry
• Illinois’ regulatory scheme will be the
most comprehensive in the nation. We do
not have to choose between oil and gas
development and the environment.