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The energy quest, how shale gas fits in, what it means for you

Mark Linder,Cuadrilla ResourcesMarch 6, 2013Altrincham Grammar School for Boys

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• What is the shale gas process?

• What are the risks? (such as groundwater pollution, water usage, emissions, visability, “earthquakes” etc.)

• How does gas fit into our energy strategy?

• Why energy is an exciting area of study (and an exciting career)

Topics

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What is shale gas?

• Normal natural gas that never “escaped” from source rock• Trapped in nanometre sized pores in brittle rock (it is called

“unconventional” because of the way the gas is trapped)• Needs to be fractured to release• Scientists have known about this for decades

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Shale gas is normal natural gas that never escaped“Conventional” vs “Unconventional” traps for gas & oil

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What is exploration, today?

(Welcome back for Ben Saunders and Tarka L’Herpiniere, on their completion of Scott’s iconic 1,795 mile Terra Nova route from the very coast of Antarctica to the South Pole and back.)

http://scottexpedition.com/about

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Another view of exploration – a 300 million year journey(Preese Hall-1: UK’s Shale Gas Discovery Well)

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What made exploration possible?

• Horizontal drilling (contact more of the formation)• Hydraulic fracturing (create pathways for trapped gas)• 3D seismic surveys, monitoring (to map the subsurface)

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Hydraulic fracturing is not new

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Horizontal drilling, hydraulic fracturing(NOT to scale!)

Shale gas = methane gas = natural gas

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This is not “fracking”Drilling is first….

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Water Tanks Frac Pumps

Sand Silos Data VanFlowback Tanks

Separator

Service Rig

Then fracturing….

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After drilling and fracturing the equipment is removed

(Artist’s impression, production pad 2013)

Elswick facility

For the next 25 years the site looks like this

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Why are we exploring now, and why here?

• The UK’s North Sea gas is declining• Technology exists to recover gas onshore in the UK• The price of gas is higher (the economics work)• There is a lot of gas underneath us

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UK North Sea is decliningUK spending £8B on imports, rising to £16B by 2029

(Source: Department of Energy and Climate Change)

Our growing gas import gap

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Unconventional oil and gas – a global resource

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Lancashire has a “North Sea” of gas

BGS:

"The lower limit of the range is 822 tcf and the upper limit is 2,281 tcf, but the central estimate for the resource is 1,329 tcf”

• Over 1000m (>3300 ft) thickness of shale

• 1000’s feet below aquifers

• Very close to major gas pipeline infrastructure

UK annual gas consumption ≈ 3.2 tcf

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As of September 2013, three gas wells drilled

• Preese Hall-1 drilled to 9,100 feet (partially fractured)

• Grange Hill-1 drilled to 10,700 feet• Becconsall-1 drilled to 10,500 feet• Acquired detailed 3D subsurface

mapping of 100 KM2 through seismic survey

• Existing: Elswick-1 producing from 3,500 feet (existing sandstone well, vertical fracture in 1993)

(For reference, there are over 2,000 onshore wells in the UK, 200 of which have been fractured)

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This is what it’s about

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The challenges

(4th Media 2012)

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Environmental sustainability

Issues of concern– Water

• Aquifer contamination• Water use• Flowback water disposal

– Seismicity– Landscape and community impact– Emissions – local health impact, greenhouse gas– Impact on renewables investment

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What residents are concerned about

Damage to environment

Truck movements, noise

Health risks

Contamination of drinking water

Dangerous chemicals

Use of fossil fuels

0 10 20 30 40 50 60 70 80 90

Women

Men

(Institute of Mechanical Engineers, Fracking survey, 2014)

% citing concern

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Aquifer contamination – the perceptionA question of scale

(4th Media 2012)

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The reality

4KM (2.5 mi)8” wellbore (Credit: Ground Gas Solutions 2012)

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Well integrityGood well design: triple barrier through aquifer

(Cuadrilla 2012)

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Fracking water make-up

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Hydraulic fracturing -- water makeup and management

• What goes in – 99.5% water, about .5% sand, 0.05% friction reducer, and a handful of tracer salt

• Mains water from United Utilities (already has a biocide)• Sand• Polyacrylamide (classified as non hazardous by the EA) , to reduce

friction and improve the suspension of sand in the water

• What comes out – flowback water– Very salty water from the formation– Various minerals from the rock, metals (very dilute solution)– NORM (naturally occurring radiation)

• Flow-back waters are classified as non-hazardous by the Environment Agency are captured, processed in an industrial facility

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Truck traffic

• Assuming all the truck movements take place in the five years of drilling, truck movements would average 6.1-17.1 per day

• Piping water in saves truck journey

• Re-cycling water will save truck journeys

(IoD 2012, central scenario, 10 well pad)

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Seismic risks

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Seismic risks

Injection can lubricate faults, cause small tremors– Cuadrilla’s two events: 1 April 2.3 ML and 27 May 2011 1.5 ML

Subsequently we have

1.Conducted 3D survey (better a-priori knowledge of faults)

2.Planned to hydrofracture in smaller stages

3.Placed seismometers and tiltmeters in arrays around sites (real-time data)

4.Agreed a “traffic light” mitigation system, at 0.5ML threshold

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3D imaging – software exploration(not to mention micro-seismic imaging)

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Fractures and contaminationIs fracture length a cause for concern?

