the world’s leading sustainability consultancy

The world’s leading sustainability consultancyThe world’s leading sustainability consultancy

Environmental Challenges for UGR–18 Jan 2013

The world’s leading sustainability consultancy

Content

• Introduction

• Environmental Regulation

• Water/ Air challenges

• Questions and Answers

2


What Are Unconventional Resources?

• Conventional oil and gas deposits are characterized by • Depleted source rock

• Migration of hydrocarbons into a permeable rock formation (sandstone, carbonates)

• Structural or geological traps that impede further migration

• Free flow into a production well

• Unconventional oil and gas resources are• contained in or near its source rock due to low porosity and

permeability

• Usually found in deposits of large lateral extent

• Flow needs to be initiated artificially (technology challenge)

• Shale gas and oil, tight sand gas, coalbed and coal mine methane, heavy oil (oil sands), gas hydrates

3


What Are Unvonventional Resources?

• Structural Trap• Sandstone or Carbonate

• Stratigraphic Trap• Blanket or lenticular• No Trap

• Continuous• Sweet spots!

• …plus Coal Mine Methane (CMM)

4


UCG Life Cycle

5


Drilling and Hydraulic Fracturing

• Drilling through freshwater aquifers

• Multiple protective layers to be installed

• Vertical or directional wells drilled and cased

• Initial perforation with explosive charges (guns)

• High-volume, high-pressure injection of fracturing fluid (water, proppant, chemicals)

• Flowback recovery■ 50% for vertical wells

■ 10 - 40% for horizontal wells

6


Inadequate well design or completion can result in leaks

Interface with Groundwater

7


1 Well head with frac tree

2 Line for flowback & testing

3 Sand separator

4 Flowback tanks

5 Line heaters

6 Flare stack

7 Pump trucks

8 Sand hogs

9 Sand trucks

10 Acid trucks

11 Frac additive trucks

12 Blender

13 Frac control center

14 Fresh water impoundment

15 Fresh water supply

16 Extra tanks

17 Line heaters

18 Separators

19 Production manifold

Technological Aspects – Hydraulic Fracturing

8


Environmental Regulations

• The Govt. proposed a draft policy for private participation in Exploration & Exploitation of Shale Oil & Gas on 31st July 2012.• Safety aspects will be regulated as per existing regulations/ OISD

guidelines and practices, as in the case of O&G and CBM operations.

• MoEF will prescribe a panel of agencies competent to carry out EIA for blocks allotted to successful bidder.

• Central Govt will seek in-priniciple approval from State Govt's prior to bidding, including facilitation in the matters of land acquisition and water management issues.

• Exploration for shale oil/ gas will in accordance with the law of the Land including the Water Act, Air Act and the overall ambit of environment protection measures.

9


Annex – Provisions for addressing Water Management Issues

• There will be mandatory full baseline testing of water and air quality before undertaking drilling of wells.

• As far as possible, river, rain or non potable groundwater should only be used for hydro-fracturing. Re-use/ recycling of water should be the preferred method of water management.

• Contractor will have to abide by water management provisions and other environmental issues related to exploration and exploitation.

10


Article 14 of Production Sharing Contract

• Contractor shall conduct its Petroleum Operations with due regard to protection of the environment and conservation of natural resources.

• Contractor shall cause a person or persons with special knowledge on environmental matters to conduct relevant EIA’s.

• EIA’s shall contain proposed environmental guidelines to be followed in order to minimize environmental damage.

11

? EIA‘s (Regulatory) or ESHIA‘s (Best Practice) ?


