This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Marcellus and Utica Shale Databook 2014 Volume 3: 2014 Sep-Dec Drilling Permit Maps; Waste Facilities Directory; Well Decline Rates
92 Detail Maps & Charts, Individual County Maps for Permits Issued Sep-Dec; Regulatory/Legal Update; Rig Counts; Well Counts & More!
Section V – Directory of Marcellus & Utica Drilling Waste Facilities
Disclaimer: Select Analytics, LLC, dba “ShaleNavigator” and Marcellus Drilling News, are not liable for any direct or indirect damages suffered related to the use of this Databook product arising from any errors, omissions, inaccuracies, or any other inadequacies of the Databook or the Recipient’s use of the Databook. In no event will Select Analytics, LLC’s, dba “ShaleNavigator”’s or Marcellus Drilling News’ liability to the Recipient or anyone else exceed the fee paid for the Databook product. Use of information provided in this report is at your own risk. Editor’s Note: If you spot anything you believe is inaccurate or should be added, tell us! You may qualify for a free MDN or ShaleNavigator subscription.
Flowback and Brine 84 Drill Cuttings and Solid Waste 84 Strengths and Weaknesses of this List 85 Consolidated Map of Northeast Waste Facilities 86 List of Facilities by Geography – NY (chart) 87 List of Facilities by Geography – OH (chart) 87-89 List of Facilities by Geography – PA (chart) 89-91 List of Facilities by Geography – WV (chart) 91-92
List of Facilities by Type – Injection Well (chart) 93-95 List of Facilities by Type – Landfill (chart) 95-96 List of Facilities by Type – Recycle Cuttings (chart) 96-97 List of Facilities by Type – Storage (chart) 97 List of Facilities by Type – Recycle Water (chart) 97-98
Section VI – Marcellus Shale Well Decline Rates
Predictable Marcellus Well Decline Curves 99 Marcellus Production Trends in the Northern Tier of Pennsylvania 99 McKean County Production, Cumulative Production & Decline Curve Estimates (chart) 100 Wyoming County Production, Cumulative Production & Decline Curve Estimates (chart) 101 A Picture of the Marcellus Emerges 102 Your Mileage May Vary 102 Dry Gas Estimated Ultimate Recovery (chart) 102 Greene County Production, Cumulative Production & Decline Curve Estimate (chart) 103 What Factors Influence Production? 104 Flawed Assumptions 104 Technology’s Big Impact on Production 104 Production Averages by Time Producing (chart) 105 Summary 106
Too Much Production, Not Enough Pipelines We begin this Drilling Update with a statement of the obvious—the Marcellus/Utica production is prolific. It is “too” prolific, if such a thing is possible. Because of the enormous amount of gas that continues to be pumped in the northeast, there’s not enough pipelines to shuttle the gas to markets outside of the region where it might fetch a better price. As you can see in the chart on the right, as of December 2014 the Marcellus is producing an average 1.6 billion cubic feet of natural gas each and every day. Truly astonishing! Every month that number grows. If you combine the average daily output of the Marcellus and Utica, and compare it to all other major shale plays in the U.S., the Marcellus/Utica is producing 40% of all the natural gas now produced in this country. Nearly half! The problem is, without enough pipelines in place to move that gas to other regions, the northeast is drowning in natural gas supply—and demand has not kept pace. Consequently, as you’ll see on the next page, the huge oversupply continues to depress prices for gas in the northeast. Note that by “northeast” we mean Pennsylvania, Ohio and West Virginia. If you move just a few hundred miles—say to New York City, New Jersey, Boston and up into New England, they are NOT awash in natural gas. The situation is improving—gradually—but more pipelines are needed to these regions. There are also plans for more pipelines to the southeast, south, and even pipelines to the Midwest and southwest. Until some of those projects become reality, we’ll continue to see low prices for natural gas in the Marcellus/Utica region.
In this section it we take a look at the number of permits issued by “trimesters” or Jan-Apr (1T), May-Aug (2T) and Sep-Dec (3T)—for each driller active in either the Marcellus and/or Utica Shale. The numbers reflect a permit received by that driller for a distinct, unique well (not pad, but individual well). That is, if the driller applied for and received a permit for any purpose—to begin drilling, to continue drilling, to frack, to re-drill, etc.—that number is included. This chart shows intent—an indication of potential activity. We filter out multiple permits for the same well and show only unique, distinct well locations. So a driller with a “46” for a given period means that driller received at least one permit for 46 different, distinct wells. Use this information to spot trends and get a high-level overview of activity for a particular driller—where, when, and how much they are drilling now—or soon will be.
