# Site Visit Report Anadarko Petroleum Corporation Marcellus Shale Gas Operations

January 20 , 201 5i TABLE OF CONTENTS

Page

1.0 I NTRODUCTION

................................ ................................ ................................ ........ 1

2.0 B ACKGROUND AND O BJECTIVES

................................ ................................ .............. 1

3.0 O VERVIEW OF S HALE G AS P RODUCTION

................................ ................................ . 1

3.1 Company Background

................................ ................................ ................ 1 3.2 Shale Gas Well Development

................................ ................................ ..... 3 3.2.1 Well Pad Construction

................................ ................................ .... 3 3.2.2 Drilling

................................ ................................ ............................ 4 3.2.3 Hydraulic Fracturing

................................ ................................ ....... 5 3.3 Production Phase

................................ ................................ ......................... 7 3.4 Waste Management

................................ ................................ ..................... 9 3.4.1 Wastewater

................................ ................................ ...................... 9 3.4.2 Solid Waste

................................ ................................ ..................... 9

4.0 A NADARKO S ITES V ISITED

................................ ................................ .................... 10

4.1 Larry’s Creek freshwater impoundment

................................ ................... 10 4.2 Active Drilling Site

— Larry’s Creek Pad C

................................ .............. 11 4.3 Fracturing Site

— Larry’s Creek Pad H

................................ ..................... 14 4.4 Producti on Site

— Larry’s Creek Pad B

................................ ..................... 16

A PPENDIX A L IST OF P ARTICIPANTS ON THE A NADARKO S ITE V ISIT

................................ ........ 20

A PPENDIX B M AP OF S ITES V ISITED

................................ ................................ ........................... 22

A PPENDIX C S UMMARY OF C OSTS P ROVIDED BY A NADARKO

................................ ................... 24ii LIST OF FIGURES Page

Figure 3

- 1. Anadarko’s 2012 Active Shale Wells in North Central Pennsylvania

.......................... 3

Figure 4

- 1. Larry’s Creek Freshwater Impoundment

................................ ................................ .... 11

Figure 4

- 2. Example Source Water Withdrawal Site Flow Diagram

................................ ............ 11

Figure 4

- 3. Drilling Rig

................................ ................................ ................................ ................. 12

Figure 4

- 4. Water Storage (Left) and Drilling Rig (Right)

................................ ............................ 12

Figure 4

- 5. Steel Casing

................................ ................................ ................................ ................. 1 2

Figure 4

- 6. Drilling Mud Shaker and Solids Collection Container (Removes Cuttings From

Drilling Mud)

................................ ................................ ................................ ............ 13

Figure 4

- 7. Drill Cuttings Dewatering Equipment

................................ ................................ ........ 13

Figure 4

- 8. Drill Cuttings Disposal Containers (to Be Sent to Landfill); Barite (Used to Add

Weight to Drilling Mud) in the Gray Tank

................................ ............................... 13

F igure 4

- 9. Fracturing Site

................................ ................................ ................................ ............. 14

Figure 4

- 10. Wireline Blowout Preventor (“Producing Tree”)

................................ ..................... 14

Figure 4

- 11. Water Storage Tanks

................................ ................................ ................................ . 15

Figure 4

- 12. Proppant and Chemical Addition Equipm ent

................................ ........................... 15

Figure 4

- 13. Perforating Guns Before Perforation (Right) and After Perforation (Left)

.............. 15

Figure 4

- 14. Well Plug (Which Is Later Drilled Out to Allow the Flow of Water and Gas to the

Surface)

................................ ................................ ................................ ..................... 16

Figure 4

- 15. Production Site: Four Water Tanks (Left Side of Left Photo), Six Well Heads

(Foreground of Right Photo), Water/Gas Separation Equipment (Background of Right Photo)

................................ ................................ ................................ .............. 17

Figure 4

- 16. Production W ell Assembly (Foreground) and Solar

- Powered Monitoring

(Background)

................................ ................................ ................................ ............ 17

Figure 4

- 17. Dehydrator Exterior (Left) and Interior (Right)

................................ ........................ 18

Figure 4

- 18. Water/Gas Separator

................................ ................................ ................................ . 18

Figure 4

- 19. Production Site Flow Diagram

................................ ................................ .................. 19iii

Figure A

- 1. Overview of Sites Visited in ArcGIS

................................ ................................ ......... 23

LIST OF TABLES

Page

Table 3

- 1. Anadarko’s Active U.S. Formation Production

................................ ............................. 2

Table 3

- 2. Anadarko Illustratio n of Responsible Surface Use (Grugan Area)

