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Potential of the Marcellus Shale Formation. By Beth Clearwater. December 8, 2008. The Marcellus Shale. Location : - New York southern portion, -Pennsylvania western and northeastern -West Virginia -Ohio eastern area Covers 54,000 square miles Depth varies:

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    1. Potential of the Marcellus Shale Formation By Beth Clearwater December 8, 2008

    2. The Marcellus Shale • Location : -New York southern portion, -Pennsylvania western and northeastern -West Virginia -Ohio eastern area • Covers 54,000 square miles • Depth varies: majority of the shale = 1 mi to 9,000ft below the surface • Range of thickness: • a couple feet to 250ft • thickest in the east

    3. Thickest and Deepest Locations Thickness Depth

    4. What is it? • Shale exposed above the surface in New York • Middle Devonian-age black shale -originated 350-415 million years ago -low density, carbonaceous (organic-rich) • Shale: layers of mud/clay compressed into a fine-grained sedimentary rock • How did it get there? -area believed to be covered by the sea at one point -death of algae and sea organisms in sand/silt deposits -decay, exposed to high temperature and pressure as buried below the earth’s surface  production of natural gas

    5. Why is it important? • Source of Natural Gas -increase in natural gas prices over the years The Energy Information Administration predicts natural gas prices will decline as a due a greater production of natural gas Eai.doe.gov

    6. Why is it important? • Geoscience professor Terry Englander of Penn State University estimates that the Marcellus Shale contains 516 trillion cubic feet of gas, 10% of which or roughly 50 trillion cubic feet of natural gas is technically recoverable. • Based on an annual consumption of 21trillion cubic feet in 2006, this supply could support U.S. consumption for 1-2 yrs. • Unfortunately shale has low permeability. Natural gas is trapped in tiny pore spaces and cannot easily flow. • New Technology makes this natural gas accessible -horizontal drilling -hydraulic fracturing

    7. Conventional vs. Unconventional Sources of Natural Gas Conventional Natural Gas • Natural gas is travels up through permeable rock until trapped by impermeable rock • Easy to extract because it will naturally flow out of reservoir when well is drilled Unconventional Natural Gas • Natural gas is trapped in: -rock with low permeability -vertical fracture joints in the shale -adsorbed (attached) to clay-like particles • Vertical • Well  Horizontal Well 

    8. Horizontal Drilling: Method for unconventional gas capture

    9. Horizontal Drilling: Method for unconventional gas capture The most common orientation of fractures in shale are vertical. Horizontal Wells: -Intersect these fractures -Create a “fracture-network” (intersect fractures which intersect other fractures, etc….) -Increase the volume of gas you can capture over a larger area of land (in comparison to traditional Vertical wells).

    10. Horizontal Drilling • Developed by George Mitchell of Mitchell Energy -1950’s producing gas from a well in the Barnett Shale (TX) -1990’s production waning, wanted to obtain more gas without drilling another well -triggered boom of natural gas production in the Barnett Shale -18 years of perfecting horizontal drilling and hydraulic fracturing methods -high prices of gas made this expensive drilling economically viable -The success of Mitchell Energy influenced other companies such as Chesapeake Energy to adopt these methods. At the end of 2009, Chesapeake Energy will have completed drilling 24 rigs across the Fayetteville Shale in Arkansas and the Haynesville Shale in Louisiana

    11. Horizontal Drilling The Pinedale Anticline and Jonah Field area of the Green River Basin in southwest Wyoming • Positive: -minimal surface damage • Negatives: -high cost $1.3 million for a vertical well $3-4million for a horizontal well http://www.youtube.com/watch?v=Y37XbMEDnXc&eurl=http://www.horizontaldrilling.org/&feature=player_embedded

    12. Hydraulic Fracturing Hydrofracturing/fracing: method in which water is injected into a well at high pressures to induce fractures into rock layer Oftentimes a proppant such as sand is used to to keep the fractures propped partially open. A perforation charge penetrates the bore of the well extending 30cm into the rock formation *This method can be applied to both vertical and horizontal wells

