SPECIAL REPORT

T H E J O U R N A L O F E N E R G Y F R O M I N N O V A T I O N VOLUME 1 NUMBER 3 SEPTEMBER/OCTOBER 2013

URTeC: WOLFCAMP
Wolfcamp shale graduates
to world class play
South Texas county addresses disposal concerns
Tayvis Dunnahoe, Editor
FRIO COUNTY, Tex.Drilling for oil
and gas has been limited in Frio Coun-
ty, yet it has the largest population
of wells for wastewater disposal, or
wastewater injection, in South Texas.
With 10 active commercial disposal
wells, 10 more approved, and six await-
ing permit application review, county
officials are working to determine the
draw for this secondary activity.
Part of the answer is geological. The
county resides directly above the Ol-
mos formation. This oil- and mostly
water-bearing formation provides a
1,000-ft thick depository for disposal
wastewater. At a depth range of 4,500-
5,500 ft, the Olmos is firmly capped by
a 1,600-ft layer of shale. The concern
for residents is the Carrizo aquifer,
which lies at a depth of 1,200-1,900 ft.
Technologically, injection wells are
environmentally sound, and the prac-
tice of disposing of produced water is
common in many states throughout
the US. The process also is relatively
inexpensive, and when applied prop-
erly it can be fairly nonintrusive to lo-
cal communities.
In Frio Countys case, the sheer
abundance of new disposal sites has
raised local concern.
While environmental risks such as
contaminating ground and surface wa-
ter are a major source of concern, the
county also is working on increased
truck traffic, road repair, ensuring
public safety, and increasing prepared-
ness for emergency response.
Water management lifecycle
The Eagle Ford shale is a frontrunner
for economic stimulus and increased
production among similar North Amer-
ican plays. Since 2008, companies have
used the latest advances in technology
to identify the central core of this vast
contd on p. 3
DENVER, Colo.The Wolfcamp could
possibly become the largest oil and gas
discovery in the world, said Scott Shef-
field, chief executive officer, Pioneer
Natural Resources Co.
The operator is the largest acre-
age holder in the Spraberry/Wolfcamp
field with about 900,000 gross acres
(730,000 net acres), the majority of
which could be prospective for the hor-
izontal Wolfcamp shale.
Based on Pioneers extensive geolog-
ic database, petrophysical analysis, and
successful drilling results to date, there
is significant horizontal Wolfcamp
shale resource potential in this acreage.
A vast resource
The Wolfcamp is interesting because
its been out there, said J. Ross Craft,
chief executive officer, Approach Re-
sources Inc. Since the onset of Permian
development in the early 1920s, opera-
tors have drilled through this forma-
tion. Early in my career, we knew the
Wolfcamp as a nonproductive shale that
would put oil in the pits every once in
a while, Craft said. That was about it.
Today, Approach Resources holds
170,000 gross acres (mostly contigu-
ous) in the Permian basin with a re-
ported production of 8.4 MMboe/d as
of the first quarter of 2013. In 2012, the
contd on p. 6
Advanced technology
p. 20
Activity snapshot: Bakken
p. 12
LNG supply train
p. 18
Injection-induced seismicity
p. 10
P R S R T S T D
U S P O S T A G E
P A I D
L E B A N O N
J U N C T I O N K Y P E R M I T
# 8 4 8
Many of Frio Countys disposal wells are privately owned, which can hinder local over-
sight. Photo by Tayvis Dunnahoe.
1310uogr_1 1 9/24/13 2:52 PM
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1310uogr_2 2 9/24/13 2:52 PM
Unconventional Oil & Gas Report | September/October 2013 3
South Texas
contd from p. 1
resource play, which has resulted in
many success stories for early adopters.
Aside from increased production,
decreased drilling times, and returns
on investment, certain processes such
as wastewater disposal come primarily
as an operating expense. On the front
end, water management involves many
advanced technologies including reuse
and recycling.
