AVOIDING PITFALLS IN SHALE OR OTHER OIL & GAS DEVELOPMENTS

APRIL 16, 2014

SPE GCS

FACILITIES & OPS

GEORGE E. KING, P.E.

I. Establish realistic expectations.

II. Communicate at all levels.

III. Ask questions & listen to concerns.

IV. Educate & learn at all levels.

V. Return $$s to the community

VI. “Live there.”

VII. Live technical excellence

VIII. Be proactive.

IX. Deliver on promises.

X. Control costs.

PROJECT DEVELOPMENT COMMANDMENTS

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Projects are long term and communities must be a part of the development for any development to succeed.

SEQUENCE OF EVENTS IN A DEVELOPMENT

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UNCONVENTIONAL PLAYS ARE TECHNOLOGY DRIVEN

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Reality is reality. It is “Just the Facts” – but, which are often in scarce supply and can be twisted.

Perception is a measure of our ignorance on any given subject at a point in time. Perception can be changed with education, but education takes time and is a better preventative than a cure. Educate early!

HOWEVER – if perception is not treated with education, it can become a long term “reality”, nearly always in a detrimental way.

MY THOUGHTS ON PERCEPTION AND REALITY

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From the Community To Management & Workers

Are there jobs? How long will this

last? (benefit vs. congestion)

How much will it disrupt our lives?

Will it tie up traffic? What are the

hazards? “Can you put it

somewhere else?”

Who benefits?

How many wells will it take to “work”?

What is the market & what will competitors do?

What technology is needed?

How to control costs?

ESTABLISHING EXPECTATIONS

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HIGH LEVEL REGIONAL CHECKS

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Opposition and proponents – can the gap be bridged? What fuels the anti-crowd?

Local with real concerns or paid and imported? Educate and listen to concerns – address them.

Recognize communication gaps early and move quickly to educate, solve problems and engage. Lease holders and surface owners (separate concerns) Community perception Local government Educators and thought/reaction leaders Regulators Management

The best spokespeople you have are an educated and involved local workforce.

COMMUNICATION ISSUES

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1. Traffic Congestion and Trucks.

2. Water Usage and Consumption.

3. Seismic Disturbances (Earthquakes).

4. Chemicals.

5. Groundwater Protection.

6. Methane Migration.

7. Emissions.

8. Spills.

9. Climate Change.

10. Delays Alternate Energy Development.

WHAT ARE THE PUBLIC’S MAJOR ISSUES IN OIL AND GAS DEVELOPMENTS?

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1. Trucks – temporary pipelines, On-site recycle, dust control, scheduling

2. Water – put water use in perspective & stop using fresh water for fracturing

3. Seismic – pre-lease investigation & lessen disposal needs by recycling.

4. Chemicals – limit use to EPAs D.F.E. or North Sea Gold Band products.

5. Groundwater protection – prevent spills, pre-lease review of pay zone depth and barriers. Know the barriers and warning signs.

6. Gas Migration – highly localized, educate and work through gas issues. Limit air drilling.

7. Emissions – no venting, minimize flaring, use air for controls, not gas.

8. Spills – transport changes, who is driving the trucks?

9. Climate change – educate, gas use reduces all pollutants.

10. Alternate energy – explain cyclic problems of alternate energy sources & how to use it in combination with your development (recycling, powering pad equipment, etc.).

WHAT ADDRESSES THE ISSUES?

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Produced Water Re-injection (floods)

WHAT & WHO IS INVOLVED IN FRACTURING?

Large Producers (top 50)

Small Producers (~1500?)

Pumping Service Providers (Big 5)

Pumping Service Providers (mid 10)

Pumping Service Providers (~50)

~ 700 frac fleets active

Trucking Water Transfer

Proppant Suppliers

Chemical Suppliers

Tank Suppliers HSE equip. Flowback

Monitoring

Water Supply-recycle

Produced Water Treating

Produced Water Disposal? Or recycle instead.