    13. Hydraulic Fracturing • Sand and water are mixed by a blending truck • Mixture is transported to the Frac Pumper • Pumped into the well at high pressure • Sand is lodged into fractures created by the water pressure • Fractures held open allowing gas to freely flow

    14. Issues Concerning Hydraulic Fracturing • Requires A LOT of Water According to The Railroad Commission of Texas, a ******, 1.2 million gallons of water is required for hydrofracturing in vertical wells 3.5 million of gallons of water in horizontal wells Devon Energy Reports that Horizontal wells in the Barnett Shale use 3.5 million gallons of freshwater. Multi-stage fracs- Shales may need to be fractured more than once over their lifetime - Can lead to 5-6 million gallons of water use In Texas, 700 truck loads are needed to transport the water to the individual drilling sites – creates high traffic in communities -greater risk of accidents

    15. Issues Concerning Hydraulic Fracturing • Toxic Chemicals -Sometimes gels are used instead of water for the fracing fluid. These gels contain harmful toxins including benzene, ethylbenzene, xylene, naphthalene, polycyclic aromatic hydrocarbons, glycol ethers, and many others. -Fracturing fluids are pumped back out of the well during the process of extracting the gas however 20-40% of fracing fluids remain underground -Very small quantities of carcinogens such as benzene are capable of contaminating millions of gallons of water -Reports in Alabama, Colorado, New Mexico, Virgina, and West Virginia of decilined quality of drinking water after drilling operations occurred -On August 6, 2008 New York City Officials called for a ban on drilling near upstate reservoirs due to fear of drinking water contamination, unfortunately this places half a million acres of land off-limits to drilling

    16. Transportation of natural gas • Natural Gas is transported from the well and distributed via pipeline • The Marcellus Shale formation is in a key location because it is close to major industrial centers • Unfortunately, there exists an insufficient number of pipelines for the volume of gas the Marcellus shale is predicted to produce • Development of the Millennium Pipeline aims to provide a strong main line for the high population markets in New York, New Jersey, and New England.

    17. The Millennium Pipeline • 182 mile 30-in diameter pipeline approved in 2007 to replace and existing 10-in line • By the end of 2007, 12 miles of the pipeline was completed in Rockland, Orange, and Sullivan Counties (N.Y) • 170 miles of pipeline remaining to be completed in 2008 • Gas is currently flowing through portions of the pipeline in Rockland, Orange, and Sullivan Counties • As of Nov 2008, the pipeline is scheduled to be fully operational on December 15, 2008

    18. Debate over Pipelines • Insufficient number of pipelines By creating more pipelines: • Fragmentation of important blocks of forest, disrupt wildlife habitats. Large areas of land are cleared for constructional purposes. In most cases, it is the responsibility of the company to restore the surrounding area upon completion of construction. *In the case of the millennium pipeline, an existing pipeline was replaced and clearing was not an extensive project

    19. Natural Gas Pipelines intersecting the Millennium Pipeline

    20. Other Shales In the United States Barnett Shale (TX) San Juan Basin (NM/CO) Antrim Shale (Michigan *Fayetteville Shale (Arkansas) *Haynesville Shale (Gulf Coast, *Most Recently Northern Louisiana Southern Arkansas) Developed

    21. Other gas Shales in the U.S.According to the Marcellus Information Report of 2008 as part of the Oil and Gas Accountability Project By Lisa Sumi, The Majority of US gas shale production comes from:

    22. National natural gas pipelines *Rapid development in Barnett Shale contributed by preexisting infrastructure

    23. Recent Shale Development • From 2008-2009, the Chesapeake Energy Co will be adding 24rigs across the Fayette, Haynesville, and Barnett Shales (total of $950 million in drilling and leasing expenses) -In Haynesville: Drilling with four rigs and will increase to drilling with ten rigs by the end of 2008 with possible increases into 2009 -Have added 5 rigs in the Barnett (have a total of 45 across Barnett Shale) -Aside from planning in Fayetteville Shale, are investing in Marcellus Shale