In areas like Pennsylvanias Marcel-
lus, injection wells are not permitted
because of the lack of proper geology
in the region. Recycling and water re-
use have increased substantially in the
Marcellus region. The state of Ohio has
some injection well capacity. When fea-
sible, companies transport produced
water to these sites. From a cost per-
spective, disposing of water through
injection remains the least expensive
option. Recycling is encouraged, and
many operators use the process to alle-
viate pressures garnered from accessing
fresh water. Recent technologies such as
PennWell, Houston Office
1455 West Loop South, Suite 400,
Houston, TX 77027
Telephone 713.621.9720/Fax 713.963.6285
Web site www.ogjonline.com
Editor
Tayvis Dunnahoe, tayvisd@pennwell.com
Oil & Gas Journal Editorial Advisors
Bob Tippee, Editor, bobt@ogjonline.com
Alan Petzet, Chief Editor-Exploration, alanp@ogjonline.com
Steven Poruban, Senior Editor, stevenp@ogjonline.com
Houston Administration
Jim Klingele, Publisher, jimk@pennwell.com
Paul Westervelt, Vice-President/Group Publishing
Director, pwestervelt@pennwell.com
PennWell, Tulsa Office
1421 S. Sheridan Rd., Tulsa, OK 74112
PO Box 1260, Tulsa, OK 74101
Telephone 918.835.3161 / Fax 918.832.9290
Michelle Gourd, Senior Art Director,
michelleg@pennwell.com
Mike Reeder, Kay Wayne, Senior Illustrators
Donna Barnett, Editorial Assistant,
donnab@ogjonline.com
Charlie Cole, Production Director
Shirley Gamboa, Production Manager
Subscriber Service
Telephone 847.763.9540
E-mail uogr@halldata.com
Tommie Grigg, Audience Development Manager,
tommieg@pennwell.com
PennWell Corporate Headquarters
1421 S. Sheridan Rd., Tulsa, OK 74112
P.C. Lauinger, 1900-1988
Frank T. Lauinger, Chairman
Robert F. Biolchini, President/Chief Executive Officer
American Business Media
Advertising Sales
Mike MCManus, Regional Sales Representative,
MMcManus@Pennwell.com, 713.963.6254
Mike Moss, Digital Media Sales,
MikeM@PennWell.com, 713.963.6221
Stan Terry, Sales Representative,
StanT@Pennwell.com, 713.963.6208
Mark Gates, Regional Sales Manager,
MarkG@Pennwell.com, 713.963.6237
Marlene Breedlove, Online & Print Sales Mgr OGJ,
marleneb@pennwell.com, 713.963.6293
Myla Dixon, Marketing Manager,
MylaD@Pennwell.com, 713.963.6204
Source: Frontier Oilfeld Services Inc.
SALTWATER DISPOSAL WELL
Step One: Site is prepared, drilling rig is set up, and drilling begins. Over the next 2 weeks the disposal well
is drilled to over a mile deep depending on location and formations.
Step Two: Workers encase the drillpipe in a steel casing pipe as it passes through the water table, frequently
just a few hundred feet below the surface. A second pipe is drilled hundreds of feet deeper and cemented
into the disposal reservoir formation.
Step Three: After the drilling rig is removed, a wellhead is installed along with pumps and several pressure
injection tanks. The well will function up to 15 years accepting oil feld wastewater and will be safely
capped when it reaches capacity.
Protective
deposition
between water
table and
disposal
reservoir
formation
(8,000 ft)
Surface
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Injected saltwater
Sandstone
reservoir
formation
Impermeable
cap formation
Saltwater
fow
EPA-approved
steel casement
pipe
EPA-approved
protective
cement
casing
Water Table Protection
From surface to 500 ft
below watertable
Surface
Water table
waterless fracing, which uses liquefied
petroleum gas (LPG), may soon allevi-
ate pressure on water resources and de-
crease net disposal rates, but the tech-
nology is still fairly new.
In South Texas, the process of waste-
water injection is the preferred method
of disposal. It is important to note shale
development does not account for 100%
of the water currently injected. There are
many sources for produced water includ-
ing stripper wells throughout the state
that produce moslty water with limited
1310uogr_3 3 9/24/13 2:52 PM
4 Unconventional Oil & Gas Report | September/October 2013
Increased production
According to the Texas Railroad Com-
mission (RRC), the Eagle Fords produc-
tion reached nearly 600,000 b/d in June.
In 2008, production averaged 352 b/d
from the Eagle Ford shale. This increase
has brought major changes to South
Texas within the last 5 years.
In 2010, Frio County contained seven
disposal wells that took on 620,000 bbl
of produced water. By yearend 2012, the
county had 10 active disposal wells that
received more than 10 million bbl of wa-
ter. According to RRC data, this repre-
sented a 473% increase in the countys
disposal intake. Frio County is project-
ing that 60.8 million bbl of wastewater
will be disposed of by yearend.
The county is close to Karnes
County, the most productive in the
region with 46 million bbl of oil pro-
duced last year. La Salle and Dimmit
counties, also near Frio, produced
more than 44 million bbl of oil cumu-
latively last year. Frio County, which
has experienced very little produc-
tion, has become a unique feature in
the overall picture of the Eagle Ford
boom.
If you look at the other counties,
drilling activity is much higher than
in Frio County, but the numbers for
disposal wells lag by half, said Rich-
ard Graf, Frio County commission-
er, Pct. 2. According to Sally Velas-
quez, a consultant who works on Frio
Countys behalf, the county receives
more than 53% of the total wastewa-
ter coming from Eagle Ford produc-
tion. As of Aug. 16, 2013, Frio County
had eight active drilling rigs working
within its border.
From a load-bearing standpoint,
Frio County has had difficulty mak-
ing its case that providing disposal
well capacity comes with a cost that
is, in some cases, greater than its
neighboring counties that account for
larger shares of Eagle Ford produc-
tion.
The county recently worked with
the 83rd Texas Legislature and its
state leadership in Austin to add its
disposal capacity to Senate Bill 1747,
which was designed to assist energy
development counties with roadway
funding related to increased oil and
gas activity. We simply asked that the
bill include language to account for
disposal wells but were told that there
was no formula related to disposal ac-
tivity to justify adding it to the bill,
Velasquez said. The Frio County offi-
cials then coordinated with the Texas
Department of Transportation to de-
velop data that could justify its role as
an energy development county. Frio
was eventually added to the bill.
