Water and Shale Gas Development

Description

Water and Shale Gas Development Leveraging the US experience in new shale developments Global development of shale gas resources has the potential to expand significantly outside the United States. However, there continue to be environmental concerns, particularly with respect to water use. As operators outside the United States explore shale gas, there are many lessons that can be taken from the United States’ experience. This paper highlights areas that operators of new shale developments should consider. It also includes an analysis of considerations for Argentina, China, Poland and South Africa focusing on water regulation, water use and management, and water movements during shale gas development. 1 Contents 1 Introduction 4 Overview of shale gas life cycle activities 8 1.1 Shale resources outside the United States 9 In Focus: Shale developments in Argentina, China, Poland and South Africa 12 2 Water regulation 18 2.1 Regulatory history and the current landscape 19 2.2 Federal efforts to support regulatory consistency 21 2.3 Key trends 22 In Focus: Water regulation in Argentina, China, Poland and South Africa 23 3 Water management 26 3.1 Water use and production 27 Comparison: Managing produced water: unconventional vs. conventional 30 3.2 Water management options 31 Primer: Water treatment technologies 33 3.3 Key trends 34 In Focus: Water use/management in Argentina, China, Poland and South Africa 35 4 Water movements 42 4.

Informations

• Publié par: lagrenouille
• Publié le: 14 décembre 2012
• Nombre de lectures: 84
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

Water and Shale Gas Development Leveraging the US experience in new shale developments

Global development of shale gas resources has the potential to expand significantly outside the United States. However, there continue to be environmental concerns, particularly with respect to water use. As operators outside the United States explore shale gas, there are many lessons that can be taken from the United States’ experience. This paper highlights areas that operators of new shale developments should consider. It also includes an analysis of considerations for Argentina, China, Poland and South Africa focusing on water regulation, water use and management, and water movements during shale gas development.

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Contents

1 Introduction Overview of shale gas life cycle activities

1.1 Shale resources outside the United States In Focus: Shale developments in Argentina, China, Poland and South Africa

2 Water regulation

2.1 Regulatory history and the current landscape

2.2 Federal efforts to support regulatory consistency

2.3 Key trends In Focus: Water regulation in Argentina, China, Poland and South Africa

3 Water management

3.1 Water use and production Comparison: Managing produced water: unconventional vs. conventional

3.2 Water management options Primer: Water treatment technologies

3.3 Key trends In Focus: Water use/management in Argentina, China, Poland and South Africa

4 Water movements

4.1 Shale gas development life cycle: logistics requirements

4.2 Significance of water transportation

4.3 Rising to the water transportation challenge

4.4 Key trends In Focus: Water movements in Argentina, China, Poland and South Africa Concept Overview: Basin-wide water logistics management model

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Lessons learned for new shale developments In Focus: Implications for Argentina, China, Poland and South Africa

Implications for operators Overview of the challenges in the shale gas lifecycle

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1 Introduction

Natural gas production in the United States has grown significantly in recent years as improvements in horizontal drilling and hydraulic fracturing technologies have made it commercially viable to recover gas trapped in tight formations, such as shale and coal. The United States is now the number one natural gas producer in the world and, together with Canada, accounts for more than 25 percent of global natural gas production. 1 Shale gas will play an ever-increasing role in this resource base and is projected to increase to 49 percent of total US gas production by 2035, up from 23 percent in 2010, highlighting the significance of shale gas in the US energy mix in the future. Lower and less volatile prices for natural gas in the past two years reflect these new realities, with benefits for American consumers and the nation’s competitive and strategic interests, including the revitalization of several domestic industries. 2 

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(74.7 trillion cubic feet), and Barnett (43.4 trillion cubic feet). Activity in new plays has increased shale gas production in the United States from 11 billion cubic meters (bcm) in 2000 to 140 bcm in 2010. 4 Such production potential has the ability to change the nature of the North American energy mix and according to the National Petroleum Council 2011 study, “Prudent Development: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources,” the natural gas resource base could support supply for five or more decades at current or greatly expanded levels of use. 5 

Source: Shale Gas and Oil Plays, Lower 48 States, U.S. Energy Information Administration, www.eia.gov.