~ 50% of U.S. Fracs

Treated Water Storage

Operations

~ 50% of U.S. Fracs

Prospect Analysis

Leasing & Permits

Seismic & Evaluation

Drilling Location

Exploratory Drilling

Development Drilling

Pipelines, Refinery, Processing, Distribution, Manufacturing 11

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LOCAL SETTING: SHALES, EVEN IN A PLAY ARE NOT EQUAL

Critical Needs? Significant Needs Important Needs? Manageable Needs?

A major step in reducing environmental footprint is to improve the technology for selecting the right areas in which to drill.

Of the shale wells drilled to date, an estimation can be made that:

1/3rd of shale wells are not economical – mostly older wells

1/3rd of shale wells are marginally economical.

1/3rd of wells are so economical that they carry the development.

THE 1/3 : 1/3 : 1/3 CLASSIFICATION & HOW TO IMPROVE THE ODDS AND LOWER RISK.

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We could possible achieve ~33% or more savings in shale development, reduce water & chemicals by half and slash emissions, if we could eliminate the bottom 1/3rd of wells and improve the marginal characteristics of the middle third of shale wells.

Nature controls location, hydrocarbons in place, depth, pressure & natural flow paths. Operators control drilling and completion, stimulation and production. Politicians control regulations and taxes.

FINDING THE SWEET SPOT LOWERS RISK OF POOR WELLS.

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Focusing the drilling using technology is the best way to maximize economics and minimize the number of wells.

HOW DO FLUIDS TRAVEL IN THE ROCK?

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IDENTIFYING AND MANAGING RISK (FROM SPE 152596 – ESTIMATING AND EVALUATING FRACTURING RISK)

1.Spill clean fresh or salt water 2.Spill biocide 3.Spill dry additives 4.Spill of diesel from truck wreck 5.Spill of diesel -wrecked re-fueler 6.Spill frac tank water, no adds 7.Spill frac tank water w/adds 8.Spill diesel fuel while re-fueling 9.Spill of frac tank -flowback water 10. Frac press ruptures surface casing 11. Cooling pulls tubing out of packer (casing maintains integrity) 12. Mud channel, well < 2000 ft 13. Mud channel, well > 2000 ft 14. Intersects well in the pay zone 15. Intersect properly abandoned well 16. Intersects improperly abandoned well 17. Frac to surface through rock, well greater than 2000 ft deep. 18. Earthquake, mag. >5.0 19. Frac intersects a natural seep 20. Emissions > background 21. Normal frac operation – no problems.

The Red / Yellow / Green designations are an attempt at comparison bracket of operational states of must avoid / caution / acceptable risk measurements.

Many oil & gas wells penetrate major and minor aquifers.

Longstanding (Texas) History:

Freshwater protection regulations (depth, cement surface casing, pressure test) starting in the 1930’s and sharply tightened in late 1960’s.

Approximately 300,000 producing wells including 50,000 injection wells

Approximately 500,000 fracturing operations since 1950 AQUIFERS – Texas Water Development Board

OIL & GAS FIELDS – Bureau of Economic Geology, UT Austin

Know the territory you want to develop. What are the hazards?

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IMPROVE ISOLATION - WELL CONSTRUCTION

Barriers & Containment – What is required? Well Design – Basics & Complexities

Drilling What is involved, how long does it last?

Casing Basic calculations & design for different

Geo-Technical Settings One size does not fit all

Cement How much depends on the area, how to place, Cement tests and monitoring methods – their specific accuracy. Mud and Gas-cut channels How long will it last?

Problems – annular pressure, methane in fresh water

Early Warning Signals Must be Handled. 19

CEMENT SEAL IS IMPORTANT – CEMENT TOP IS EVEN MORE IMPORTANT IF IN DOUBT - RUN MORE CEMENT THAN REQUIRED AND DO MORE TESTING.

