fracking - 2020 ngvamerica annual industry summit...• $15.8b production value in 2014 • $4.1b in...
TRANSCRIPT
FrackingThe Debate, the Facts, and the Path Forward
2016 NGVAmerica Annual Meeting & Industry SummitSeptember 9, 2016
Colorado Oil & Gas Association (COGA)
• Founded 1984
• Nationally Recognized Trade Association Focused on Issues in Colorado
• Over 300 Member Companies• Major and Independent Oil & Gas Companies• Service Companies• Mid-Stream Companies• Support Services
Today’s Talk
•Fracking Fundamentals•Public Narrative•Political Developments•Path Forward
Fracking Fundamentals
Definition• The use of fluids to create
a crack by hydraulic pressure
• The continued injection of fluids into the created crack fracture to make it grow larger
• The placement of small granular solids into the crack to ensure the crack remains open after the hydraulic pressure is no longer applied
Why HF a Well?
• Increase the Rate at which the well is capable of producing oil or gas
• Most unconventional formations Requirehydraulic fracturing to be economic
• Does not increase total Reserves
Why HF a Well? Electronic Microscope Image of Rock
Magnification: 1000X Filename: S0178.tif
Width of a human hair
100 µm
Fractures and Proppant
Misperception: Hydraulic Fracturing is Injecting Fluids
into Groundwater
Drilling Distance
Wells Fargo Center ~700 ft
7000 ft.
Aquifer 400-800 ft.
Steel Casing Purpose
• Protect ground water• Provide stable wellbore
during drilling operation• Provide well control during
drilling Depth Requirements
• Set by State and BLM regulations
• Extends below the aquifer Cement Helps
• Protect casing from corrosion
• Provide zonal isolation• Support casing in wellbore
HF Fluids
HF FluidsAdditive Main Compound Common Use Diluted Acid Hydrochloricor, Muriatic Acid Swimming Pools Biocide Glutaraldehyde Dental Disinfectant Breaker Ammonium Persulfate Bleaching Hair Crosslinker Borate Salts Laundry Detergents Iron Control Citric Acid Food Additive Gelling Agent Guar Gum Biscuits Scale Inhibitor Ethylene Glycol Antifreeze Surfactant Isopropanol Glass Cleaner Friction Reducer Polyacrylamide Water and Soil Treatment
FracFocus Website
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Improved Search
HF Disclosure Example
Misperception:
Drilling is Getting Riskier
“HydraFrac” Process• July of 1947 - Stanolind Oil and Gas
• 1st Job: Klepper No. 1 gelled kerosene/gasoline mix• Hugoton Gas Field, Kansas
• Late 1948 - Patent issued, 23 wells H.F. before commercial application began
• In 1949, The Halliburton Oil Well Cementing Co. was granted an exclusive license to pump the new “Hydrafrac” process
• 332 wells were treated first 12 months• 75% success rate
Boulder Oil Field - 1903
Boulder Oil Field Today
Footprint
1 Well Pad or 32?
Misperception:
Drilling and Hydraulic Fracturing
Use Too Much Water
Agriculture 85.6%
Municipal7.0%
Recreation and Fisheries6.1%
Large Industry0.69%
Thermoelectric Power Generation
0.39%
Hydraulic Fracturing, 0.09%
Snowmaking0.03%
Other Energy Development*
0.03%
Industrial1.18%
Source: Colorado Division of Water Resources*Other energy development includes solar, coal, natural gas, and uranium developmentNotes: 5-year hydraulic fracturing totals are estimates; a small margin of error should be noted when analyzing final results. Total water amounts and percentages will vary slightly from year-to-year based on supplies from varying snowpack and demands resulting from varying climatic conditions.
Colorado Water Utilization by Sector, 2008-2012Agriculture uses the majority of Colorado water; energy sector consumes
less than 1% of total
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
10000000
City Use Agriculture Excess Hydraulic Fracturing
Thou
sand
s of
Gal
lons
Uses
Greeley Water 2011
8.5 Billion
Gallons: 34%
9.1 Billion
Gallons: 36%
.49 Billion
Gallons: 2%
7.1 Billion Gallons:
28%
Source: Greeley Water/Sanitation
Misperception: Hydraulic Fracturing is Destroying our
Air
Is Natural Gas Clean?
• Cleanest-burning hydrocarbon fuel
• Combustion products are primarily CO2 and water vapor
Colorado’s O&G Industry• 54,000+ active wells • $1.2B in public revenue• $15.8B production value in 2014• $4.1B in employee income to CO households in 2014• $31.7B in total economic output• 102,700 direct and indirect jobs in Colorado • Average annual wage for direct employee is $105,000 –
50% higher than the state average for all industry • $160 Million in state royalties, rents, and bonuses in 2014
Sources: University of Colorado Boulder Leeds School of Business Research Division Oil and Gas Industry Economic and Fiscal Contributions in Colorado by County, 2014- Published December 2015
Average household energy costs in Colorado ($1,551 per year) are 23 percent less than the national average, primarily due to historically lower natural gas prices in the state, according to EIA's Residential Energy Consumption Survey.
The Fracking Debate
The Perception of Concerns
The Reality of Concerns
National Campaigns Target CO
Bans and Moratoria • Moratoria Descriptions
• Longmont – Indefinite ban on fracking and production• Boulder – A 5-year ban on fracking and production• Lafayette – A 5-year ban that could be interpreted to prohibit
even gas pipelines and residential delivery.• Broomfield – A 2-year moratorium slightly improved by a
supportive city council.• Ft. Collins – A 5-year fracking ban. • Loveland – A 2-year moratorium for further study but possibly
interpreted as indefinite pending voter recall.
Ballot Initiatives & Governor’s Task Force
• Governor’s Executive Order Sept. 2014, established task force comprised of 21 representatives from local government, civic organizations, environmental interests, agriculture, and impacted industries (7/7/7).
• Mission: To make recommendations for COGCC rules or state legislation to “harmonize” state and local regulation of oil and gas development in Colorado.
• Public meetings across the state from Sept. 2014 – Feb. 2015. • 9 of 34 recommendations passed by requisite super-majority
• #75 – Local Control of Oil and Gas Development – preempt state law
• #78 – 2500’ Setback from all new oil and gas facilities and “Areas of Special Concern”
2,500 Foot Setback – Effectively Bans Development
Current 500 footSetbacks
2,500 foot Setbacks with areas of special concern
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Lesson 1
Lesson 2
Lesson 3• HF Disclosure• Drinking Water Protection• Setbacks and Mitigation• Spill Reporting• Air Emissions• Enforcement &
Penalty• Taskforce Rulemaking
Lesson 4
Lesson 5