## Unconventional Resource Development

and Hydraulic Fracturing

for

October 25, 2012 Kevin Heffernan President 

### Red Deer River Watershed AllianceOctober 25, 2012 

## • Horizontal wells now account for more than 70% of wells drilled



## • Unconventional gas now accounts for more than 25% of Canadian natural gas supply and over 50% in the United States



## • Advances in technology (horizontal drilling and multi

stage hydraulic fracturing) have enabled substantial growth in oil and natural gas supply in North America 

## The Oil and Gas Industry is ChangingOctober 25, 2012 

## What Makes an Unconventional Reservoir ?

Sidewalk Cement

modified from US DOE Granite 0.0001 0.001 0.01 0.1 1.0 10.0 100.0 Low Moderate High Tight Very Tight Extremely Tight Conventional Reservoirs Unconventional Reservoirs

Shale Tight Gas Sand Conventional Natural Gas Reservoirs

Natural Gas from Coal

Permeability (mD)

Volcanic Pumice Limestone

Quality of Reservoir Poor Good

Note: Natural Gas from Coal reservoirs are classified as unconventional due to type of gas storage Increasing Requirement for Hydraulic FracturingOctober 25, 2012 

## What is Hydraulic Fracturing?

• From a geological perspective there are a number of stresses (or pressures) present in the subsurface that affect the ability of rock to fracture

• Principle of hydraulic fracturing is to create enough pressure on the rock in the subsurface to overcome the stresses that lie within the rock and create a fracture

• The purpose of a hydraulic fracture is to create a series of pathways that connect the wellbore to the natural fractures or flow paths within 

### the reservoir

Hydraulic fracturing is the process of transmitting sufficient pressure by fluid or gas into rock in the subsurface to cause existing fractures to open or new fractures to be createdOctober 25, 2012 First Commercial Frac Job was at Velma, Oklahoma in March of 1949

Courtesy of Halliburton 

### Hydraulic Fracturing has a long history and is not something new 

## History of Hydraulic FracturingOctober 25, 2012 Drilling of wells with the horizontal legs up to 3500 m in length

Multi stage fracture stimulations using a variety of fracture fluids and sand to essentially “create reservoir” in rock that would not have been previously be considered reservoir quality 

## Drilling and Completion TechnologiesOctober 25, 2012  Hydraulic fracturing fluids can consist of gases, or fluids that are capable of being pumped under pressure into the reservoir as well as capable of supporting proppant material

 The most common fluid used is water (or variations) although in some cases, nitrogen, propane, oil and CO2 have been used. The choice of fluid is dependent on reservoir properties, cost and availability. Compatibility tests between fracture fluid and reservoir properties are commonly completed prior to fracture treatment

 Proppant materials commonly consist of sand or ceramics of specific size that can be carried within the fluid as well as withstand reservoir pressures once the fracture treatment is completed

 Where necessary small amounts of chemicals are added to the fracture fluid to minimize some of the reactions that may occur between the fracture fluid and the reservoir or hydrocarbons 

## Basic Hydraulic Fracturing PrinciplesOctober 25, 2012 

## Basic Hydraulic Fracturing Principles

 To fracture the reservoir rock, a fracture fluid (or gas) is pumped using mechanical means under sufficient pressure into the reservoir

 To achieve sufficient downhole pressure commonly pumping units are placed in tandem to achieve sufficient pumping capacity to reach fracture pressures

 Volumes of fluid, proppant as well as fracturing pressures are monitored and controlled onsite Courtesy of Trican

 Objective of the fracturing process is to create a fracture, induce growth of the fracture, but confine it to the reservoir zone, and allow proppant to be placed into the fracture to hold it open once the pressure has been released

 Changes in rock characteristics tend to terminate growth of hydraulic fractures upward or downwardOctober 25, 2012  “Slick Water” fracture fluid consists mostly of water and is the most common fluid used

 Tight oil reservoirs such as the Cardium may require different types of fracture fluids and proppant to optimize production 

