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ANOVERVIEWOFMODERNSHALEGASDEVELOPMENTINTHEUNITED

STATES

Authors:J.DanielArthur,P.E.,ALLConsulting;BruceLanghus,P.G.,Ph.D.,ALLConsulting;
DavidAlleman,ALLConsulting

Naturalgasproductionfromtightshaleformations,knownasshalegas,isoneofthemostrapidly
expandingtrendsinonshoredomesticoilandgasexplorationandproductiontoday.Insomecases,
thishasincludedbringingdrillingandproductiontoregionsofthecountrythathaveseenlittleor
noactivityinthepast.Newoilandgasdevelopmentsbringchangetotheenvironmentalandsocio
economiclandscape,particularlyinthoseareaswheregasdevelopmentisnew.Withthesechanges
havecomequestionsaboutthenatureofshalegasdevelopment,thepotentialenvironmental
impacts,andtheabilityofthecurrentregulatorystructuretodealwiththisdevelopment.Both
regulatorsandpolicymakersneedobjectivesourcesofinformationuponwhichtobaseanswersto
thesequestionsandtomakedecisionsabouthowtomanagethechallengesthatmayaccompany
shalegasdevelopment.

Thispaperrespondstotheseneedsbydescribingtheimportanceofshalegasinmeetingthefuture
energyneedsoftheUnitedStates(U.S.)andprovidinganoverviewofmodernshalegas
development.Italsopresentsasummaryofregulationsapplicabletothenaturalgasproduction
industry,anddetailstheenvironmentalconsiderationsrelatedtoshalegasdevelopment.
NaturalGasBasics
Naturalgasisamixtureoflightend,flammablehydrocarbonsprimarilycomposedofmethane
(CH4), 1 butalsocontaininglesserpercentagesofbutane,ethane,propane,andothergases.Itis
odorless,colorless,and,whenignited,releasesasignificantamountofenergy. 2 Naturalgasis
burnscleanlyandemitsmuchsmallerquantitiesofpotentiallyharmfulemissionsthaneithercoal
oroil. 3

Naturalgasisfoundinrockformations(reservoirs)beneaththeearthssurface;insomecasesit
maybeassociatedwithoildeposits.Onceextracted,thenaturalgasisprocessedtoeliminateother
gases,water,sand,andimpurities.Somehydrocarbongases,suchasbutaneandpropane,are
capturedandmarketedseparately.Onceithasbeenpurified,thenaturalgasisdistributedthrough
asystemofpipelinesacrossthousandsofmiles 4 toitsendpointsforresidential,commercial,
industrial,andtransportationuse.

Thewidespreaduseofnaturalgasintheindustrial,residential,andcommercialsectorsis
largelyduetoitsversatility.ItshighBTUcontentandwelldevelopedinfrastructuremakeita
1ChemistryandTechnologyofFuelsandOils.2000.Volume36,Number2,pp.8288.March2000.
2NaturalGas.org.OverviewofNaturalGas.Background.www.naturalgas.org/overview/background.asp.

Accessed:September2008.
3EIA.1999.NaturalGas1998:IssuesandTrends.

http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/natural_gas_1998_issues_trends/pdf
/it98.pdf.Accessed:April1999.
4EIA.AboutU.S.NaturalGasPipelinesTransportingNaturalGas.

www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline.Accessed:September2008.

ALL Consulting, 2008


versatilefuel,usefulformanyapplications,fromelectricalgenerationtoresidentialheating.In
addition,itisefficientandcleanburning,thecleanestofallofthefossilfuels. 5 , 6 , 7 , 8 Withthecurrent
emphasisonthepotentialeffectsofairemissionsonglobalclimatechange,airquality,and
visibility,cleanerfuelslikenaturalgasareanimportantpartofournationsenergyfuture. 9

Anotherfactorthatmakesnaturalgasanattractiveenergysourceisitsreliability.Eightyfour
percentofthenaturalgasconsumedintheU.S.isproducedhere,and98percentisproducedin
NorthAmerica. 10 Thus,thesupplyofnaturalgasisnotdependentonunstableforeigncountries
andthedeliverysystemislesssubjecttointerruption.
TheRoleofNaturalGasintheUnitedStatesEnergyPortfolio
NaturalgasplaysakeyroleinmeetingU.S.energydemands.Naturalgas,coalandoilsupplyabout
85percentofthenationsenergy(Exhibit1 11 ),withnaturalgassupplyingabout22percentofthe
total. 12 Proportionally,thisisexpectedtoremainfairlyconstantforthenexttwentyyears.The
NationalPetroleumCouncilestimatesthattheU.S.hasmorethan1,530Tcfoftechnically
recoverablenaturalgas,including204Tcfofprovenreserves(reservesarethediscovered,
economicallyrecoverablefractionoftheoriginalgasinplace). 13 GiventhatoneTcfisonetrillion
cubicfeet,theprovenreservesalonecouldprovideheatingenergyto3,060homes,generate204
billionkilowatthoursofelectricity,orfuel2,448,000,000naturalgaspoweredvehiclesforone
year. 14 AtU.S.productionratesfor2008,thecurrentresourceestimateprovidesenoughnaturalgas
tosupplytheU.S.forthenext82years. 15

5EIA.2007.InternationalEnergyOutlook2007,Chapter4:NaturalGas.

http://tonto.eia.doe.gov/FTPROOT/forecasting/0484(2007).pdf.May2007.

6EIA.2008.AnnualEnergyOutlook2008withProjectionsto2030.

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.June2008.

7NaturalGas.org.2008.NaturalGasandtheEnvironment.

http://www.naturalgas.org/environment/naturalgas.asp.Accessed:September2008.

8AmericanCleanSkiesFoundation.NaturalGasMythvs.Fact.www.cleanskies.org.Accessed:September

2008.
9AmericanCleanSkiesFoundation.U.S.FuelGoals.www.cleanskies.org.Accessed:September2008.
10EIA.2008.NaturalGasYearInReview2007.

http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2008/ngyir2007/ngyir2007.pdf.
Accessed:March2008.
11EIA.2008.AnnualEnergyOutlook2008withProjectionsto2030.

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.Accessed:June2008.

12EIA.2008.AnnualEnergyOutlook2008withProjectionsto2030.

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.June2008.
13NationalPetroleumCouncil.2008.118thmeetingoftheNationalPetroleumCouncil.September17,2008.
14DepartmentofEnergy.2003.RockyMountainStatesNaturalGasResourcePotentialandPrerequisitesto

ExpandedProduction.
http://fossil.energy.gov/programs/oilgas/publications/naturalgas_general/rockymtn_final.pdf.DOE/FE
0460.Accessed:September2003.

15NavigantConsulting.2008.NorthAmericanNaturalGasSupplyAssessment.PreparedforAmericanClean

SkiesFoundation.July4,2008.