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San Joaquin Basin Monterey- Temblor

Mon Santa Maria Ventura, Los Angeles Basins

Water regulation This rapid expansion in shale gas production has given rise to concerns around the impact of operations in areas such as water, road, air quality, seismic and greenhouse gas emissions (GHG). The process of hydraulic fracturing (fracking) in a shale gas well requires significant volumes of water and causes additional greenhouse gas emissions compared to conventional gas wells. There is already significant resistance to shale gas development due to these water and emission concerns in many parts of the United States and Western Europe, with France and Bulgaria imposing nationwide moratoriums on shale gas production through fracking. The regulation of shale gas is an evolving landscape as the industry has developed so rapidly that it has often outpaced the availability of information for regulators to develop specific guidance.

Niobrara* Montana Thrust Bakken*** Belt Heath** CodyWilliston Basin Big Hom  Powder River Gammon Hilliard Basin Basin Baxter Mowry Appalachian Mancos  P Greater Green Niobrara* sin an Ba chigMi Antrim Basin River Basin  ark Basin Forest evonian (Ohio) Marcellus Manning as   B isnoliIl Unia i t n B s B a   n s i aiCyt ni Utica Canyon Manco eciPecna Basin inas rD B veen Excello- New Hermosa Mulky Cherokee Platform Albany Paradox Basin Pierre Lewis uJ naS nisaB na ni Aan as n B t a o Bi R s a W n ad o rk o o vitee fo l r l d Fetay d Chattano oga Palo Duro Bend Arkoma Basin k acBl roirraW nisaB gaasauCno Avalon- Basin Bone Sprin Permian Barnett T F X l - o L y A d - - M N S eal alVy leRi& e dg vorPecni Basin Ft. Worth  Salt Basin Barnett- Marfa Basin Tuscaloosa Woodfo Basin Ea For g d le  H Bo a s y s n i e e s r ville- Shale plays Basins Pearsall  shale & Mixed * Current plays Western  chalk Prospective plays  play Gulf Stacked plays lIi     & e  e onstme iM **lahs dex      ale &  pya ** *iMex dhs unyot/esowllhaStseg  Intermediate depth/age  tight dolostone-  Deepest/oldest  siltstone-sandstone

In its “2012 Annual Energy Outlook,” the U.S. Energy Information Administration (EIA) referred to the “enormous potential” of shale gas, and according to the Institute for Energy Research, the United States has enough natural gas to meet domestic electricity demand for 575 years at current fuel demand for generation levels—enough natural gas to fuel homes heated by natural gas in the United States for 857 years and more natural gas than Russia, Iran, Qatar, Saudi Arabia 3 and Turkmenistan combined. As Figure 1 illustrates, US shale gas reserves are vast and broadly dispersed; the EIA estimates that the lower 48 states have a total of 482 trillion cubic feet of technically recoverable shale gas resources with the largest portions in the Northeast (63 percent), Gulf Coast (13 percent), and Southwest regions (10 percent), respectively. The largest shale gas plays are the Marcellus (141 trillion cubic feet), Haynesville

Figure 1. US lower 48 states shale gas plays.

