Michael D. Klein, P.E., CHMM11/17/11

Hydraulic Fracturing

The method used to make hard shale rock more porous Allows gas shale to flow through the fine grained, organic-rich,

sedimentary rock formations to the wellbore

What is hydraulic fracturing?

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Shale gas is present across much of North America in basins of both extreme and moderate size. Some of the major shale reserves include:

Marcellus (Pennsylvania, New York, Ohio, West Virginia, Kentucky)

Bakken (North Dakota, Wyoming) Haynesville (Texas, Louisiana) Barnett (Texas) Eagleford (Texas) Fayetteville (Arkansas) Antrim (Michigan, Illinois, Ohio) Woodford (Oklahoma)

Where are the Shale Gas Reserves?

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The Marcellus Shale is known as the Saudi Arabia of Natural Gas

The US Geological Survey estimates 500 trillion cu ft of natural gas in Marcellus alone

Where are the Shale Gas Reserves?

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The Penn State study reported that Marcellus gasindustry generated . . .

$3.0 billion in total valueadded revenue

more than 44,000 jobs $389 million in state and

local revenue

Penn State Economic Study of theNatural Gas Industry

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For 2011 the Penn State estimate exceeds

$10 billion in total value added revenue

more than 100,000 jobs $1 billion in state and local

revenue in Pennsylvania

Penn State Economic Study of theNatural Gas Industry

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Until recently shale gas could not be cost effectively extracted

Two factors came together in recent years to make shale gas production economically viable:• Advances in horizontal drilling• Advances in hydraulic fracturing

Shale Gas Recovery Economics

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By drilling and casing a well for the extraction of thenatural gas producers drill into the earth several thousand feet

until they reach the natural gas reservoir steel casings are inserted to a depth of 1,000 to

3,000 ft the space between the casing and the drilled hole

is filled with cement to stabilize the well and prevent any leakage

the cement sets this process is repeated, using a series of s

successively smaller casings until the reservoir is reached

depths reach distances of 6,000 to 10,000 feet

How is shale gas extracted?

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Once drilling and casing is complete

3 to 5 million gallons of water, mixed with sand andchemical additives, are pumped into the wellhead at high pressure, creating cracks in the rock beds

the hydraulic fracturing mixture is 95% water,4.5% proppant, and 0.5% chemical additives

How is shale gas extracted?

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Once drilling and casing is complete

proppant is a material, such as grains of sand, ceramic, or other particulates, that prevent the fractures from closing when the injection is stopped

fracturing fluid formulas vary slightly among production sites in accordance with the unique requirements of each site’s geology

The fracture width is typically maintained after the injection by introducing a proppant into the injected fluid

How is shale gas extracted?

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In the case of shale gas extraction using hydrofracking, questions have been raised

Environmental safety of processThe management of the volumes of water used

to fracture shaleWater, water, it’s everywhere!

Concerns

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Environmental and human health concerns associated with hydraulic fracturing include:

If all goes as intended the many fissures and fractures in the surrounding rock are sealed by the cement

Depending on the nature of the gaps and fractures, it can be extremely difficult to properly cement the casing

Contamination of groundwater

What are the risks?

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Environmental and human health concerns associated with hydraulic fracturing include:

The migration of gases and hydraulic fracturing chemicals to the surface

Risks to air quality Industrial strength waste streams

containing high concentrations of a wide range of substance that have adverse health and water quality effects

What are the risks?

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Environmental and human health concerns associated with hydraulic fracturing include:

Mishandling of waste; chronic and persistent occurrence of spills and contamination incidents

Waste streams are expected to exceed existing treatment and assimilative capacities

Withdrawals of water to support hydraulic fracturing during dry periods extending duration of “drought”

What are the risks?

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Problems with drilling for natural gas is notnecessarily the drilling of the wells anddistribution of the gas . . .

• It is managing the site and the fate of drilling fluids

• Improper disposal of recoverable drilling fluids

• Mismanagement of wastes in “tank farms”

Site Management

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Environmental cleanupLoss of land valueHuman and animal health concerns Introduction of hundreds of tons of

fracturing chemical into a watershed over a period of several decades

The gradual dispersion of low levels of toxic chemicals into the environment and water supplies through multiple pathways

The Potential Costs

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Nationally over 40 lawsuits have been filed

Terms of the lease Landowners who do not own the

oil or gas rights under their property are suing for nuisance

Physical ailments such as headaches, nosebleeds, nausea, and open skin sores

Diminution in the value of their property as a result of damaged soil, water, and air

Plaintiff Legal Actions

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The 2005 Energy Act exempted oil and gas companies from federal environmental laws such as . . .

Safe Drinking Water Act Underground Injection Control Program Did restrict the use of diesel fluids in the fracking process

Clean Water Act (CWA) Onsite Pretreatment Publically Owned Treatment

Works (POTW) Centralized Waste Treatment

Facilities Handling of biosolids from facilities

treating frack water

Plaintiff Legal Actions

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Claims are hampered due to the lack of information concerning the makeup of the fracking fluid

On 6/9/2009 the Fracturing Responsibility and Awareness of Chemicals (FRAC) Act was introduced to Congress – Amends the Safe Drinking Water Act to:

Repeal the exemption from restrictions on underground injection of fluids near drinking water sources granted to hydraulic fracturing operations under such Act

Require oil and gas companies to disclose the chemicals used in hydraulic fracturing operations