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MULTI-FRACTURED HORIZONTAL WELLS ARE ACTUALLY MORE ENVIRONMENTALLY SOUND.

Shales are so low permeability that the gas inflow is controlled by the area of the shale that is actually stimulated and contacted by the fracturing treatment.

• Each horizontal well can replace 10 to 30 vertical wells.

• Horizontal & extended reach wells can often be grouped into pad developments.

12 wells on one 6 acre pad drain 6000 acres of reservoir. Footprint reduced by 93% over vertical well development – Apache Canada

DEVELOPMENT BY VERTICAL OR HORIZONTAL WELLS? 9+ SQ. MILE AREA (6000 ACRES)

Horizontal well advantages: • Less land used •Agreed upon pad placement • Less traffic, • Less dust, • Less urban / wildlife disturbance,

• Less air pollution. • All wells penetrate the ground in the same area – can be easily monitored •Sharply lower methane vapor loss (low press capture and compression)

6000 acres: Items Vertical Wells

Horizontal Well Pad

Wells (80 acre spacing) >75 12

Roads (miles) 28 2

Gas/Oil Pipelines (miles) 30 4

Frac Water supply pipeline (miles)

30 2

Facility Pads 8 1

Trucking Miles (on pad) 45000 36000 (or 1400 with water pipeline)

Rig Mob/De-Mob 75 1

Fresh water monitor area 6000 acres 8 acres

Pad Footprint (acres) 150 6

Total Development Footprint 566 acres 45

Total Production Footprint 491 acres 33 22

Sand System

Automated Refueling System

Facility Installation

HP Frac Manifold Acid Pumping Kit

Pumpdown Kit

Slick-Cable Trucks

Debolt Water Pipeline

CT Pumpers

P Tank(s)

MCC

Wellheads GORV

Over 100 people on site 24/7 • Learning: Both Surface and Sub-surface simultaneous operations plans are mandatory.

• Safety training updates are required to enter site and monitored by continually updated entry passes.

• Improvements in economics and safety seen year-on-year 23

Frac Jobs Use Millions of Gallons of Water and this can total 50 to 100 billion gallons per year in Texas (home to half of all US wells & fracs in 2013). But in perspective: City of Houston loses ~22 billion gallons of drinking

water per year from line leaks (Houston Chronicle). Municipal water losses from 54% of cities in TX

were 225 billion gallons in 2010 (TX Water Development Board).

Just 2 of the 19 coal fired TX power plants use twice the water than Eagle Ford Fracturing Uses in a Year.

For 2011 thru 2013, for all 3 years total, Fracturing used 25% of 1 day’s water use in the US.

Americans use 9 trillion gallons watering lawns & golf courses every year (EPA). In TX, that’s 18 times more water on lawns than in a year of Fracs – every year.

In many areas, Apache is using 100% brackish water and virtually no fresh water.

ARE WE REALLY RUNNING OUT OF WATER FOR FRACTURING? – PUT IT IN PERSPECTIVE.

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PRODUCED WATER RECYCLE PILOT (NEWFIELD)

Net cover not visible but it is there.

Courtesy Newfield Energy

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APACHE FRACTURES WOLFCAMP WELLS WITHOUT FRESH WATER IN DRY BARNHART PROJECT AREA

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Photos from Oil & Gas Journal- 12 Feb 2014

Produced and brackish waters used for fracturing.

FRESH WATER IS ACTUALLY PRODUCED WHEN METHANE IS BURNED AS A FUEL.

Average gas shale frac uses 5,000,000 gallons of water (salt water is replacing some fresh water as fracturing fluid).

When methane is burned as a fuel:

CH4 + 2O2 => CO2 + 2H2O

100,000 BTU of methane => 9.41 lb of water

100,000 BTU (methane) = 100 scf of methane

1 mmscf of methane produces [(1,000,000/100 * 9.41)/8.33 lb/gal] = 11,300 gal

1 bcf produces 11,300,000 gallons of fresh water

Gas shale wells produce 1 to 10+ bcf over their lifetime.