At present, the US shale gas industry is regulated by a patchwork of existing oil and gas regulations on drilling and well site activities, combined with environmental regulations on water and air management. This loose regulatory landscape is beginning to change with growing state and federal attention. In 2010, the U.S. Environmental Protection Agency (EPA) launched a four-year field study on the impact of shale gas hydraulic fracturing and, in 2011, the U.S. Department of Energy received a report by the Secretary of Energy Advisory Board (SEAB) for shale gas providing recommendations on how to reduce the environmental impact and improve the safety of shale gas production. In addition to these reports, numerous smaller studies continue to provide information to support improvements in regulation and leading practice. In 2010, New York issued a temporary moratorium on additional shale gas development to allow the state’s Department of Environmental Conservation (DEC) to finish its Supplemental Generic Environmental Impact Statement (SGEIS) on issues surrounding natural gas drilling. New York published a Revised Draft SGEIS on September 28, 2011, which was open for public comment until January 2012. 6  There has been no further movement from the DEC on the moratorium. In June 2011, Maryland Governor Martin O’Malley issued an order calling for a three-year study of the economic and environmental effects of drilling the Marcellus Shale before permits to drill can be issued. And in August 2011, New Jersey Governor Chris Christie placed a one-year moratorium on hydraulic fracturing so that the Department of Environmental Protection “can further evaluate the potential environmental impacts of this practice in New Jersey, as well as evaluate the findings of ongoing federal studies.” 7  (Note, however, that no hydraulic fracturing operations were taking place in New Jersey when the moratorium was issued.) Several other states, however—including Wyoming, Pennsylvania, Arkansas, Colorado, Louisiana and Texas—have passed new legislation or regulations in response to the increased activity associated with natural gas development.

Water use and Regarding contamination incidents, the MIT re management ildrsllweealshtsalehtnidel t“wthaatedtst 0002  ,0 voretihpor 10 Oneofthemostcontentiousandwidely g ye as a  r d s, e  v t e h l e o  p en m v e ir n o t n h m as e  n f t o a r l   t r h e e c  o m rd o  s o t f   p s a h r a t l  e publicized issues in shale gas production  been a good one—but it is important is water management. Shale gas  to recognize the inherent risks and the production is a highly water-intensive  damage that can be caused by just process, with a typical well requiring  one poor operation…. In the studies around 5 million gallons of water to drill andfracture,dependingonthebasin s w u h r i v c e h y c e o d, n  c n l o u i si n v c e i l d y e  n d t e s m a o r n e s r t e ra p t o e r  ted and geological formation. 8 The vast majorityofthiswaterisusedduringthe c w o it n h t  a fr m a i c n t a u ti r o e n f  l o u f i  d s s h ” a 9 llow water zones fracturing process, with large volumes  . of water pumped into the well with sand  In areas with dee unconventional  andchemicalstofacilitatetheextraction formations,such p astheMarcellus  of the gas; the remainder is used in areas in Appalachia, the shale gas the drilling stage, with water being the majorcomponentofthedrillingfluids. f u r n e d sh er w d a e te v r e  l a o q p u m if e e n r t s   i b s y s t e h p o ar u a s t a e n d d  s fr o o f m  Relatively small amounts of water are  rs . alsousedfordustsuppressiononsite, r