The county is in a unique position.
Many lawmakers as well as industry
proponents base energy develop-
ment involvement solely on drill-
ing and production activity, which is
marked by rig counts, completions,
and production numbers. Because
Frio County has very limited activity
for these types of operations, it has
been overlooked as providing a vital
service to the recent boom. In many
cases, Frio County has more truck
traffic than most high-production
counties, Velasquez said. A single
disposal facility in Frio County can
take on as many as 130 trucks/day
on average. With an average load of
130 bbl of water, one facility can take
on 16,900 b/d of wastewater. Monthly
and yearly averages for a single dis-
posal well are estimated at 50,700 bbl
and 608,400 bbl, respectively.
Given its potential for 25 opera-
tional disposal wells by the end of the
year, Frio County is actively pursuing
recognition as a producing county
based on the major increase in traf-
fic from this process. For perspec-
tive, the county could see more than
350,000 truckloads on its roadways
with 10 operational disposal wells
COUNTY WELLS VS. DISPOSAL SITES
County Rigs (as of Aug. 16, 2013)
Injection wells
(as of Jan. 1, 2013)
Karnes 33 13
McMullen 31 2
DeWitt 27 3
Dimmit 25 14
Gonzales 25 9
La Salle 25 12
Webb 23 12
Live Oak 11 7
Atascosa 10 8
Frio 6 20
*
Lavaca 5 6
Duval 3 7
Leon 1 3
*Currently six pending approvals with two applications pending for surface waste facilities as of
May 2013.
Frio County is easily accessible within the I-35 corridor, which has been referred to as the Gateway to the Eagle Ford.
35E
35
35
35
57
57
85
85
85
99.11268
28.86811
COMMERCIAL DISPOSAL WELLS IN FRIO COUNTY, TEXAS
Pearsall
Dilley
Source: Texas Railroad Commission
F r i o
Medina
A
t
a
s
c
o
s
a
La Salle
Z
a
v
a
l
a
amounts of saleable oil. Flowback water
from the regions shale development sup-
plies a large portion of disposed water in
Frio County, but injection totals com-
prise volumes from many sources.
Access and location can affect the
bottom line for many operators. In the
Marcellus example, transporting wa-
ter into Ohio for disposal can be cost
prohibitive, hence the increase in reuse
technology. For Frio County, Interstate
35 (I-35) offers an easily accessible route
for most Eagle Ford operations. As a re-
sult, both Pearsall and Dilley, Tex., have
been inundated with associated traffic
from wastewater disposal.
1310uogr_4 4 9/24/13 2:52 PM
Unconventional Oil & Gas Report | September/October 2013 5
in a single year. A producing county
with 30 rigs actively drilling will see
around 76,000 truckloads based on
a 5-year average. Essentially, this ac-
counts for nearly a fivefold increase in
activity.
Using this formula, Frio County
was successful in having injection
wells added to the wording for Senate
Bill 1747, which will provide match-
ing grant funds to energy develop-
ment counties for use in repairing
roadways and other municipal pro-
grams related to increased oil and gas
activity. While the grant will match
50% for producing counties, just 10%
will be allocated in matching funds
for counties primarily dealing with
disposal well activity.
Environmental risks
As recently as 2009, RRC has denied
applications for disposal wells because
of a combination of resident concerns
and a lack of data for the proposed in-
jection well (see Oil and Gas Docket
No. 01-0262406, RRC).
The environmental risks associated
with disposal wells are manageable under
the current standards provided by RRC.
According to US Geological Sur-
vey Chief Hydrologist George Ozona,
Some areas have seen recent concerns
related to groundwater contamination,
such as signs of arsenic in the Barnett
and methane and carbon dioxide in the
Marcellus, but no contamination has
been detected in South Texas related to
Eagle Ford shale development. Since
2010, USGS also has worked with the
San Antonio River Authority. Water
samples have shown no constituents
from unconventional development,
Ozona said. The study is now focusing
on the tributaries to further eliminate
possible sources of contamination.
Permitting disposal wells in South
Texas is not impossible, but the well
must meet specific standards prior to
being approved. In some cases a non-
productive well may be used, which is
where Frio County officials are most
concerned. Casing integrity is the key
element, and applications must prove
that the wellbore is properly isolated
from the aquifer to prevent contami-
nation. Neighboring wells also must
be shown to be properly shut in to
prevent communication with the
aquifer as formation pressure changes
with injection.
In other cases, a new well may be
drilled. This process ensures proper
isolation from local aquifers and pro-
vides a proper casing structure for the
life of the disposal well. To date, RRC
is actively restructuring its rules for
disposal wells, and this process may
see regulatory changes within the
next several years.
On the surface, increased traffic
provides a substantial risk for Frio
County. Groundwater could be af-
fected in the event of a collision.
Malfunction at a disposal site also
could lead to contamination of sur-
face water. In addition to water con-
tamination, other emergencies such
as explosions, fires, and air quality
issues are viewed with caution.