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FRACTURING FLUIDS – WHAT ARE THEY? WHAT IS THE RISK?

Slick Water Fluids – salt or fresh water with friction reducer & biocide. 0.05% to 0.2% total additives.

Risk level – v. low chemically, fractures are small. ----------------------------------------------------------------

Hybrid or Gelled Fracs – salt or fresh water with polymer, x-linker, biocide, acid, scale inhibitor, breaker, etc. 0.25 to 0.1% additives.

Risk level – low chemically, fractures wider, taller & longer.

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HOW CLOSE DOES THE TOP OF A FRAC COME TO GROUND WATER?

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HOW CLOSE DOES THE TOP OF A FRAC COME TO GROUND WATER?

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USING TECHNOLOGY: FRAC MONITORING METHODS EDUCATE YOURSELF AND THE COMMUNITY ON HOW TO MONITOR YOUR WELLS. SHOWCASE YOUR OPERATIONS.

Frac Monitoring

Technique

Frac Loc.

in Well

Frac

Direction

Frac

Height

Frac

Length

Investigation

Timing

Comments

Surface Pressure No No Indirect No Real Time

Downhole Pressure No No Indirect No Post Frac or

Real Time

More accurate

than surface

pressure

Fiber optic, (temp,

press, sound)

Yes No No No Real Time Run on casing

Microseismic Yes Yes Yes Yes 5 min. delay

Tilt Meters Yes Yes Yes Yes 5 min. delay

Temperature Logging Yes No Vert. wells No Post frac Vert. Wells

Tracer Tagged

Proppant

Yes Transverse or

longitudinal Only in

vertical

No Post Frac Investigation to a

few inches

Chemical Tracers in

frac fluid

No No No No Post Frac Tag water or oil

Production Log Yes No Only in

Vertical

No Post Frac

Pressure Build Up,

Production Tests &

Interference tests

No Indirect Indirect Indirect Post Production

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SO – WHAT ARE RISKS TO GROUNDWATER BY OIL & GAS ACTIVITIES? Major Risk

Poor performance by the few.

Not understanding the ABSOLUTE importance of cement and coupling performance in establishing isolation.

Lack of effective maintenance.

Moderate Risk Transport wrecks & spills of on-site stored chemicals

Poor cementing practices and improper coupling selection and make-up

Minor Risks Drilling phases (generally not on shales: low perm)

Well construction (early leaks) & older era or vintage wells.

Thread leaks (connections)

Near zero risks Properly placed and test cement in producing wells, regardless of age

The specific act of fracturing rock

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Why is gas in my water well?? Gas migration >>200+ yrs.

old, highly regional, many causes, 1000’s of natural seeps.

SPE 166142, Barrier vs. Well Failure, King

High Risk

Low Risk

Are there areas that you shouldn’t drill?

SPE 166142, Barrier vs. Well Failure, King

Methane Seepage from Soils Oil & Gas Seeps are indicators of oil & gas beneath the surface. Gas and Oil

seeps in PA & New York were mapped by explorers in the 1600’s. First gas

well in NY was 28 ft deep, Drake’s oil well in PA was 69 ft deep. How deep are

the fresh water wells there?

Many natural seep flows diminished as wells were drilled & produced. Coal

Point Seep (Santa Barbara Channel, CA) is an example.

First – it is Produced Fluid – not a waste. It has value.

Returning Fluid Composition: Frac base water and frac

additives Waters from one or more

formations A variety of salts and ions –

some stable, some not. Isotopes that can range from

benign to low dose radioactive Solids of silica and many other

minerals Hydrocarbon gas and liquids Other gases

Consistency – highly variable Early time gaining salinity Late time – less saline?

FLOWBACK – WHAT IS IT? HOW LONG DOES IT LAST?