f e e a et c  h a  n t d h  e m se u  l d ti e p e l p e   f c o o r n m fi a n t i i n o g n  s l  a w ye here T t o he and for the cleaning and flushing of  fracturing of rock occurs, drilling goes drilling equipment. Although increasing  through the shallower areas, with the volumes of water are being recycled and reused,freshwaterisstillrequiredinhigh s d e ri a l l li e n d g   o e f q f u u i s p in m g e  n c t a a si n n d g   p a r n o d d  u c c e t m io e n n  t p i i n p g e   quantities for the drilling operations as brackishwaterismorelikelytodamage r t e e g c i h s n t i r q y u ( e F s r . a  c A F n o e c w us  ) v  o f l o u r n d t i a s r c y l  o c s h in e g m  ical the equipment and result in formation  n damagethatreducesthechanceofa f i r n a t c h t e u  r s i pr g i  n fl g u  i o d f   a 20 d 1 di 1 t  i b v y e  s t  h w e as G  r l o a u u n nc d hed  successful well. The need for freshwater  Water Protecti il isagrowingissue,especiallyinwater- theInterstate o Oi n l  a C n o d u  n G c as ( C G o W m P p C a ) c a t nd scarce regions and in areas with high  Commiss ra cumulativedemandforwater,leading arerequir i e o d n  ( b I y O l G a C w C t ). o   T u e s x e a  s F  r o a p c e Foc t u or s. s    to pressure on sources and competition  The IOGCC, comprised of 30 member for water withdrawal permits. The  states in the United States, reported pressure to increase efficiencies is high  in 2009 that there have been no cases  as industry demand for water grows with  where hydraulic fracturing has been the development of more wells.  verified to have contaminated water. Watercontaminationisanother A t  u ke d y y  i o s b  j t e o c b tiveo r f   u t n h d e e E rs P t A a ’s n  d o  n t g h o e ing aspect of shale gas production that  s ette hasgeneratedsignificantresistance f h u y ll d  r li a f u e l - ic c  y f c r l a e c  t re u l r a in ti g o  n a s n h d i  p d b i e nk t i w n e g e  n tocurrentshaleproductionprocesses. aterandgroundwaterre r sources. 10  According to the Massachusetts  w Institute of Technology (MIT) 2011 Gas  osal of uced  report,whichreviewedthreestudies T w h a e t  e m rf o r v o e m m  e fr n a t c a t n ur d e d d i  s w p ellsisal p s r o o a d   of publicly reported incidents related  part of the debate on the environmental to gas well drilling, there were only 43  im s oduction. “widelyreported”watercontamination pactofshale  g e a ac p h r wellreturn incidentsrelatedtogaswelldrilling p A e f r t c er e  n fr t a a c g t e u  r o i f n t g h , einjectedfractur s e   a in the past decade (to 2010) during  fluid volume over its li me er whichtime,therewereabout20,000 feti a ;   r t i h s i k s o w f at  shalegaswellsdrilledwithalmostall ishea d vi w ly a  t p e o r l  l c u o te nt d, a c m r i e n a a ting nits ofthembeinghydraulicallyfractured. r grountionupo Ofthese,48percentoftheincidents c e o t n u t r a n i  n t e o d t  h a e n  d s  u t r r f e a a c t e e  d i . f   C n o ot n  c c e o r r n r s e  c a t r l o y und involved groundwater contamination  such risks have led to the moratorium by natural gas or drilling fluids; 33  on shale gas development in New percent involved on-site surface spills;  York’s Marcellus Shale. In addition to 10 percent involved water withdrawal  the nature of the and air quality issues, and blowouts; and,  produced water, the growing volumes of wastewater are the remaining 9 percent involved off-site disposalissues(seeFigure2). i i n n cr w e a a t s e i r n t g r  e d a e t m m a e n n d t   f t o e r c  h ef n f o i l c o ie gi n e c s i  e t s o   improve water reuse and