................................ 4

Table 3

- 3. Anadarko’s 2011 and 2012 Average Cost for Fracturing per Stage

.............................. 5

Table 3

- 4. Anadarko’s 2010 and 2012 Average Cost for Fracturing per Foot

................................ 6

Table 3

- 6. Andarko’s Solid Waste Management Practices in Pennsylvania

................................ . 10

Table A

- 1. List of Attendees

................................ ................................ ................................ .......... 21

Table A

- 2. Summary of Costs Provided by Anadarko

................................ ................................ .. 251

1.0 I NTRODUCTION

On June 26

, 2012

, t he U.S. Environmental Protection Agency (EPA) participated in a site
tour with Anadarko Petroleum Corporation ( Anadarko ) . They visited four places, all in the Marcellus s hale p lay in north central Pennsylvania :

 Larry’s Creek f

reshwater impoundment

 Larry’s Creek Pad C , an active drilling site

 Larry’s C reek Pad H , a hydraulic fracturing and completion site

 Larry’s Creek Pad B , a production site

Over 30 people participated in the site tour; including Anadarko employees, members of the National Petroleum Council, and various federal government and congres sional staff. Participants from Anadarko and the EPA Engineering and Analysis Division (EAD) are listed in Appendix A.

2.0 B ACKGROUND AND O BJECTIVES

I n coordination with the National Petroleum Council, Anadarko arranged a tour of it s Marcellus shale gas opera tions

. EPA EAD participated in the tour to collect background information on the shale gas industry and observe wastewater management practices

. Clay Bretches of Anadarko facilitated the discussion of the company’s Marcellus operations and the site tour

. Other Anadarko staff provided technical information during the discussion and site tour (Appendix A lists all the participants ). The remainder of this report summarizes the site visit, including a general discussion held with Anadarko before going into the field (Section 3.0 ) and information provided by Anadarko during the tour (Section 4.0 )

.

3.0 O VERVIEW OF S HALE G AS P RODUCTION

Before a tour of operations near Williamsport , Pennsylvania, Anadarko provided information about their shale gas operations . Topics discussed include d the c ompany ’s b ackground , s hale gas well development (well pad construction, drilling, and fracturing) , and

w aste management

.

3.1 Company Background

Anadarko is one of the world’s largest independent oil and natural gas exploration and production companies

, with 2.54 billion barrel

- of

- oil equivalents (BOE) of proved reserves at
year

- end 2011. Table 3

- 1 provides some of Anadarko’s active formations, along with estimated oil, natural gas liquids, and gas production for second quarter 2012, according to its 2012 second quarter operation report

. 1 Anadarko is also investing in exploration activities in the Geneseo Shale 2 layer , which the company believes may be favorable for future drilling.

1 Available online at: http://www.anadarko.com/SiteCollectionDocuments/PDF/Operations%20Reports/2Q12%20Operations%20Report.p df
2 The Geneseo shale layer is present in the Appalachian Basin and is shallower than the Marcellus.2 Table 3

- 1

. Anadarko’s Active U.S. Formation Production

For mation Name Formation

Type First Quarter 2012 Net

Production Notes on Formation Activity and Projections Oil ( mbbl/ d) NGLs

( mbbl / d) Gas

( mmcf/d )

Marcellus Shale gas 0 0 314 Estimates 8 BCF estimated ultimate recovery per well.

Utica Shale oil and

gas NR NR NR Only drilled 7 wells through the second quarter of 2012. Has 390,000 gross acres of lease. Eagle F ord Shale oil 12 8 61 4,000 total potential drill sites. Haynesville Shale gas 1 8 158 350 potential drill sites in the Haynesville and 100 potential drill sites in the Cotton Valley. Cotton Valley Tight gas

Avalon and Bone Springs Shale oil 8 2 46 1,300 total potential drill sites.

Austin Chalk Tight gas 7 5 34 Bossier Shale gas 0 0 96 Source: “Operations Report Second Quarter 2012,” Anadarko Petroleum Corporation. July 30 , 2012. And “Operations Report First Quarter 2012,” Anadarko Petroleum Corporation. April 30 , 2012. NR

— Not Reported

. NGLs

— Natural gas liquids. Mbbl/d

— Million b arrels per day. Mmcf/d

— Million cubic feet per day

.

Anadarko is active in the north central Pennsylvania portion of the Marcellus, where it has areas of mutual interest (AMI) with Chesapeake Energy and has leases that total 760,000 gross acres and 260,000 net acres

. Figure 3

- 1 shows Anadarko’s active Marcellus wells in Pennsylvania as of June 30 , 2011, using EPA’s GeoPlatform mapping tool and coordinates from the Pennsylvania Department of Environmental Protection’ s (PA DEP ’s ) database. According to PA DEP, Anadarko has drilled 348 wells in Clinton, Centre, and Lycoming counties at the end of June 2012

. At the time of the site visit, Anadarko had a shared interest in 575 wells with Chesapeake Energy in this region

, 222 of which were producing over 1.1 billion cubic feet per day. The other wells may not have been producing due to unfavorable logistics, lack of pipeline, or poor production.

