Hydraulic Fracturing Basics

Synergy Conference Panel Hydraulic Fracturing Frac or Friction

November 7, 2014

A Definition

• A stimulation technique that increases a gas or oil well’s production potential by the creation of enhanced permeability of the reservoir rock through which the well bore is placed. The enhanced permeability is obtained by exposing the rock matrix to pressures in excess of the intrinsic forces holding the rock together.

The Reservoir Reservoir rocks must have three characteristics to be considered a reservoir rock.

– Porosity (void spaces in the rock matrix) – Void spaces containing hydrocarbons – Permeability (measure of the connectedness of

the porosity) Reservoirs are not characterized as cavernous voids in the rock or subterranean hydrocarbon rivers

What Does Hydraulic fracturing do?

• Brings a permeability to a naturally impermeable rock on a large scale

Porosity Without Permeability

History

• Halliburton (HOWCO) was the first to experiment in late 1940s.

• By 1950s technique was refined • Used primarily to repair “skin damage” from

drilling operations • 1980’s started to experiment with large

volume of sand and water (slick water) or high volume fracturing.

Marriage of Technologies

• Fracking R&D going on in relative isolation to directional and horizontal drilling R&D.

• Horizontal drilling going on in the late 1980s in naturally fractured reservoirs such as the Austin Chalk (Texas).

• Barnett shale in North Texas combined the technologies successfully.

Multiple Packer with Sliding Sleeve Liner with multi packer and sliding sleeve assembly

– Uses packers and sliding sleeves activated with various size balls.

Facts and Figures

• 9500 MSHWs drilled in Alberta • Over the last three years more than half the wells

drilled were horizontal. • 80% of all new oil wells over the last year were

horizontal. • Horizontal wells responsible for more than half of the

provincial crude oil production today. • AGS responsible for monitoring seismicity in province. • D-83 compliance being monitored. • Following maps show where the activity is.

Frac or Fiction:

Synergy Alberta Conference

Panel discussion Tuesday Nov 4, 2014

9:00am- 10:30am

Alberta Energy: Mandate and Mission

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• Energy’s mission is to assure sustained prosperity in the interests of Albertans through the stewardship of energy and mineral resource systems, responsible development and wise use of energy.

• Part of energy’s mandate is to work collaboratively with partners to develop strategies that address issues and barriers and understand social license challenges and work with Albertans, communities and governments and industries to develop strategic and integrated polices and plans.

Background

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• Opportunities and challenges associated with unconventional resource development highlight the need for collaborative approaches in all areas

• With development activity increasing in unconventional resource formations, a number of concerns are being raised by Albertans, industry and other stakeholders related to the potential implications of such development.

• In response, the Government of Alberta is working on a number of initiatives to ensure responsible development of these resources

The Stats • Wells Drilled in Alberta (Oil and Gas)

Total Oil Wells Drilled: • 2013 – 3,037 Wells • 2014 (YTD, Jun 2014) – 1,367 Wells Total Gas Wells Drilled: • 2013 – 1,337 Wells • 2014 (YTD, July 2014) – 725 Wells

• Horizontal Multistage Hydraulically fractured Wells 2013/2014(up to July 2014) Horizontal Multistage Oil Wells: • 2013 – 1,612 Wells (53%) • 2014 (YTD, Jun 2014) – 722 Wells (53%) Horizontal Multistage Gas Wells: • 2013 – 626 Wells (47%) • 2014 (YTD) – 302 Wells (42%)

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Evolving Policy Elements

• Cumulative effects management – Looking at a region in consideration of appropriate

response based on aggregate factors, risks, management opportunities

• Net effects – Consideration of trade offs and/or synergies of

response actions based on outcomes • Integrated management

– Collaboration in management responses including planning, mitigation, balanced decisions

Integrated Resource Management System

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• Integrated and comprehensive approach to decision-making that looks at the whole picture

• Balance environment, economic and social

impacts • Ensuring our solutions today don’t become

the problems of tomorrow

• Successful implementation of this system will require strong working relationships with numerous ministries, organizations and other stakeholders.

Integrated Resource Management System

1. INTEGRATED POLICY (Govt)

2. REGIONAL PLANNING (Govt)

3. ALBERTA ENERGY REGULATOR (AER)

4. AEMERA (monitoring)

5. ACO

Integrated Management Approach (IMA)

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IMA • The purpose of IMA is:

o To integrate the development and enhancement of policy, regulation and information relating to unconventional resource development between Ministries and the AER

o To foster cross- ministry and AER collaboration and communication

o Proactive identification of issues that may arise from unconventional resource development

Integrated Management Approach (IMA)

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Natural Resources and the Environment

Pod

ADM HF Steering Committee

Hydraulic Fracturing and Horizontal Well

Committee

Public Information Task Group

• Evaluate complex cross-ministry policy initiatives

• Identify risks and potential issues • Support development of integrated policy • Ensure alignment of government priorities

• Interface with Deputy and Assistant Deputy NRE Pod committees

• Strategic issue identification • Guidance and priority setting HFHWC • ESRD, AER and Alberta Energy members

• Manager/Senior Professional Level • Information sharing and coordination • Track current initiatives • Identify policy, regulatory, information gaps • ESRD, AER, Alberta Energy, Health,

Agriculture, Municipal Affairs

• Technical and nontechnical information is publically available, Engagement Materials

• ESRD, AER, Alberta Energy, Health, Agriculture (FAO), Municipal Affairs

Policies and Initiatives Examples

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Water • Water Conversation Materials • Draft Water Conservation Policy Regulatory • AER Directive 83 • Chemical disclosure website - FracFocus.ca and

Directive 59 Resource Inventories • Defining Unconventional Resource potential -

Summary of Alberta's Shale- and Siltstone-Hosted Hydrocarbon Resource Potential, 2012

Play-Based Integration at Work • The AER’s PBR regulatory approach supports the

Integrated Resource Management System • Government of Alberta sets the outcomes for air,

land, and water that resource activities are to achieve

• These outcomes will play an important role in ensuring that PBR results in responsible energy development.

• Alberta Energy may use this pilot as an opportunity to test extending petroleum and natural gas agreements based on a requirement for industry to produce plans that ensure collaboration with other stakeholders and responsible resource development 11

Hydraulic Fracturing, Frac or Fiction An ENGOs perspective on fracking Nov 4th, 2014 Synergy Conference

Duncan Kenyon Pembina Institute Program Director, Unconventional Oil and Gas

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Leading Canada’s transition to a clean energy future The Pembina Institute is a national non-profit think tank that advances clean energy solutions through research, education, consulting and advocacy.

Fast moving • Fast moving new technology and o&g

development • New technology: multistage horizontal

fracturing technology • New strategy for extracting resource:

• different footprint • Different economics

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Keeping Up • Speed creates challenges for govt, regulators,

industry, landowners and society • Getting our heads around this thing called fracking

• information overload • who to believe

• Need to create the systems to manage the process

• Fluid environment decision making • Updating and/or creating new rules for mgmt.

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Real Challenges • Understanding where our energy comes from • Standing • Well bore integrity and groundwater contamination • Water use • Level of Activity • Local Air Quality • Greenhouse gas emissions

• Lifecycle • Venting & Flaring

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New Approaches 1. Play Based Regulations 2. Improving well integrity 3. Prioritizing resources

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pembina.org

Contact me if you have any further questions duncank@pembina.org

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