The Marcellus shale, which extends 575 miles across parts of three eastern US states, is thought to hold as much as 500 tcf of natural gas, about 50 tcf of which is considered recoverable. The area is bringing producers, landowners, and state and local officials to address water use and other questions.
The Marcellus shale deep-gas formation also is bringing the oil and gas industry into parts of Pennsylvania, New York, and West Virginia for the first time. Producers have responded with aggressive outreach efforts.
“We have been meeting with individual groups about the Marcellus play for some time,” said Charlie Burd, executive director of the Independent Oil & Gas Association of West Virginia (IOGA of WV) in Charleston. “We have been to several places in eastern West Virginia where this development will take place because it lies in a formation that hasn’t been produced and a part of the state that hasn’t had a lot of oil and gas exploration, Burd said, adding, “So there’s more concern, both positive and negative, from those constituents. Residents and royalty owners where there has been shallow drilling are more familiar with the process of exploring and producing natural gas and oil.”
State regulators also have responded. “We have experienced here in Pennsylvania what may be a relatively unprecedented land rush,” said J. Scott Roberts, deputy for mineral resources management in Pennsylvania’s Department of Environmental Protection. “There are now several million acres of private land which have been leased for Marcellus shale development, including 78,000 acres of state forest land where bids were put out in September,” Roberts said.
“Pennsylvania’s traditional oil and gas production has been in the western quarter of the state,” Roberts told OGJ during an Oct. 28 telephone interview. “The Marcellus exists in sort of an arc, starting in the same portions to the south but extending north and east, including all of our northern tier counties to the Delaware River. Those counties haven’t seen any oil and gas production because the opportunities haven’t existed,” he said.
Marcellus shale committee
The state’s two main industry associations–the Pennsylvania Oil & Gas Association (POGAM) and the Independent Oil & Gas Association of Pennsylvania (IOGA of PA)–announced the formation of a joint Marcellus shale committee on Oct. 15. The associations said the committee will represent Pennsylvania producers on matters connected with acquisition, exploration, drilling, and development of the Marcellus shale gas resource. It also will help present a unified voice before state, county, and local governments and regulators, they said.
“We’re focused on Pennsylvania, which has had an active oil and gas industry for 150 years. But the industry has been relatively small, focusing on smaller producing wells, and has flown under the radar,” said Richard D. Weber, one of the committee’s cochairman and president of Atlas Energy Resources LLC in Moon Township near Pittsburgh. “The Marcellus shale has brought a lot more attention to it,” Weber noted, adding, “It potentially could be one of the larger US natural gas fields, and it has caught the attention of our legislators, regulators, and governor.”
Weber told OGJ in an Oct. 30 telephone interview that POGAM and IOGA of PA recognized that several changes had been proposed for regulating oil and gas industry activities in Pennsylvania “and we felt we needed to come together on issues related to the Marcellus shale,” he said, adding, “We invited some newer companies to Pennsylvania to join us. There are about 26 companies participating. The committee tries to provide a unified voice on regulatory issues and best practices.”
A separate, Appalachian shale water conservation and management committee has existed for about 6 months to address technical issues. It was formed last spring by about half a dozen Marcellus shale producers, which have been active in the Barnett shale formation near Fort Worth, Tex., according to Tom Hayes, its managing director and a senior engineer at the Gas Technology Institute in Des Plaines, Ill. There are about 20 members now who are working to develop best management practices and technical solutions for Appalachian shale gas development, Hayes said in an Oct. 23 telephone interview.
Some major differences
“There are tools that have been examined and evaluated in the Barnett that have been helpful with the Appalachian,” Hayes said. “But the two regions are different in terms of regulatory environment and the challenges the industry faces there. Climate is a big difference. The availability of water is another. Having to deal with three states instead of one is a third. The Appalachian shale also traverses states that are in three [Environmental Protection Agency] regions,” Hayes said.
Water use is the single biggest issue that has emerged as producers look more closely at hydrological fracturing to develop Marcellus shale gas. Hayes said producers will need to begin the actual process before they can say whether there’s a major difference from the Barnett shale experience. “For now, they’re estimating the same water use per well,” he said.
