Presentation
Air Emissions and Water Reuse An Overview
Kathryn Z. Klaber President and Executive Director October 13, 2011 1 | MARCELLUS SHALE COALITION
Agenda
Pennsylvania’s Oil and Gas History Marcellus Shale Coalition The Pennsylvania Marcellus: Regulatory Overview
Advances in Air and Water Quality
2 | MARCELLUS SHALE COALITION
Pennsylvania’s History of Oil and Gas: A Foundation for Marcellus Production
PA’s History of Oil and Gas
• Edwin Drake – Titusville, 1859 • More than 350,000 oil and natural gas wells since
• 2009: PA > 57,000 active natural gas wells and ~ 20,000 active oil wells • A solid foundation for Marcellus activity
4 | MARCELLUS SHALE COALITION
Marcellus Shale: Geographic Footprint
5 | MARCELLUS SHALE COALITION
“Wet Gas” Region of the Marcellus Shale
Legend Marcellus Shale Formation Wet Gas Region
Sources: Pace Global; Equitable Resources, MarkWest, Atlas Energy, Range Resources, and Caiman Energy. 6 | MARCELLUS SHALE COALITION
Average Composition in Wet Mol% Gas Region
Propane, 5.5%
Iso Butane, 0.7% Methane, 74.2%
Liquids, 25.3% Ethane, 15.6%
Normal Butane, 1.4% Iso Pentane, 0.5% Normal Pentane, 0.5% Hexanes+, 1.1%
Source: Pace Global; NiSource Gas Transmission and Storage Presentation to WVONGA Spring Meeting May 6, 2010 p.5 7 | MARCELLUS SHALE COALITION
Economic Benefits 2010
Economic Value Added:
2011
2020
$11.2 billion $12.8 billion $20.2 billion
State/Local Taxes: $1.09 billion $1.23 billion $2 billion Cumulative Employment:
139,889
156,695
256,420
Wells Spudded:
1,405
2,300
2,497
3.5
17.5
Output (bcfe/day): 1.3
8 | MARCELLUS SHALE COALITION
Economic Benefits Key Report Findings •
Pennsylvania is self-sufficient in natural gas (net exporter)
•
2020 output levels (17 billion cubic feet per day) could make the Marcellus the single largest producing gas field in the U.S.
•
Marcellus could produce a quarter of U.S. natural gas by 2020.
•
$1.6 billion in lease and bonus payments in 2010.
•
Given a 12.6 percent reduction in natural gas prices due to higher Marcellus output, total energy expenditures declined by $633 million during 2010.
9 | MARCELLUS SHALE COALITION
Economic Benefits
Fast Facts $5+ million investment to produce each well $12.5 billion investment in well site operations alone (2,500 produced annually)
400+ individuals & 150 different jobs required to complete and produce gas from a Marcellus Shale well 10 | MARCELLUS SHALE COALITION
Marcellus Shale Coalition
Marcellus Shale Coalition
About Us ‒ Founded in 2008 ‒ More than 250 members strong ‒ From producers to suppliers Our Focus ‒ Long-term development of resource ‒ Protecting the environment and responsible use of water resources ‒ Addressing landowner, government and public issues ‒ Benefits to our region’s future
12 | MARCELLUS SHALE COALITION
PA Marcellus Wells By County
13 | MARCELLUS SHALE COALITION
PA Marcellus Wells Drilled in 2010 Talisman Energy USA, Inc. Chesapeake Appalachia LLC East Resources/Shell Range Resources Appalachia LLC Anadarko E&P Co. LP EOG Resources Inc. Seneca Resources Corp. Atlas Resources LLC Chief Oil & Gas LLC Cabot Oil & Gas Corp. Ultra Resources Inc.