The eye opener for us was an ex-
plosion and ensuing fire that caught
us off guard in Pearsall, said Frio
County Judge Carlos Garcia. In Janu-
ary 2012, a disposal well outside of
Pearsall exploded when workers were
welding near a storage tank. Located
about 50 miles southwest of San An-
tonio, the towns volunteer fire de-
partment responded to the fire, which
continued to burn for more than an
hour. Three people were injured.
With assistance from three nearby
fire departments, the fire was extin-
guished with water and foam, requir-
ing the efforts of 12 trucks and 33
firefighters.
The lack of training for our emer-
gency personnel put them at risk be-
cause the county had no experience
fighting this type of fire, Garcia
said, and we were not equipped as
first responders for this type of emer-
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6 Unconventional Oil & Gas Report | September/October 2013
disposal. Waste is a curse word in any
business, Graf said. All waste is not
necessarily toxic, but its waste and, as
such, it can contaminate. The goal for
Frio County is to find oil and gas com-
panies that are willing to talk about the
issue. It is better to prevent something
from happening than to try and repair
a major problem after it has already oc-
curred, Graf said. As leaders of the
community, we have to be responsible.
We have to say that we have done ev-
erything in our power to provide reme-
diation if a major catastrophe were to
take place.
Business generally aims to maxi-
mizing profit. In Frio Countys case,
its ability to maximize profit is hin-
dered as counties in Texas typically
have no statutory power or zoning au-
thority to generate revenues with in-
creased activity. For the disposal well
market, landowners are in control of
the process. But in general, the Eagle
Ford boom has provided the county
with similar benefits as its neighbor-
ing, producing counties. Retail sur-
pluses, hotel and RV park rentals, and
contd from p. 1
company held 95.5 MMboe of proved
reserves, with 69% represented by oil
and natural gas liquids. When we first
started the company in 2006, we had a
$5 million commitment, 0 acres, and 0
reserves, Craft said.
Both Pioneer and Approach Re-
sources tout Wolfcamp potential as a
boon for the industry. According to
Sheffield, Pioneers Eagle Ford success
has provided a smooth transfer into the
Wolfcamp. When comparing phases
of development, we see the Wolfcamp
trending higher than the Eagle Ford
based on activity and production, he
said.
According to Sheffield, the compa-
ny will test 13 zones within the next
3 years. Sheffield noted that recover-
able reserves were based solely on the
PAVEMENT LIFE REDUCTION IN CONNECTION WITH SALTWATER DISPOSAL FACILITIES

Saltwater disposal facility Pavement life (years) for no. of design ESALs
Capacity, b/d Truck loads/day Truck loads/year ESALs/year 750,000 2,500,000 7,000,000
1,000 10 3,494 8,581 87.4 291.3 815.8
3,000 29 10,483 25,743 29.1 97.1 271.9
10,000 97 34,944 85,810 8.7 29.1 81.6
20,000 194 69,888 171,621 4.4 14.6 40.8
25,000 243 87,360 214,526 3.5 11.7 32.6
30,000 291 104,832 257,431 2.9 9.7 27.2
37,000 359 129,293 317,499 2.4 7.9 22.0
ESAL = equivalent single axle load
gency. It was later discovered that the
disposal well was privately owned and
operated. RRC completed an initial in-
vestigation and determined that several
ignition sources were close to gas-con-
taining water. This is one of the rea-
sons we are working to raise awareness
for these issue. We owe it to our con-
stituents, Garcia said.
Finding middle ground
Water disposal is an operational ex-
pense. While virtually no revenue is
attached to waste from oil and gas
development from an operators per-
spective, there is an essential cost for
counties where this water is disposed.
Private ownership of disposal wells can
be problematic in the event of a catas-
trophe, yet the process is purely man-
ageable if proper safety guidelines are
followed. Both from a personal and en-
vironmental safety standpoint, water
injection wells can be managed respon-
sibly.
Meanwhile, the county must con-
tend with the underlying issue of edu-
cating itself on the topic of wastewater
local job opportunities have grown.
Weve got nothing against the in-
dustry, but there are some negative
sides to this issue that need to be ad-
dressed, Garcia explained. Risks asso-
ciated to exponential growth of waste-
water disposal capacity have placed
undue pressures on the countys bud-
get. Training first responders to fight
chemical fires, keeping the roadways
safe and in good repair, and putting
aside funding to provide effective reme-
diation in the event of a major catastro-
phe are issues that the county commis-
sioners are actively pursuing. Funding
a major crisis would be difficult at this
point. The county doesnt have the re-
sources to deal with a major problem
should something happen, and the state
and federal governments say they dont
have the resources either, Graf said.
So, whos going to help us to resolve an
emergency situation?
Frio County has proposed a coun-
ty-based service fee on water disposal
at a rate of 1/bbl to meet it budgetary
concerns. This move has not garnered
the county much assistance from the
Wolfcamp
industry as impact fees are often bad for
business.
There is an extensive amount of dis-
posal going on in this county, Graf said.
