Hydraulic Fracturing and Green Technologies A Raymond G. Thorpe Lecture Series event featuring Joseph Degenfelder , CEO of Atlantic Green Fuels

“I would found an institution where any personcan find instruction in any study.”

—Ezra Cornell, October 1868opening-day address

Produced By:Hanson Boyd

Mark EngstromJoe Mohn

While global energy demand is estimated to grow by almost 50% by 2030, the energy portfolio will remain highly diversified

Millions of Barrels of Oil per Day

Source: EIA International Energy Outlook 2012

A diverse portfolio of energy will power the future

Europe and Asia import liquefied natural gas at a significant premium to the price currently paid in America

The United States has enjoyed low natural gas prices for the past several years, and new proven reserves have given rise to the possibility for exportations to higher priced markets

Source: EIA International Energy Outlook 2012

Source: EIA International Energy Outlook 2012

US Natural Gas production will exceed demand, presenting two opportunities for exportation

Exportation via LNG to Europe and Asia to capitalize on high prices

Exportation via currently existing pipelines to Mexico

Discovers + Green Hydraulic Fracturing Technology will position the US to be a natural gas exporter

By 2035, the US is projected to export 4 billion cubic feet per day

The Marcellus Basin is a pivotal shale gas play, representing 30% of all recoverable shale gas in the United States

Source: EIA International Energy Outlook 2012

New York State represents 28% of the recoverable shale gas in the Marcellus Basin

Top States

Pennsylvania – 63%88,182 BCF

New York – 28.5%40, 124 BCF

West Virginia – 6%8,182 BCF

BCF = Billion cubic feet

Source: EIA International Energy Outlook 2012

Pennsylvania and West Virginia have been drilling wells in the Marcellus Shale basin since 2007

2007 2008 2009 2010 20110

500

1000

1500

2000

2500

Number of Wells Drilled by State and Year

Pennsylvania

West Virginia

NY State has had a

moratorium on Hydraulic Fracturing for more than 4

years

As other states ramp up production and recognize economic benefits to local economies, New York state has been slow to acknowledge technological advances in

Hydraulic Fracturing

The rate we can pump natural gas out of a single well is too slow to be valuable

Horizontal drilling and hydraulic franking increases the rate which natural gas can be extracted

Horizontal drilling – the natural gas well is drilled at an angle deep underground to follow the shale layer containing natural gas

Hydraulic fracking – a mixture of water, sand, and additives is pumped into the well to create a network of paths for natural gas to flow to the surface

Hydraulic Fracking

How does fracking work?

• A vertical well is drilled• Layers of steel pipe is lowered into the well and

cemented in place to create a barrier to drinking water sources

• After a “kick-off” point the well is drilled horizontally• The horizontal portion of the well is perforated by

shaped charges • Fracking fluid is pumped in at high volume and

pressure to fracture a network of passages in the rock to allow natural gas to flow into the wellbore

What’s in fracking fluid and why?

Water90%

Proppant (sand) 9.5%

Friction Reducer

Surfactant

Salt

Gelling Agent

Scale Inhibitor

Acid

Other 0.034%

Improves the rate pumps can deliver fracking fluid

Helps blend additive ingredients

Delays the breakdown of gel polymer chains

Thickens the water to suspend the sand

Prevents deposit buildup in the pipe in operation

Helps disolve minerals and initiate fissure in the rock

pH, breaker, crosslinker, iron control, corrosion inhibitor

Once a well is fracked the fissures need to be propped open for gas to flow though

Additives help carry the proppants and maintain the well

Like all energy sources, shale gas does not come without risk or concern

Water usage and contamination

Road wear and community impact

Legal implications and involvement of courts

Methane emissions from natural gas systems

Surface spills, managing waste

Source: Ecologix Environmental Systems

Top concerns with hydraulic fracturing

Increased seismic activity

Water & Fracking

• The average fracking well requires about 4M gallons of water• Typically 15-20% can be reused • At least 30% of the 4M gal used is

unrecoverable• Billions of gallons used each year

• Treating wastewater is expensive and must be done at licensed facilities

• Risks include :• Potential to contaminate waterways

through surface discharge• Open air storage poses risks to

wildlife

Surface spills and leaks

Situation• Flowback water is stored

in tanks and open-air pits for many days

• Casings isolate the well and prevent leakage to groundwater

Concern• Spills could contaminate shallow water sources and pose

threat to wildlife and biodiversity• Well casing could fail and causing fracking fluid to leak,

possibly contaminating groundwater

Methane emissions for fracking sites• Methane is a green house gas and second largest contributor

to climate change behind CO2

• During the weeks following hydraulic fracking, frac-return liquids flow back to the surface along with large volumes of methane