Shale Gas Technology has a Reputation Problem Often Related to the Use of Chemicals in Hydraulic Fracturing and Water

Concerns

These pictures are not representative of

a general public opinion in a country

12


Stakeholder concerns about UCR can be grouped into the following Categories

Wat

er

• volume of water required

• quality of return water

• pollution of groundwater

Lan

dA

ir

Bio

div

ers

ity &

C

onse

rvat

ion

Com

mun

ity I

mpa

cts

Hea

lth &

Saf

ety

*

• degradation of visual landscape (both during operations and permanently)

• soil quality

• earthquakes

• area of surface footprint

• tourism

• air quality

• toxic fumes

• GHG emissions

• destruction of nature protection areas and buffer zones

• degradation of shadow list areas

• threats to endangered species / sensitive habitats, fragmentation of habitats

• increased cost of living in area

• stakeholders not benefiting from royalties or taxes

• competition for supply (water, contractors, goods, staff)

• transient workforce and behaviour of contractors

• vulnerable stakeholder groups being ‘overseen’ e.g. indigenous people

• resettlement issues

• replacement of traditional land use (e.g. "famous hunting area")

• hazardous wastes and inadequate waste disposal facilities

• traffic safety

• light, odour and noise pollution from flaring

• impacts on community health by contamination of drinking water

Areas of concern can also present opportunities to create net positive impact over the life-cycle of the venture

* of employees, contractors and community

Social Issues - Key Stakeholder Concerns

13


Typical land parcels in Poland

Local StakeholdersWhat may / could happen to my community?

Jobs (less unemployment)

Career opportunities

New businesses

More service offerings

Better infrastructure

Higher salaries (more money)

New restaurants, bars, shops

Higher costs of living

Competition for resources

Visual impacts; negative impacts on tourism

Integration problems with foreign workers

prostitution / crimes

Traffic accidents

Concerns of pollution (Water, Air)

Manage Expectations Inform and Engage

14


How to Address Perceived and Real Issues?

Both have to be taken equally serious and have to be addressed;

Perceived Issues (high):

• Use of chemicals

• groundwater pollution

• gas migration

In addition to the standard efforts for risk mitigation and avoidance, put special efforts also on solid baseline assessments (documentation), communication and stakeholder engagement.

Real Issues (high):

• transportation - mostly linked to traffic risks:

• Put focus on proper planning, management systems and controls to avoid these risks

• focus on service providers / contractors

15

The world’s leading sustainability consultancy 16

The world’s leading sustainability consultancy 17


Water Sourcing

• Surface water bodies (streams, lakes, impoundments), requires intake structures.

• City water (chlorinated!) during exploration phase.

• Water from desalination plants in arid regions.

• Treated effluent from industry or sewage treatment plants.

• Recycled flowback and produced water from other wells.

18

The world’s leading sustainability consultancy19


• Water Sourcing (also during dry and cold seasons).

• Adequate volume for development stage.

• Water quality requirements, compatibility and consistency of parameters.

• Delivery and distribution logistics.

• Storage - frac water (ASR?) and flowback water.

• Water Treatment – pre-frac, re-use, pre-disposal.

• Water Disposal (challenges of deep well wastewater injection).

Water Issues – An Operator’s View

22

ASR = Aquifer Storage and Recovery


Typical Fracturing Fluid Composition

• For an average multi-stage frac job, the volume of chemicals is 150 m3

• Contamination risk mostly from transport, storage and blending

23


Water Storage

• Pits and Ponds

• Covered Ponds

• Tanks

• C-Ring Storage

• Aquifer Storage and Recovery (ASR)?

25


• Re-Use (Zero Discharge)

• Treatment

• Disposal- Deep injection wells

- Reuse for other purposes

- Treatment for surface discharge?

• Surface impoundments for brine needed as buffer (potential source of groundwater contamination if containment is not adequate)

Flowback and Produced Water Treatment

26


Air

32

• Sources of Emissions

• Well Development• Drilling

• Fracturing Shale formations

• Initial well completions

•

• Gas Compression Stations• Reciprocating internal combustion engines

• Dehydration units

• Seperators

• Re-boilers


Air

33

• Emission Profiles

• Combustion products• Nitrogen oxides (NOx)

• Carbon Monoxide (CO)

• Particulate Matter (PM/PM10/PM2.5)

• Sulfur dioxide (SO2)

• Total Hydrocarbons (THC/VOCs)

• Process Emissions• Methane (GHGs)

• Total Hydrocarbons (THC/VOCs)

• Hazardous Air Pollutants (HAPs)


Concluding Statements

35

• Unconventional Gas can be misunderstood a lot by the general public, and this can be a non starter.

