Hydraulic Fracturing in Nevada J. Berton Fisher, Ph. D., CPG, RPG (TX #0201)

University of Tulsa & Lithochimeia, LLC

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U. S. Crude Oil Reserves Increasing

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1981 1986 1991 1996 2001 2006 2011

U. S. Crude Reserves (MMBbl) 1981-2011

Crude Reserves (MMBbl)

Source: U. S. Department of Energy, Energy Information Agency, Crude Oil Proved Reserves, Reserves Changes, and Production, available at http://www.eia.gov/dnav/pet/pet_crd_pres_dcu_NUS_a.htm

U. S. Crude Oil Production Closes Gap on Imports

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1981 1986 1991 1996 2001 2006 2011

U. S. Crude Production and Imports (MMBbl) 1981-2013

Crude Production (MMBbl)

Crude Imports (MMBbl)

Source: U. S. Department of Energy, Energy Information Agency, Crude Oil and Other Liquids, U. S. Imports of Crude Oil, available at http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrimus1&f=m U. S. Department of Energy, Energy Information Agency, Crude Oil and Other Liquids, Crude Oil Proved Reserves, Reserves Changes, and Production, available at http://www.eia.gov/dnav/pet/pet_crd_pres_dcu_NUS_a.htm

Key Technologies

• Horizontal Drilling • Hydraulic Fracturing

U. S. Oil Turnaround!

Goodbye and Hello

Energy Security means minimizing vulnerability to energy supply disruptions and the resulting volatile and disruptive energy pricing.

Nevada Oil and Gas Yesterday & Today

Sources: compiled from Hess, R.H., Henson, M.A., Davis, D.A., Limerick, S.H., Siewe, S.S., and Niles, M., 2011, Oil and gas well information for Nevada - 2011 update: Nevada Bureau of Mines and Geology Open-File Report 11-6, portable hard drive, 105 GB.

Nevada Produces Oil and Gas TODAY • Wells

~ 740 drilled ~100 producing 11 water injection

• Recent Oil Production July-Aug 2013: 57,225 bbl July-Aug 2012: 61,371 bbl Water : Oil ~ 17:1

• Cumulative Production Oil 39,998,902 bbl Water 135,561,809 bbl Water : Oil ~ 3.4:1

Sources: compiled from Hess, R.H., Henson, M.A., Davis, D.A., Limerick, S.H., Siewe, S.S., and Niles, M., 2011, Oil and gas well information for Nevada - 2011 update: Nevada Bureau of Mines and Geology Open-File Report 11-6, portable hard drive, 105 GB.

Nevada Oil Production 1960-2013

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

BB

Ls

– 1

,00

0s

Source: U. S. Department of Energy, Energy Information Administration, State Energy Data System (SEDS): 1960-2011 (Complete), Released: June 28, 2013, Available at: http://www.eia.gov/state/seds/seds-data-complete.cfm?sid=NV#CompleteDataFile and Nevada Commission of Mineral Resources, Division of Minerals, Nevada Oil Patch - bi-monthly production reports, Nov/Dec 2013; Nov/Dec 201212, available at http://minerals.state.nv.us/formspubs_ogg.htm#Nevada_Oil_Patch

Recent Nevada Production

2,000

7,000

12,000

17,000

22,000

27,000

32,000 Nevada Oil Production (bbls/month)

Nevada Commission of Mineral Resources, Division of Minerals, Nevada Oil Patch - bi-monthly production reports, Nov/Dec 2013; Sep/Oct 2013; Jul/Aug 2013; May/Jun 2013; Mar/Apr 2013; Jan/Feb 2013; Nov/Dec 2012; Sep/Oct 2012, available at http://minerals.state.nv.us/formspubs_ogg.htm#Nevada_Oil_Patch

Elko County Oil and Gas Wells 2001

• ~70 drilled; oil and gas shows • No current producers • Two historic fields

Deadman Creek (May 1997 – 387 bbl / 0 bbl H2O)

Toano Draw (Jan 2007 – 1,964 bbl / 29,121 bbl H2O)