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recycling. Innovative water management can represent up to 80 percent of Operational performance solutions are required to address the logistics activity. Research into water-  Better monitoring and planning long-termsustainabilityofwateruseinf d r is e p e o f s r a a l c  k a i n n d g  , a  s on-sit m e e t n r t e  a o t f m a e lt n e t r  n a a n t d i  ve capabilitieswillreducebottlenecks shale gas production. sess  and smooth delivery into a site (e.g., Water movements cminagedmana  , t y l d e ods o w  wnilsto b,deusrup  abunytlenrrcue snoptarsfoomedeingllbrearta ut ar  re-routing to avoid congestion). generate significant impact. Within the  Availability of accurate operational data T a h n e d   v w ol a u te m r e r  e o q f u e ir q e u d i  p t m o e s n u t p , p m or a t t  e s r h ia a l l s e   b a o d u o n pt d i a o r n i  e a s n o d f   i c n u t r e r g e r n a t t  i c o a n p o a f b l il o it g i i e s s t , i  c t s h  e canallowoperatorstoidentifyissues and enable continuous improvement l g o a g s i  s o t p ic e s r  a c t h io al n l s e  n p g r e e . s  e G n iv ts e  n a   t s h ig e n r i e fi m ca ot n e t   l s e tr a a d i i g n h g t  f p o r r a w ct a i r c d e ,  t p e ro c v h i n d o e l  o t g hemos d t y inbothdrillingandtransportation. nature of most locations and the  approach to redu i  y-rea  Logistics costs can be reduced through frequent operations ts across  c ng transport cost  efficiency gains (e.g., reduction of  highlydispersedand   m n o u v m e e m ro en uswellsit andregulatoryandHSSEexposure. waitingtime)andautomatedprocesses locations,flexibilityisrequiredinthe e Improvementsinwatermovements i c m an pl r e e m d e u n c t e a  t a i d on m s i  n h is a t v r e a  t s i h ve o  w co n s t t h s. a  t Past also have an impact on other aspects t t r h a e n  i l r s o o p g n o i r s m t t  i e c m n s t o  s d m . e o l W  d h m el il a  e o k  i f p  n c i g p h  e r o l i o i c n a e e d    f t a o r n r a  d n  m r s o a p i s o l t  r  t ofshaleoperations,specificallyHSSE p c r o a n c s t i i s c t e e s n  t c  a a n d  o d p e t l i i o ve n r o u f p l  o t g o i  s 4 ti 5 c  s p  e l r e c a e d n in t g e m n o v vementscanbeeffectivefolo exposure,operationalperformance reductionintranspor  tcosts. r ng-  and compliance. t d w h is e e t l  l f a  i p n n c a a e d l  i d o s i r  s  a t p l r o i m i b n o u t s t - t i t  o o e n - x  c p t l o o u i  s n a i t n v  e d m l  y f o  r v o m e m a m  n t e a h n g e t e  s, d   HSSE exposure T C h omplia of n  c a e water inventory monitoring Improved transport planning processes  e use v v i o a l  u ro m a e d s t a r n a d n  s t p y o p r e t s .   v R a o r a y d s  i tr g a ni n f s i p ca or n t t  ly andsystemscanreducethenumber t r o e o g l u  l c a a t n o  r s y u c p o po m r p t li w a a n t c e e r   t m hr a o n u a g g h e v m i e si n b t i  lity of truck moves, while telematics  of water draw, usage and movements. depending on the operational phase of  systems can provide real-time visibility of truck movements and driver  Automated end-to-end processes and t p d h h u e r a i  s n p e r g s  o , t j  e h w c e h  t i , f  c r w h a  i c t c k h i a  n n t g  h  a e a c  n c m d o a  u j c n o o r t i  m t f p y o l  r e o  t f 6 i  0 o d – n e  8 m 5 a  nd performance,supportingreduction s d y a s t t a e c m a s p e tu n r a e b , l s e t a o c ra c g ur e a a te n  d a r n e d p r o a r p ti i n d g. percent of total transport volumes.  in wait times, less congestion and  A cross-operator, basin-wide solution  better driver HSSE compliance.  would also confirm consistent basin- s S o o u m r e c  e l , a  r p g la e n o a p n er d at m io a n n s a  g a e r  e u r p e t q o u  i 3 re 0 d 0   to widereportingstandardsacross truck movements per day within a  multiple sites and operators. single basin, which is the equivalent of a pan-regional transport operation in many other sectors. This concentration creates significant challenges, with on-site congestion causing issues to the Chart of water contamination incidents related to gas well drilling.Figure 2. operations teams and local residents, and leading to significant cost exposure to an already marginal cost operation. 9% The high volume and intensity of road transport associated with shale 10% gas production present some unique challenges for operators. A shortage of transport operators with sufficient 48% knowledge, difficulties in tracking and optimizing delivery schedules, reducing 33% Groundwater contamination burden on strained road infrastructure, On-site surface spills and a lack of standardized reporting and regulatory data can all lead to b dnowolstu liua ityuess  a s,rdwalaa dna riq Water with high costs, Health Safety Security Off-site disposal issues Environment (HSSE) exposure, and regulatory compliance issues. With up to 30 percent of completion costs related to transportation, operators Source: Massachusetts Institute of Technology 2011 Gas Report. are exploring different options to reduce transport activity, with a key focus on water hauling, which

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