ALL Consulting, 2008

EXHIBIT2:NATURALGASPRODUCTIONBYSOURCE(TCF/YEAR)

Source: EIA, 2008

UnconventionalGas
MuchofthetechnicallyrecoverablenaturalgasinNorthAmericaispresentinunconventional
reservoirssuchastightsands,shale,andcoalbeds. 16 Overthelastdecade,productionfrom
unconventionalsourceshasincreasedalmost65percent,from5.4Tcf/yearin1998to8.9Tcf/year
in2007.Thismeansunconventionalproductionnowaccountsfor46percentofthetotalU.S.
manufacture. 17 Overall,unconventionalnaturalgasisanticipatedtobecomeaneverincreasing
portionoftheU.S.provenreserves,constitutingthebulkoftheU.S.naturalgassupplyforthenext
twentyyears(Exhibit2 18 ),whileproductionfromconventionalgasresourcesisdeclining. 19

16EIA.2007.InternationalEnergyOutlook,Chapter4:NaturalGas.

http://tonto.eia.doe.gov/FTPROOT/forecasting/0484(2007).pdf.Accessed:May2007.

17NavigantConsulting.2008.NorthAmericanNaturalGasSupplyAssessment.PreparedforAmericanClean

SkiesFoundation.July4,2008.

18EIA.2008.AnnualEnergyOutlook2008withProjectionsto2030.

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.Accessed:June2008.
19EIA.2008.AnnualEnergyOutlook2008withProjectionsto2030.

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf.Accessed:June2008.

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EXHIBIT3:SHALEGASPLAYSINTHEUNITEDSTATES

EXHIBIT4:UNITEDSTATESUNCONVENTIONALGAS
OUTLOOK

TheRoleofShaleGasinUnconventionalGas
Akeyfactorinthisincreaseinproductionfrom
unconventionalresourceshasbeenthe
developmentofshalegas.Thelowerforty
eightstateshaveawidedistributionofhighly
organicshalescapableofcontainingvast
resourcesofnaturalgas(Exhibit3 20 ).This
potentialforproductioninthetwentyone
knownonshoreshalebasins,coupledwith
otherunconventionalgasplays,isexpectedto
contributesignificantlytotheU.S.domestic
energyoutlook.Exhibit4 21 showsthe
projectedcontributionofshalegastothe
overallunconventionalgasproductioninthe
U.S.intermsofBcfperday.

Threefactorshavecometogetherinrecent
yearstomakeshalegasproduction

20Modifiedfrom:Frantz,J.K.andJochen,V.2005.Schlumberger.ShaleGasWhitePaper.05OF299.

SchlumbergerMarketingCommunications.October2005.

21ALLConsulting,2008.U.S.UnconventionalGasOutlook.

ALL Consulting, 2008


economicallyviable:technologicaladvancesin1)horizontaldrillingand2)hydraulicfracturing,
plus3)rapidincreasesinnaturalgaspricesasaresultofsignificantsupplyanddemandpressures.
Horizontaldrillingandhydraulicfracturinghavenotonlydramaticallyimproveddailyproduction
rates,buthaveincreasedthetotalultimaterecoverypotentialofindividualwellstoashighas54
percentinoneexperimentalcaseinTexas. 22 Withouttheseadvancesinthepreexisting
technology,manyunconventionalnaturalgasplayswouldnotbeeconomical.Asrecentlyasthe
late1990s,only40drillingrigs(6percent)intheU.S.werecapableofonshorehorizontaldrilling;
thatnumbergrewto519rigs(28percent)byMayof2008. 23

Since1998,annualproductionhasconsistentlyexceededEIAsforecastsofunconventionalgas
production.Agreatdealofthisincreaseisattributabletoshalegasproduction,particularlyfrom
theBarnettShaleinTexas.Already,thefledglingBarnettShaleplayinTexasproduces6percentof
allnaturalgasproducedinthelowerfortyeightstates. 24 Thepotentialformostothershalegas
playsintheU.S.isjustemerging.Takingthisintoconsideration,Navigant(2008)hasprojectedthat
theU.S.totalnaturalgasresources(provenplusunproventechnicallyrecoverable)are1,680Tcfto
2,247Tcf,or88to118yearsofproductionat2007productionlevels.Ofthat,shalegasisexpected
toprovide28percent,ormore,oftheestimatedproduction. 25

EXHIBIT5:MARCELLUSSHALE
Analystshaveestimatedthatby2011mostnew
reservesgrowth(50to60percentorapproximately
OUTCROP
3Bcf/d)willcomefromunconventionalshalegas
reservoirs. 26 Totalannualproductionvolumesof3
to4Tcfmaybesustainablefordecades.An
additionalbenefitofshalegasplaysisthatmany
existinareaspreviouslydevelopedfornaturalgas
productionand,therefore,muchofthenecessary
pipelineinfrastructureisalreadyinplace.Manyof
theseareasarealsonearthenationspopulation
centersthusfacilitatingtransportationto
consumers.
SHALEGASDEVELOPMENTINTHEUNITED
STATES
ShaleformationsacrosstheU.S.havebeenusedto
producenaturalgasinsmallbutcontinuous
volumessincetheearliestyearsofgas

Source: ALL Consulting, 2008

22Williams,P.2008.AmericanCleanSkies.AVastOceanofNaturalGas.p4450.Summer2008.
23EIA.2008.IsU.S.NaturalGasProductionIncreasing?

http://tonto.eia.doe.gov/energy_in_brief/natural_gas_production.cfm.Accessed:June11,2008

24EIA.2008.IsU.S.NaturalGasProductionIncreasing?

http://tonto.eia.doe.gov/energy_in_brief/natural_gas_production.cfm.Accessed:June11,2008.

25NavigantConsulting.2008.NorthAmericanNaturalGasSupplyAssessment.PreparedforAmericanClean

SkiesFoundation.July4,2008.
26NavigantConsulting.2008.NorthAmericanNaturalGasSupplyAssessment.PreparedforAmericanClean

SkiesFoundation.July4,2008.

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development. 27 Bythe1930s,gasfromtheAntrimShaleinMichiganhadexperiencedmoderate
cultivation,andinthe1980s,itgrewtonearly9,000wells. 28

Itwasalsoduringthe1980sthatthenationsmostactivenaturalgasplayinitiallykickedoffinthe
areanearFortWorth,Texas. 29 TheplaywastheBarnettShaleanditssuccessgrabbedthe
industrysattention.Largescalehydraulicfracturing,aprocessfirstdevelopedinTexasinthe
1950s,wasfirstusedontheBarnettin1986;likewise,thefirsthorizontalwellintheBarnettwas
drilledin1992. 30 Throughcontinuedimprovementsinthetechniquesandtechnologyofhydraulic
fracturing,developmentoftheBarnettShalehasaccelerated. 31 Intheensuingtwodecades,the
scienceofshalegasextractionhasmaturedintoasophisticatedprocesswhichutilizeshorizontal
drillingandsequencedmultistagehydraulicfracturingtechnologies.AstheBarnettShaleplayhas
matured,naturalgasproducershavebeenlookingtoapplythelessonslearnedtheretoothershale
gasformationsacrosstheU.S.andCanada. 32