Sources: Nevada Bureau of Mines and Geology, University of Nevada at Reno, Production and Injection Data for Oil, Gas, and Geothermal Wells in Nevada, Oil and Gas Production Data by Field, available at http://www.nbmg.unr.edu/lists/Production/Oil/oil_production/dead_man_creek/ and http://www.nbmg.unr.edu/lists/Production/Oil/oil_production/toana_draw/

Nevada and Oil and Gas TOMORROW

• Nobel Energy, Inc (Wilson Play/Tabor Flats) Vertical exploration wells Elko Formation (Eocene-Oligocene) 350,000 acres (66% private land) Oil found Flow test planned 2014 Project ~50,000 bbls/day by year end 2014 Current Nevada production ~30,000 bbls/month

$130,000,000 invested over next four years Acreage might hold 1 billion barrels or more.

Helman, C. 2013. Far-Flung Noble Energy Believes In Oil And Gas 'Diversification‘. Forbes 12/18/2013 http://www.forbes.com/sites/christopherhelman/2013/12/18/far-flung-noble-energy-believes-in-oil-and-gas-diversification/ Personal communication, Lee Hinman, Noble Energy, 2014

Sources: Compiled from Hess, R.H., Henson, M.A., Davis, D.A., Limerick, S.H., Siewe, S.S., and Niles, M., 2011, Oil and gas well information for Nevada - 2011 update: Nevada Bureau of Mines and Geology Open-File Report 11-6, portable hard drive, 105 GB; Las Vegas Review Journal, January 8, 2013 Available at http://www.reviewjournal.com/business/energy/oilgas-search-fracking-comes-nevad

Nevada Oil and Gas Tomorrow

Las Vegas Review Journal, January 8, 2013 Available at http://www.reviewjournal.com/business/energy/oilgas-search-fracking-comes-nevada

Noble’s Play

Elko Daily Free Press, January 23, 2013 Noble Energy plans extensive test drilling in Elko County Available at: http://elkodaily.com/news/local/noble-energy-plans-extensive-test-drilling-in-elko-county/article_04d1b8e0-6506-11e2-b38a-001a4bcf887a.html

SOURCE: Anna, L. O., et al. 2007. Geologic Assessment of Undiscovered Oil and Gas Resources of the Eastern Great Basin Province, Nevada, Utah, Idaho, and Arizona. Chapter 2: Geologic Assessment of Undiscovered Oil and Gas in the Paleozoic–Tertiary Composite Total Petroleum System of the Eastern Great Basin, Nevada and Utah . U.S. Geological Survey Digital Data Series DDS–69–L

Elko Fm.

Terms of Engagement

• The author Henry Brean’s words “The Silver State is about to get fracked.” “… use of pressurized fluid to smash oil and gas

from previously untapped shale deposits…”

Las Vegas Review Journal, January 8, 2013 Available at http://www.reviewjournal.com/business/energy/oilgas-search-fracking-comes-nevada

Las Vegas Review Journal, January 8, 2013

Terms of Engagement

• Brean Quoting Ron Mrowka, Center for Biological Diversity: “poison groundwater, foul the air and lead to

chemical spills and other contamination near drill sites”

“would include wells 6,000 to 14,000 feet deep, putting them thousands of feet below the groundwater table”

"Fracking is not a good thing," he said. "We don't feel there is a safe way to do it."

Las Vegas Review Journal, January 8, 2013 Available at http://www.reviewjournal.com/business/energy/oilgas-search-fracking-comes-nevada

The facts about fracturing • One Million Hydraulic Fractures: Hydraulic

fracturing was first used in 1947 in an oil well in Grant County, Kansas, and by 2002, the practice had already been used approximately a million times in the United States.

• Nearly all wells are hydraulically fractured: Up

to 95% of wells drilled today are hydraulically fractured, accounting for more than 43% of total U.S. oil production and 67% of natural gas production.