Pennsylvania Permitting and drilling in Pennsylvania is regulated by the Department of Environmental Protection (DEP). DEP in Transition During the last four months of 2014, the State of PA elected a new governor, Tom Wolf. One of Wolf’s key campaign promises is to enact a 5% severance tax on shale drilling in the state—something the industry has warned will mean a scaling back of drilling in the state. At the same time, PA citizens re-elected a Republican-controlled House and Senate. A new severance tax is far from certain given Republican control of the legislature, however, it’s not out of the question. All eyes are now on Wolf’s pick to run the DEP—a former Sec. of the Dept. of Conservation and Natural Resources (DCNR), John Quigley. After leaving the Rendell administration, Quigley worked for the environmental activist organization PennFuture. He also pens a “green” blog site to espouse his green views. The industry seems to be taking a wait and see attitude to his nomination. Will he erect new barriers to drilling in the Keystone State? Will drillers be under intense, new scrutiny? Hard to say. Wolf has also appointed the current president of PennFuture, Cindy Dunn, to head the DCNR. It appears with Wolf’s campaign statements and Dunn’s appointment that any new drilling under state-owned lands is now dead—at least for the next four years during the Wolf administration. Wolf’s election points out the high stakes involved with even one election. Wolf’s campaign received a large cash infusion from Californian “environmentalist” and anti-fracking crusader billionaire Tom Steyer. It remains to be seen if Steyer’s money will buy influence in PA. Record Fines & Record Number of Fines The abrupt departure of DEP Sec. Chris Abruzzo in September, following a scandal involving off-color emails, didn’t seem to hamper the department’s ability to mete out fines. A variety of older cases were closed with a number of fines, including a new record. September: NFG Midstream was fined $250,000 for multiple violations of the Clean Streams Law and DEP regulations during construction of a pipeline in Lycoming County in 2011-2012. September: MarkWest Energy was fined $151,000 for flaring violations over a six month period at their Houston Gas Processing Plant in Washington County. October: The DEP levied its biggest fine (to date) on EQT--a whopping $4.53 million for a leaky wastewater impoundment in Tioga County. EQT is fighting the fine saying it was sour grapes over another matter in which EQT took the DEP to court. October: PVR Midstream (now part of Regency Energy Partners) was fined $306,000 for multiple violations of the Clean Streams Law, Dam Safety and Encroachment Act and state regulations while building two pipelines in Lycoming and Tioga counties in 2012-2013. December: Cabot Oil & Gas was fined $120,000 for a brine water tank explosion that occurred in January, in Susquehanna County. December: Vantage Energy was fined $1 million for more than a dozen violations of environmental regulations stemming from a landslide and illegal waste disposal in Greene County, earlier in the year. December: the Tennessee Gas Pipeline (TGP) was fined $800,000 for violations in four different counties--Pike, Potter, Susquehanna and Wayne--during pipeline construction for the 300 Line Project. Two New Laws Affecting Drillers and Landowners Just prior to leaving office, outgoing Gov. Tom Corbett signed into law two important new laws. The first law provides for monthly production reporting by drillers starting March 31 of this year. Previously, production reports were filed every six months in PA. Second, drillers must now provide “surrender” documents to landowners when a lease expires or is terminated. A surrender document is proof that the lease is no longer in effect and the landowner is free to seek a new lease.
operator name is followed by two sets of numbers, with the second number in parentheses. Example: Eldred – 7 (6). The first number - “7” in this case - shows the total number of permits issued. The second number - “(6)” in this case - indicates how many wells the permits were issued for. Usually a single well requires several permits during drilling, to allow the driller to continue to the next stage.
#2 – A red dot indicates where a
well pad is located. Each well pad can have from one to ten wells on it. Typically a pad will contain 2-4 wells. Because of the size of the maps (vastly reduced to show an entire county), sometimes the red dots will be “on top of each other” and sometimes will not be labeled with a driller’s name.
#3 – The boundary of each
county is indicated with a blue outline.
#4 – Major gas pipelines are
indicated with red lines and the name of the pipeline somewhere along the line.
#5 – The location for pipeline
compressor stations is indicated by a green triangle–the name is next to it.