253 179 170 132 93 55 54 47 45 43 32
EQT Production Co. 27 EXCO Resources PA Inc. 25 PA General Energy Co. LLC 24 Rex Energy Operating Corp. 24 XTO Energy Inc. 22 Southwestern Energy Prod. Co. 20 Energy Corp. of America 19 Williams Production Appalachia LLC 19 CNX Gas Co. LLC 18 Other 114 Total 1,415
Top 22 of PA Marcellus wells drilled in 2010 were by MSC members. 14 | MARCELLUS SHALE COALITION
WV Marcellus Wells By County
15 | MARCELLUS SHALE COALITION
OH Marcellus Wells By County
16 | MARCELLUS SHALE COALITION
NY Marcellus Wells By County
17 | MARCELLUS SHALE COALITION
Our Legacy We recognize that to succeed in business, we not only embrace these principles, we live by them each and every day. This will be our legacy. We provide the safest possible workplace for our employees, with our contractors, and in the communities in which we operate; We implement state-of-the-art environmental protection across our operations; We continuously improve our practices and seek transparency in our operations; We strive to attract and retain a talented and engaged local workforce; We are committed to being responsible members of the communities in which we work; We encourage spirited public dialogue and fact-based education about responsible shale gas development; and We conduct our business in a manner that will provide sustainable and broad-based economic and energy-security benefits for all. 18 | MARCELLUS SHALE COALITION
The Pennsylvania Marcellus: Highly Regulated, Highly Sophisticated, Highly Transparent
Environmental Protection Highly regulated. Highly sophisticated. • Transparency in permitting • Staffing, permit fee increases • Advances in water recycling and reuse
• Protective well casing standards • Focus on best practices
20 | MARCELLUS SHALE COALITION
Water Quality Protection
Well Casing • Metal casing assures integrity of the well from end-to-end. • Cement seals the steel casing throughout the entire well, preventing the release of hydrocarbons. • Chapter 78 casing standards
21 | MARCELLUS SHALE COALITION
Water Quality Protection Hydraulic Fracturing • Permits from state regulatory agencies for water withdrawal. • 1,000’ rebuttable presumption rule • 30 State and federal agencies monitor hydraulic fracturing • DEP: 80 orders to repair or replace water supplies in past 15 years; ‒ 32,000 oil and gas wells drilled; 0.25% incident rate • Legislature’s Center for Rural PA: 2009 study ‒ >40% of 1.2 million private water wells fail drinking water standards 22 | MARCELLUS SHALE COALITION
Water Quality Protection Hydraulic Fracturing: No Impact on Deepest Aquifers
Source: The American Oil and Gas Reporter, July 2010 23 | MARCELLUS SHALE COALITION
Water Quality Protection Focus on Wastewater • Hydraulic fracturing produces high amounts of salt, solids • Pennsylvania Chapter 95 regulations − Limit total dissolved solids (TDS) in oil and gas wastewater − Ban direct discharges from drilling sites − Wastewater with high TDS: stringent recycling requirements • Allegations of high levels of naturally-occurring radioactive material in Marcellus wastewater are disproven.
• PA DEP tests (11/10 – 12/10): “All samples showed levels at or below the normal naturally occurring background levels of radioactivity.”
24 | MARCELLUS SHALE COALITION
Water Quality Protection Focus on Wastewater • PA – many streams and waterways, outdoor culture
• April 19, 2011: PA DEP calls on Marcellus producers to end discharges to grandfathered treatment facilities • MSC companies respond one day later, end discharges within one month • Commitment to MSC’s Guiding Principles – protecting PA’s valuable natural resources
• Next step: More recycling and reuse 25 | MARCELLUS SHALE COALITION
Water Quality Protection Less Reliance on Water Resources at the Outset Gallons per million BTU Range Mid-point
0.60 – 5.80
3
Nuclear
8 – 14
11
Conventional oil
8 – 20
14
Coal
13 – 32
23
Fuel ethanol from corn
2,510 – 29,100
15,800
Biodiesel from soy
14,000 – 75,000
44,500
Deep shale natural gas
Source: Ground Water Protection Council, U.S. Department of Energy
26 | MARCELLUS SHALE COALITION
Water Quality Protection Recycling and Reuse • Fewer discharges increase the need for more treatment and reuse of water at the well site • MSC member companies – upwards of 70 percent of flowback water is being recycled and reused • MSC member companies developing new technologies to sustainably recycle more • Positive from a financial, public regulations, and regulatory compliance standpoint