Whether we have drilling rigs or not,
we have just as much traffic as any of
the other counties from disposal. The
goal, as stated by Frio County officials,
is not to penalize its entrepeneurs. As
a commissioner we have to take note of
the economic benefits of increased oil
and gas activity, but we also must pay
close attention to the environmental
quality of our surroundings, Graf said.
Collaborative expansion
The Eagle Ford shale is anticipated to
be productive through the next 20 to 25
years. The water produced from here
has to go somewherethere is no ques-
tion about that. But how much of this
waste is going to be pumped into Frio
County? Graf asked. There are other
counties that also have a good number
of disposal wells.
As the Eagle Ford play continues
to expand, more drilling and produc-
tion activity will most likely enter Frio
County, which could compound its
problems should the trend of adding
new disposal wells continue.
Frio County wants better monitoring
for its disposal activity. Knowing what
is being pumped, and at what pressures,
could alleviate some of the concerns the
commissioners currently have. Some
energy companies have volunteered to
help with certain things, Graf said. It
takes the counties, cities, the local en-
trepreneurs, and the industry itself to
deal with problems that we cant fix on
our own, he said. We have to find the
best method to deal with these issues
without becoming adversarial.
Wolfcamp A, B, and D shelves and the
Jo Mill formation. The potential is enor-
mous, and more reserves are yet to be
discovered, Sheffield said.
Pioneer combines its Spraberry/
Wolfcamp acreage. It operates on the
northern end of the play, which is said
to contain an estimated 3,500-4,000 ft
of shales, which translates to nearly 3
to 4 million acres when considered in
3D space as opposed to surface area.
Compare that to the Eagle Ford shale
formation, which is about 300 ft thick
and the Spraberry/Wolfcamp shale,
with its 50 billion boe, begins to dwarf
the Eagle Ford and the Bakken with 27
billion boe and 13 billion boe, respec-
tively, Sheffield said.
The Wolfcamps variety of geological
zones places it as a frontrunner among
the worlds largest onshore plays. Based
on recoverable reserves, the Wolfcamp
is second only the Ghawar field in Saudi
Arabia. We believe this field will reach
100 billion boe recoverable reserves at
some point in time, Sheffield said.
Approach Resources has identified
2,000 drilling locations. Were run-
ning three horizontal rigs, and plan on
moving to four in 2014, Craft said.
Prudhoe Bay, which covers 215,000
acres, is geographically the largest play
in the US with reserves around 13 bil-
lion boe. Approachs acreage in the
Wolfcamp is about 1,000, and if you
look at these from the perspective of a
1,200-ft column, that equals 7 billion
boe recoverable reserves, Craft said.
The company is risking this develop-
ment at 25% with a 3.5% recovery fac-
tor for oil and a 10% recovery factor for
natural gas. Its not quite there with
what you see with Prudhoe Bay, but
when you expand the Wolfcamp out to
where the bulk of the activity has been
up to just recently, that adds another 1
million acres, Craft said.
Pioneer recently announced several
discovery wells in Martin and Midland
counties. That puts quite a bit of real es-
tate between those counties and the ma-
jority of activity thats been developed to
date, Craft said. This is the reason why
the Wolfcamp has appealed to us.
According to Approach Resources,
the Wolfcamp alone has the potential
to become the largest oil field in the
US. And it was right in the indus-
trys sight, Craft said. It wasnt de-
veloped until producers ran out of the
easy stuff and gas prices tanked that
companies started focusing on newer
sources of oil.
1310uogr_6 6 9/24/13 2:52 PM
Unconventional Oil & Gas Report | September/October 2013 7
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Unique properties
What sets the Wolfcamp apart from
similar plays is its inherent rock prop-
erties, Craft said. Typical total organ-
ic carbon (TOC) runs between 2.24-
7.24%. Weve looked at core samples
from 30-40 miles away, and they all fall
within this range. Some fall lower or
higher, but a uniform average in TOC
across a wide span provides a solid base
from which to work. With the variety
of shale plays out there, anything be-
tween 2-10% is considered excellent,
he added.
Thermal maturity also is an im-
portant factor. Whats unique about
the Wolfcamp is that its normal pres-
sured, Craft said. Its probably one of
the few shale plays out there that has
normal pressure. While temperature
is not an issue for drilling and comple-
tion activities, normal pressured res-
ervoirs can present their own unique
Operators are gaining ground in the stacked Wolfcamp play, which is online to become
the largest onshore oil field in the US based on cumulative and recoverable reserves.
Photo by Approach Resources Inc.
challenges as production begins.
Wolfcamp generally displays vitrin-
ite reflectance (Ro) values ranging from
0.95-0.97%. Likewise, these are on the
same band in core samples from 30-40
miles away, Craft said. Ro indicates
the level of organic maturity. Ro val-
ues greater than 0.78% usually indicate
gas-prone rocks. High values can sug-
gest sweet spots for completing gas
shale wells. The Wolfcamps Ro values
places it right into the deep oil and wet
gas generation window, and this is ben-
eficial because it takes the gas to help
move the oil out of zone in this normal
pressured reservoir, Craft explained.
