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1
The Path and Safety
Challenge AssociatedWith the Marcellus
Shale in Pennsylvania
Stephanie Catarino WissmanExecutive Director
Pennsylvania Governor’s Occupational Safety &
Health Conference
February 19, 2013
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 2
Associated Petroleum Industries of PennsylvaniaA Division of the American Petroleum Institute
The American Petroleum Institute (API) is the only national trade association that represents all aspects of America’s 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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Associated Petroleum Industries of PennsylvaniaA 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.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 4
Associated Petroleum Industries of PennsylvaniaA 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 industry’s 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, they’re also being adopted by the International Organization for Standardization.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 5
Associated Petroleum Industries of PennsylvaniaA 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.
•API’s Weekly Statistical Bulletin is the most recognized publication, widely reported by the media.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org6
Associated Petroleum Industries of PennsylvaniaA Division of the American Petroleum Institute
What We DoCertification
•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.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org7
Associated Petroleum Industries of PennsylvaniaA Division of the American Petroleum Institute
What We DoEducation
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 www.classroom-energy.org, informative and interactive educational resources in one easy-to-use location.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 11
Shale Formations in Pennsylvania
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 12
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 50-200 feet
• Approximately size of 95,000 square miles
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 13
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 14
The Competition
U.S. Department of Energy, U.S. Shale Basins
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 15
…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 2nd largest natural gas field (largest in Qatar/Iran)
(Bubble size approximates reserves)
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 16
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.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 17
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.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 18
Marcellus Shale Development
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 19
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 21
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 15-20 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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 22
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 23
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 24
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 26
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 27
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 28
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%
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 29
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Marcellus Shale Development
•Peak water use will be 60 million gallons/day•At peak, water use will remain less than ONE PERCENT of state’s daily water consumption •Less than half the water used to irrigate Pennsylvania golf courses
Water Usage
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 31
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
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 32
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 owner’s needs
• Similar to home construction
Restoration
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 33
• Multi-well Pad: Before and After
Restoration
Marcellus Shale Development
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Financial Impact of the Oil and Gas Industry
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 35
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.
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Regulation of the Oil and Gas Industry
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Potential Permits Required for Gas Well
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org
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Well Stimulation Additives
Marcellus Shale Development
300 North Second Street | Suite 902 | Harrisburg, PA 17101 | www.api.org 39
State Law Now Requires Posting on www.FracFocus.com
Upstream Americas
Governor’s Occupational Safety and Health Conference
Unsafe Acts are the major cause of Accidents!
Robin GrouetteProduction Operations Manager – Shell Appalachia
What do we mean by Safety?
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HSE, HSSE, Personal Safety, PSM, AI,LOTO,
HAZCOM, Environment,
BBSM, Security, STOP, MIE, OCA, OIA, ERP, PTW,
MOC…
Management of Change
Safety Philosophy
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Is Safety a Priority or a Value?
Why be Safe?It is humane (The Right Thing to do!)Legal ObligationBest for the Business
Why do Unsafe Acts/Condition OccurDon’t Know! Not AbleDon’t Care!
Appalachia TRIR YTD – It is a Journey!
Copyright of Shell Exploration & ProductionUpstream Americas - Appalachia
CONFIDENTIAL
Worker Safety Issues
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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
Site Challenges
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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
Other Successes
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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