The company is operating four drill rigs in the Marcellus region. Anadarko note d that operations in this region are nearing the point of not being economical given the current price of gas (approximately $ 3 .50 per thousand cubic feet ), especially considering the need to compete with the more profitable liquid plays. The company noted they would be making more capital investments in the Marcellus if the pr ice of gas would increase to $4 to $ 5 per thousand cubic feet (mcf) . However, the costs for the entire drilling and hydraulic fracturing process are coming down, which is helping Anad arko to stay economical and operat e at its current level of activity in this time of low gas prices. Section 3.2.3 provides specific costs for fracturing in various formations for 2011 and 2012.3 Source: EPA’s GeoPlatform mapping tool. Figure 3

- 1 . Anadarko ’s 201 2 Active Shale Wells in North Central Pennsylvania

3.2 Shale Gas Well Development

The following subsections summarize general information Anadarko provided on shale gas well development. Anada rko typically install s six to 12 wells per pad ; the company estimate s the total cost to obtain permits, construct a well pad, drill a horizontal well, and fracture is approximately $ 7 to $9 million

. Anadarko ’s reserve engineers anticipate that the production lifetime of each Marcellus well will be between 40 and 60 years

. Reserve engineers use existing production decline curves to make these estimates. Because Marcellus wells are relatively young, these estimates may change as more production data b ecome available.

3.2.1 Well P ad Construction

Construction of a well pad costs between $ 400,000 and $1,000,000 depending on location and existing road infrastructure

. If access roads already exist, well pad costs are closer to $400,000. If Anadarko is required t o construct long access roads, the well pad costs are closer to $1,000,000. Construction costs include excavation, access roads, well pad containment, and permi ts. The wide range of well pad costs is attributed to the construction of access road. Anadarko typically designs e ach well pad to accommodate six to 12 horizontal wells on approximately 3.7 acres (400 feet by 400 feet)

. W ells are generally spaced 15 feet apart at the well head

. Anadarko provided an example of a site that produced natural gas from an area of 15,309 acres and only used 2 percent of that area (295 acres) for the pad and related support infrastructure. Table 3

- 2 provides this example.4 Table 3

- 2

. Anadarko Illustration of Responsible Surface Use

(Grugan Area)

Surface Use Area (acres) Pad locations and road access (15) 140 Water containment 21 Water lines 14 Midstream gas pipelines 110 a Compressor stations 10 Total use 295 Tract area produced 15,309 Percent of total area used <2%

a

— A ttempted to route pipelines in previously disturbed right of ways

. Source: “National Petroleum Council Site Tour,” presented by Anadarko Petroleum Corporation

— Appalachian Basin, June 26, 2012.

When planning to construct a new well pad, Anadarko develops road use agreements with the local townships as well as the Pennsylvania Dep artment of Transportation. The latter agreement commits Anadarko to repair roads after the work is done. Therefore, before beginning construction Anadarko takes video of the roads, to record the condition to the roads must meet after their onsite work is done . To date, Anadarko has paved 150 miles of roads in Pennsylvania. All of the roads Anadarko builds are designed to last 10 years. Recently, Anadarko rebuilt a 5

- mile road in order to improve access to its site. This effort involved doubling the width o f the road (from approximately 0.75 lanes to 1.5 lanes) and cost approximately $6 million.

To prevent migration of materials from the well pad

, Anadarko lines the entire area under frac turing equipment and fluid storage with a triple

- pad liner. This liner consists of static

- free, anti

- slip, tear

- resistant material in three layers: the first and third layers are 8

- ounce geotextile felt and the center layer consists of 30

- millimeter woven coated HDPE

- reinforced plastic liner. This liner extends to solid barri ers or conduits on the perimeter of the site , which are between 12 and 18 inches tall. Separate, individual containment units are used under all engines and pumps. Permanent tank batteries are located within lined steel containment. All non

- fresh water is stored within containment as well. Secondary containment is left in place until all wells on the well pad are in the production phase and no future wells are planned.

Before secondary containment is removed, Anadarko removes any spills or precipitation via vacuum trucks. This fluid is hauled to the same destinations as flowback and produced water (see Section 3.4 for more details)

. Anadarko routes all storm water runoff that falls outside of the secondary containment away from the well pad and does not attempt to collect any for use.

Before drilling

, Anadarko requests access to perform pre

- drilling test of neighboring drinking water wells within 2,500 feet of oper ations.