27 | MARCELLUS SHALE COALITION
Air Quality Protection Impact on Air Quality •
Next “battleground” in shale gas debate
•
Short-term monitoring in Northeastern, Southwestern, and North Central PA
•
Gas Processing Plants ‒ Plan approval/air permit
•
Compressors ‒ Covered by GP-5
•
Fugitive emissions ‒ Roads ‒ Compressor stations
•
Flares ‒ Temporary sources
28 | MARCELLUS SHALE COALITION
Air Quality Protection Recent Developments • As MSC President and member of PA’s Air Quality Technical Advisory Committee, provided testimony to EPA hearing in Pittsburgh. − EPA has underestimated cost of compliance − Delay in effective date of New Source Performance Standards − Longer comment period
• Ozone Transport Commission rulemaking • U.S. Secretary of Energy Advisory Board – urges companies to employ technologies to reduce air emissions
29 | MARCELLUS SHALE COALITION
Reducing Air Emissions MSC Natural Gas Use Committee • Establishment of natural gas use best management practices
• Bifuel rig – Energy Corporation of America (50/50 blend) • Promoting natural gas in electricity production • Establishing PA as natural gas vehicle hub
30 | MARCELLUS SHALE COALITION
Reducing Air Emissions MSC Pennsylvania Roadmap Study • MSC’s contribution to nationwide NGV conversation
• Only 150,000 NGVs in U.S. with millions worldwide • 17 new fueling stations for fleets
• Begin with fleet conversions and urban infrastructure focus to achieve better air quality, lower noise, lower cost • $5 million reduction in annual fuel costs for PA fleet operators • A direct impact on nearly 1,300 PA jobs
• A reduction of NOx emissions, particulate matter emissions, and greenhouse gas emissions 31 | MARCELLUS SHALE COALITION
Our Legacy We recognize that to succeed in business, we not only embrace these principles, we live by them each and every day. This will be our legacy. We provide the safest possible workplace for our employees, with our contractors, and in the communities in which we operate; We implement state-of-the-art environmental protection across our operations; We continuously improve our practices and seek transparency in our operations; We strive to attract and retain a talented and engaged local workforce; We are committed to being responsible members of the communities in which we work; We encourage spirited public dialogue and fact-based education about responsible shale gas development; and We conduct our business in a manner that will provide sustainable and broad-based economic and energy-security benefits for all. 32 | MARCELLUS SHALE COALITION
Thank you! Questions? Marcellus Shale Coalition
Kathryn Z. Klaber October 13, 2011 www.MarcellusCoalition.org
33 | MARCELLUS SHALE COALITION
Kathryn Z. Klaber President and Executive Director October 13, 2011 1 | MARCELLUS SHALE COALITION
Agenda
Pennsylvania’s Oil and Gas History Marcellus Shale Coalition The Pennsylvania Marcellus: Regulatory Overview
Advances in Air and Water Quality
2 | MARCELLUS SHALE COALITION
Pennsylvania’s History of Oil and Gas: A Foundation for Marcellus Production
PA’s History of Oil and Gas
• Edwin Drake – Titusville, 1859 • More than 350,000 oil and natural gas wells since
• 2009: PA > 57,000 active natural gas wells and ~ 20,000 active oil wells • A solid foundation for Marcellus activity
4 | MARCELLUS SHALE COALITION
Marcellus Shale: Geographic Footprint
5 | MARCELLUS SHALE COALITION
“Wet Gas” Region of the Marcellus Shale
Legend Marcellus Shale Formation Wet Gas Region
Sources: Pace Global; Equitable Resources, MarkWest, Atlas Energy, Range Resources, and Caiman Energy. 6 | MARCELLUS SHALE COALITION
Average Composition in Wet Mol% Gas Region
Propane, 5.5%
Iso Butane, 0.7% Methane, 74.2%
Liquids, 25.3% Ethane, 15.6%
Normal Butane, 1.4% Iso Pentane, 0.5% Normal Pentane, 0.5% Hexanes+, 1.1%
Source: Pace Global; NiSource Gas Transmission and Storage Presentation to WVONGA Spring Meeting May 6, 2010 p.5 7 | MARCELLUS SHALE COALITION
Economic Benefits 2010
Economic Value Added:
2011
2020
$11.2 billion $12.8 billion $20.2 billion
State/Local Taxes: $1.09 billion $1.23 billion $2 billion Cumulative Employment:
139,889
156,695
256,420
Wells Spudded:
1,405
2,300
2,497
3.5
17.5
Output (bcfe/day): 1.3
8 | MARCELLUS SHALE COALITION
Economic Benefits Key Report Findings •
Pennsylvania is self-sufficient in natural gas (net exporter)
•
2020 output levels (17 billion cubic feet per day) could make the Marcellus the single largest producing gas field in the U.S.