Normal porosity for the Wolfcamp
ranges from 4-10%, with an average of
about 7% throughout much of the play.
According to Craft, This provides plen-
ty of porosity for the process to work.
Organic material for Wolfcamp is about
72 scf/ton. If the Wolfcamp was a pure
1310uogr_7 7 9/24/13 2:52 PM
8 Unconventional Oil & Gas Report | September/October 2013
gas play that would be on the border-
line and probably wouldnt work, but
for an oil play it gives us plenty of up-
side potential.
According to Craft, the rock compo-
sition is favorable. Wolfcamp is sitting
right where it needs to be, he said. Typ-
ical cores show the composition to con-
sist of carbonate (26%), quartz (36%),
and clays (25%). This creates a brittle
environment conducive to natural frac-
turing from thrust during the drilling
process. Approach Resources uses log-
ging-while-drilling technology to avert
risks associated with stuck tools, Craft
said. Our laterals are 7,000 ft on aver-
age with a natural frac density ranging
from 1,500-4,000 fractures per lateral
(2,000 on average), he said. The forma-
tion responds further to hydraulic frac-
turing.
The most important attribute to
the Wolfcamp is its uniformity, Craft
said. As the play tracks east to west, the
Wolfcamp A, B, and C shelves are uni-
form and consistent. The D interval
ranges from 500-1,000 ft, he added.
The company currently produces out of
all four of these zones.
Learning curve
Approach Resources estimates Wolf-
camp thickness at 1,200 ft. The Clear-
fork above this acts as a trap. How
do you develop shale that is 1,200-ft
thick, Craft asked. You have to be
very careful with what you put into the
reservoir.
The company initially tested the
Wolfcamp in 2005 through an acid
treatment of an older perforation. The
well produced about 2 b/d of oil. This
was not a stellar result, but it indicated
that something was there, Craft said.
In 2008, the company made a second
attempt with a CO
2
foam treatment.
That turned out to be the wrong thing
to do in a shale formation, Craft noted.
While the well proved to be uneco-
nomic, the company learned from this
enterprise. Its important to keep in
mind that you are dealing with a nanod-
arcy environment, Craft said.
The company began with an aggres-
sive approach to fracing its wells but soon
learned that more planning was need-
ed to increase ultimate recovery. On its
first completions, Approach Resources
attempted gels to achieve the necessary
heights on its fracture stimulations. The
initial thinking was that this would be the
only method capable of pushing the sand
upward into fractures. The companys
earliest wells made very good gas wells in
the first 30 days of production but would
rapidly decline by the 60-day mark. We
would be lucky to have a well that was
producing 200 Mcfd of gas and 50 b/d of
oil, Craft said. Because the Wolfcamp is
a normal pressured reservoir, the gel was
condensing and its residuals were reduc-
ing permeability.
Due to the lack of production from
fracing with gels, the company moved
to slickwater and started to see im-
provement. A typical frac job for Ap-
proach Resources in the Wolfcamp
consists of 9,000 lbs of sand with
250,000 bbl of fluid.
Once we began to cut the friction
reducer (FR) down to about 0.35 per
1,000 gal of fluid, our production in-
creased dramatically, he said. The
biggest mistake people make in the
Wolfcamp right now is running too
much FR in their slickwater comple-
tions, he added. FR is slick in small
quantities, and according to Craft, it is
common for operators to increase FR
in slickwater frac jobs up to 0.75 or 1
gal per 1,000 gal of fluid. The extra
FR can produce positive results early
on but ultimately acts as a gel and can
deteriorate production over time. As
it opens fractures, it is also plugging
them, he explained.
Approach Resources also benefited
from running microseismic on its earli-
est wells. We wanted to see what the
fractures would do, Craft said. In the
Wolfcamp A bench, which has a frac
rating of 0.56 as opposed to the average
of 0.81 or 0.82 for the remaining inter-
vals, the company quickly learned that
landing high in this interval would re-
sult in height thrust into the Clearfork
formation during frac jobs. Once you
get here, fracs will run for a long dis-
tance, so it is important to be careful
in this portion of the reservoir, he add-
ed. For the most part, frac heights were
contained in the A bench at 300-350 ft
using slickwater. The B bench showed
similar results.
For the Wolfcamp C, the company
planned to land into the upper portion
allowing the fracs to extend through
the C bench into the lower B. We were
surprised to find a 10-ft thick dolomitic
stringer right at the top of the Wolfcamp
C, Craft said. The stringer is traceable
across the field.
For its first frac job in the Wolfcamp
C, only half of the fracs were landed.
The dolomitic layer acted as a frac bar-
rier. Its not a permeability barrier,
as pressure will move through it, but
fracs will not penetrate it, Craft ex-
plained.
Because of the overshadowing from
the containment stringer, the company
revised its well plan to land the lateral
100 ft deeper in the Wolfcamp C. It has
The Wolfcamp shale in West Texas has been known to operators since the onset of Permian basin development in the 1920s.
The advent of unconventional technology has focused attention on this formation, which was once thought to be uneconomic.
Photo by Approach Resources Inc.