3.2.2 Drilling

Anadarko explained that in the north central Pennsylvania region of the Marcellus

, the
gas

- rich “ zone of interest ” is at an approximate depth of 8,000 feet, and the shale is between 150 and 175 feet thick. When drilling, it takes approxima tely 1,000 feet to turn the bit from vertical
to horizontal; therefore Anadarko begins turning the drill bit at approximately 7,000 feet. Most of Anadarko’s horizontal laterals are approximately 6, 500 feet long, though the company has drilled5

some lengths closer to 7,500 feet. The cost to Anadarko to drill a single horizontal well is approximately $ 5 to $8 million (this is based on Anadarko’s estimate of $7 to $9 million overall well costs less Anadarko’s estimate of $1 to $2 million to perform hydraulic fr acturing, as described below)

. Drilling a well in the Marcellus takes approximately 30 days including casing installation and rig mobilization. This process use d to take much longer (between 40 to 50 days). Anadarko typically drills all initial wells on t he pad before demobilizing the drilling rig and hydraulically fracturing any of them. There is typically a two week lag to removing drilling equipment and mobilizing hydraulic fracturing service providers.

Anadarko use s air, rather than mud, to drill throu gh the drinking water aquifer (whic h is 100 to 400 feet below the surface in this region) . Also the w e lls are encased in two cement barriers at the elevations that pass through the aquifer. Synthetic

- based drilling mud is used for the remainder of the drilling. This mud is reused through a c losed

- loop recirculating system (see Figure 4

- 6 for synthetic mud recycling ima ges).

3.2.3 Hydraulic Fracturing

Anadarko contracts with service providers to perform the hydraulic fracturing portion of the well completion. 3 Anadarko estimated they typically spend $1 to $2 million per well for hydraulic fracturing but noted that service comp any costs have decreased over time , which is helping Anadarko to stay economical and operat e at their current level of activity in this time of low gas prices. Table 3

- 3 provides Anadarko’s 2011 and 2012 average cost for fracturing a single stage in various shale oil and shale gas formations, according to their 2012 first quarter operation report. 4 Table 3

- 3 also provides the range of stages per well for each formation, which Anadark o provided after the site visit and suggested they tend to use the lower end of the range presented

. Table 3

- 4 provides Anadarko’s 2011 and 2012 average cost for fracturing on a per foot basis with the average lateral length for several shale oil and shale gas formations, according to their 2012 secon d quarter operation report. 5

Table 3

- 3 . Anadarko’s 2011 and 2012 Average Cost for

Fracturing per Stage

Formation Cost for Fracturing ($ per stage) Number of Stages per Well b 2011 a 2012 a Haynesville $256,000 $136,000

8 to 23 Avalon $212,000 $133,000 Bone Springs $142,000 $122,000 Marcellus (Vendor 1) $180,000 $137,000

Marcellus (Vendor 2) $142,000 $122,000

a

— Source: “Operations Report First Quarter 2012,” Anadarko Petroleum Corporation. April 26, 2012. b

— Source: Provided by Anadarko.

3 Names of service providers companies are available online at: fracfocus.org
4 Available online at: http://www.anadarko.com/SiteCollectionDocuments/PDF/Oper ations%20Reports/1Q12OpsReport%20final.pdf
5 Available online at: http://www.anadarko.com/SiteCollectionDocuments/PDF/Operations%20Reports/2Q12%20Operations%20Report.p df6

Table 3

- 4 . Anadarko’s 2010 and 2012 Average Cost for Fracturing per Foot

Formation 4 th Quarter 2010 2 nd Quarter 2012

Cost per Foot of Lateral ($/foot) Typical

Lateral Length (feet) Cost per Foot

of Lateral ($/foot) Typical

Lateral Length (feet)
Ma rcellus 1, 00 0 to 1, 25 0 5,000 500 to 750 6,000 Eagle F ord 750 4,500 750 5,000 Haynesville 1,500 4,000 500 to 750 6,000 Source: “Operations Report Second Quarter 2012,” Anadarko Petroleum Corporation. July 30 , 2012.
Each horizontal lateral is fractured in stages, each stage is approximately 350 to 400 feet in length; typically Anadarko will fracture eight to 23 stages per well. Fracturing operations vary from 12 to 24 hours, based on the service provider. Typically, service provides can fracture three to four stages per day when operating for 12 hours and four to six if operating for 24 hours. Anadarko provides the water that is used in the hydraulic fract uring process. Approximately 6,000 to 10,000 barrels of water are needed for each stage of fracturing, equating to a total of 60,000 to 100,000 barrels for a ten

- stage well. This water comes from one or more of the following sources: surface water (Susqueh anna River), the municipal drinking water supply, or recycled shale gas extraction wastewater. Anadarko has also submitted an application for groundwater withdrawal wells, but has not received approval from the Susquehanna River Basin Commission ( SRBC )

.