•
Marcellus could produce a quarter of U.S. natural gas by 2020.
•
$1.6 billion in lease and bonus payments in 2010.
•
Given a 12.6 percent reduction in natural gas prices due to higher Marcellus output, total energy expenditures declined by $633 million during 2010.
9 | MARCELLUS SHALE COALITION
Economic Benefits
Fast Facts $5+ million investment to produce each well $12.5 billion investment in well site operations alone (2,500 produced annually)
400+ individuals & 150 different jobs required to complete and produce gas from a Marcellus Shale well 10 | MARCELLUS SHALE COALITION
Marcellus Shale Coalition
Marcellus Shale Coalition
About Us ‒ Founded in 2008 ‒ More than 250 members strong ‒ From producers to suppliers Our Focus ‒ Long-term development of resource ‒ Protecting the environment and responsible use of water resources ‒ Addressing landowner, government and public issues ‒ Benefits to our region’s future
12 | MARCELLUS SHALE COALITION
PA Marcellus Wells By County
13 | MARCELLUS SHALE COALITION
PA Marcellus Wells Drilled in 2010 Talisman Energy USA, Inc. Chesapeake Appalachia LLC East Resources/Shell Range Resources Appalachia LLC Anadarko E&P Co. LP EOG Resources Inc. Seneca Resources Corp. Atlas Resources LLC Chief Oil & Gas LLC Cabot Oil & Gas Corp. Ultra Resources Inc.
253 179 170 132 93 55 54 47 45 43 32
EQT Production Co. 27 EXCO Resources PA Inc. 25 PA General Energy Co. LLC 24 Rex Energy Operating Corp. 24 XTO Energy Inc. 22 Southwestern Energy Prod. Co. 20 Energy Corp. of America 19 Williams Production Appalachia LLC 19 CNX Gas Co. LLC 18 Other 114 Total 1,415
Top 22 of PA Marcellus wells drilled in 2010 were by MSC members. 14 | MARCELLUS SHALE COALITION
WV Marcellus Wells By County
15 | MARCELLUS SHALE COALITION
OH Marcellus Wells By County
16 | MARCELLUS SHALE COALITION
NY Marcellus Wells By County
17 | MARCELLUS SHALE COALITION
Our Legacy We recognize that to succeed in business, we not only embrace these principles, we live by them each and every day. This will be our legacy. We provide the safest possible workplace for our employees, with our contractors, and in the communities in which we operate; We implement state-of-the-art environmental protection across our operations; We continuously improve our practices and seek transparency in our operations; We strive to attract and retain a talented and engaged local workforce; We are committed to being responsible members of the communities in which we work; We encourage spirited public dialogue and fact-based education about responsible shale gas development; and We conduct our business in a manner that will provide sustainable and broad-based economic and energy-security benefits for all. 18 | MARCELLUS SHALE COALITION
The Pennsylvania Marcellus: Highly Regulated, Highly Sophisticated, Highly Transparent
Environmental Protection Highly regulated. Highly sophisticated. • Transparency in permitting • Staffing, permit fee increases • Advances in water recycling and reuse
• Protective well casing standards • Focus on best practices
20 | MARCELLUS SHALE COALITION
Water Quality Protection
Well Casing • Metal casing assures integrity of the well from end-to-end. • Cement seals the steel casing throughout the entire well, preventing the release of hydrocarbons. • Chapter 78 casing standards
21 | MARCELLUS SHALE COALITION
Water Quality Protection Hydraulic Fracturing • Permits from state regulatory agencies for water withdrawal. • 1,000’ rebuttable presumption rule • 30 State and federal agencies monitor hydraulic fracturing • DEP: 80 orders to repair or replace water supplies in past 15 years; ‒ 32,000 oil and gas wells drilled; 0.25% incident rate • Legislature’s Center for Rural PA: 2009 study ‒ >40% of 1.2 million private water wells fail drinking water standards 22 | MARCELLUS SHALE COALITION
Water Quality Protection Hydraulic Fracturing: No Impact on Deepest Aquifers
Source: The American Oil and Gas Reporter, July 2010 23 | MARCELLUS SHALE COALITION
Water Quality Protection Focus on Wastewater • Hydraulic fracturing produces high amounts of salt, solids • Pennsylvania Chapter 95 regulations − Limit total dissolved solids (TDS) in oil and gas wastewater − Ban direct discharges from drilling sites − Wastewater with high TDS: stringent recycling requirements • Allegations of high levels of naturally-occurring radioactive material in Marcellus wastewater are disproven.