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Experience with large developments shows total cost of water (acquiring, treating, trucking and disposal or recycle), shows recycled water much cheaper than fresh water without recycle.

1,000

10,00

0

100

,000

1,000

,000

10,00

0,000

Lakeview Gusher,CA Onshore, 1910

Santa BarbaraBlowout, CA, 1969

Tanker Grounding,MA, 1976

Tanker Grounding,AK, 1989

Tanker Grounding,TX, 1990

Sabotage, Kuwait,1992

Tanker Grounding,LA, 2000

Pipelines Rupturedby Hurricanes,…

Barge Collision, LA,2008

Tanker Collision, TX,2010

Pipeline Corrosion,MI, 2010

Macondo Blowout,GOM, 2010

Natural Seeps,Coal Point, CA, Yearly

Natural Seeps,GOM, Yearly

BARRELS

Single Estimate

High Value Range

Comparing

Spills & Seeps

Various sources – data

in SPE 166142

Natural seep volumes of oil into the Gulf of Mexico alone total about ¼ of the volume of the Macondo spill – every year!

Most Common

Frac Additives

Composition CAS Number Total amt. in avg

frac (10k bbl)

Used in

recycled water?

Alternate Use

Friction

Reducer

Polyacrylamide 9003-05-8 100 to 200

gallons.

50k to 70k ppm

is upper limit

baby diapers, floc for

drink water

Biocide Glutaraldehyde 111-30-8 50 to 100 gallons. decrease w/

increasing

salinity

Medical

disinfectant

Alternate

Biocide

Ozone,

Chlorine

dioxide UV,

10028-15-6 10049-04-

4 Turbidity & v.

high salinity

hindrances.

Disinfectant in

municipal

water

Scale Inhibitor

(if needed)

Phosphonate &

polymers

6419-19-8 & others 10 to 100+ gallons

– depends on

local

Specific ions

like calcium are

a problem.

Some cleaners

and medical

treatment

Gellants

(hybrid / gel)

Guar &

Cellulose

9000-30-0 9004-62-0 Depends on frac type

~1000 to 2000 lb. Ca++ , Fex & TDS

problem.

Thickening ice

cream / soup

Acid 5% TO 15%

hydrochloric

7647-01-0 ~0 to 2000 gals

not universally

Yes food prep, mfg,

swim pools,

Acid Corrosion

inhib.

Quat. Ammonium

salts, Coa Coa

Amines, etc.

Various 2 to 40 gals if acid is

used Yes Industrial

COMMON CHEMICALS USED IN ACIDS

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WATER MANAGEMENT: QUANTITIES FLOWED BACK IN SHALE RESERVOIRS (RANGES)

Basin or Area

% Frac Water Recovered

Typical Frac Volume Used (Gal.)

Typical Chemical % in Frac

Chemical % in Flowback (Gross Est.)

Barnett 30 to 50% 4 to 5 mm 0.2% <0.05%

Devonian 40 to 50% 4 to 5 mm 0.2% <0.1%

Eagle Ford 5 to 10% 4 to 5 mm 0.3 to 0.4% (Hybrid Frac)

<0.2% (polymer dominated)

Fayetteville 30 to 60% 3 to 4 mm 0.2% <0.05%

Haynesville 5 to 15% 4 to 6mm 0.3% (Hybrid Frac)

<0.1% (polymer dominated)

Horn River 30 to 50% 10 to 12mm (salt water Supply wells)

<0.1% (Apache) <0.05%

Woodford 30 to 50% 4 to 5 mm 0.2% <0.05%

Sources: SPE 133456, SPE 152596, communication with operators in these basins. Also SPE papers on produced water treating.

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http://www.dailymail.co.uk/sciencetech/article-2170140/Shaking-Map-major-earthquake-1898-reveals-stunning-image-planets-danger-zones.html

DOES FRACTURING CREATE EARTHQUAKES?

