Transcript powerpoint
THE ENVIRONMENT AND THE ECONOMY:
HYDRAULIC FRACTURING AS THE
INTERSECTION OF SUSTAINABILITY
North Dakota Oil: The Bakken and Three Forks Formations
© 2011 Joshua P. Fershee
THE NORTH DAKOTA DIFFERENCE
July 2011
424,000 bopd
Data from US Energy Information Administration
© 2011 Joshua P. Fershee
Source: North Dakota Dep’t of Mineral Resources
THE NORTH DAKOTA DIFFERENCE
The Bakken Shale is different than the Marcellus and many other regions
Current extraction is about 90% oil and 10% gas, with almost two-thirds
of the oil being extracted via hydraulic fracturing.
North Dakota is on pace to pass California this year, to become the #3
oil producer in the United States
Unlike the Marcellus and other gas shale plays, price doesn’t seem to be
a concern.
© 2011 Joshua P. Fershee
THE BAKKEN PLAY
© 2011 Joshua P. Fershee
NORTH DAKOTA: BAKKEN & THREE FORKS
AREA
BAKKEN
FORMATION
ESTIMATED MATURE AREA OF THE BAKKEN FORMATION
Mature
area
THREE FORKS
FORMATION
(Nordeng, 2010)
© 2011 Joshua P. Fershee
Source: North Dakota Dep’t of Mineral Resources
BAKKEN POOL: BAKKEN AND THREE FORKS ASSESSMENT
Three Forks Fm.
EXPECTED ULTIMATE RECOVERY
Bakken Fm.
48%
2.1 billion barrels 1.9 billion barrels
52%
(Nordeng and Helms, 2010))
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA FRACKING OPERATION
Performing hydraulic fracture stimulation south of Tioga
• all Bakken wells must be hydraulically fractured to produce
• > 2 million gallons of water
• > 3 million pounds of sand
• cost > $2 million
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
Vern Whitten Photography
Small Footprint
• Developed 13,000 acres
• 14 wells
• rough topography
• LMR Confluence
NORTH DAKOTA WELL SITES
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2009
NORTH DAKOTA – 54 DRILLING RIGS – Oct 2009
One year ago, drilling activity was focused
in Mountrail and Dunn Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2010
NORTH DAKOTA – 153 DRILLING RIGS – Oct 2010
Current drilling activity is focused
in Mountrail, Dunn, McKenzie, and Williams Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2011
NORTH DAKOTA – 200 DRILLING RIGS – Oct 2011
NORTH DAKOTA – 153 DRILLING RIGS – Oct 201
Current drilling activity is focused
Current drilling activity is focused
in Mountrail, Dunn, McKenzie, and Williams Countie
in Mountrail, Dunn, McKenzie, and Williams Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
THAT’S TACO JOHNS!
© 2011 Joshua P. Fershee
Source: Blake Ellis/CNNMoney
THE GOOD, THE BAD, & THE UGLY
CNNMoney: AMERICA'S BIGGEST BOOMTOWN
Earn $2,000 a night as a boomtown stripper (in Williston,
ND)
Housing Costs Skyrocket/Camps
Traffic & Safety Concerns
High Poverty and Prosperity Rates
© 2011 Joshua P. Fershee
JOBS & INCOME
POVERTY & HOMELESS
Jobs:
170-225 new rigs = 20,000 jobs in drilling
Anticipated 28,000 new wells & 28,000 long-term jobs over 15-25 years
Income
McKenzie County: In the top five ave. annual wages at $51,493 in 2010
Poverty
McKenzie County's poverty rate is 12.8%, when state average =11.7%
Homelessness
6-figure salaries, no where to live: “My address is Wal-Mart”
“Lucky” to live in a man camp
© 2011 Joshua P. Fershee
© 2011 Joshua P. Fershee
SEEING A TREND?