National Petroleum Council, 2011. PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources, available at http://www.npc.org/reports/NARD-ExecSummVol.pdf

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

1

2

3

Environmental Concerns Related to Hydraulic Fracturing Fluid and Brine

Potential Pathways for Exposure to Fluids:

• Upward from deep, hydraulically

fractured target formation to shallow groundwater

• Migration of a surface spill to groundwater

• Migration of a surface spill to a stream or river

Source: Gradient. 2013. National Human Health Risk Evaluation for

Hydraulic Fracturing Additives. Report to Halliburton Energy Services, Inc. 169p., available at http://www.energy.senate.gov/public/index.cfm/files/serve?File_id=53a41a78-c06c-4695-a7be-84225aa7230f

Water Requirements

• Water and sand 99.5 percent of fracturing fluid • Water is primary carrier fluid

Play Drilling

Fracturing Total

Water Used -Millions of Gallons /well

Barnett 0.3 3.8 4.1

Fayetteville 0.1 4.0 4.1

Haynesville 0.6 5.0 5.6

Marcellus 0.1 5.5 5.6

Source: Chesapeake Energy, (2010), “Chesapeake energy - shale gas information,” Oklahoma City, Oklahoma, cited by Mielke, E. et. al, 2010. Water Consumption of Energy Resource Extraction, Processing and Conversion Avaliable at: http://belfercenter.ksg.harvard.edu/files/ETIP-DP-2010-15-final-4.pdf Accessed 02/19/2014 http://www.chk.com/Media/CorpMediaKits/Water_Use_Fact_Sheet.pdf, http://www.chk.com/Media/MarcellusMediaKits/Marcellus_Water_Use_Fact_Sheet.pdf, http://www.chk.com/Media/BarnettMediaKits/Barnett_Water_Use_Fact_Sheet.pdf, http://www.chk.com/Media/HaynesvilleMediaKits/Haynesville_Water_Use_Fact_Sheet.pdf, http://www.chk.com/Media/FayettevilleMediaKits/Fayetteville_Water_Use_Fact_Sheet.pdf.

Water Use • Noble’s Project < 0.4% of Elko County’s Current Water Use

Elko County Largest water user in Nevada 933,041 acre feet/yr (24% of State’s Use)

Noble’s 20 well project Assume 5,600,000 gallons water/well (17.1 acre-ft) 20 wells @ 17.1 acre-feet/well 343.6 acre-feet

Even at 5.6 million gallons/well, drilling and completing 543 wells/year would only be 1% of Elko County’s current water use.

Noble is not competing with farmers and ranchers for water – unallocated deeper groundwater to be used

Noble’s actual water use < 1 million gallons/well (3.06 acre-ft)

Source: Elko County Nevada Water Resource Management Plan 2007Available at http://www.leg.state.nv.us/74th/Interim_Agendas_Minutes_Exhibits/Exhibits/Lands/E060608F-1.pdf ; Personal communication, Lee Hinman, Noble Energy, 2014

Water Use

• Industry recognizes that competition for water use is a major issue Recycle/re-use water is the direction the industry

is taking Industry increasingly using saltier water

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Surface Releases

• Nevada proposed hydraulic fracturing regulations require that during hydraulic fracturing all liquids be contained in steel tanks

• Industry practice is to isolate fluids from the environment

• Surface releases from equipment failures are noticed and addressed immediately

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Subsurface Releases – The Hype

• Fracturing takes place 1,000s of feet below freshwater aquifers

Subsurface Releases - Reality

Theoretical Upper Limit to Hydraulic Fracture Height Growth

( )3/1

213

−

Ω=

υπ nPaEVHeight

shape factor

driving stress

Poisson’s ratio (how much the sides of a block of rock bulge in response to being compressed)

elastic modulus of rock (how much the rock squishes in response to an applied pressure)

volume of HF fluid

Source: Flewelling, S.A., Tymchak, M.P., Warpinski, N.E. 2013. " Hydraulic Fracture Height Limits and Fault Interactions in Tight Oil and Gas Formations." Geophysical Research Letters, 40, 3602–3606, doi:10.1002/grl.50707 Available at http://onlinelibrary.wiley.com/doi/10.1002/grl.50707/pdf .

