A revolution concentrating on responsibility is taking place in North American unconventional oil and gas extraction—particularly in the Marcellus Shale.
by Doug Walser, Pinnacle, a Halliburton Service Line
July 31, 2013

A not-so-quiet revolution is underway in North American unconventional oil and gas extraction, centered in the Appalachian Basin and, more specifically, the Marcellus Shale. The upheaval is not violent, but it is transformational.

While not purely technical, it involves continuous technical improvement. It is not only political, but politics are an integral driver of the process. It is not just a fiscal issue, but microeconomics are the motivation for the hundreds of thousands of decisions made by individuals, families, advocacy groups and the corporations that ultimately spend capital to attempt to achieve a return on their investments.

Changes in drilling and completion practices are evolving almost daily. The Marcellus Shale has been targeted by developers since the mid-1800s. However, during the last eight to 10 years, incremental improvements in drilling and completion (D&C) practices have increased the level of activity to such a degree that public awareness of the industry has been stimulated. Opposition to development activities initially started public debate. Advocacy groups from all walks of life used questionable tactics, taking advantage of general unawareness of the business and technical specifics. As the years have passed and the (once muddy) issues have been clarified, a number of realities are being recognized by the general public and industry participants:

  • Industry activities must be performed responsibly—from an environmental, health and safety perspective. These three areas of focus must be taken seriously.
  • D&C activities should be directed and performed by locally sourced human resources whenever possible, so that the flow of cash generally remains regionalized to the greatest extent that is reasonable.
  • The concerns of local residents must be seriously considered and addressed.
  • Environmental practices that are often considered unnecessary or extreme in other regions of the world are entirely appropriate for this area. These include a major focus on surface and groundwater protection, significant footprint reduction per unit of hydrocarbon produced, optimized use of fresh water, and careful attention to minimizing existing infrastructure disruptions.

These realities have always been well understood by many industry participants. The difference today is that corporations, groups and individuals are recognizing that they must be applied across the board if continued regional participation is desired. Fortunately, lifting and transportation costs are on the low end of what is generally observed in North America, so even with extended low gas commodity pricing, some companies have declared positive margins associated with continued Marcellus activity.

Footprint Reduction
Footprint reduction per unit of hydrocarbon produced has become important in the drive to minimize localized impact in sensitive areas. The process of horizontal drilling and multi-well pads has, by its nature, reduced the surface footprint. While four to six wellheads per pad location have been used for a while as starting points for parallel horizontal development wells, more operators are moving to or considering eight wellheads per surface location, and some operators have experimented with 10 to 12 per location.

Different factors restrict an immediate and complete industry move to the higher concentrations. First, industry experience with tight parallel wellbore spacing (the downhole laterals 400 to 800 feet apart from each other from a map view perspective) has demonstrated that the acceleration of reserve recovery is best enabled when the time period between completions is short, on the order of hours or days, as opposed to months or years.

The implication, then, is that one drilling rig on one pad drilling eight wells sequentially will normally force hydraulic stimulation and completion activity to wait for multiple months until the drilling of all eight (or more) wells is finished. Obviously, production from those same eight wells is delayed by that same process. Therefore, cash flow and the cost of capital become non-negligible issues of concern. Some unique methods for enabling simultaneous drilling rigs on the same pad have been considered, but so far, that scenario has not been actively embraced by the industry as a whole.

Second, including eight or more wellbores per pad necessitates construction of incremental surface infrastructure to handle extremely high production rates for relatively short periods of time. This infrastructure (pipelines, compression, separating and stripping facilities) is customized to the particular hydrocarbon and water stream that is expected to be produced, as opposed to what is actually produced. Therefore, designing these facilities involves considering factors associated with over- or underestimating the magnitude and type of production in advance of D&C operations.

Fresh Water Use Reduction
Operators and service companies alike recognize that conservation and protection of surface and subsurface sources of drinking water are critical to continued sustainability of the energy industry in the region. As operators continue to transition from acreage delineation to full-scale field development in a manufacturing mode environment, responsible recycling of fracturing fluid makeup water is rapidly becoming the rule rather than the “experiment.”
Three sources of water can generally be considered for pre-completion treatment and subsequent injection during hydraulic fracturing activities:

  • Load water from previous fracturing operations—This is “used” fracturing water that has flowed back to surface processing facilities and has mixed with pre-existing reservoir waters and some amount of solids and minerals from the reservoir of interest.
  • Produced waters from existing wells—Many older wellbores that have long since ceased the production of load water will produce small quantities of water directly sourced in or adjacent to the target reservoir. This water often has elevated chloride content, suspended solids and dissolved minerals that must be dealt with prior to reuse.
  • Water from other industrial, residential or natural sources that does not meet “fresh water” standards—Custom analysis and treating is required.

The technologies related to recycling, preparing and treating water for use in hydraulic fracturing operations have improved dramatically in the last three to five years. In addition to specialized chemical diagnostic and treatment tools, mobile electrocoagulation units are used in anodic processes to coagulate solids and either drop them out or float them to the surface for mechanical removal.

Historically, fracturing fluids used in unconventional shale plays such as the Marcellus have been based on fresh water with small amounts of additives that assist in functionalities—such as friction reduction, lowering of surface tension and scale prevention. During the last few years, not only are these additives shifting toward “greener” compositions, but determining exactly how much, what and where it is being pumped is becoming easier. Operators that actively embrace these technologies gain respect from local groups, individuals and regulatory entities and play a vital role in improving the industry’s environmental footprint and reducing the overall use of surface and fresh groundwater.

Conclusion
A revolution is occurring in the way business is being conducted in the Appalachian Basin. Employers are looking to local labor pools and local schools to staff the ramp-up in activity. States are finding ways to effectively legislate, administrate and regulate activity to balance economic viability with environmental responsibility.

Local residents and groups are educating themselves on the specifics of the issues that impact them and their economy. As development activity in the Marcellus continues to mature, this region is and will continue to be a living example of how commonsense responsibility can be applied across North America and eventually to all unconventional plays worldwide.