0 5 10 15 20 25 30 35 40 45 50
LARGEST US OIL FIELDS
Estimated recoverable resource
*
(billion boe)
Spraberry/Wolfcamp
Eagle Ford
Prudhoe Bay
Bakken
Delaware basin
East Texas basin
*
Cumulative production and estimated recoverable reserves.
Source: Pioneer Natural Resources Co.
The Wolfcamp is the the largest producing shale play in the US based on cumulative
and estimated reserves.
1310uogr_8 8 9/24/13 2:52 PM
Unconventional Oil & Gas Report | September/October 2013 9
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since drilled three additional C bench
wells with positive results.
The key element in the Wolfcamp
is to increase the surface area through
optimal rock breakage. There is little
concern for the competitive nature of
the reservoir when you conduct hy-
draulic fracturing all at once, Craft
said. However, the companys experi-
ence has shown that waiting between
frac jobs on different intervals can have
a negative effect on the outcome.
Field development
Approach Resources practices full-field
development in its Wolfcamp acre-
age using pad drilling from one side
of the field. Maximizing the surface
area requires drilling and fracing all
the way across. Our system is to stack
the wellbores from A, B, and C, Craft
explained. In addition, these stacked
completions are optimized for the to-
tal production of all three intervals.
In some cases, one well could produce
700,000 boe with one below producing
200,000 boe. Whats important is that
the total volume equals to 1.35 MM-
boe, he said.
With a recovery factor of only 3.5%,
in-place reserves range from 518 mil-
lion boe to 648 million boe. If you can
raise that recovery factor by 0.5%, that is
a huge increase in recoverable reserves,
Craft said.
The company produces from stacked
laterals in the A and B and in the B and
C intervals of the Wolfcamp. It is cur-
rently optimizing three stacks and re-
searching the proper distances for this
layout to be productive. We hope to
have those answers within the next 6
months, Craft said.
Cost control
Like many operators working in other
major shale plays, Approach Resources
has dramatically reduced its drilling
and completion costs in the Wolfcamp.
We cant control commodity prices,
but controlling cost is a key element
to our success in the Wolfcamp, Craft
said. Originally, a Wolfcamp well was
on average a $9 million investment. It
is now down to $5.5 million/well. We
will be at $4.8 million/well by the end
of 2013 or early 2014, he said.
A mix of adding infrastructure, ex-
perimenting with frac zones, and re-
ducing the number of frac stages per
well has contributed to the overall cost
reduction in the Wolfcamp, making it
a prime investment for unconventional
resource development.
Editors note: Comments were presented
at the first annual Unconventional Re-
sources Technology Conference (URTeC), a
joint effort among SPE, SEG, and AAPG,
held in Denver, Aug. 12-14, 2013.
Reprints of any article appearing in this issue may be purchased by contacting
Rhonda Brown, Reprint Marketing Manager,
Foster Printing Co., 4295 Ohio St., Michigan City, IN 46360,
1-866-879-9144 (ext. 194) 219-561-2023 (fax)
E-mail: rhondab@fosterprinting.com Web site: www.fosterprinting.com
1310uogr_9 9 9/24/13 2:52 PM
10 Unconventional Oil & Gas Report | September/October 2013
Tayvis Dunnahoe
Editor
For several decades in the US, earth-
quakes occurred at a steady rate of 21
events per year. Beginning in 2001, this
rate began to increase and peaked in
2011 at 188 earthquakes.
Impoundment of reservoirs, sur-
face and underground mining; with-
drawal of fluids and gas from the sub-
surface; and injection of fluids into
underground formations are capable
of inducing earthquakes, according to
research conducted by William Ells-
worth, seismologist for the US Geologi-
cal Survey (USGS) Earthquake Science
Center. Ellsworth recently published
his findings in Science, the academic
journal of the American Association for
the Advancement of Science. Disposal
wells could be a source for some of the
increase in earthquakes throughout the
US Midcontinent, according to Ells-
worth.
New drilling and well completion
technologies have enabled the extrac-
tion of oil and gas from previously un-
productive formations. In some regions,
this new production also has increased
the amount of fluid being disposed of
in deep injection wells.
Degrees of magnitude
Hydraulic fracturing essentially func-
tions through the creation of micro-
earthquakes (those with magnitudes
[Mw] below 2.0). The actual fracing
process has very low risk associated
with it, Ellsworth said. Different lines
of evidence show that fracing is an un-
likely source for a large earthquake.
In the US, more than 100,000 wells
have been completed using hydraulic
fracturing in recent years. To date, the
largest induced earthquake from this
process was Mw 3.6. According to the
findings, this is too small to pose a seri-
ous risk to the community. The study
claims that higher risks are posed by
wastewater disposal by injection into
deep wells. This process has the poten-
tial to induce larger earthquakes that
could have a greater impact.
An analysis of earthquakes and
wastewater wells by geophysicist Cliff
Frohlich of the University of Texas at
Austin (UT) found spatial associations
between high-magnitude earthquakes
and high-volume injection wells. Risk
factors identified in USGS research are
the combination of deep disposal wells
that inject into rocks that may be in
communication with the crystalline
basement and high-volume injection
combined with high pressure. These
are all factors that seem to be common
among the wells where problems have
occurred, Ellsworth said.