    24. Recent Development in the Marcellus Shale Formation Lycoming County, PA : Chief Oil and Gas LLC has drilled two wells in Mifflin Township and one in Watson Township — and, in late 2007 was preparing to drill a well in Penn Township. The company plans to drill three more wells early in 2008. In April, 2008, Range Resources stated that it had drilled three wells in Lycoming County and was in the midst of its fourth. Fayette County, PA Atlas Energy Resources has drilled 58 wells as of May, 2008. Atlas Energy Resources has about 250,000 acres under lease in southwestern Pennsylvania, which includes Fayette, Greene, Westmoreland and part of Washington counties. Washington County, PA Range Resources has installed 5 horizontal wells Susquehanna County, PA. Turm Oil of Butler, recently drilled a well in Rush Township. Cabot Oil has drilled a well in Dimock Township. As of March, 2008, Southwestern Energy Company subsidiary SEPCO has drilled one exploratory well in Herrick Township. This is expected to be followed by two more exploratory wells in the County. Greene County, PA There have been number of wells that have shown Marcellus gas. The question is whether or not it can be made commercial. Clearfield County, PA Mid-East Gas Inc./M.M. & V Energy LLC. has partnered with Denver-based Rimrock Energy LLC, to begin deep well and horizontal drilling in this area. At the present time they are drilling test wells. Indiana County, PA Dominion Exploration & Production expects to drill 140 natural gas wells in Pennsylvania in 2008, and 25 to 30 of those will be in Indiana County. Penneco Oil Co. ordinarily drills five to 10 new wells a year in Indiana County, and that number could approach 15 in 2008.38 It is not clear how many of the Dominion or Penneco wells will be drilled into the Marcellus shale formation.

    25. Recent Development in the Marcellus Shale Formation Wayne County, PA Leases have been finalized in Wayne County, PA.39 Wyoming County, PA Leasing is occurring West Virginia41 PetroEdge is drilling a well in Wetzel County, and expects to drill in Marion and Ritchie counties. Cabot has drilled eight wells in southern West Virginia this year, with at least one in Jackson County. Dominion has been testing the Marcellus for three years now and expects to drill its first five to six producing wells this year, in the north-central part of the state. Other players in West Virginia include Equitable Resources Inc. and Chesapeake Energy Co. Ohio Range Resources is evaluating a well in Jefferson County. According to Range, Ohio is “more limited in potential than in Pennsylvania and West Virginia, but there are some areas, mostly along the Ohio River, that have better potential.” PC Exploration, based in Warrendale, PA, has two wells in Belmont County. Exploration and drilling are occurring in Bradford County. New York Petroedge Resources plans to drill two wildcat wells in Tioga County, NY, to evaluate gas in Marcellus shale. Leasing is occurring in Sullivan County, NY.

    26. Exploratory gas shale drilling in the U.S. • Devonian Shale in Appalachian Basin • Mowry Shale in Powder River Basin • Mancos Shale in Uinta Basin • Woodford Shale in Ardmore Basin • Floyd/Neal Shale in Black Warrior Basin • Barnett Shale in Permian Basin • New Albany Shale in Illinois Basin

    27. International gas shale exploration The German Research Center for Geosciences in Potsdam, Germany will begin this January (2009) a six-year industry-financed study to map possible shale-gas sites throughout Europe. Areas Currently Undergoing investigation include Sweden, Netherlands, Germany, Austria, France, and Poland. OMV, an Austrian Company, Dutch Royal Shell, and Lane Energy Poland are also exploring shale-gas resources “Europe Starting to Search For Shale Gas” by David Jolly August 22, 2008