3.2.3.1 Fr esh Water Supply

Anadarko has four approved withdrawal points on the Susquehanna River. These withdrawals are approved by the SRBC for 12 ,000 to 36 ,000 barrels per day

. Anadarko sends the SRBC a permit application fee , annual compliance and monitoring fee, and a consumptive use fee for each surface water withdrawal . SRBC’s fee schedules are availa ble online and are based on the daily withdrawal limit

. 6 Anadarko mentioned that it can take between six months and two years to obtain withdra wal approval from the SRBC.

Water withdrawn from the river is transported to the fracturing sites by trucks or pipeline. Due to the cost of trucking and subsequent road repairs, Anadarko prefers to pipe the water when possible. The company has one pipelin e in place in north central Pennsylvania and plans to
construct a second. Anadarko estimates that the use of the one pipeline reduced the number of truck trips by 40 ,000 to 50,000. It costs approximately $50 to $ 60 per foot to construct the pipeline. Anada rko estimates that the return on investment for the new pipeline will be 10 percent ; factor ing in the cost of road repairs, though, it is more economical to construct the new pipeline.

Trucks transport 100 barrels per load, so approximately 1,000 truckload s are needed to fracture one well

. Anadarko contracts trucking to third parties who charge approximately $100 per hour. Trucking costs range from $4 to $5 per barrel but varies significantly with the distance between the source and well.

6 SRBC’s water withdrawal fee schedule is available online at: http://www.srbc.net/p rograms/docs/Regulatory_Program_Fee_Schedule_FY

- 2013_FINAL_20120607.pdf7

Anadarko stores th e fresh water in permanent or temporary impoundments. Impoundments are never used by Anadarko to store any fluids other than fresh water. One permanent impoundmen t has a 400,000

- barrel capacity and costs between $600,000 and $1,2 00,000 to construct. The impoundment that EPA visited served approximately 14 wells ; however, Anadarko noted that the number of wells serviced per impoundment is highly variable from one impoundment to the next . Anadarko currently has ten to 12 permanent impoundments in place in Pennsylvania at this time. A temporary above ground impoundment that can be moved between locations has an approximate 75 ,000

- barrel capacity and costs between $400,000 and $500,000 to purchase. Anadarko had two temporary impoundments in the field in Pe nnsylvania at the time of the site visit

.

3.2.3.2 Recycled Shale Gas Extraction Wastew ater

The third water source Anadarko uses for hydraulic fracturing is recycled wastewater from the flowback or production stages of shale gas extraction . Anadarko estimates that it

recover s 10 to 20 percent of the water injected during the hydraulic fracturing process and , after treatment, can reuse 100 percent of th e recovered water. On most fracturing jobs, recycled water makes up approximately 25 percent of the total fracturing fluid volume

. Anadarko ’s fracturing fluid sometimes contains 40 percent recycled water

— and the company once used approximately 70 percent

— but the ability to do this varies based on location and formation geology. The reuse water is stored onsite in 500 ba rrel tanks. These tanks rent for $30 to $ 50 per day per tank. S ee Section 3.4 for further discussion of wastewater treatment prior to reuse

.

3.2.3.3 Chemical Additives

T he fracturing service provider determines the mixture and concentrations of fracturing fluid ch emicals and supplies the required chemicals . The chemical mix is dictated by formation chemistry and geology. In the Marcellus, this mixture usually includes biocides, friction reducers, and scale inhibitors

. Anadarko pointed out that the Fracfocus website provides public information on fracturing fluid volumes and chemicals. 7

3.2.3.4 Flowback

After all of the stages have been fractured, the fracturing plugs are drilled out to allow water and gas to flow to the surface. Initially fracturing fluid is returned to the surface (often referred to as “flowback”) at a high rate of approximately 1,000 barrels per day. The water usually flows at this rate for 30 to 90 days , after which the rate decreases significantly

. During the initial flowback period, Anadarko stor es the water onsite in 500 barrel tanks (as mentioned above, these tanks are rented for $30 to $ 50 per day and kept on site for the life of the flowback
process ), and then trucks the water from the well pad to treatment prior to reuse on the next fracturin g job.

3.3 Production Phase

Early in the well life, the well will flow out sand and plug parts, as well as water and gas. The flow first passes through a sand trap which collects the solids . Following the sand tra p, the flow is directed through a two

- part gas production unit. In a wet play, unlike t he north central

7 Available online at: http://fracfocus.org/

.8

Marcellus, a th ird part would be used to collect the hydrocarbon liquids (which are not present in the dry northeastern Marcellus). The gas that Anadarko collects in the northeastern Marcellus is 97 percent methane with no liquid hydrocarbon liquids or hydrogen sulfide , so only a two

- phase separator is needed.