Thecombinationofsequencedhydraulicfracturetreatmentsandhorizontalwellcompletionshas
beencrucialtotheexpansionofshalegasdevelopment.Priortothesuccessfulapplicationofthese
twotechnologiesintheBarnettShale,similarresourcesinmanybasinswereoverlookedbecause
productionwasnotconsideredeconomicallyfeasible. 33 Thelownaturalpermeabilityofshalehas
limitedtheproductionofgasshaleresourcesbecausesuchlowpermeabilityallowsonlyminor
volumesofgastoflownaturallytoawellbore. 34 Thischaracteristicoflowmatrixpermeability
representsakeydifferencebetweenshaleandothergasreservoirs,andmustbeovercomeforgas
shalestobeeconomicallyviable. 35 Historically,operatorshavebypassedgasshaleformations
becauseofthecombinationofreducedeconomicsandlowpermeability. 36

27Harper,J.2008.PublishedbytheBureauofTopographicandGeologicSurvey,PennsylvaniaDepartmentof

ConservationandNaturalResources.PennsylvaniaGeology.TheMarcellusShaleAnOldNewGasReservoir
inPennsylvania.v28.no1.Spring2008.
28Harrison,W.ProductionHistoryandReservoirCharacteristicsoftheAntrimShaleGasPlay,Michigan

Basin.WesternMichiganUniversity.2006.

29Hayden,J.,andPursell,D.2005.PickeringEnergyPartnersInc.TheBarnettShale.VisitorsGuidetothe

HottestGasPlayintheUS.October2005.
30Hayden,J.,andPursell,D.2005.PickeringEnergyPartnersInc.TheBarnettShale.VisitorsGuidetothe

HottestGasPlayintheUS.October2005.

31HalliburtonEnergyServices.2008.U.S.ShaleGas:AnUnconventionalResource.UnconventionalChallenges.

2008.

32Hayden,J.,andPursell,D.2005.PickeringEnergyPartnersInc.TheBarnettShale.VisitorsGuidetothe

HottestGasPlayintheUS.October2005.

33Harper,J.2008.PublishedbytheBureauofTopographicandGeologicSurvey,PennsylvaniaDepartmentof

ConservationandNaturalResources.PennsylvaniaGeology.TheMarcellusShaleAnOldNewGasReservoir
inPennsylvania.v28.no1.Spring2008.
34Ameri,S.,Aminian,K.,Miller,J.A.,Doricich,D.,andYost,A.B.ASystematicApproachforEconomic

DevelopmentoftheDevonianShaleGasResources.SPE14504.

35HalliburtonEnergyServices.2008.U.S.ShaleGas:AnUnconventionalResource.UnconventionalChallenges.

2008.
36Airhart,M.Geology.com.TheBarnettShaleGasBoom:IgnitingaHuntforUnconventionalNaturalGas
Resources.Accessed:September2008.

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ShaleGasGeology
Shalegasisnaturalgasproducedfromshaleformationsthattypicallyfunctionasboththereservoir
andsourcerocksforthenaturalgas.Intermsofitschemicalmakeup,shalegasistypicallyadry
gascomposedprimarilyofmethane(atleast90percentmethane),butsomeformationsdoproduce
wetgas.TheAntrimandNewAlbanyplayshavetypicallyproducedwaterandgas. 37 Gasshalesare
organicrichshaleformationsthatwerepreviouslyregardedonlyassourcerocksandsealsforgas
accumulatinginthestratanearsandstoneandcarbonatereservoirsoftraditionalonshoregas
development. 38 Shaleisasedimentaryrockthatispredominantlycomposedofconsolidatedclay
sizedparticles.Shalesaredepositedasmudsinlowenergyenvironmentssuchastidalflatsand
deepwaterbasinswherethefinegrainedclayparticlesfalloutofsuspensioninthequietwaters.
Duringthedepositionoftheseveryfinegrainedsediments,therecanalsobeaccumulationof
organicmatterintheformofalgae,plant,andanimalderivedorganicdebris. 39 Theveryfinesheet
likeclaymineralgrainsandlaminatedlayersofsedimentresultinarockwithpermeabilitythatis
limitedhorizontallyandextremelylimitedverticallyThislowpermeabilitymeansthatgastrapped
inshalecannotmoveeasilywithintherockexceptovergeologicexpansesoftime,i.e.,millionsof
years.Theseunitsareoftenorganicrichandarethoughttobethesourcebedsformuchofthe
hydrocarbonsproducedinthesebasins. 40

Exhibit5showsatypicalshaleoutcrop,revealingthenaturalbeddingplanes,orlayers,oftheshale
andnearverticalfracturesthatcancutacrossthenaturallyhorizontalbeddingplanes.Although
theverticalfissuresshowninthispicturearenaturallyoccurring,artificialcracksinducedby
hydraulicfracturestimulationinthedeepsubsurfacereservoirrockwouldhaveasimilar
appearance.
ShaleGasintheUnitedStates
ShalegasispresentacrossmuchofthelowerfortyeightStates.Exhibit3showstheapproximate
locationsofcurrentproducinggasshales.ThemostactiveshalestodatearetheBarnettShale,the
HaynesvilleShale,theAntrimShale,andtheNewAlbanyShale.

Eachofthesegasshalebasinsisdifferentandeachhasitsuniquesetofexplorationcriteriaand
operationalchallenges.Becauseofthesedifferences,thedevelopmentofshalegasresourcesineach
oftheseareasposespotentialchallengestothesurroundingcommunitiesandecosystemsFor
exampletheAntrimandNewAlbanyShalesareshallowershaleswhichproducesignificant
volumesofformationwaterunlikemostoftheothergasshales.Whiledevelopmentofthe
FayettevilleShaleislocatedinruralareasofnorthcentralArkansas,developmentoftheBarnett
ShaleisfocusedintheareaofForthWorth,Texasinanurbanandsuburbanenvironment.
Asnewtechnologiesaredevelopedandrefined,shalegasplaysoncebelievedtohavelimited
economicviabilityarebeingreevaluated.Exhibit6summarizesthekeycharacteristicsofselect
shalegasplaysacrosstheU.S.ThisExhibitprovidesnotonlydatarelatedtothecharacterofthe
37Boyer,C.,Kieschnick,J.,SuarezRivera,R.,Lewis,R.,andWalter,G.2006.Schlumberger.OilfieldReview.
ProducingGasfromItsSource.Autumn2006.
38Frantz,J.K.andJochen,V.2005.Schlumberger.ShaleGasWhitePaper.05OF299.SchlumbergerMarketing

Communications.October2005.

39DavisJr,R.1992.DepositionalSystems:AnIntroductiontoSedimentologyandStratigraphy.PrenticeHall.
2ndEdition.1992.
40Nuttal,B.C.2007.KentuckyGeologicalSurvey.PredictingCumulativeProductionofDevonianShaleGas

WellsfromEarlyWellPerformanceData,AppalachianBasinofEasternKentucky.September2007..

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shalebutalsoameanstocomparesomeofthekeycharacteristicsforevaluatingthedifferentgas
shalebasins.