    28. Other issues • Recent issues include problems with leakage of waste water. • Waste water drawn out of the well after recovering the natural gas is often stored in surface pits before being loaded onto trucks to be carted away. • These pits are lined with tarps to prevent the leakage of harmful chemicals sometimes used in hydraulic fracturing from entering the ground • Tarps in some cases rip allowing chemicals to seep back into the ground and cause potential hazards in contaminating groundwater resources • Others argue noise pollution will be another problem because drilling is an industrial process that occurs 24/7

    29. World Impact • Greater supply of Natural gas, increase trade, lower world prices • Lower world prices—and a larger oil and natural gas resource base lead to: lower resource development costs, lower consumer prices, and higher levels of consumption and imports • U.S. a possible supplier of natural gas to European countries -European Union uneasy about their increasing dependence on Gazprom, a Russian State monopoly (supplies ¼ of European gas needs)

    30. Released Dec4th EIA Weekly Report: Released Dec4th 2008

    31. EIA Outlook with Projections to 2030 In 2005: • 10 trillion cubic feet produced conventionally • 8 trillion cubic feet produced unconventionally • An overall increase of 1.1 trillion cubic ft from the previous year (6% of this increase came from gas shale production) Prediction: • In the next 18years shale gas will provide up to 15% of the technologically recoverable gas resources • By 2030, half of the natural gas produced will come from unconventional sources

    32. Opinion • The Marcellus Shale raises a lot of interesting issues, concerning environmental effects of drilling, installing natural gas pipelines and the hazardous effects of hydraulic fracturing. I believe it is difficult to determine the future success of the Marcellus for we still know very little about it. Although the Barnett Shale in northern Texas has experienced tremendous success, we can not base our plan of action similar to that of Texas’. The Marcellus Shale is located in an entirely different area surrounded by different sorts of obstacles. I believe we must continue to explore this region and look toward it as a “back up” source of natural gas. We shouldn’t get too overexcited and be wary of large aggressive companies like the Chesapeake Energy Company who may invest in rapid development in the northeastern region.

    33. Citations “Marcellus Shale-Appalachian Basin Natural Gas at Play.” geology.com. 26 Aug 2008. <http://geology.com/articles/marcellus-shale.shtml>.   Airhart, Marc. “The Barnett Shale Gas Boom, Igniting a Hunt for Unconventional Natural Gas Resources.” Jackson School of Geosciences, The University of Texas at Austin. http://www.mitchellenergy.com.  Lynch, Michael. “Shale Gas Development Spreading Worldwide Faster than Expected.” 6 Oct 2008. The Expert Network Energy & Industrials. <http://www.glgroup.com/News/shale-gas-development-spreadingworldwide-faster-than-expected-28319html?obj=search&keyword=barnett>. Sumi, Lisa. “Marcellus Shale Information Report 2008.” Earthworks. 12 June 2008. May 2008. <http://earthworksaction.org/pubsOGAPMarcellusShaleReport-6-12-08.pdf>.   “The Marcellus Shale-America’s next supergiant.” The Catskill Mountain Keeper. <http://catskillmountainkeeper.org/node/290>. U.S. Energy Information Administration (EIA). Feb2007.2007 Annual Energy Outlook Projects to 2030.p93. <http://www.eia.doe.gov/oiaf/archive/aeo07/pdf/0383(2007).pdf>.

    34. Citations “Directional and Horizontal Drilling.” Natural Gas.org. http://www.naturalgas.org/naturalgas/extraction_directional.asp “How is Natural Gas Produced?” Centre for Energy. <http://www.centreforenergy.com/silos/naturalGas/generator.asp?xml=/silos/naturalGas/natGasOverview06XML.asp&template=1,2>. Jolly, David. “Europe Starting Search for Shale Gas.” International Herald Tribune. 22 August 2008. <http://www.iht.com/articles/2008/08/22/business/eurogas.php>.