DIRECTORY OF MARCELLUS & UTICA DRILLING WASTE FACILITIES A Comprehensive List of Facilities Most-Used to Dispose of Frack Wastewater & Drill Cuttings
We are excited to bring you an updated version of what we believe to be the most comprehensive list of waste disposal facilities for frack waste in existence for the Marcellus and Utica Shale region. In the lists that follow you will see waste disposal options listed by type of disposal: centralized treatment plants, injection wells and landfills, primarily. We also show a few other options—long-term storage and cuttings recycling. Each facility's address is given along with the county where it's located. Flowback and Brine Wastewater from shale drilling is a by-product of drilling and comprised primarily of two components. The first is “flowback”–the water, sand and chemical mixture used during the drilling and hydraulic fracturing process that returns to the surface. An average 20% of fracking fluid pumped into a borehole comes back to the surface. The second component of wastewater is naturally occurring “brine,” also known as “produced water.” An interesting fact not known by many outside of the drilling industry is that there is a lot of water deep in the earth--far below the water aquifers we use for our drinking water. These water sources from a mile or more down produce naturally occurring water heavy with minerals—like sodium chloride, calcium chloride, magnesium chloride—various kinds of salt compounds. This mineral laden water is called brine because the water is very salty—far more salty than ocean water by comparison. The brine, often called “produced water” needs to be disposed of along with flowback water. Produced water comes to the surface weeks, months, and in some cases years after a well is drilled. Produced water/brine does not contain the chemicals found in flowback—but the minerals and chemicals present in brine are potent nonetheless, and brine, along with flowback, must be properly recycled or disposed of. Many drillers now recycle part or even all of the flowback and produced water that comes from the wells they drill. Sometimes wastewater recycling is done right at the drill site, and sometimes it’s done at regional sites set up by the driller to service all of their well drilling activities in a given area. However, some drillers are not prepared to handle the extra activity of flowback and brine recycling themselves (due to size of the company, geographic constraints, etc.). For those drillers who do not recycle on site or at their own regional facilities, there are several methods for disposing of flowback and brine. The two primary methods are to ship it to a centralized recycling facility owned by a third party, set up for that purpose, or ship it to an underground injection well where it is permanently pumped deep into the earth. In some cases flowback and brine can be stored until it is eventually disposed of either by recycling or injection well. Some brine is processed to strip out the salts leaving the water usable for spreading on roads in summertime as a dust suppressant. The salts in brine can be further processed to be used as ice treatments for roadways during wintertime. Drill Cuttings and Solid Waste In addition to wastewater (flowback and brine), as the drill bit chews through the earth, all of the rock and soil and semi-liquid drilling mud pumped down the borehole comes out and must disposed of. As drillers cut through various rock layers, some of those rocks contain low levels of naturally occurring radioactivity. Most of the time the radiation is so low it's undetectable. On occasion “drill cuttings,” as this mix of rock and dirt and drilling mud is called, trips a radiation alarm. In those cases the drill cuttings must be disposed of in a specially permitted landfill—or treated before
DECLINE CURVE DEVELOPMENT: GEOLOGY AND PRODUCTION PRACTICES Ladlee & Karabin: The influence of geology, well variability & technology on Marcellus decline curves
Predictable Marcellus Well Decline Curves
Over the last several years, decline curve analysis for producing horizontal wells in Pennsylvania has come
into sharper view. The sharper view is entirely attributable to the availability of more well production data. Given
the ability to track wells for longer periods of time, it now appears most wells in the Marcellus Play do follow a
relatively standard modified hyperbolic/exponential decline curve. The modified curve basically accounts for the
sharp initial decline in production (hyperbolic) and the conversion to relatively consistent (exponential) decline
over a much longer period of time. Once a well has cleaned up and gas flows normalizes, the modified curve
appears to estimate production very accurately, especially over the near term. Understanding the predictability of
a Marcellus well decline curve can help bring focus to a couple of key areas beyond production such as potential
geologic differences within the play and projection of predictable landowner royalty income streams and wealth
management strategies; well production variability; and the impact of changes in production technology.
Marcellus Production Trends in the Northern Tier of Pennsylvania
With more data available across Pennsylvania, estimates of geologic production differences begin to emerge within the decline curve calculations.
Looking to Marcellus production trends along the northern tier of Pennsylvania, a fair amount of shale development has occurred from McKean
County east to Wyoming County. Starting in McKean County we find the average EUR, on about 30 wells in production, to be about 3.16 billion cubic
feet, or “Bcf” (see figure 1). Moving to the east, the 34 producing Potter County wells have a slightly higher EUR with an average of roughly 3.5 Bcf.
Tioga County has significantly more producing wells reporting production at 490 with an estimated EUR of approximately 4.5 Bcf for Marcellus
production. With the recent announcement of the significant Utica discovery in Tioga County, changes based on target formation
may be in store for Tioga and counties to the west. Continuing the path across the northern border, Bradford County has the most producing
horizontal wells at 852, and a significantly higher average EUR, currently estimated at about 8.8 Bcf. Many reports of massive wells have come from
Susquehanna County and perhaps it is not a surprise the 656 horizontal wells reporting production have an average EUR of nearly 12 Bcf. While
drilling in Wyoming has not been as extensive as its neighbors, the 133 wells that are reporting production clearly are producing big results, with an
estimated EUR of 16.4 Bcf over 30 years (see figure 2). While the Wyoming results are spectacular, it is important to note only roughly the top 1/3 of
Wyoming County will likely produce commercial quantities of natural gas from the Marcellus. The presence of the Lackawanna Syncline
seems to mark the rough edge of the productive Marcellus zone.
Figure 1: McKean County Production, Cumulative Production & Decline Curve Estimates
DECLINE CURVE DEVELOPMENT: GEOLOGY AND PRODUCTION PRACTICES Ladlee & Karabin: The influence of geology, well variability & technology on Marcellus decline curves