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REGULATORYFRAMEWORK

ThedevelopmentandproductionofoilandgasintheU.S.,includingshalegas,areregulatedunder
acomplexsetoffederal,state,andlocallawsthataddresseveryaspectofexplorationand
operation.Allofthelaws,regulations,andpermitsthatapplytoconventionaloilandgas
explorationandproductionactivitiesalsoapplytoshalegasdevelopment.TheU.S.Environmental
ProtectionAgency(EPA)administersmostofthefederallaws,butdevelopmentonfederallyowned
landismanagedprimarilybytheBureauofLandManagement(partoftheDepartmentofthe
Interior)andtheU.S.ForestService(partoftheU.S.DepartmentofAgriculture).Inaddition,each
stateinwhichoilandgasisproducedhasoneormoreregulatoryagenciesthatadministratewells,
includingtheirdesign,location,spacing,operation,andabandonment,aswellasenvironmental
activitiesanddischarges,includingwatermanagementanddisposal,wastemanagementand
disposal,airemissions,undergroundinjection,wildlifeimpacts,surfacedisturbance,andworker
healthandsafety.Manyofthefederallawsareimplementedbythestatesunderagreementsand
plansapprovedbytheappropriatefederalagencies.
FederalandStateEnvironmentalLawsGoverningShaleGasDevelopment
Aseriesoffederallawsgovernmostenvironmentalaspectsofshalegasdevelopment.Forexample,
theCleanWaterActregulatessurfacedischargesofwaterassociatedwithshalegasdrillingand
production,aswellasstormwaterrunofffromproductionsites.TheSafeDrinkingWaterAct
directstheundergroundinjectionoffluidsfromshalegasactivities.TheCleanAirActlimitsair
emissionsfromengines,gasprocessingequipment,andothersourcesassociatedwithdrillingand
production.TheNationalEnvironmentalPolicyAct(NEPA)requiresthatexplorationand
productiononfederallandsbethoroughlyanalyzedforenvironmentalimpacts.

However,federalagenciesdonothavetheresourcestoadministeralloftheseenvironmental
programsforalltheoilandgassitesaroundthecountry.Inaddition,federalregulationmaynot
alwaysbethemosteffectivewayofassuringthedesiredlevelofenvironmentalprotection.
Therefore,mostofthesefederallawshaveprovisionsforgrantingprimacytothestates,whichhave
usuallydevelopedtheirownsetsofregulations.Bystatute,statesmayadoptthesestandardsof
theirown,buttheymustbeatleastasprotectiveasthefederalprinciplestheyreplacetheymay
actuallybemoreprotectiveinordertoaddresslocalconditions.Oncetheseprogramsare
approvedbytherelevantfederalagency(usuallyEPA),thestatethenhasprimacyjurisdiction.

Stateregulationoftheenvironmentalpracticesrelatedtoshalegasdevelopmentcanmoreeasily
addresstheregionalandstatespecificcharacteroftheactivities,comparedtoonesizefitsall
managementatthefederallevel. 41 Someofthesefactorsinclude:geology,hydrology,climate,
topography,industrycharacteristics,developmenthistory,statelegalstructures,population
density,andlocaleconomics.Thestateagenciesthatregulateenvironmentalpracticesandmonitor
andenforcetheirlawsandregulationsmaybelocatedintheDepartmentofNaturalResources
(suchasinOhio)orintheDepartmentofEnvironmentalProtection(suchasinPennsylvania).The
TexasRailroadCommissionregulatesoilandgasactivityinthenationslargestoilandgas
producingstate,hometotheBarnettShale.Thenamesandorganizationalstructuresvary,butthe
functionsareverysimilar.Often,multipleagenciesareinvolved,havingjurisdictionoverdifferent
activitiesandaspectsofdevelopment.
41InterstateOilandGasCompactCommission(IOGCC).Issues.StatesRights.

http://www.iogcc.state.ok.us/statesrights.Accessed:September2008.

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Thesestateagenciesnotonlyimplementandenforcefederallaws;theyalsohavetheirownsetsof
statelawstoadminister,whichoftenaddadditionallevelsofenvironmentalprotectionand
requirements.Also,severalstateshavetheirownversionsofthefederalNEPAlaw,requiring
environmentalassessmentsandreviewsatthestatelevelandextendingthosereviewsbeyond
federallandstostateandprivatelands.

Theregulationofshalegasdrillingandproductionisacradletograveapproach,andstateshave
manytoolsattheirdisposaltoassurethatshalegasoperationsdonotadverselyimpactthe
environment.Theyhavebroadpowerstoregulate,permit,andenforceallactivitiesfromdrilling
andfracturingofthewell,toproductionoperations,tomanaginganddisposingofwastes,to
abandoningandpluggingthewell.Differentstatestakedifferentapproachestothisregulationand
enforcement,buttheirlawsgenerallygivethestateoilandgasdirectorortheagencythediscretion
torequirewhateverisnecessarytoprotectthehumanhealthandtheenvironment. 42 Inaddition,
mosthaveageneralprohibitionagainstpollutionfromoilandgasdrillingandproduction. 43 A
majorityofthestaterequirementsarewrittenintorulesorregulations;howeversomeareaddedto
permitsonacasebycasebasisasaresultofenvironmentalreview,onthegroundinspections,
publiccomments,orcommissionhearings.

Statesrequiredeveloperstoobtainapermitbeforedrillingandoperatingagaswell.The
applicationforthispermitincludesdataaboutthewelllocation,construction,operationand
reclamation.Ifthewellistobefractured,informationaboutthefracturingprogramisincludedin
theapplication. 44 Agencystaffmembersreviewtheapplicationforcompliancewithregulations
andtoassureadequateenvironmentalsafeguards,andifnecessary,performasiteinspection
beforepermitapproval.Moststatesrequirenoticetoaffectedlandownersand/orthepublicand
providetheopportunityforobjectionstodrillingpermits.Anyprotestationsaretheninvestigated
bytheagenciesforevidenceofpossibleadverseimpactsfromdrilling.Moststateshave
implementedsafeguardsevenbeyondthese:mostrequireoperatorstopostabondorother
financialsecuritywhenobtainingadrillingpermittoinsurecompliancewiththestateregulations
andtomakesurethattherearefundstoproperlyplugthewellonceproductionceases;andmany
obligateproducerstonotifythestateagenciesofanysignificantnewactivitythroughasundry
noticeoranewpermitapplicationsothattheagencyisawareofthatactivityandcanreviewit. 45

Stateoilandgasenvironmentalprogramsarealsoperiodicallyreviewedagainstasetofguidelines
developedbyanindependentbodyofstate,industry,andenvironmentalstakeholders,knownas

42AnexampleofthistypeofprovisionisthefollowingfromPennsylvaniasstatute:[T]hedepartmentshall

havetheauthoritytoissuesuchordersasarenecessarytoaidintheenforcementoftheprovisionsof[theoil
andgas]act.(58P.S.section601.503.).
43AnexampleofsuchlanguagecanbefoundinNewYorksrules,whichstate:Thedrilling,casingand
completionprogramadoptedforanywellshallbesuchastopreventpollution.Pollutionofthelandand/or
ofsurfaceorgroundfreshwaterresultingfromexplorationordrillingisprohibited.(5NYCRRPart554).
AnotherexampleistherequirementintherulesoftheTexasRailroadCommission:Nopersonconducting
activitiessubjecttoregulationbythecommissionmaycauseorallowpollutionofsurfaceorsubsurfacewater
inthestate.(TAC16.1.3.8).
44See,forexample,WestVirginiaCodeSection2266(c)(11)whichstates,Everypermitapplicationfiled
underthissectionshallbeverifiedandshallcontainthefollowing:Iftheproposedwellworkistostimulate
anoilorgaswell,specificationsinaccordancewiththedatarequirementsofthisarticle.
45See,forexample,LouisianaStatewideOrder29B,section105,orTexasAdministrativeCode16.1.3.5.