“If you look at the economic opportunities that were created in the Dallas-Fort Worth area by the Barnett shale and then apply it across Pennsylvania, the potential is immense.”– J. Scott Roberts, deputy for mineral resources management, Pennsylvania Department of Environmental Protection
“The companies have worked together to bring a lineup of service companies, key equipment vendors, engineers, and regulatory organizations to help understand the challenges and possible solutions to what lies before us,” Hayes told OGJ. “They have made a lot of progress in bringing a lot of information into the arena. Now that we have it, we’re continuing to gather more while starting to understand how to use it to make integrated solutions come to the forefront. We’ve even had a lot of very good meetings with regulators on a technical, rather than legal, basis. They have been good conversations,” he said.
State regulators’ approaches to potential Marcellus shale gas development have varied. In New York, where 54.9 bcf of gas was produced in 2007 from existing shallower wells that were drilled vertically, the horizontal drilling necessary to produce from the deeper Marcellus and Utica formations has raised questions. “Land agents and companies have been scouring the Catskill foothills and southern mountains signing up leases,” said a spokesman for the state’s Department of Environmental Conservation.
The state has updated its well spacing law to address horizontal drilling issues, the DEC spokesman said. The department also launched a Marcellus shale information page on its web site. Gov. David A. Paterson also directed DEC on July 25 to draft a supplement to a 1992 Generic Environmental Impact Statement (GEIS) to address issues related to the larger water volumes needed for hydrologic fracturing. DEC scheduled six public meetings from Nov. 6 to Dec. 4 on its proposal. “This is just the first step in what will be a careful process designed to look at environmental issues unique to the high-volume hydraulic fracturing of horizontal wells in these deep rock layers,” DEC Commissioner Pete Grannis said on Oct. 6.
Combination of elements
“Horizontal drilling is not new. Hydraulic fracturing is not new. And drilling into the Marcellus shale is not new. But the drilling operations proposed involve all three of these elements, along with greatly increased water use,” Grannis said. “This review is designed to ensure that if the drilling goes forward, it takes place in the most environmentally responsible way possible,” he said.
Following the public hearings and comment period, DEC will release a final scoping document and then prepare the supplemental GEIS. It hopes to have a draft ready for public review by early spring 2009.
The DEC spokesman said during the supplemental GEIS’s scoping and preparation, producers applying for Marcellus shale drilling permits will be required to undertake an individual, site-specific environmental review. That review must take into account the same issues being considered in the supplemental GEIS process and must be consistent with the requirements of State Environmental Quality Review Act and the state Environmental Conservation Law. Three companies applied to drill eight horizontal wells before the announcement, the spokesman said. No new applications have come in since, he added.
Producers also have tried to respond to concerns expressed about possible impacts on drinking water supplies. Testifying before the New York State Assembly’s Standing Committee on Environmental Conservation on Oct. 15 on behalf of the Independent Oil & Gas Association of New York, Roger Willis, president of Universal Well Services Inc. in Meadsville, Pa., said the US EPA has reviewed hydraulic fracturing extensively and found no cause for alarm.
“With all of the hydraulic fracturing treatments that have been pumped in New York state, DEC has not found one case of documented damage to aquifers,” Willis said. “The waters of the Marcellus have no potential to be used for potable water and have been in place without migrating for over 50 million years. We are utilizing fluids that comply with EPA regulations and all of them have been divulged to DEC for [its] review,” he added.
The industry also continues to work to advance the technology from “greener” additives and continues research with the Groundwater Protection Council and the US Department of Energy, Willis said. “Industry partners are working with DOE on a project named ‘Modern Shale Gas Development,’ which is a nationwide shale program with emphasis on the Barnett, Marcellus, Fayette and Woodford shales,” Willis said.
West Virginia responses
Water use also has raised questions in West Virginia. “The big difference is the volume [of water] used in the completions compared with more conventional activities,” said James Martin, chief of the Office of Oil and Gas in the state’s Department of Environmental Protection, in an Oct. 28 telephone interview. “That’s not the case with all of the Marcellus, but most if it is that way. If the water has been intended to be land applied, that raises questions, particularly since some of the terrain is not suitable for that application,” he said.