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ENERGY LEVELS - QUAKES RISK FROM FRACS VERY LOW. MAIN MAN MADE RISKS ARE DAMS, MINES AND INJECTION WELLS. 150,000 US INJECTION & DISPOSAL WELLS – ABOUT 15 MAY BE RELATED TO 3.0 TO 5.0 QUAKES (1/100TH OF 1% OF TOTAL WELLS) – WATER RECYCLE SHARPLY LOWERS QUAKE RISK.

Felt Seismic

Normal Fracturing Energy

Energy levels of largest moment magnitude measured in normal fracturing, even with engagement of local, small faults is on the order of one million times smaller than a “felt” earthquake and approximately one billion times lower than a damaging earthquake. 40

EARTHQUAKES State Magnitude Date

Alaska 9.2 1964 03 28

Arkansas 7.7 1811 12 16

California 7.9 1857 01 09

California 7.8 1906 04 18

Colorado 6.6 1882 04 18

Louisiana 4.2 1930 10 19

Montana 7.3 1959 08 18

N Mexico 7 1906 11 15

New York 5.8 1944 09 05

N. Dakota 5.5 1909 05 16

Ohio 5.4 1937 03 09

Oklahoma 5.5 2011 11 06

PA 5.2 1998 09 25

TX 5.8 1931 08 16

Virginia 5.9 1897 05 31

W. Virginia 4.5 1969 11 20

Wyoming 6.5 1959 08 18

~7 quakes each day felt in U.S. Small quakes are common & swarms of ~20,000 in a few months are not unusual (Example 19,000 tremors in Eola AR, 3,000 in Mamoth Lake CA, and 500 in Moodus CN in 1982/83). Most high mag. earthquakes predate shale development & frac invention. For a damaging quake (6.0 or higher), stresses rip 100’s of miles of major faults. Major quake depths are 2 to >7 miles beneath the surface.

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EARTHQUAKES ARE NOW MORE EASILY RECORDED AND ANNOUNCED. MORE SEISMIC STATIONS AND FASTER DATA ACQUISITIONS INCREASED NUMBERS OF SMALL QUAKES IN RANGE OF SENSORS.

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1

10

100

1000

10000

100000

1990 1995 2000 2005 2010

WW Magnitude 8+ US 8+

WW 7 US 7

WW 5 & 6 US 5 & 6

WW 4 US 4

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~ 40% of wells have measurable methane – regardless of drilling history. 96% of natural seep methane is thermogenic – same composition as gas

reservoir. Fingerprint (isotope) of gas is often misleading. Water – sample and test offset water wells,

water quality trends are valuable, single point tests are problematic.

Water quality changes with: Rock type of the aquifer Gas generation or trapping within the aquifer – prior to drilling Location in aquifer – both aerially & vertically (often salty deeper) Recharge (source, rate, season, surface pollution factors) Withdrawal rate (expect more free methane at higher withdrawal)

Video road conditions – work with communities to offset damage you do. Locate abandoned & orphaned wells, seeps, natural CH4 & NORM levels

Pre-existing pollution - Most common GW contamination is gasoline & diesel from underground storage tanks at gas stations, second is sewage leaks, third is agriculture sources.

PRE-DRILL TEST: EVALUATE GROUND WATER (GW) QUALITY

GLOBAL EMISSIONS – WHY NATURAL GAS IS DESPERATELY NEEDED.

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China passed the US in CO2 emissions 8 years ago and if we cut out all emissions today, if China doesn’t switch to gas, the reduction would be erased in 4 years are current rate of their emission increase.

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Shale Gas Basins and Pipeline Systems

Slide from Talk by Rich Muller

Coal Power Pollution in China

Power frac spread with dual-fuel or electricity. Substitute 60% of diesel with natural gas.

Generate electricity from field gas on-site.

Operate pad equipment with compressed air or solar.

FRAC SITE & WELL OPERATION EMISSIONS – WHAT CAN WE DO?