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STRONGER(StateReviewofOilandNaturalGasEnvironmentalRegulation). 46 Periodicevaluations
ofstateandfederalexplorationandproductionwastemanagementprogramshaveprovenusefulin
improvingtheeffectivenessofthoseprogramsandincreasingcooperationbetweenfederaland
stateregulatoryagencies.Todate,eighteenstateshavebeenreviewedunderthesereview
guidelines,severalmorethanonce.TheSTRONGERprogramhasdocumentedtheeffectivenessof
andimprovementsinthesestateoilandgasenvironmentalprograms. 47,48 BeforeSTRONGER,the
InterstateOilandGasCompactCommissionwasresponsibleforstatereviewsusingearlier
versionsoftheguidelines.

Theorganizationofregulatoryagencieswithinthedifferentoilandgasproducingstatesvaries
considerably.Somestateshaveseveralagenciesthatmayoverseesomefacetofoilandgas
operations,particularlyenvironmentalrequirements.Indifferentstates,theseagenciesmaybe
locatedinsundrydepartmentsordivisionswithintheirrespectivegovernments.Thesevarious
approacheshavedevelopedovertimewithineachstate,andeachstatetriestocreateastructure
thatbestservesitscitizenryandalloftheindustriesthatitmustoversee.Theoneconstantisthat
eachoilandgasproducingstatehasoneagencywithprimaryresponsibilityforpermittingwells
andoverseeinggeneraloperations.Whiletheseagenciesmayworkwithotheragenciesinthe
regulatoryprocess,theyserveasacentralorganizingbodyandausefulsourceofinformationabout
thevariousagenciesthatmayhavejurisdictionoveroilandgasactivities.
LocalRegulation
Inadditiontostateandfederalrequirements,additionalrequirementsregardingoilandgas
operationsmaybeimposedbyotherlevelsofgovernmentinspecificlocations.Entitiessuchas
cities,counties,tribes,andregionalwaterauthoritiesmayeachsetoperationalrequirementsthat
affectthelocationandoperationofwellsorrequirepermitsandapprovalsoverandabovethoseat
thefederalorstatelevel.

Whenoperationsoccurinornearpopulatedareas,localgovernmentsmayestablishordinancesto
protecttheenvironmentandthegeneralwelfareofitscitizens.Theselocalordinancesfrequently
requireadditionalpermitsforcontrolofissuessuchaswellplacementinfloodzones,noiselevel,
setbacksfromresidencesorotherprotectedsites,sitehousekeeping,andtraffic.Forexample,
ordinancesmaysetlimitsonthenoiselevelsthatmaybegeneratedduringbothdaytimeand
nighttimeoperations. 49,50,51,52

Insomecases,regionalriverauthoritiesthathavejurisdictioninmultiplestateshavealsobeen
established.Thesefederallyestablishedriverauthoritieshavebeencreatedtoprotectthewater
46StateReviewofOilandNaturalGasRegulations(STRONGER).http://www.strongerinc.org.Accessed:

September2008.

47STRONGER.ListofStateReviews.http://www.strongerinc.org/reviews/reviews.asp.Accessed:September
2008.
48STRONGER.HistoryofSTRONGERHelpingToMakeAnExperimentWork.

http://www.strongerinc.org/about/history.asp.Accessed:September2008..

49Southlake,TexasGasWellOrdinance.ArticleIV.GasandOilWellDrillingandProduction.
50RichardHillsTexasGasWellOrdinance.OrdinanceNo.99604.September14,2004.
51HaltomCityOrdinanceNo.0200402615.November22,2004.
52FortWorth,TexasOrdinanceNo.16986062006.June21,2006.

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qualityoftheentireriverbasinandtogovernusesofthewater. 53 Additionalapprovalsand
permitsmayberequiredforoperationsintheseriverbasins.Forexample,theDelawareRiver
BasinCommissioncoverspartsofNewYork,Pennsylvania,NewJerseyandDelaware. 54 Natural
gasoperatorswishingtowithdrawwaterforconsumptiveuseinthisbasinmustfirstreceivea
permitfromtheDRBC.
EnvironmentalConsiderations
Thedevelopmentofshalegasresourceshasbeendependentonseveralconcomitantimprovements
intechnology.Theseimprovementsdirectlyaffecttheenvironmentalconsiderationsassociated
withshalegasdevelopment.

Hydraulicfracturingtechniqueshavegrowntobecarefullyengineeredprocessesemployedto
generateamoreextensivenetworkoffracturesandtherebyproducealargerportionofthein
placenaturalgas.Thisinnovationhastransformedshalegasintoabonafideeconomicresource
playandhasledtothedrillingofmanymoreshalegaswellsandtoincreasedattentiononpotential
environmentaleffects.

EXHIBIT 9: OUTPUT OF HYDRAULIC FRACTURE SIMULATION MODEL

Atthesametime,horizontaldrillinghasbecomemoreeconomical,faster,moreaccurate,andmore
widespread.Withhorizontaldrilling,operatorscanaccessanddrainlargervolumesoftheshale
reservoirfromasinglewell.Thecombinationofopeninguplargervolumesofthereservoirand
beingabletoreachoutlongdistancesmeansthatonlyafractionofthewellsareneededtodrain
53SusquehannaRiverBasinCommission.RegulationofProjects.18CFR801,806,807,and808.

http://srbc.net/policies/docs/srbc_regulation_of_projects.PDF.Effective:February20,2007.Accessed:
September2008

54DelawareRiverBasinCommissionBasin.AdministrativeManualPartIII.WaterQualityRegulations.18CFR
PART410.http://www.state.nj.us/drbc/regs/WQRegs_071608.pdf.September12,2008

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thegasfromagivenfieldarea.Fewerwellstranslateintofewerimpactsfromlanddisturbance,
noise,wateruse,traffic,andairemissions.