• PA DEP tests (11/10 – 12/10): “All samples showed levels at or below the normal naturally occurring background levels of radioactivity.”
24 | MARCELLUS SHALE COALITION
Water Quality Protection Focus on Wastewater • PA – many streams and waterways, outdoor culture
• April 19, 2011: PA DEP calls on Marcellus producers to end discharges to grandfathered treatment facilities • MSC companies respond one day later, end discharges within one month • Commitment to MSC’s Guiding Principles – protecting PA’s valuable natural resources
• Next step: More recycling and reuse 25 | MARCELLUS SHALE COALITION
Water Quality Protection Less Reliance on Water Resources at the Outset Gallons per million BTU Range Mid-point
0.60 – 5.80
3
Nuclear
8 – 14
11
Conventional oil
8 – 20
14
Coal
13 – 32
23
Fuel ethanol from corn
2,510 – 29,100
15,800
Biodiesel from soy
14,000 – 75,000
44,500
Deep shale natural gas
Source: Ground Water Protection Council, U.S. Department of Energy
26 | MARCELLUS SHALE COALITION
Water Quality Protection Recycling and Reuse • Fewer discharges increase the need for more treatment and reuse of water at the well site • MSC member companies – upwards of 70 percent of flowback water is being recycled and reused • MSC member companies developing new technologies to sustainably recycle more • Positive from a financial, public regulations, and regulatory compliance standpoint
27 | MARCELLUS SHALE COALITION
Air Quality Protection Impact on Air Quality •
Next “battleground” in shale gas debate
•
Short-term monitoring in Northeastern, Southwestern, and North Central PA
•
Gas Processing Plants ‒ Plan approval/air permit
•
Compressors ‒ Covered by GP-5
•
Fugitive emissions ‒ Roads ‒ Compressor stations
•
Flares ‒ Temporary sources
28 | MARCELLUS SHALE COALITION
Air Quality Protection Recent Developments • As MSC President and member of PA’s Air Quality Technical Advisory Committee, provided testimony to EPA hearing in Pittsburgh. − EPA has underestimated cost of compliance − Delay in effective date of New Source Performance Standards − Longer comment period
• Ozone Transport Commission rulemaking • U.S. Secretary of Energy Advisory Board – urges companies to employ technologies to reduce air emissions
29 | MARCELLUS SHALE COALITION
Reducing Air Emissions MSC Natural Gas Use Committee • Establishment of natural gas use best management practices
• Bifuel rig – Energy Corporation of America (50/50 blend) • Promoting natural gas in electricity production • Establishing PA as natural gas vehicle hub
30 | MARCELLUS SHALE COALITION
Reducing Air Emissions MSC Pennsylvania Roadmap Study • MSC’s contribution to nationwide NGV conversation
• Only 150,000 NGVs in U.S. with millions worldwide • 17 new fueling stations for fleets
• Begin with fleet conversions and urban infrastructure focus to achieve better air quality, lower noise, lower cost • $5 million reduction in annual fuel costs for PA fleet operators • A direct impact on nearly 1,300 PA jobs
• A reduction of NOx emissions, particulate matter emissions, and greenhouse gas emissions 31 | MARCELLUS SHALE COALITION
Our Legacy We recognize that to succeed in business, we not only embrace these principles, we live by them each and every day. This will be our legacy. We provide the safest possible workplace for our employees, with our contractors, and in the communities in which we operate; We implement state-of-the-art environmental protection across our operations; We continuously improve our practices and seek transparency in our operations; We strive to attract and retain a talented and engaged local workforce; We are committed to being responsible members of the communities in which we work; We encourage spirited public dialogue and fact-based education about responsible shale gas development; and We conduct our business in a manner that will provide sustainable and broad-based economic and energy-security benefits for all. 32 | MARCELLUS SHALE COALITION
Thank you! Questions? Marcellus Shale Coalition
Kathryn Z. Klaber October 13, 2011 www.MarcellusCoalition.org
33 | MARCELLUS SHALE COALITION