• Flowback emissions are estimated at 1.9% of the lifetime production

• This methane is either captured, flared, or vented which increases the carbon footprint compared to conventional gas wells

Road Wear, Noise, Traffic

– Each well requires 600 one-way truck trips

– Truck traffic causes significant road damage, especially on county roads that were not designed to handle the traffic volume and weight

- Typically, provisions for road repair

Key Legal Issues Being Litigated

Is hydraulic fracturing an “ultrahazardous” or “unreasonably dangerous” activity?

• If so, strict liability may apply.

• Courts have not yet ruled on this issue.

• Should courts issue Lone Pine orders?

Such orders can save litigation costs by bringing a quick end to litigation when plaintiffs lack evidence to prove certain elements of their claims when they file suit.

But plaintiffs argue such orders can be unfair.

Key Legal Issues Being Litigated

• A court in Colorado dismissed a case after plaintiffs failed to adequately respond to a Lone Pine order.

• Courts in Pennsylvania have declined to issue Lone Pine orders.

Key Legal Issues Being Litigated

Numerous states require public disclosure of the composition of fracturing fluid, except for constituents that are trade secrets. • Are Wyoming regulators adequately vetting

trade secret claims ?• Environmental groups have sued, saying

Wyoming regulators are too lax in accepting trade secret claims.

Key Legal Issues Being Litigated

Is Pennsylvania statute expanding preemption constitutional?• In several states, state-level oil & gas statutes

and regulations preempt local regulation of oil & gas activity.

• A new Pennsylvania statute that expands the preemptive effect of state law is being challenged.

Key Legal Issues Being Litigated

Does grant of “minerals” in a Pennsylvania deed include shale gas?• In the context of deeds that grant the right to

“minerals,” the word “minerals” does not have a well-established meaning.

• The issue can be critical to determining who has the right to drill in the Marcellus.

Key Legal Issues Being Litigated

Sustainable Technology +Hydraulic Fracturing

Treating Wastewater from Fracking

Frack water contains:• Chemicals and salts found in the

fracking fluid • Other minerals picked up when

the water comes in contact with the fracture rock

• Naturally occurring radioactive material (NORMs)

• Heavy metals

Water & Fracking Going Forward

• Replacing water with gelled liquefied petroleum gas (LPG) or compressed air• Eliminates the need for:• Post-frac cleanup • Water disposal• Frack tanks• Various pieces of heavy equipment

• Developing environmentally friendly fracking fluid

• ingredients source from the food industry, to offer an extra margin of safety

Source: Technology Advances Push Greener Side of Fracking (2010)

Greenhouse gas emissions

• Portable equipment called reduced emissions completions (RECs) developed to capture well flowback (mix of fracking fluid and methane) • Separates frack water and methane • Reduces methane, VOC, and HAP emissions• Significantly reduces or eliminates the need for flaring• Capture and sell the gas – on average 3,300 Mcf

Source: EPA Lessons Learned from Natural Gas STAR Partners

Remaining environmentally sustainable is the top priority for leading shale gas site developers

Source: http://www.green2010.us/technologyinfracking.htmLogo usage is for educational purposes only and does not signify the companies listed above endorse any parts of this presentation

• In 2010, Schlumberger commercialized the OpenFrac fully disclosed hydraulic fracturing fluids, a family of fluids that avoid the use of analytes listed on the US EPA Priority Pollutants and National Primary Drinking Water Contaminants

• Schlumberger HiWAY hydraulic fracturing technique, which is a process for fracture construction that delivers a step-change in fracture conductivity and uses 45% less proppant material

