Fracking - AWMA Presentation

Fracking – An UpdateKeith Turner

Watkins & Eager

The IssuesWater usage

Fracking fluid disclosure

Infrastructure – lack ofTransportation – directSupport – indirect

Fracking wastewater discharge

Groundwater protection

IssuesOther side effects

Earthquakes

Air pollution

Loss of insurance coverage

Federal ActionsHydraulic Fracturing

Federal ActionsHydraulic FracturingApril 2012 – EPA promulgated new air

regulations with a goal to reduce VOC emissions:Phased requirements for all NEW natural gas

wells Before Jan 2015 – flare or capture After Jan 2015 – capture

New requirements for production controllers, storage vessels and dehydrators

Federal ActionsExceptions for new wells: “Green” completions

are not required for: New exploratory (“wildcat”) wells or delineation wells

(used to define the borders of a natural gas reservoir), because they are not near a pipeline to bring the gas to market.

Hydraulically fractured low-pressure wells, where natural gas cannot be routed to the gathering line. Owners/operators must reduce emissions from these wells

using combustion during the well-completion process, unless combustion is a safety hazard or is prohibited by state or local regulations.

Federal Actions

EPA has added notification and reporting requirements: must notify EPA by e-mail no later than two

days before completion work begins.

owners/ operators must submit a report on their well completions that is certified by a senior company official attesting to the report’s truth, accuracy and completeness

Federal ActionsRequirements for Storage Vessels at the

Well Site New storage tanks with VOC emissions of 6

tons a year or more must reduce VOC emissions by at least 95 percent. EPA expects this will generally be accomplished by routing emissions to a combustion device.

Federal Actions

NSPS Requirements for New and Modified Compressors Capture and reroute or flareRequired maintenance schedules on seals

etc.

Title V case – 6th CircuitSummit Petroleum

41 sites Common Control

Court overturn EPA

Prior Federal ActionHydraulic FracturingEnergy Policy Act of 2005, Congress revised

the SDWA definition of “underground injection” to specifically exclude from UIC regulation the “underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities

Hydraulic Fracturing EPA published on May 10, 2012, Permitting Guidance

for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels—Draft. The initial public comment period for this proposal was 60 days –the deadline was extended to August 23, 2012

Not exempt activity (as other hydraulic fracturing fluids currently are) - diesel hydraulic fracturing will require UIC permit

Important threshold question – how will diesel be defined?

EPA's Study of Hydraulic Fracturing At the request of Congress, EPA is conducting

a study to better understand any potential impacts of hydraulic fracturing on drinking water and ground water

first progress report is planned for late 2012. A final draft report is expected to be released for public comment and peer review in 2014

EPA Web Site

Bureau of Land Management Proposing Hydraulic Fracturing Rule May 2012 – Rule will regulate hydraulic fracturing

on public land and Indian land. The rule would: (1) provide disclosure to the public of chemicals used

in hydraulic fracturing on public land and Indian land (2) strengthen regulations related to well-bore

integrity (3) address issues related to flowback water

(wastewater)

Public comments were extended thru September 10, 2012

BLM – not just out west – in the Southern Section of AWMACurrently there are several oil and gas leases

in process in Alabama and Mississippi for oil and gas leasing in 2012 and 2013

Recent oil and gas leases completed in Alabama and Mississippi in 2012

US Forest Service delayed certain leases this year due concerns over environmental issues

National Academy of Sciences -Report on Hydraulic Fracturing and Earthquakes

Three major findings emerged from the study:(1) the process of hydraulic fracturing a well as

presently implemented for shale gas recovery does not pose a high risk for inducing felt seismic events

(2) injection for disposal of waste water derived from energy technologies into the subsurface does pose some risk for induced seismicity, but very few events have been documented over the past several decades relative to the large number of disposal wells in operation

(3) Carbon Capture and Storage operations, due to the large volumes of injected fluids, may have potential for inducing larger seismic events.

Recent State ActionNorth Carolina passed new law – new

commission with broad authority, prohibits certain hydraulic fracturing chemicals, requires additional controls and reporting

Vermont banned hydraulic fracturing in May 2012 (had no oil or gas ongoing activities)

New York and New Jersey – under moratorium

Other State LegislationMaryland –

new law this summer that creates a presumption that contamination found in a drinking water well in the area (a 2500 foot radius) of a gas well is caused by the gas exploration or production activity.

Presumption lasts one year from the last drilling, well completion or fracking activity.

Eliminate presumption if offer to test, share results and land owner refuses to allow access to drinking water well

Note - Maryland under drilling ban until study complete in 2014

Water withdrawal permits

Threshold In 1000’s gallons

Fracking Water Withdrawal Permitting

EPA new rules will create consistent requirements

EPA rules will now control

New York30 town bans 80 town moratoriums

Shale Gas Plays

MississippiCurrent operators in early stages of

development thru 2013 – limited number of wells utilizing fracking

If decision makes business sense – by 2014 could see up to 20 wells a month underway

Mississippi Oil and Gas BoardProposed Rule 26 – Requirements For Hydraulic

Fracture Stimulation - Report Of Shooting Or TreatingMust obtain prior approval Demonstrate casing is sufficient to protectReporting Disclosure

Identify fracking fluids - (Fracfocus.org)

Based on recently passed Louisiana regulations

Will be taken up at September 19th Board meetingPotentially effective early November

Currently 2 wells reported in Miss and 55 in Ala.

Mississippi Department of Environmental QualityWorking closely with operatorsWells using up to 12 million gallons of water

to develop up to 8000 foot horizontal well300,000 to 400,000 gallons per stage

Local geology is important – for example the average amount of water used in hydraulic fracturing in California is 164,000 gallons per job

MississippiCurrently using surface water – rivers and

farm pondsLimit to flows above minimum

Trucking and piping water to sites

Industry considering pipe line from Mississippi River

No requests to use groundwater - yet

Mississippi - WastewaterTo date no NPDES permits issued for

wastewater disposal

Hydrocarbon Formations – Post Removal

Who has legal ownership of the pore space post gas/oil removal ?

Kansas

S.B. 271 – Ownership of Pore Space The ownership of all pore space in all the

strata below the surface lands and waters of Kansas would be vested in the owners of the surface above the strata.

Wyoming34-1-152. Ownership of pore space

underlying surfaces.(a) The ownership of all pore space in all strata

below the surface lands and waters of this state is declared to be vested in the several owners of the surface above the strata

North DakotaTitle to pore space. Title to pore space in

all strata underlying the surface of lands and waters is vested in the owner of the overlying surface estate.

Mississippi Geologic Sequestration of Carbon Dioxide Act (§53-11-1)

Oil and Gas Board determines use of reservoirOil/gas production or carbon storage or both

If determined (by O & G Board)that sequestration is best use – must obtain approval of the majority interest of surface owners Must obtain full approval from owners within

12 months from Order

Questions ?

Keith Turner601-965-1958