Groundwater Contamination

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Information on the composition of fracking fluid that has largely been protected as trade secrets Methane migration into the ground water and drinking

water supply

Groundwater Contamination

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Several States require the disclosure of the hydraulic fracturing water composition; they are:

WyomingArkansasMontanaLouisianaWest VirginiaColorado (pending)Texas (pending)New York (pending)

Hydraulic Fracturing Water Composition

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The operators disclosing information posts to FracFocus, a website operated by the Ground Water Protection Council and the Interstate Oil & Gas Compact Commission

The websites have become a central location for the posting on information regarding the hydraulic fracturing of wells

Visitors to the website can search for wells by county, longitude and latitude, or the name of the operator, as well as by other criteria

Hydraulic Fracturing Water Composition

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Management of flowback fluids

Surface Water Impacts

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Surface Water Impacts

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Recycling of water for reuse in the fracking process

Total Dissolved Solids (TDS)

Naturally occurring radioactive materials

EPA is evaluating current and potential new CWA pretreatment

Surface Water Impacts

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The Marcellus has sought-after deposits of natural gas, but has also found large amounts of highly radioactive radium

Significant amounts of radiation have ended up in wastewater, much of it sent to Public Treatment Plants

Radiation from Contaminated Wastewater

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However, most municipal wastewater treatment plants are completely unequipped to process the levels of radiation in the wastewater and cases of leakage and contamination in waterways have occurred

The threat has caused enough concern that the state of New York recently issued a partial moratorium on hydrofracking activity to investigate the issue

Radiation from Contaminated Wastewater

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Gas STAR under the Clean Air Act (CAA)

Control air emission throughout the natural gas extraction and production process

Natural gas development process causes the release into the atmosphere of a variety of toxic emissions:

Future Regulatory Environment for Fracking Operations

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o methaneo ethaneo n-hexaneo benzene

o tolueneo ethylbezeneo xyleneo sulfur dioxide

These emissions are occurring during the flowback process, where fracking fluid, ground water, and gas come to the surface before natural gas is collected for transmission to the processing facility

New EPA regulations for new frack wells; reuse of existing wells must separate liquid and gas hydrocarbons during the flowback process

Captured gases can be treated and sold

Future Regulatory Environment for Fracking Operations

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The new regulations also cover compressors used to transport natural gas through pipelines and the pneumatic controllers used to maintain liquid levels, pressure and temperature in processing plants and compressor stations, condensate and crude oil storage tanks

EPA calculates cost recovery in under a year of compliance with regulations in tanks

Future Regulatory Environment for Fracking Operations

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Public comments on the proposed rules October 24, 2011 with Final rule February 28, 2012

Estimated 11,400 new fracked wells and 14,000 re-fracked wells will be impacted by the new regulations

Currently 1.1 million wells are producing oil and natural gas in the USA

Future Regulatory Environment for Fracking Operations

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At the request of Congress, the EPA was tasked to better understand potential impacts of hydraulic fracturing on drinking water resources

In March 2010, the EPA announced its intention to conduct the study in response to a request from Congress

The EPA has held a series of public meetings across the nation to receive input from states, industry, environmental and public health groups, and individual citizens

EPA Study Plan to AssessHydraulic Fracturing

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The study was reviewed by the Science Advisory Board (SAB), an independent panel of scientists, to ensure the agency conducted the research using a scientifically sound approach

The initial research results and study findings will be released to the public in 2012

The final report will be delivered in 2014

EPA Study Plan to AssessHydraulic Fracturing

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The final study plan looks at the full cycle of water in hydraulic fracturing

the acquisition of the water

the mixing of chemicals and actual fracturing

to the post-fracturing stage, including the management of flowback and produced or used water as well as its ultimate treatment and disposal.

EPA Study Plan to AssessHydraulic Fracturing

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Earlier this year, EPA announced its selection of locations for five retrospective and two prospective case studies; the two Pennsylvania sites are:

EPA Study Plan to AssessHydraulic Fracturing

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Well water protection and other water protection:

No permits would be issued for sites within 500 feet of a private water well or domestic use spring

No permits may be issued for a proposed site within 2,000 feet of a public drinking water supply well or reservoir at least until three years of experience elsewhere has been evaluated

No permits will be issued for well pads sited within a 100-year floodplain

Future Regulations being considered to protect drinking water

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Spill control:All new guidelines will require that flowback water

on site must use watertight tanks within a secondary containment

No open containment may be used

A secondary containment will also be required for all fracturing additive containers, additive staging areas and flowback tanks to ensure any spills of wastewater or chemicals at the well pad do not migrate into water supplies

Future Regulations being considered to protect drinking water

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Regulating Water Withdrawals:

New Legislation: A special permit would be required to withdraw large volumes of water for industrial and commercial purposes to ensure there are not adverse impacts

Permit Condition: All withdrawals from surface water bodies will be subject to limits to prevent impacts upon ecosystems and other water quantity requirements

Identification of the water source: An applicant intends to use will be required and an annual report must be issued on the aggregate amount of water it has withdrawn or purchased

Future Regulations being considered to protect drinking water

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Delaware River Basin Commissiongoverns natural gas drilling in northeast Pennsylvania

The Commission oversees the water supply for Philadelphia and half the population of New York City

The Commission imposed a moratorium on all Marcellus drilling projects in the four-state basin until the rule-making process is complete

Recently established rules to allow gas drillers to use fracking to extract natural gas from the Marcellus

Rules are designed to protect water quality in the Delaware River and its tributaries

Regulatory Agencies

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Questions?Thank you for having

me!

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