Shale Resources in Ohio. By Amanda Weinstein Swank Program in Rural-Urban Policy http://aede.osu.edu/programs/swank [email protected] NAIOP Conference October 24, 2012 Cincinnati, OH. Outline. Introduction Shale Resources Hydraulic Fracturing Local Impact Economic Impact
Shale is a sedimentary rock that is formed as particles of sediment settle in calm water.
Shale rock is generally high in organic content.
Once covered up by other sediments and buried over millions of years, heat and pressure begin to work on these sediments and oil and gas are formed.
Many of the shale formations in the U.S. were formed during the Devonian period, around 390 million years ago.
“Conventional” oil and gas reserves occur when some of the oil and gas has migrated upwards, to layers of sandstone and porous limestone where it becomes trapped.
In some cases, a significant quantity of oil and gas remain in the shale rock. These reserves are called “unconventional”
According to the U.S. EIA (2011) there is approximately 750 trillion cubic feet of gas and 24 billion barrels of oil yet to be developed
The largest shale plays in terms recoverable oil are the Monterey, Bakken, and Eagle Ford.
The largest shale plays in terms of recoverable gas are the Marcellus (410.3 trillion cubic feet, 55% of the total), Haynesville, and Barnett.
Marcellus – mainly comprised of natural gas also called “dry gas” which is mostly methane (heat our homes and power plant)
Utica – may have more “wet gas” with liquids such as ethane, propane, and butane used as a chemical feedstock or additives in gasoline, with low natural gas prices more valuable.
The market for ethane has gotten a lot of attention, as Shell weighs building a petrochemical plant in Beaver County that would convert “crack” ethane into ethylene, which is used to make plastics
Commercial hydraulic fracturing began in 1949, though it took several decades for it to become cost effective
Practical application of horizontal drilling to oil production began in the early 1980s in the Barnett Shale in Texas
By 2005 the Barnett Shale was producing approximately 0.5 tcf of natural gas per year
An initial wellbore is drilled and thick steel pipe is placed in the hole and sealed with cement on the outside of the pipe.
Drilling recommences to the deeper zones of interest and when this depth is reached, a second string of steel pipe is run inside the first and additional cement is used to provide a permanent seal.
Leasing and royalty payments
Spacing is variable
Marcellus wells can be spaced in 40-acre units or 16 wells per square mile. An average town could contain up to 1,500 wells.
About ½ the water will stay in the ground and in some cases the water has been reused
The rest will come back up as “flowback” or “produced water” or wastewater
The wastewater will often be stored in a lined pit onsite until it can be transported to an injection well or containment vessel
Wells are then shut in, or capped, while awaiting completion of pipelines to transport the natural gas to market.
Marcellus Shale horizontal drilling tower in Lycoming County, PA.
Major Holders of Utica Shale Right in Ohio (April 2012)
A bridge to more environmentally friendly energy production
Carbon benefits may be slightly less due to the trucking requirements, but carbon emissions remain significantly less than coal
We are concerned that job numbers may be overinflated by an industry (any industry).
Commenting on shale energy development, Aubrey McClendon CEO of Chesapeake Energy of Oklahoma was quoted in the Columbus Dispatch saying, “This will be the biggest thing in the state of Ohio since the plow.”
Industry funded estimates range from 65,000 to 200,000 jobs created by shale development in Ohio
Examining the trends in employment we find the jobs impact of shale development will be approximately 20,000 after accounting for the multiplier effect.