The mixture of produced water and gas exits the well and/or sand trap at 5,000 pounds per square inch (psi). The produced water and gas are then separated in a two

- step unit two

- step unit :

1. Line heater: The mixture of produced water and gas of produced water and gas

extracted from the well is passed through a series of coils that are surrounded by glycol and water k ept at a temperature of 170 degrees Fahrenheit. Passing through the line heater increases the liquid temperature to 70 degrees Fahrenheit, prevents hydrate formation during the pressure drop in step 2. 8
2. Gas/Water separator : The heated mixture of produced water and gas is passed through a gas/water separator unit. The separator expands the gas/water mixture through a wide r pipe

, caus ing the pressure to drop fro m approximately 5,000 psi to 1,000 psi . The pressure drop causes a large portion of the water to settle to the bottom

, where it is collected

, and the gas to rise for further treatment in the dehydration unit. 9 Anadarko suggested that hydrates form during the pressure drop to 1,000 psi if the temperature of the mixture of produced water drops below 55 degrees Fahrenheit.

The w ater storage portion of the separator has a float valve ; when it reaches the designated level the water is transferred to the produced water tanks. The produced water is stored onsite, typically in a set of 400 barrel tanks. After the “flowback period” of 30 to 90 days, water returns to the surface at a rate of 100 barrels per day per well (at which point it is typically referred to as “produced water ” )

. A fter six months, the produced water flow rate is expect ed to decrease further

, to approximately 10 to 20 barrels per day per well for the duration of the well life.

Anadarko tries to reduce the need for venting or flaring of gas when production starts by having the pipeline ready to receive gas when it is detected. I n the past, i f the pipeline had not been brought to the site yet, Anadarko would flare off for a short time (less than 10 days) until the pressure and rate we re known for the well ; then the well wa s shut in until it could be tied into a pipeline. Currently, Anadarko does not do any flaring, and the gas product is fed directly into the pipeline.

Once the well is producing, Anadarko uses remote monitoring using microwave technology to track parameters measured onsite, including produced water tank levels and gas well pressu re and flow

. Anadarko indicated that the gas flow decline rate on wells varies : some are flat for years and others decli ne after a month and then level out. In general, Anadarko expects shale gas wells to produce economically for 40 to 60 years. When flow from producing

8 Hydrates are solid crystals composed of hydrocarbons and water that cause plugging in pipes. Hydrates form when the temperature and pressure of a water and hydrocarbon mixture decrease past a certain point. Hydrate formation is dependent on both temperatu re and pressure.
9 The remaining step in the dehydration process is absorption of remaining water vapor from the gas into the glycol in an absorber.9

wells decreases, a smaller pipe is installed to increase the velocity

. Anadarko stated that they have not refractured any Marcellus wells in order to enhance production

. In addition, it is too early to predict whether their Marcell us wells will require refracturing in the future

.

3.4 Waste Management

Anadarko provided information on wastewater and solid waste management for its Marcellus opera tions.

3.4.1 Wastewater

As discussed earlier in this report, the majority of wastewater is generated in the first 30
to 90 days after a well is fractured. After that time, volumes decrease to 100 barrels per day for three to five months and then down to approximately 10 to 20 barrels per day for the remaining life of the well. Anadarko collects flowback in 500 barrel fracturing tanks on the well site and produced water in 400 barrel above ground storage tanks . The wastewater is either treated onsite with Anadarko’s mobile treatment unit or at third party treatment facilities

.

Anadarko rents a mobile treatment unit that removes suspended solids through a filtration process. The company can move the unit to high

- production areas . However, the state of Pennsylvania now requires a separate Pennsylvania WMGR

- 123 permit 10 at each location where the unit is set up ; because this permitting is cumbersome, Anadarko is using the mobile unit less often

. Instead, Anadarko is using third party treatment facilities to treat its wastewater prior to

reuse . After treatment, wastewater is transported by truck to the next fracturing site

, where it is stored onsite in 500 barrel tanks.

PA DEP data indicates tha t , after 2011, Anadarko use d Hydro Recovery LP for third party treatment. Hydro Recovery LP is a treatment for reuse facility located in Blossburg, Pennsylva nia that us es chemical precipitation. 11

3.4.2 Solid Waste

C uttings generated during the drilling process are t he main solid waste generated and managed on Anadarko sites

. The cuttings are dewatered by a centrifuge , resulting in the following waste streams:

 Solid waste

— t he solids from drill cuttings are sent to a landfill

.