fracture aspect ratio

Volume of Fluid Used = Volume of Hydraulic Fracture Produced

Microseismic Estimates of Fracture Heights

Greene County Pennsylvania Site

UD-1 UD-2 UD-5 MW-1 MW-2 MH 1-6

Source: Hammack, R. et al., Use of Perfluorocarbon Tracers to Detect the Migration of Gas from Hydraulically Fractured Marcellus Shale Wells. IPEC, San Antonio, TX November 13, 2013, Available at http://ipec.utulsa.edu/Conf2013/Manuscripts_pdfs/GreeneCountySite.pdf

Vertical Extent of Microseismicity above Well Perforations

Source: Flewelling, S.A., Tymchak, M.P., Warpinski, N.E. 2013. " Hydraulic Fracture Height Limits and Fault Interactions in Tight Oil and Gas Formations." Geophysical Research Letters, 40, 3602–3606, doi:10.1002/grl.50707.

Source: Sheorey, P. R. 1994. A theory for in situ stresses in isotropic and transverseley isotropic rock. International Journal of Rock Mechanics and Mining Sciences 31, no. 1: 23-34.

Horizontal Fractures

Vertical Fractures

Fractures extend only about 400-500 feet from wellbore

The Real Threat to Groundwater

• Bad cement Jobs!

Nevada Regulations

• Extensive and specific requirements for Casing Cementing

• 14 day notice to landowners/lessors of hydraulic fracturing

• Cement bond log must be certified by operator

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Chemicals Used

Source: Shale Gas Primer, GWPC and ALL

Chemicals Used Source: Shale Gas Primer, GWPC and ALL

Chemicals Used

Source: Shale Gas Primer, GWPC and ALL

Nevada Regulations

• Operator must insure that chemicals proposed to be used for hydraulic fracturing are only those chemicals listed on the division’s web page.

• A sundry notice (Form 4) must be submitted to the division for approval at least 30 days before hydraulic fracturing if there are any chemicals proposed to be used that are not listed.

• Report amount and type of chemicals used to FracFocus (www.fracfocus.org)

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Induced Seismicity

Induced Seismicity Energy

Technology Number

of Projects

Induced Events

Felt

Felt Events

Maximum Magnitude

Number with

M > 4.0

Mechanism Location of

M > 2.0 Events

Waterflooding ~ 108,000 (wells)

One or more @ 18 sites

4.9 3 Pore pressure increase

AL, CA, CO, MS, OK, TX

EOR ~13,000 (wells)

None known None known 0 Pore pressure increase

None known

Hydraulic Fracturing ~35,000 (wells)

1 2.8 0 Pore pressure increase

OK

Production ~ 6,000 (fields)

20 sites 6.5 5 Pore pressure increase

CA, IL, NB, OK, TX

Water Disposal ~30,000 (wells)

9 4.8 7 Pore pressure increase

AR, CO, OH

Hitzman, M. W., et al. 2013. Induced Seismicity Potential in Energy Technologies, The National Academies Press, Available at http://www.nap.edu/catalog.php?record_id=13355

Induced Seismicity Energy Released •Rock Strength •Size of rupture •Displacement on rupture

Induced Seismicity

Seismic Moment = µ * (Rupture Area) * (Fault Offset) Mw = 2 / 3 * log(Seismic Moment) - 10.73

Las Vegas Strip Home Plate to

1st Base

500 foot fracture (152.4 meters)

Rock Strength

Displacement

Maximum Seismic Moment Maximum seismic moment and magnitude as functions of total volume of injected fluid from the start of injection until the time of the largest induced earthquake. The equation along the solid line relates the upper bound seismic moment to the product of the modulus of rigidity and the total volume of injected fluid.

Source: McGarr, A. 2014. Maximum magnitude earthquakes induced by fluid injection, J. Geophys. Res. Solid Earth, 119, doi:10.1002/2013JB010597.

5.6 million gallons 1.6 million gallons

In the U.S. 3 reported earthquakes induced by permeability-enhancing treatments in unconventional oil and gas fields that were large enough to be felt at the surface.