Source: http://www.mongabay.com/images/commodities/charts/crude_oil.html
© 2011 Joshua P. Fershee
NORTH DAKOTA SPEAKS:
ND HOUSE BILL NO. 1216
SECTION 1.
Hydraulic fracturing - Designated as acceptable recovery process.
Notwithstanding any other provision of law, the legislative assembly
designates hydraulic fracturing, a mechanical method of increasing the
permeability of rock to increase the amount of oil and gas produced from
the rock, an acceptable recovery process in this state.
SECTION 2. EMERGENCY.
This Act is declared to be an emergency measure.
© 2011 Joshua P. Fershee
NORTH DAKOTA SPEAKS:
ND HOUSE BILL NO. 1216
Loosely translated:
“We really, really like fracking. Please leave us
alone!”
© 2011 Joshua P. Fershee
WHEN, NOT IF, LOCALS FIGHT BACK
Crime
Williston Police Department: the number of accidents it investigated
jumped 30% last year to 974, and traffic misdemeanors increased 30% from
324 in 2009 to 421 in 2010.
Housing:
One-bedroom apartments can run around $1,500 a month, while two- to
three-bedroom apartments are often around $3,000.
Zoning, Zoning, Zoning
Infrastructure problems
Traffic Problems
© 2011 Joshua P. Fershee
NEED FOR OVERSIGHT
"It's a fire drill every day.”: Lynn Helms, Director, North Dakota
Department of Mineral Resources
In February 2011: Agency's staffing designed to handle 100 rigs and
about 5,000 wells
But, 169 rigs were running and 5,300+ wells were pumping oil.
2,000 more new wells are expected by the end of 2011.
© 2011 Joshua P. Fershee
SHORT-TERM FOCUS COULD BE
LONG-TERM PROBLEM
Dep’t of Mineral Resources monitored a record 1,213 new wells last year
Visited each site at least six times during the three-week construction phase
The inspectors ensure, among other things, that the steel pipe driven into the ground and
cemented into place is done correctly to prevent groundwater contamination.
The oversight of well construction is adequate but other
monitoring is lacking.
Nearly 900 disposal wells that hold saltwater, a byproduct of oil production,
and about 5,200 sites that hold other oil waste are being monitored only
twice annually at best, agency records show.
Disposal wells should be visited at least six to 12 times a year
© 2011 Joshua P. Fershee
PROPOSED SAFETY REGULATIONS
43-02-03-28. SAFETY REGULATION, ADDS: The director may
require remote operated or automatic shut-down equipment to be
installed on, or shut in for no more than forty days, any well that is likely
to cause a serious threat of pollution or injury to the public health or
safety.
ADDS: No well shall be drilled nor production or injection equipment
installed less than five hundred feet [152.40 meters] from an occupied
dwelling unless agreed to in writing by the surface owner or authorized
by order of the commission.
Not Exactly Norway, but it’s a start
© 2011 Joshua P. Fershee
COMPARE: § 33: EMERGENCY
SHUTDOWN SYSTEM
Petroleum Safety Authority (Norway): Guidelines Regarding the
Facilities Regulations
Facilities shall have an emergency shutdown system that can prevent
the development of hazard and accident situations and limit the
consequences of accidents . . . .
It shall be possible to manually activate functions from the central
control room that bring the facility to a safe condition in the event of a
fault in the parts of the system that can be programmed.
Coincidence? Norway’s Statoil just bought Bingham, a Texas
company, with 375,000 net acres in the Williston Basin
© 2011 Joshua P. Fershee
23
AVOIDING THE BIG RISK,
SEEKING THE BIG REWARD
Economic Sustainability requires Environmental Sustainability
Fracking problems will be dealt with differently than traditional oil
pipeline spills
Long-Term price support in oil makes it different from gas fracking plays
Collateral Damage: Human, Environmental, Political
© 2011 Joshua P. Fershee
MULTI-FACETED ISSUES NEED
MULTI-FACETED APPROACHES
Economic
Environmental
Social
© 2011 Joshua P. Fershee