• Detailed pre drilling assessments need to be carried out in order to set the baseline before actual work begins.

• EIA’s (regulatory) or EHSIA’s (Best Practice)???

• Environmental Regulations specific to Unconventional’s still in the draft policy stage.

• Important that we study what is being done elsewhere and adopt best practices in India.

• Engagement with all stakholder’s is essential at an early stage.

Delivering sustainable solutions in a more competitive world

Unconventional Resources

ERM contacts

Ravi Costa, Partner, ERM India

[email protected], +919967516643

Paddy Girinathanair, Principal Consultant, ERM India

Paddy.girinathanair, +919167874995


Q&A

37


HOW ARE THE AQUIFERS PROTECTED DURING WELL CONSTRUCTION AND OPERATIONS ? A “cement bond log – CBL” is usually performed to ensure that no cement channel or micro-channel is present between the casing and the formation where hydrocarbons or other fluids can migrate to shallower depths.

IS IT TRUE THAT HYDRAULIC FRACTURING CONSUMES LARGE VOLUMES OF POTABLE WATER? No. The hydraulic fracturing operation uses water resources efficiently, since it seeks to recover as much water as possible (flowback). The flowback fluid is reused and returns will depend on geological factors. The aim is to implement a recycling system so that this flowback is used in other fracturing processes.For the extraction and processing of shale gas, less water is consumed per unit of energy supplied in the extraction and processing of coal or oil in comparison. Regarding water quality, it is no longer necessary to use potable water for hydraulic fracturing because the fracturing chemicals used today are compatible with higher TDS values. This means that saline water from deep aquifers or treated wastewater (industrial, municipal or even flowback) can be used for fracturing, provided that the injected fluid is compatible with the receiving formation chemistry.


WHAT IS THE COMPOSITION OF FRACTURING FLUIDS? The hydraulic fracturing fluid is composed of water (91%), sand (8%) and chemical additives (1%). Some of the chemical additives used are surfactants, also used in shampoo; ethylene glycol, also used in household cleaners; guar gum, usually used in food and pharmaceutical products. These compounds are used for cooling the pipe, friction reduction, bactericides, and corrosion inhibitors among others. The flowback may further contain hydrocarbons from the reservoir and metals and minerals that may have leached from the reservoir. These minerals may be weakly radioactive and may require specific precautions when brought to surface. It should be noted that these naturally radioactive materials (called Norms), are not specific to unconventional reservoirs. .


HOW IS THE RETURN FLUID HANDLED? The flowback requires storage which must be performed safely to prevent potential issues. The flowback is separated usually in the surface (biphasic separation of the mixture of hydrocarbons and water-soluble compounds). Once separated, the optimal solution as mentioned above is the same for recirculation of new fracturing. If the fluid does not have the required chemical elements needed for reuse, a treatment is performed which allows the fluid to be disposed of at surface. This is based on established local policy . Current technology allows the waste water to be treated to bring it to the required standard before disposal; this option enables the "return" to the ecosystem of the water so that it is usable. Alternatively the return fluid can be re-injected into the reservoir if geology permits. It is correct that flowback water gets stored at the surface in ponds/lagoons or tanks and it will usually require some treatment before re-use. For example, any suspended solids will have to be removed and where present, also any liquid hydrocarbons will be separated. Neutralization of the fluids with high pH may also be required. A surface discharge (or a discharge into an open stream) will be the absolute exception because very expensive treatment would be necessary (such as reverse osmosis). In my water management presentation for the 2011 shale gas conference in Beijing, I have listed some treatment options.