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Documented tests of actual well sites show methane leak rates are below 1% (UT/EDF, 2013)

Methane venting common in 2007/8 (Yale/NOAA study) has been stopped. Remaining areas of work are pneumatic operated equipment and other small volume but regular releases need to be replaced with solar or air operated controls and/or low pressure gas recovery systems.

NEGATIVES FOR LARGE SCALE WELL DEVELOPMENTS

Well development can be a traffic nightmare in urban environments.

Road damage is significant in areas with roads not meant for industrial use.

Dust, noise, spills, wrecks, soil disturbance & people “activities” increase during development. -----------------------------------------------------------------

Areas not accustomed to oil & gas developments usually lack infrastructure to minimize many of the large well development problems.

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CAN & SHOULD EVERY WELL BE FRACTURED?

No. Some wells don’t need fracturing. Some wells cannot be fractured safely. Some geology makes gas migration more likely.

Rules of Thumb: Fracturing in deeper wells poses less risk (>2000 ft). Stand off from bottom of fresh water ~1000 ft (safety factor varies). Need two cemented barriers between fluid flow path & fresh water. Fracturing in older wells is higher risk (test & derate max. pressure?). Well construction best practices are required. A “pop-off” or pressure release valve is good insurance.

– Set below the minimum burst pressure of the pipe. – A line from the valve to a tank prevents spills in event of a over-pressure. – Odds against a pipe rupture are about 50,000:1 to 100,000:1.

Areas with gas seeps & historical near-surface gas more likely to see gas migration before & after well development.

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THE FRACTURING DEBATE! MASSIVE COVER-UP OR MASSIVE FEAR-MONGERING?

Some Truth on Both Sides…..

Follow the money & agenda of the position supporters… -----------------------------------------------------------

Let’s look at a few statements: 1. Fracturing is new! ...fracturing is 60 yrs old!

2. Multifrac horizontals are new …. 40 yrs old & 1 million fracs in MFH

3. Gas emissions are high! ...actual measured emissions are low!

4. My well has gas in it! …. Some areas have natural seeps of gas!

5. Water usage is huge! …. 2% of all water use & less than leaks

6. Fracturing causes quakes! … no, a few disposal wells did!

7. Fracs pollute groundwater! … no traces of frac water in GW!

8. Wells don’t leak! … some wells do leak!

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What is safe?

Risk = Frequency of Occurrence vs. Impact

Slide 50

Risk exists in every action.

What is operationally safe?

Occurrence & impact create a

threat level that we can

understand & accept or reject

based on what we believe:

hopefully on assessment of facts.

What does the public

think is safe?

SPE 166142, Barrier vs. Well Failure, King

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Some “forget it” Factors (and some tempering) Gas in place too low

Maturity out of range

TOC (total organic content) too low (but check TR!)

Too shallow and/or too low pressure

Bad Lease terms

Delay Red Flags Market and transport not ready

Disposal, permits, regulations, access problems

Infrastructure limited or absent

DEAL BREAKERS – MY OPINION (MAYBE JUST MORE DIFFICULT?)

REDUCING THE

IMPACT OF

SHALE GAS

DEVELOPMENT

IS CRITICAL

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Questions? More Information at www.GEKengineering.com

Restored shale drilling site - Chesapeake

QUESTIONS I WOULD ASK.

1. Will everything be on www.fracfocus.org?

2. Minimum distance - -water to frac be > 1500 ft?

3. Will “green completions” be used?

4. Is the Fracturing water source sustainable?

5. Can multi-well pads be used?

6. Does the company have a list of chemicals they will not use?

7. What are your questions?

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Completion Optimization Expertise – local knowledge often better than books

Infrastructure? Cost to do first few jobs?

Water supply (cost in $ and community displeasure)

Disposal cost (trucking and disposal)

Lease factors Bonus

Percent

Continuous drilling

Damages

Water rights (AND responsibilities)

ECONOMIC FACTORS