Fluidhandlingtechniqueshavealsoevolvedtomakeroutinedrillingandstimulationworkless
impactfulonthelocalenvironmentandespeciallylesspronetoaccidentalreleasestoland,water,
andair.
HydraulicFracturing
Fracturingisaformationstimulationtechniqueusedtocreateadditionalpermeabilityina
producingreservoir,thusallowinggastoflowmorereadilytothewellbore.Fracturinghasbecome
theindustrystandard. 55 Recentdevelopmentsinhydraulicfracturingincludepumpinglarge
volumesoflowviscosity;nearlypurewater/sandslurryintotheshaletoinducenewfracturesand
augmentexistingfracturesintheshale.Modernrefinementsinhydraulicfracturingtechnology
makeitanextremelysophisticatedengineeringprocessdesignedtoemplacefracturenetworksinto
specificreservoirunits.Hydraulicfracturingtreatmentsarecarefullytailoredtothespecific
parametersofthetargetshaleincludingthickness,localstressconditions,compressibility,and
rigidity.Localconditionsareusedincomputermodelstodesignsitespecifichydraulicfracturing
treatmentsandoptimizethenewfracturesasshowninExhibit9.Bothshalegasreservoirsandthe
intervalstobefracturedaretypicallythick,soitisoftenmoreeffectivetoseparatethehydraulic
fracturingprocessintoseveralstages,eachfocusedonaconsistentportionofthereservoir.Each
stageofthejobwillbeisolatedwithintheboreholesothatthefullcapacityofthefracturing
equipmentcanbeappliedtothesinglereservoirunit. 56 Thiscanbedoneinverticalorhorizontal
wellstogreateffect.

Beforeoperatorsorservicecompanies
EXHIBIT10:FRACTURETREATMENTCENTRALCONTROLVAN
performahydraulicfracturetreatment
ofawell(eitherverticalorhorizontal),
theyconductaseriesofteststoensure
thatthewell,wellheadequipment,and
fracturingequipmentareinproper
workingorderandwillsafelywithstand
thefracturetreatmentpressuresand
pumprates.Itshouldbenotedthat
minimumconstructionrequirementsare
typicallymandatedbystateoilandgas
regulatoryagenciestomakesurethatthe
wellconstructionandfracturetreatment
designareprotectiveofenvironmental
resourcesandaresafeforoperation.

Aftertestingsurfaceequipment,the
hydraulicfracturingprocessbeginswith
thepumpingofarockacidoften
hydrochloricacid(HCl)treatmentto
cleanthenearwellboreareawhichmay
55Boyer,C.,Kieschnick,J.,SuarezRivera,R.,Lewis,R.,andWalter,G.2006.Schlumberger.OilfieldReview.
ProducingGasfromItsSource.Pp3649.Autumn2006.
56Ketter,A.A.,Daniels,J.L.,Heinze,J.R.,andWaters,G.AFieldStudyOptimizingCompletionStrategiesfor
FractureInitiationinBarnettShaleHorizontalWells.SPE103232.

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havebecomepluggedwithdrillingmudandcement.Thenextstepisaslugofslickwaterwhich
combineswaterwithafrictionreducingchemicaladditiveallowingthewatertobepumpedfaster
intotheformation.Slickwaterhydraulicfracturestreatmentsworkbestinlowpermeability
reservoirs,andhavebeentheprimaryinstrumentinopeningupunconventionalplayslikethe
TexasBarnettShale. 57 Inadditiontothecostadvantage,slickwaterhydraulicfracturestreatments
requirelesscleanup,providelongerfractures,andcarryproppantfartherintothefracture
network.

Afterthefirstwaterslug,theoperatorbeginsthefracturingprocessbypumpingalargevolumeof
slickwaterwithfinesandatalowvolume.Subsequentstepsincludetheapplicationofslickwater
volumeswithcoarsersandproppantthatkeepfracturesclosertothewellboreopen.Thelaststep
isaflushtoremoveproppantfromtheequipmentandwellbore.Aftertheflush,thenext
treatmentstageisbegunonanewportionoftheboreholethatcontainsitsownspecificreservoir
parametersincludingthickness,localstressconditions,compressibility,andrigidity.

Thestagedfracturingtreatmentsarecloselymonitoredbytechniciansfromserviceandoperating
companies(Exhibit10).Byfracturingdiscreteintervalsofthewellbore(eitherhorizontalor
vertical),theoperatorisabletomakemodificationstoaccommodatelocalchangesintheshale
reservoirincludinglithology,naturalsplitting,rigidity,andchangesinthestressregime.

EXHIBIT 11: MICRO SEISMIC MAPPING OF FRACTURES IN A


TREATMENT

57Palisch,T.,M.Vincent,andP.Handren,2008.SlickwaterFracturingFoodforThought.SPEPaper115766,

September2008.

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Fracturingstagesaredeterminedwiththehelpofnumericalsimulatorstopredictfracture
performanceintheshalereservoir.Engineersandgeologistscanmanipulatethesimulatorand
evaluatetheeffectonfissureheight,length,andorientation. 58 Predictionsfromthesimulatorcan
beusedtomonitorandevaluatetheresultsofthefracturejob.Monitoringcanalsobedoneinreal
timeatthewellbywayofmicroseismicmapping(Exhibit11).Thistechnologycanlocatethe
fracturetipsinaneastwestandnorthsouthdirectionfromtheboreholeandtracktheirgrowthas
thejobproceedsandmorestepsarecompleted.Ofparticularimportanceisthegrowthoffractures
intheverticaldirection.Operatorstakeparticularcaretoensurethattheydonotmigrateoutof
theshalereservoirandextendintoadjacentwaterbearingunits.Suchfissurescanruinthe
economicsofashalegaswell.

Duringthefracturingtreatment,anumberofchemicalsareaddedtothewatersandmix.Each
chemicalcompoundservesaspecificallyengineeredpurposesuchasreducingviscosityorbacterial
growthorbiofoulingreservoirsurfaces.Themakeupoffracturingfluidwillvaryfromonebasin
toanotherandfromonecontractortoanother.Exhibit12belowgraphicallydemonstratesthe
relativeamountsofthecomponentsinafracturefluidusedrecentlyontheFayettevilleShale;this
fluidis99.5percentwaterwithlessthan0.5percentothercompounds.Anytoxicityofthe
components,suchasacid,isgreatlyreducedbydilutioninthepumpedfluidandbythereactionof
theacidwiththerockinthesubsurfacethatconvertstheacidintosalts. 59

EXHIBIT 12: VOLUMETRIC COMPOSITION OF A SHALE GAS FRACTURE FLUID

Source: Compiled from data collected at Fayetteville Shale


Fracture Stimulation by ALL Consulting, 2008.

58Meyer&Associates,Inc.UsersGuidefortheMeyerFracturingSimulators.SixthEdition
59Parshall,J.2008.BarnettShaleShowcasesTightgasDevelopment.JournalofPetroleumTechnology.

September19,2008.