• Halliburton uses an electrocoagulation technology to treat frac water on site for re-use. It features a mobile electrocoagulation unit that uses electricity to treat up to 26,000 bbl/day of water

• Baker Hughes’ VaporFrac fracturing fluid also eliminates post-frac cleanup, water disposal costs, frac tank rentals, sand haulers and proportioning units

• Weatherford reclaims water through a two-step process that involves the physical separation of the solids from the water and further filtering and clarification

To protect drink water aquifers, proper drilling, casing and cementing programs are the primary protection mechanism.

along with the fact that these aquifers are typically shallow and close to the surface

Preventing Leaks

The other thing we must be cognizant of is that perforating takes place in the hydrocarbon production sections of the wellbore.”

- David Adams

Environmentally fracking flud: CleanStim• Complete fluid system (Gelling agent, crosslinker/buffer,

breaker, and surfactant)

• Made with ingredients sourced from the food industry

• Excellent performance and reduced environmental risk should a leak or spill occur

Microseismic mapping provides significant improvements to model hydraulic fracture growth leading to economic success

• Used to map subterranean landscape

• Provides tacking ability to monitor the path of treatments and proppants (hydraulic fracturing fluid)

Source: http://www.green2010.us/technologyinfracking.htm

• Should a fracture begin to develop in an unwanted direction, that fracturing stage can be shut down immediately

• Injection rates and pressures are monitored real time; any abrupt change is an indication the process should be paused for further examination

Ceramic Proppants increase productivity and offer superior stability compared to silica sand

• Ideal for slickwater fracturing applications

• Can offer 40% more conductivity than higher priced 40/70 resin coated sand

• Priced similarly to resin coated sand

• Due to a higher porosity within the fracture, a greater amount of oil and natural gas is liberated

Sources: CARBOceramics.com 2011

40/80 CARBOHYDROPROP capitalizes on the reduced settling rates afforded by small particle diameter, while retaining the benefits of a high quality ceramic proppant. According to Stokes’ Law, pellet diameter has a greater impact on transport than particle density. 40/80 CARBOHYDROPROP provides similar settling velocities to 40/70 sand or resin-coated sand, and exhibits uniform, spherical and rigid particles.

Seismic activity

Don’t dispose of frack water to dry wells

Reuse it

((((WORK IN PROGRESS))))

Economic stimulus in the local community through the introduction of hydraulic fracturing

Boulder County

• <50% land protected from public use

• County carries debt in excess of $250M

• Moratorium on hydraulic fracturing

• Property taxes = Denver suburbs

• 10% sales tax• Higher than average

unemployment rate

Weld County

• Shale gas wells and agriculture co-exist

• Zero bond indebtedness

• >1200 wells drilled in during 2012

• Property tax = 60% of Boulder County

• 5% sales tax• Below average

unemployment rate

Source: Discussion with Howard Wheeler, Atlantic Green Fuels, 2013

Hydraulic fracturing provides an energy source and brings stimulation to local economies by providing jobs, taxable revenue, and income to local landowners and businesses

How Natural Gas Fracking is Beneficial to the US?

Energy Independence

Cleaner (less CO2) compared to coal

Advances in green technology for fracking

Low Cost Energy

EPA http://www.epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html

Conclusion

Thursday February 283:00 – 4:00 PM

Sage Hall – Room B10Networking event immediately after

The Johnson Energy Club is proud to welcome Joseph Degenfelder (Chem Eng ‘60) to campus for a panel discussion on the latest Green Technologies in Hydraulic Fracturing.

Joining Mr. Degenfelder will be Professor Anthony Ingraffea, Cornell University Engineering, as well as Keith Hall JD, Director of the Louisiana Mineral Law Institute.

Funded by the GPSAFC. Open to the entire Graduate Community

Hydraulic Fracturing and Green Technologies A Raymond G. Thorpe Lecture Series event featuring Joseph Degenfelder , CEO of Atlantic Green Fuels

- Appendix -

Reduced Emissions

50% reduction in CO2 emissions, 99.99% reduction in SO2, 72% Reduction in NOx

Natural Gas power plants offer low cost energy generation

Electricity costs for new power plants, excluding subsidies, both 2020 and 2035 (in 2010 cents)

Source: EIA International Energy Outlook 2012