 Dewatering liquid stream

— the liquid stream from this process is collected and treated with Anadarko’s other liquid waste stream s for recycling in the hydraulic fracturing process. However, this waste is never combined with flowback and produced waters.

10 PA DEP requires WMGR

- 123 permits for processing and beneficial use of oil and gas liquid waste

. 11 This is based on 2012 PA DEP data. Anadarko used other wastewater treatment facilities in the past. More information on Hydro Recovery is available online at: http://www.hydrorecoverylp.com/?section=what

- we

do&id=process

.10

During drilling operations

, Anadarko also manages synthetic

- based drilling muds . A s discussed in Section 3.3.2 , they are recycled in a closed loop system, so there are no solid or liquid waste streams associated with the synthetic

- based drilling muds.

Table 3

- 5 lists the companies Anadarko uses for solid waste from drill cuttings disposal according to PA DEP’s oil and gas reporting data. Anadarko did not provide solid waste management costs for the disposal companies they currently use and requested that EPA collect this cost information directly from the disposal companies.

Table 3

- 5

. Andarko’s Solid Waste Management Practices in

Pennsylvania

Management Practice Percentage (%) 2010 through 2012 Cumulative Tons a

Veolia Greentree 37 102,200
Wayne Township 32 89,100
Appex Environmental, LLC 18 49,900

Tunnell Hill Reclamation 8 22,300

White Pine 5 13,000
Other <1 1,700

4.0 A NADARKO S ITES V ISI TED

This section describes the four sites that the EPA visited during the June 26 , 2012

, tour. The se sites (in order of the well development process involved) were:

 Larry’s Creek f

reshwater impoundment

 Larry’s Creek Pad C , an active drilling site

 Larry’s Creek Pad H , a frac turing site

 Larry’s Creek Pad B , a production site

4.1 Larry’s Creek f

reshwater impoundment

While driving between sites, Anadarko pointed out the freshwater i mpoundment shown in Figure 4

- 1

. S urrounded by fencing and lined with a plastic liner

, the impoundment holds approximately 240 ,000 barrels of water trucked from the Susquehanna River. However, many of Anadarko’s impoundments utilize temporary piping to and from the impoundment to reduce trucking. Figure 4

- 2 illustrates A nadarko’s withdrawal and distribution for the freshwater supply.11 Figure 4

- 1

. Larry’s Creek Fresh w ater I mpoundment

Figure 4

- 2

. Example Source Water Withdrawal Site Flow Diagram

4.2 Active Drilling Site

— Larry’s Creek Pad C

At the time of the site visit, Anadarko was installing steel casing in the vertical portion of a well on the Larry’s Creek Pad C site. Large berms of soil along the site boundary will be used for site reclamation after the wells have been completed. Within the well pad, all equipment and tanks are in secondary containment. The site is set up to prevent run

- on and run

- off. The only accumulations of water on the pad are direct rain and snow precipitation.

Drilling operations on this site take place 24 hours per day, seven days per week. F resh water is stored on site (white tanks in Figure 4

- 4 ) for wash ing drilling equipment . W astewater collected from the drilling cuttings dewatering process is also stored on site (red tanks in Figure 4

- 4 ). Steel casing i s stockpile d near the drilling rig ( Figure 4

- 5 ). Closed

- cycle drilling mud reuse is managed through the equipment shown in Figure 4

- 6 , which includes a shaker for solids separation and a hopper to collect the drilling muds that are separated out from the cuttings for

reuse. Collected d rill cuttings are then dewatered in the equipment shown in Figure 4

- 7 , and the solids are stored in dumpsters ( Figure 4

- 8 ) before disposal in a landfill.12 Figure 4

- 3

. Drilling Rig

Figure 4

- 4

. Water S torage ( L eft ) and D rilling R ig ( R ight )

Figure 4

- 5

. Steel Casing13

Figure 4

- 6

. Drilling M ud S haker and S olids C ollection C ontainer ( R emoves C uttings F rom D rilling M ud )

Figure 4

- 7

. Drill C uttings D ewatering E quipment

Figure 4

- 8

. Drill C uttings D isposal C ontainers (to B e S ent to L andfill ) ; B arite ( U sed to Add Weight to Drilling Mud ) in the G ray T ank14

4.3 Frac turing Site

— Larry’s Creek Pad H

The Anadarko tour included a visit to a site where fracturing was taking place (though operations were temporarily suspended for the safety of the tour group). The site included large pumping equipment, sand and chemical storage and conveyance equipment, f racturing equipment (including perforation guns), and storage for source water as well as future flowback water. The entire site was lined with the same three layers described in S ection 4.2 and included berming around the entire site to contain any spills to the well pad.