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HorizontalDrilling
Moderndrillingtechnologyhasprogressedtothepointofallowingthedrillertoturncornersby
makingthedrillbitprogressonahorizontaltrackwhileaccuratelystayingwithinanarrow
directionalandverticalwindow.Becausethehorizontalportioniseasilycontrolled,thewellisable
todrainshalegasresourcesfromageographicalareathatismuchlargerthanasingleverticalwell
inthesameshaleformation.Exhibit13illustrateshowhorizontaldrillingprovidesmoredrainage
inashalegasdevelopmentthandoesaverticalwell.UsingtheMarcellusShaleplayin
Pennsylvaniaasanexample,averticalwellmayonlydrainacylinderofshale1,320feetindiameter
andaslittleas50feethigh.Bycomparison,ahorizontalwellmayextendfrom2,000to6,000feet
inlengthanddrainavolumeupto6,000feetby1,320feetby50feetinthickness,anareaabout
4,000timesgreaterthanthatdrainedbyaverticalwell.Theincreaseindrainagecreatesanumber
ofimportantadvantagesforhorizontaloververticalwells,particularlyintermsofenvironmental
concerns.
UsingthesimilarFayettevilleShaleasan
EXHIBIT13:EXAMPLEHORIZONTALWELL
example,analysisperformedfortheU.S.
DepartmentoftheInterior 60 estimatedthat
ashallowverticalshalegaswellinArkansas
wouldhavea2.0acrewellpadand0.10
milesofroadand0.55milesofutility
corridorresultinginatotalof4.8acresof
disturbanceperwell.Thesamestudy
identifiedahorizontalshalegaswellthat
occupiesawellpadofapproximately3.5
acresplusroadsandutilitiesresultingina
totalof6.9acres.Thehorizontalwellhas
theabilitytodrainatleastfourtimesthe
acreageofaverticalwell,meaningthat
horizontalshalegasdevelopmentresultsin
roughlyonethird(19.2acresversus6.9
acres)thedisturbedacres.Thismeansless
landscapingandvegetationdestroyed,
wildlifehabitatdisturbed,soilerosionand
compactiondone,andgeneralconstruction
needed.Colocatingseveralhorizontal
wellsonasinglepadwillfurthershrinkthe
numberofdisturbedacres.

Reducingthenumberofproducingwellsin
afieldwillalsoreducetheneedforfield
personnelandroutinetrucktrafficwithin
thefield.Fewerwellswillrequirefewer
maintenancecrewstravelingcountyroads.
Producedwaterwillstillneedtobe
transportedtocentralmanagement
facilitiesbutiftherearefewerwellsiteswithmoreproduction,itmaybecomeeconomicalto
transportthewatertothefacilitybypipelineratherthanbytruck.Pipelinesrequireground
60U.S.DepartmentoftheInterior.2008.ReasonablyForeseeableDevelopmentScenarioforFluidMinerals:

Arkansas.PreparedfortheBureauofLandManagementEasternStatesJacksonFieldOffice.March2008.

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disturbancebutthetotalamountissmallandthetimeofdisturbanceisshortuntilthetrenchescan
befilledandrevegetated.Furthermore,pipelinescanbebuiltwithanassortmentofsafety
featuressuchasautomaticcutoffvalvesalongthepipelinetoisolatethelineifpressuresdrop
(indicatingaleak)andtripwireslaidontopofthepipelinesthatwillbreakifthepipelineis
severedbyearthmovingequipment. 61

Liketraffic,noisecanbereducedbyuseofthesefewerhorizontalwells.Ifashalegasfieldonlyhas
onequarterthenumberofwells,noiseanddustfromdrillingandequipmentwillbemuchless.
Theseimpactscanbefurtherreducedasrequiredbymitigationstrategiessuchassoundwallsand
sprayinggravelroadswithdustsuppressantduringdryperiods.Thenagain,dustandnoiseare
notissuesinmostrurallocations,andmitigationmaynotbeneeded.

Otherpotentialenvironmentimpactsfromdrillingcanalsobealleviated.Wastessuchasusedmud
andproducedwateraremanagedbyroutine,onsitecontainmentofthesefluidsasdescribedinthe
nextsection.Refusevolumeandotherpossibleimpactscanbefurthercutbyreducingthenumber
ofwellsandlocatingthewellsonthesamepadornearbypads.Colocatingmultiplewellsonthe
samepadwillencouragetheuseofclosedmudsystemstomaintainmudqualityfromwelltowell
andcutdownonwastebyreusingmud.Theuseofsteeltanksformudmanagementallowsthe
operatortosegregatespecialtymudsthatmightonlybeusedovershortintervalsandthenthetank
canbemovedtoanotherwell. 62 Becausetheshalecontainsfewwaterzonesandisproneto
damageduringmuddrilling,someMarcelluswellsaredrilledwithair;inaddition,airdrillingis
considerablyfaster.Airdrillingisnotappropriateinalllocations,butwhenitis,itgeneratesalow
volumeofdrydrillingwastesthatcanbemoreeasilymanagedthanwetrefuse. 63
WaterAvailability
Thedrillingandhydraulicfracturingofatypicalhorizontalshalegaswellisestimatedtorequire
between3,000,000and4,000,000gallonsofwater.Surfacewaterwithdrawalsofnecessary
volumestodrillandstimulategasshalewellsinsomeregionsofthecountryrepresentarelatively
minorvolumeofthetotalwaterresourceuseinthatarea;however,operatorsneedthiswater
whendrilling,andrequirethatthewaterbeprocuredoverarelativelyshortperiodoftime.
Operatorsarealsoemployingalternatives,suchasmakingusingseasonalchangesinriverflowto
capturewaterwhensurfacewaterflowsaregreatest.Utilizingseasonalflowdifferencesallows
planningofwithdrawalstoavoidpotentialimpactstomunicipaldrinkingwatersuppliesandto
aquaticorripariancommunities.
Becausethedevelopmentofgasshaleisnewinsomeareas,thesewaterneedsmaychallenge
suppliesandinfrastructure.Asoperatorslooktodevelopnewshalegasplays,communicationwith
localwaterplanningagenciescanhelpoperatorsandcommunitiestoharmoniouslycoexistand
effectivelymanagelocalwaterresources.Understandinglocalwaterneedscanhelpoperators
61Severalcontractorssupplythisformofprotectionforpipelinesinsensitivelocations.Forexample,

WestminsterInternationalLtd,2008.PipelineLeakDetectionSystem,website:
http://www.wgplc.com/international/pdfs/Westminster%20Pipeline%20Security%20Leak%20Detection.p
dfAccessed:November2008.
62Forexample,BakerHughesDrillingFluidsofferanumberofspecialtymudsforspecificsituations
http://www.bakerhughesdirect.com/cgi/bhdf/resources/ExternalFileHandler.jsp?channelId=
4195539&path=private/BHDF/public/about/index.htmlAccessed:November2008.
63SchlumbergerOilfieldGlossary,2008.
http://www.glossary.oilfield.slb.com/Display.cfm?Term=air%20drillingAccessed:November2008.