The McGarr line tells you the maximum magnitude you could get if you are very unlucky.

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Disposal of Flowback Water

• Nevada Regulations All liquids contained in steel tanks Method and location of final disposal of returned

liquids must be approved by the Division before removal from well location.

Disposal of Flowback Water

• Numerous Options Recycle/Re-use Subsurface injection Onsite vacuum distillation

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Air Emissions • Diesel exhaust • Gas flares • Hydrocarbon vapor • Dust

Air Emissions

• EPA 40 CFR Parts 60 and 63 Oil and Natural Gas Sector: New Source

Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule Anticipate ~ 95 percent reduction in VOC emissions

from hydraulically fractured wells. Prevent gas/vapor escape Capture escaping gas/vapor and put into sales line

Federal Register - August 16, 2012; Volume 77 No. 159 p. 49490-49600

See: http://www.gpo.gov/fdsys/pkg/FR-2012-08-16/pdf/2012-16806.pdf; also see USEPA Oil and Natural Gas Air Pollution Standards, available at http://www.epa.gov/airquality/oilandgas/

Air Emissions

• Diesel New Technology Diesel Engines and Reformulated

Diesel Fuel ultra-low emissions of Sulfur Aromatics Particulates

Limited time footprint Emissions only during drilling and completion

Long, C. M. and Valberg, P. A. 2013. Recent Developments Related to the Health Effects of Diesel Exhaust (DE): Implications for Hydraulic Fracturing and Oil & Gas Development. IPEC, San Antonio, TX November 13, 2013, Available at http://ipec.utulsa.edu/Conf2013/Manuscripts_pdfs/CMLong.pdf

Air Emissions

• Gas Flares Controlled burning of gas Safety Production testing

Gas only flared until it can be sold Methane and low molecular weight hydrocarbons

burn cleanly

Dust

• Issue during drilling and completion of well Crew rotation Supply and equipment delivery

• Nevada Air Permit – ZERO DUST EMISSION Dust suppression on unpaved roads Limit speeds (15 mph) / monitor performance

Personal communication, Lee Hinman, Noble Energy, 2014; also see NAC 445B.22037 Emissions of particulate matter: Fugitive dust, available at http://www.leg.state.nv.us/nac/nac-445b.html

Environmental Issues

• Water Requirements • Surface Releases • Subsurface Releases • Chemicals Used • Induced Seismicity • Disposal of Flowback Water • Air Emissions

Environmental Answers

• Nevada’s Proposed Hydraulic Fracturing Regulations Comprehensive Stringent Transparent

• Standard Industry Practice

The facts about fracturing • Nearly 70 Years of Experience: Hydraulic fracturing

was first used in 1947 in an oil well in Grant County, KS • One Million Hydraulic Fractures: By 2002, ~ a million

hydraulic fractures completed in the United States. • Nearly all wells are hydraulically fractured: Up to

95% of wells drilled today are hydraulically fractured. • Responsible for much U.S. energy production: More

than 43% of total U.S. oil and 67% of U.S. natural gas production from hydraulically fractured wells

National Petroleum Council, 2011. PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources, available at http://www.npc.org/reports/NARD-ExecSummVol.pdf

The facts about fracturing • Consumptive water use minimized; recycling

maximized • Thousands of feet separate freshwater aquifers from

shale resource rocks • Hydraulic fractures cannot

Reach shallow groundwater Induce large seismic events

• In Nevada Stringent cementing and casing regulations Hydraulic fracturing fluids are isolated in steel tanks Flowback disposal must be pre-approved

National Petroleum Council, 2011. PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources, available at http://www.npc.org/reports/NARD-ExecSummVol.pdf

The facts about fracturing

• Environmental viability affirmed by multiple studies U.S. DOE and Ground Water Protection Council - 2009 U.S.EPA – 2004

• No verified cases of underground drinking water contamination from hydraulic fracturing Interstate Oil and Gas Compact Commission - 2009

National Petroleum Council, 2011. PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources, available at http://www.npc.org/reports/NARD-ExecSummVol.pdf