Figure 4

- 9

. Fracturing S ite

Figure 4

- 10

. Wireline Blowout Preventor (“ Producing T ree ”)15 Figure 4

- 11

. Water S torage T anks

Figure 4

- 12

. Proppant and C hemical A ddition E quipment

a , b

— Proppant and chemical storage equipment.

c

— Proppant and chemical mixing. d

— Fracturing chemica l and sand delivery pipes

.

Figure 4

- 13

. Perforating Gun s B efore P erforation ( Right ) and A fter P erforation ( Left )16

Figure 4

- 14

. Well P lug ( W hich I s L ater D rilled O ut to A llow the F low of W ater and G as to the S urface )

4.4 Production Site

— Larry’s Creek Pad B

The site tour included a production site ( Figure 4

- 15 through Figure 4

- 18 ) , where the last of si x well s was recently put into production. Construction on this pad started two and a half
years earlier. Anadarko estimated that the six wells are generating 20 million c ubic feet of gas per day

. T his site produces about 100 barrels of water per day (from all six wells)

. There are six separate well heads, each with a designated water/gas separator. There is one line heater , shown at the right side of Figure 4

- 15

. There are four 400

- barrel water storage tanks onsite , shown at the left side of Figure 4

- 15

. Figure 4

- 19 illustrates the flow from the well head to the delivery gas pipeline and water stor age tanks.

Each well has a pressure monitor

, powered by solar panels. (Rather than solar power, Anadarko plans to use thermal

- electric generators at future wells

. ) These monitors are observed remotely

— for parameters like pressures, levels, and flows

— through a cellular

- based monitoring system . The water storage tank levels are also monitored remotely

.17

Figure 4

- 15

. Production S ite : Four Water Tanks (Left Side of Left Photo), Six Well Heads (Foreground of Right Photo), Water/Gas Separation Equipment (Background of Right Photo)

Figure 4

- 16

. Production W ell A ssembly ( F oreground ) and Solar

- P owered M onitoring ( B ackground )18 Figure 4

- 17

. Dehydrator E xter ior ( Left ) and Interior ( Right )

Figure 4

- 18

. Water/ Gas Separator19 Figure 4

- 19

. Production Site Flow Diagr am20 A PPENDIX A L IST O F P ARTICIPANTS ON THE A NADARKO S ITE V ISIT21 Table A

- 1. List of Attendees

Last Name First Name Organization Phone Number Email
Biddle Lisa U.S. EPA, SGE Engineer (202) 566

- 0350 Biddle.Lisa@epa.gov

Bretches Clay Anadarko Petroleum Corporation Not provided. Not provided.

Conrad Mark Anadarko Petroleum Corporation Not provided. Not provided. Doyle Chris Anadarko Petroleum Corporation Not provided. Not provided. Hanley Mark Anadarko Petroleum Corporation Not provided. Not provided.

Pensabene Greg Anadarko Petroleum Corporation Not provided. Not provided.

Stone Justin Anadarko Petroleum Corporation Not provided. Not provided. Gough Rob Anadarko Petroleum Corporation Not provided. Not provided.

Milliken Brad Anadarko Petroleum Corporation Not provided. Not provided.

Shotts Doug Anadarko Petroleum Corporation Not provided. Not provided.

Bennett Nathan Anadarko Petroleum Corporation Not provided. Not provided. Note: This list only includes the U.S. EPA (Engineering and Analysis Division) and Anadarko participants on the site tour.22 A PPENDIX B M AP OF S ITES V ISITED23

Source: Generated by ArcGIS using base map information from Bing Maps TM

.

Figure A

- 1. Overview of Sites Visited in ArcGIS24 A PPENDIX C S UMMARY OF C OSTS P ROVIDED B Y A NADARKO25 Table A

- 2. Summary of Costs Provided by Anadarko

Process Cost Notes Well Construction and Development

Well pad construction $400,000

– $1,000,000 Includes excavation, access roads, well pad containment, and permits.

Drilling (one horizontal well) $ 5

– $8 million Cost to drill a horizontal well ready for fracturing. Hydraulic f

racturing (one horizontal well) $1

– $2 million Cost to hydraulically fracture a horizontal well

. Total cost (one horizontal well) $ 7

– $9 million Total cost of excavation, drilling, and fracturing

. Other General Costs

Temporary piping $50 to $60 per foot Estimated capital cost for installing temporary piping

Permanent freshwater impoundment $600,000

– $1,000,000 Cost for a single permanent impoundment with a capacity of 400,000 barrels. Serves up to 14 wells over its lifetime.

Temporary freshwater impoundment $400,000

– $500,000 Cost for a temporary above ground impoundment with a 75,000 barrel capacity.

Flowback storage tanks $ 30

– $ 50 Cost to rent one 500 barrel tank per day

.