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developawaterstorageormanagementplanthatwillmeetwithacceptanceinneighboring
communities.Althoughthewaterneededfordrillinganindividualwellmayrepresentasmall
volumeoveralargearea,thewithdrawalsmayhaveacumulativeimpacttowatershedsoverthe
shortterm.Thispotentialimpactcanbeavoidedbyworkingwithlocalwaterresourcemanagersto
developaplanoutliningwhenandwherewithdrawalswilloccur(i.e.avoidingheadwaters
tributaries,smallsurfacewaterbodies,orothersensitivesources).Insomebasins,onekeytothe
successfuldevelopmentofshalegasistheidentificationofwatersuppliescapableofmeetingthe
needsofadevelopmentcompanyfordrillingandfracturingwaterwithoutinterferingwith
communityneeds.Whileavarietyofoptionsexist,theconditionsofobtainingwaterarecomplex
andvarybyregionandevenwithinaregionsuchthatdeveloperswillalsoneedtounderstandlocal
waterlaws. 64
FluidManagement
Avarietyofwastefluidsaregeneratedonsiteatshalegaswells.Duringdrilling,usedmudand
saturatedcuttingsareproducedandmustbemanaged.Thevolumeofmudroughlycorrelateswith
thesizeofthewelldrilled,soahorizontalMarcelluswellmaygeneratetwiceasmuchdrillingwaste
asasingleverticalwell;however,asdiscussedabove,itwillreplacefoursuchholes.Drilling
wastescanbemanagedonsiteeitherinpitsorinsteeltanks.Eachpitisdesignedtokeepliquids
frominfiltratingvulnerablewaterresources.Onsitepitsareastandardintheoilandgasindustry
butarenotappropriateeverywhere;theycanbelargeandtheydisturbthelandforanextended
periodoftime.Steeltanksmayberequiredtostoredrillingmudinsomeenvironmentsto
minimizethesizeofthewellsitefootprintortoprovideextraprotectionforasensitive
environment.Steeltanksarenot,ofcourse,appropriateineverysettingeither.Inruralareas
wherespaceisavailableatthewellsiteforpitsorponds,steeltanksareusuallynotneeded.
Horizontaldrillingdevelopmenthasthe
powertoreducethenumberofwellsites
andtogroupthemsothatmanagement
facilitiessuchasstoragepondscanbeused
forseveralwells.Makeupwaterisused
throughoutthedevelopmentprocessto
drillthewellandtoformthebasisofthe
hydraulicfracturingfluid.Largevolumesof
watermaybeneededandareoftenstored
atthewellsiteinpitsortanks.For
example,surfacewatercanbepipedinto
thepitduringhighwaterrunoffperiods
andusedduringtheyearfordrillingand
fracturetreatmentsinnearbywells.Exhibit
14showsoneoftheselargestorageponds
servicingtheMarcellusdevelopmentin
Pennsylvania.Storagepondsarenot
suitableeverywhereintheshalegasplay;
likesteeltanks,theyareappropriatein
somelocationsandnotinothers.

EXHIBIT14:CENTRALWATERSTORAGEPOND

64Weston,R.T.2008.DevelopmentoftheMarcellusShaleWaterResourceChallenges.PublishedbyKirkpatrick

&LockhartPrestonGatesEllisLLP.2008.

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Afterahydraulicfracturetreatment,whenthepumpingpressurehasbeenrelievedfromthewell,
thewaterbasedfracturingfluidsbegintoflowbackthroughthewellcasingtothewellhead.This
waterisreferredtoasflowbackwaterandconsistsofspentfracturingfluidsand,insomecases,
dissolvedconstituentsfromtheformationitself(mineralspresentintheshalesaswellasbrine
watersthatmaybepresentwithinanynaturalporespacecontainedintheshale).Themajorityof
flowbackwaterisproducedinarangeoftimefromseveralhourstoacoupleofweeks.Invarious
basinsandshalegasplays,theextentofthisvolumeofflowbackwatermayaccountforlessthan30
percenttomorethan70percentoftheoriginalfracturefluidvolume. 65 Insomecases,production
offlowbackwatercancontinueforseveralmonthsaftergasproductionhasbegun. 66

Naturalformationwatersthatflowtothewellareknownasproducedwater.Regardlessofthe
sourceofwater,flowbackorformationwater,thesewatersthatareproducedbackthroughthe
wellheadwiththegasrepresentaproductionstreamthatmustbemanagedandarecollectively
referredtoasproducedwater.

Gasshaleoperatorsmanageproducedwaterthroughavarietyofmechanismsincluding:
undergroundinjection,treatmentanddischarge,andrecycling.Undergroundinjectionisnot
possibleineveryplayareaassuitableinjectionzonesmaynotbeavailable.Similartoaproducing
reservoir,theremustbeaporousandpermeableformationcapableofreceivinginjectedfluidsnear
theplayarea.Ifsuchisnotlocallyavailable,itmaybepossibletotransporttheproducedwatertoa
moredistantinjectionsite.Treatmentofproducedwatersmaybefeasiblethrougheitherself
containedsystemsatwellsitesorfieldsorthroughmunicipalwastewatertreatmentplantsor
commercialtreatmentfacilities.Theavailabilityofmunicipalorcommercialtreatmentplantsmay
belimitedtolargerurbanareaswheretreatmentfacilitieswithsufficientavailablecapacityalready
exist;asinundergroundinjection,transportationtotreatmentfacilitiesmayormaynotbe
practical. 67

LeadAuthorBiographicalSketch
DanArthurisafoundingmemberandtheManagingPartnerofALLConsulting.Mr.Arthurearnedhis
bachelorsdegreeinPetroleumEngineeringfromtheUniversityofMissouriRolla.Heisarecognized
authorityonenvironmentalissuespertainingtounconventionalresourcedevelopmentandproduction.Mr.
Arthurhasservedoriscurrentlyservingastheleadresearcheronseveralsignificantprojectsinvolving
unconventionalresources;environmentalconsiderationspertainingtoshalegasdevelopment;produced
watermanagementandrecycling;accesstofederallands;andlowimpactnaturalgasandoildevelopment.
HaspreviouslymanagedU.S.DepartmentofEnergy(DOE)fundedresearchprojectsinvolvingthe
developmentofbestmanagementpracticesutilizingGIStechnologiesforefficientenvironmentalprotection
duringunconventionalresourceDevelopmentandProduction;researchtodevelopanationalprimeroncoal
bedmethane;researchtodevelopaHandbookonthepreparationandreviewofenvironmentaldocuments
forCBMdevelopment;andresearchwiththeGroundWaterProtectionResearchFoundation(GWPRF)and
fundedbyDOEandBLMinvolvinganalysisofproducedwatermanagementalternativesandbeneficialusesof
coalbedmethaneproducedwater.Mr.Arthurhaspublishedmanyarticlesandreportsandhasmade
numerouspresentationsonenvironmental,energy,andtechnologyissues.
65Personalcommunicationwithnumerousoperatorandservicecompaniesinavarietyofshalegasplays.
66Willberg,D.M.,Steinsberger,N.,Hoover,R.,Card,R.J.,andQueen,J.1998.OptimizationofFractureCleanup

UsingFlowbackAnalysis.SPE39920MS.1998.

67Harper,J.2008.PublishedbytheBureauofTopographicandGeologicSurvey,PennsylvaniaDepartmentof

ConservationandNaturalResources.PennsylvaniaGeology.TheMarcellusShaleAnOldNewGasReservoir
inPennsylvania.v28.no1.Spring2008.

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