– Maximum fracture length circa 588m/1919 ft– The top of the Bowland shale is at a depth of circa 6000 feet

(Warpinsky et al, 2011)

Aquifer depth

Fracture depth

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Have you ever washed a car?

You are closer to the aquifer than any fracture.

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Pollution Perception

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Impact of pollutants

1. Cuadrilla installs an air quality monitoring package at every site– Methane– Benzene, toluene, ethylbenzene, and xylenes– We publish all data to EA, and in summarized form to local

stakeholders

2. Flaring is regulated in the UK, and is minimized– Flaring has been a site practice for 100 years and has not been a

health risk for workers in proximity, much less communities

3. Returned water/ gas separation is in closed-cycle system

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Would you want to live next to this?

• Operates 24 hours• Trucks and heavy equipment• Noise• Emits odours• Emits methane

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Would you want to live next to this?

• Operates 24 hours• Trucks and heavy equipment• Noise• Emits odours• Emits methane

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Footprint is small(Using Hinkley C as a reference)

Equivalent energy production from natural gas would require less than 170 acres(30 pads)

DECC footnote: “The footprint will depend on the location and turbine technology deployed. DECC estimates the footprint could be between 160,000 and 490,000 acres”

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Checking it’s Safe – thorough regulation

Regulators are:

• Department of Energy and Climate Change (DECC),• The Environment Agency (EA)• The Health and Safety Executive (HSE)• Also County Councils• The EA and HSE continually monitor operations

– March - August 2011: EA visited the Preese Hall site 10 times (7 unannounced visits)

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Through Environmental Impact Assessment

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Climate change

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GHG emissions intensity for various sources of gas

Shale gas Conventional Gas Non-EU Piped Gas LNG GAS(UK current blend)

Estim

ated

Em

issi

ons

Inte

nsity

(g C

O2e

/kW

h)

(Potential Greenhouse Gas Emissions Associated with Shale gas Production and Use- DECC 2013)

(with green completions)

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Shale gas generates controversy

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Operators engage with communities

• Statutory consultation and non-statutory informational events(16 events, past 24 months)

• Site visits, rig tours• Speaking to groups, large and small• Letters, newsletters, answering

questions, information line • Events, sponsorships• Projects – academia, 3rd parties• Recommending engagement strategies for regulators

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Community benefits announcement – transformational potential

• Communities receive £100,000 for every exploration well that is hydraulically fractured

• Communities receive one per cent of revenues from future shale gas production– Potentially, more than £1 billion over a 20 to 30 year shale gas

production timescale could be returned to Lancashire communities within the Bowland Basin license area alone

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What a successful shale gas industry has to offer

• Meaningful unsubsidized private investment– (Bowland alone potential for £50B through 2040)

• Meaningful job creation • Meaningful energy security contribution (up to 1tcf per

annum)• Highest regulatory standards (environmental, health, safety)• Small industrial surface footprint -- 100 sites occupy just 2

km2

• Opportunity for “Aberdeen effect”– Careers, jobs, universities, research, – Economic prosperity

(Source: IoD calculations)

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Perspective on energy

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Two words begin with “e” and end with “y”

We confuse them all the time

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What percentage of all energy we use is renewable?

• 30%?

• 20%

• 10%?

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What percentage of all energy we use is renewable?

• 30%?

• 20%

• 10%?

<5%

(DECC: 012 data)

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We still depend on fossil fuels

Hydrocarbons = 87%

Non-nuclear renewables <5%

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Future mix for UK energy is gas, nuclear and renewables – but coal is still a factor in electricity

(DECC: GHG Emissions 2012, issued March 2013)

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Gas is much more than “keeping the lights on”55% of gas goes to heat and industry

• 36% gas goes to heat

• 36% of gas goes to electricity and associated uses

• 19% to industry and other customers

Use of Gas

HeatElectricityIndustryOther

(Source: Department of Energy and Climate Change)

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The gas in this area alone could make a material difference

(Source: IoD calculations)

Potential Bowland contribution

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Gas is essential if we are serious about reducing CO2 emissions

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In terms of global CO2 emissions, coal and oil are significantly higher contributors

Land use

Coal

Oil

Gas

Other

Other: Emissions from cement production and gas flaring.(Global Carbon Project 2013)

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What can we learn, going forward?

• Shale gas industry brings together sciences and arts– Geology– Physics– Chemistry– Biology– ICT (sector is a heavy user)

• Energy is the lifeblood of all societies

• Sociology• Psychology• Economics• Politics• Even history

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The UK is leading in new energy

Besides being a leader in oil & gas…

• A leader in wind• Innovator in tidal (Tidal Lagoons, 13 tidal streaming

projects)• Innovator in Carbon Capture and Storage (£1B competition,

two leadership projects)

• We have to lead – we are an island nation

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Join the energy quest!

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Thank you