WHAT TYPE OF SEISMIC RISKS COULD HYDRAULIC FRACTURING CAUSE? According to the experience in other countries, hydraulic fracturing has not caused any impairment of seismicity in the area. The National Academy of Sciences of the United States, in a report on seismicity, said that technique does not represent a high risk for induction of seismic events. As an example, in the United States, thousands of fracturing operations have been performed and the strongest recorded earthquake had a magnitude of 0.8 on the Richter scale.


IS THERE A RISK OF CONTAMINATION TO THE UNDERGROUND WATER? Groundwater can provide a freshwater ecosystem (water table) and aquifers that may find themselves between 300-500mts deep. During drilling of the well, a steel casing and cement provides the main isolation barrier for drilling muds and fracturing fluids to prevent leakage to surface layers into the underground or aquifers. Whether it is an exploratory well, field development well or conventional or unconventional well, operators must submit technical studies to the Ministry of Mines and Energy that support the well design in question. The well design specifies the different casings to be installed in order to isolate the interior of the well. Unlike conventional developments, unconventional developments should consider monitoring and resistance to high pressures that will be injecting fracturing fluids. Hydraulic fracturing typically occurs over 1000 m below the water table, which is separated by layers of rock, so the risk of contamination by this activity is minimal. As in conventional field development, the risk of contamination can occur when unplanned events or issues could permeate oil or chemicals into the water table or to surface water.


Although risk is very low, according to publications by several bodies and oil companies in the US, the greatest risk of contamination of an aquifer can come if fluids migrate between the casing and the formation through cement “channels” an unlikely distance of 1000mts to an aquifer. Aquifers can exist at great depth but freshwater aquifers are usually limited to depth levels of 300 – 500 m as mentioned above. Deeper aquifers are saline and not suitable for drinking water supply anyway. Hence, in many legislations, the natural water quality defines a protected water resource (aquifer) while saline aquifers are not protected by these regulations. The question should therefore be what risks to potable/fresh water aquifers are posed by drilling and fracturing operations or by subsequent oil and gas extraction. The greatest contamination risk is from surface transport, storage and handling of chemicals. Groundwater contamination could also occur in case of inadequate casing and cementing of the well, as already mentioned above. Applying best industry practices will minimize that risk. While no confirmed cases of fresh water aquifer contamination as a direct result of fracturing operations exist in the US, there are several instances of moderate water contamination in the vicinity of shale gas operations that could not be linked to the latter, and elevated methane levels in groundwater have been observed in the vicinity of shale gas wells. This is currently being studied more closely.


Hydraulic fracturing does not release chemicals into aquifers because the geological strata that are fractured are coal seams, shales or low permeability reservoir rocks at great depth. These strata typically contain highly saline water, or water that is mixed with oil, and their low permeability precludes transmission of large quantities of water. They are not aquifers. Only by creating a connection between the fractured horizon and an aquifer would it be possible to contaminate the aquifer. Usually such a connection is effectively impossible because the fractured horizons are at least 500m below the nearest aquifer.The risk of contamination of aquifers by creating a sub-surface pathway is extremely low, but cannot be entirely ruled out where the target horizons are within a few hundred metres of a productive aquifer. This occurs in some Australian coal seam gas projects. Sub-surface pathway creation concern is primarily associated with the potential for fractures created during hydraulic fracturing travelling upwards (or in some cases downwards) and connecting the coal seam to an aquifer. This might then permit saline water from the coal seam to enter the fresh water aquifer, or in an extremely unlikely case, allow hydraulic fracturing fluids to enter the aquifer. For such an occurrence to be possible, the aquifer would need to be within the fracture travel radius, which is (approximately, normally) about 300m at most. Careful design of fracturing events, and consideration of the location of aquifers and abstraction wells prior to fracturing is applied in Australia to mitigate the risk. There has not been a documented case of groundwater contamination by hydraulic fracturing in Australia as far as I know.Contamination via spillage at the surface is much more likely, although I do not know of a case where surface spillage in Australia has resulted in groundwater contamination. There have been several surface spills onto land and into surface waters which have resulted in public concern.

the world’s leading sustainability consultancy

Documents