“I think we have made progress, but I don’t want to give anyone the impression that we’re done. We have work to do.”–Richard D. Weber, president, Atlas Energy Resources LLC
“There’s no question that more water will be needed,” confirmed IOGA of WV’s Burd. “Clearly, the play requires a good deal more than has historically been needed to develop shallow wells. It’s the difference between a 1,000 bbl frac and a 10,000 bbl frac,” he said, adding, “That has been, without question, the leading area of discussion in all the meetings we’ve been invited to or held around West Virginia. The concern most likely expressed at these meetings has to do with water withdrawal, usage, treatment, and disposal.”
Burd said the state also adopted water claiming legislation that established a reporting process that has been tweaked several times. Essentially, it states that a withdrawal of more than 750,000 gal of water from one or more streams to be used at a single facility triggers a 3-year reporting process, Burd said.
“Currently, our West Virginia [Department of Environmental Protection] water resources division understands that oil and gas is significantly different from a traditional industrial facility withdrawing water,” Burd said, adding, “[Both] DEP and the industry are working through that issue to determine how to best apply this statute so it doesn’t trigger the reporting process while the well is developed and produced and the land is reclaimed. They have recognized that this needs to be addressed, and there is a working group.”
Recycling as an option
“We have looked at recycling as a good way to approach some of these challenges, said DEP of WV’s Martin. “The more that can be used, the less impact on resources up-front. We know the industry is aware of this as an option and is looking into it. There are companies that are looking at treating the water to get it to levels where this can be done,” he told OGJ.
In Pennsylvania, said Roberts, staff members of the state’s DEP department held several conferences with landowners who had no previous oil and gas experience about provisions under the state’s oil and gas law and what the department regulates. Pennsylvania State University county extension provided landowners other information about leases, Roberts said. DEP also has launched a web page with Marcellus shale information for landowners and the general public at its own web site.
Considered the US oil industry’s birthplace because of Col. Edwin L. Drake’s discovery at Titusville in 1859, the state of Pennsylvania more recently has had a robust gas producing industry and has seen significant coalbed methane production over the last couple of years, according to the DEP official. Roberts said the Marcellus is an unconventional formation that requires more water for fracturing and that led to the development of a water permit addendum, which asks not so much how much water will be used but how much will be left in the stream after it’s withdrawn.
“The producers may think this is a bit clumsy. We continue to meet with them to understand their concerns and try to streamline things,” Roberts said. “We felt it was important to get something out and put people to work. Now, we’re going back and engaging in training for the oil and gas industry and our own staff in regard to how we do these things,” he said.
‘Constructive attitude’
“We think it still needs work,” said Weber, adding, “The DEP is working very hard to try and streamline the process to provide adequate environmental protections, but the addendum needs work and we’ve communicated that to the DEP. I think it has a constructive attitude and is looking for a proper balance.”
Roberts agrees, saying: “Withdrawal of waters is one of two problems, and in some respects is the easier one to tackle. What is done with the water after it’s used is a thornier question. In Pennsylvania, we have not seen much deep well injection of waste water. We will need to see if the rock here is suitable for it. Without that, we need to have industrial facilities for the industry to use. Up until now, it has been using sewage treatment plants with wastewater facilities. That’s not going to suffice in the long term for the Marcellus formation.”
Producers recognize that water will be needed to be treated to remove contaminants and solids once it has been used to recover Marcellus shale gas, Weber said. “We as an industry intend to responsibly dispose of this water through specially permitted facilities. We’re also evaluating other methods such as disposal wells, evaporation ponds and ways to recycle our frac water on site so we can reuse it. This last approach poses some technical challenges,” he told OGJ.
Against this backdrop, Roberts said the state recognizes that Marcellus shale gas development could have a major positive economic impact. “If you look at the economic opportunities that were created in the Dallas-Fort Worth area by the Barnett shale and then apply it across Pennsylvania, the potential is immense,” he said, adding, “Our original oil and gas act specified to make certain Pennsylvanians get the most out of our resources. Gov. [Edward G.] Rendell wants to make sure that Pennsylvania companies can compete for that work and that Pennsylvania citizens can be trained for careers in the oil and gas industry, yet in a way that respects our state, our environment, and our natural resources. That’s a challenge that the industry is embracing.”
Weber noted, “I think we have made progress. But I don’t want to give anyone the impression that we’re done. We have work to do.”