## Basic Hydraulic Fracturing PrinciplesOctober 25, 2012 

## Groundwater Protection

Proper well construction and groundwater protection is critical for oil and gas developmentOctober 25, 2012 

## Fracture Mapping Observations

Maximum known depth of aquifer Maximum depth of groundwater

Maximum vertical growth of hydraulic fractureOctober 25, 2012 

## Fluid volumes

• Fluid volumes required depend on many factors including rock characteristics and pressures, horizontal well length, and number of fracturing stages



## • Shale gas hydraulic fracturing operations are typically larger than tight oil hydraulic fracturing operations

– Shale gas

- 10,000 to 50,000 cubic meters per well

– Tight oil

– 1,500 to 4,000 cubic meters per well

... but there is no global rule of thumb

– different regional geological characteristics and different operator preferences can result in significant variationOctober 25, 2012 Source: Shell Canada at Groundbirch Source: Talisman • Water storage practices can vary, depending on the stage of development, location, and size of fracturing operation

- Surface impoundments

- C

- rings

- Tanks

• Increasing use of additives like CO 2 , N 2 , and alternate fluids is reducing water use and associated impacts

Source: Talisman 

## Fluid volumesOctober 25, 2012 

## Flowback and Produced Water

• Volumes can vary greatly, but are often 10% to 50% of the frac fluid volume



### • Produced water management varies depending on the stage of the operation

– typically tanks or c

- rings then to disposal wells

• Water treatment, re

- use, and recycling options increase as operations move to commercial development

Trends include

- Aggressive moves to develop “green” additives and salt tolerant chemicals that will allow greater re

- use of flowback and produced water

- Deep saline aquifers as source water

- Industrial and community waste water as source water

- Development of less water intensive fluidsOctober 25, 2012 

## Independent Assessments

• Groundwater Protection Council (GWPC)

- Ohio and Texas Review

– August, 2011

– Texas (1993

- 2008)

– 187,788 wells drilled (including 16,000 

### horizontal with multistage fracs); 140,818 plugged (all vintages)

• 211 groundwater contamination incidents including 57 legacy wells

• 33% waste management and disposal, 25% due to tanks and flow lines, zero related to hydraulic fracturing

• Zero incidents related to drilling, well construction, hydraulic fracturing, or production at any of the horizontal wells



### – Ohio (1983

- 2007)

– 61,000 wells drilled or plugged

• 185 groundwater contamination incidents; 53% during the first 5 years, > 25% legacy wells, pit construction 40%

• Zero attributable to well construction, hydraulic fracturing, or productionOctober 25, 2012 

### • In addition to review of regulations in many US States, third party reviews are underway in some areas

• STRONGER is a non

- profit, multi

- stakeholder organization (State 

### Review of Oil and Natural Gas Environmental Regulations, Inc.) that established a set of “2010 Hydraulic Fracturing Guidelines” and is slowly working its way through reviews of regulations in various states.

• These reviews represent a clear and common desire from multiple stakeholders to ensure current regulations are appropriate for modern shale gas development from OHS and environmental perspectives.

• Several states with active development of unconventional resources have been reviewed 

## Independent AssessmentsOctober 25, 2012 

## Trends

• Voluntary disclosure of additives used in hydraulic fracturing fluids is now commonplace in North America, either on operator websites or through FracFocus websites

• Regulated disclosure of additives now applies in many US jurisdictions



### • BC implemented mandatory disclosure requirements effective January 1, 2012, and Alberta will have similar disclosure requirements in the coming months

• Through the Canadian Association of Petroleum Producers (CAPP) the industry is adopting a set of principles and operating practices for shale gas development and hydraulic fracturing ( www.capp.ca )

• Alberta and British Columbia oil and gas regulators continue 

### to be consulted by other jurisdictions, and are a standard against which other jurisdictions measure their capabilityOctober 25, 2012



## Thank You!



# www.csur.com