In 2011 and 2012, disposal wells
may have triggered several of the larg-
est earthquakes in the Midcontinent.
The largest of these was a Mw 5.6 event
that occurred in central Oklahoma. Ac-
cording to a study by geophysicist Katie
Keranen of the Univerity of Oklahoma,
injection carried out at a nearby dispos-
al well weakened a preexisting fault by
elevating the fluid pressure in the for-
mation.
Formation factors
Factors that can induce earthquakes
are stresses in the grounddifferen-
tial and sheerand a fault that could
move under the applied stresses. The
stresses are high virtually everywhere.
That is a consequence of the nature of
the planet we live on, Ellsworth said.
Even though the Midcontinent is not
an area that is actively deforming to-
day, the stresses are present, and in
many places they are close to the failure
point, he added. Given that a fault has
the proper orientation within the cur-
rent stress field, an earthquake can oc-
cur.
However, only a small fraction of
disposal wells have earthquake poten-
tial, according to Ellsworth. In the US
there are more than 30,000 wastewater
disposal wells. The problematic wells
typically dispose of very large volumes
of water and communicate pressure
perturbations directly into basement
faults.
One lesson to be drawn from the
infrequent association of wastewater
wells and earthquakes is that in most
cases the formations selected for dis-
posal seem to be appropriate. The en-
vironmental regulations for injection
wells are primarily designed to protect
freshwater aquifers from pollution,
Ellsworth explained. Where there are
problems, we have seen evidence that
the pressures have communicated with
faults at greater depths.
The crystalline basement is known
to have an abundance of faults, and im-
aging faults within this formation is dif-
ficult. An assumption can be made that
there is likely going to be a fault that
could slip if the pressure from injec-
tion is capable of communicating with
that fault. Thats the thing you want to
avoid, Ellsworth said.
On Dec. 31, 2011, Youngstown,
Ohio, experienced an earthquake (Mw
4), which caused only minor damage in
some areas. In this case, fluid was being
injected into a well that was at the very
base of the sedimentary column that
also penetrated into the basement. The
fault that slipped was in the basement a
bit deeper than the disposal well, Ells-
worth said.
Data limitations
Quantifying seismic hazards associated
with injection-induced earthquakes,
such as those that struck in 2011, pres-
ents difficult challenges that will re-
quire new research into the physics of
induced earthquakes and the potential
for inducing large-magnitude events.
Most of the wastewater wells in the
US do not have any detected seismic-
ity associated with them. The current
level of earthquake detection means
that the potential is not high every-
where disposal wells are located. The
larger question that we are facing is try-
ing to understand the conditions at the
wells that are problematic, Ellsworth
said. Ultimately, we would like to
know more about the state of stress un-
derground before injection begins and
what the natural formations were, along
with pressures and how these pressures
have varied over time.
Historically, reporting injection well
data is done annually by the operators
of disposal wells. Most are required
only to report monthly average pres-
sures. Thats useful to have, but its not
ideal from the standpoint of monitor-
ing, Ellsworth said. Data gathering on
a national basis can be difficult. Some
states have well-maintained databas-
es and there are good reasons to trust
those numbers. In other states the situ-
ation can be less clear, Ellsworth said.
There is no revenue coming out of
this part of the industry as opposed to
production, so its not surprising that
those records in some states are not in
as great a shape as they might be for this
purpose, he continued. In many cases,
obtaining a simple list of what the wells
are and how much water was injected
over a period of time is not straightfor-
ward. Its something that we are cur-
rently working on, but we do not have a
national snapshot at this point, he said.
From a geomechanical standpoint,
total fluid injected and pressures are
key findings to perform proper res-
ervoir modeling. Ellsworth said un-
derstanding how high pressures may
be and where these pressures may be
transmitted are important factors in
early prediction of seismic events.
Wastewater comes from many
sources, and it is not solely derived
from flowback or coproduction water
from shale gas. The oil and gas industry
will need clear requirements for opera-
tion, and regulators must have a solid
scientific basis for those requirements.
Rules of disposal
Produced water from aging wells sup-
ply a large portion of the wastewater
currently disposed through deep injec-
tion wells. Modern advances in recy-
cling and reuse in unconventional op-
erations have netted a certain decrease
in the amount of flowback and copro-
duced water being disposed.
Where water can be treated it becomes
a valuable resource, Ellsworth said.
In some cases, injection is necessary.
Wastewater wells are permitted without
consideration of earthquake hazard issues.
They are governed by old laws related to
drinking water, and that is very impor-
tant, Ellsworth said. However, as the sci-
ence improves, new rules may be created
that require more data to avoid commu-
nication with existing faults. The US En-
Understanding the science behind induced seismicity
Earthquakes with magnitude (M) 3 in the US Midcontinent, 19672012.
Source: Earthquake Science Center, USGS
1,200
1,400
1970 1980 1990 2000 2010
1,000
800
600
400
200
0
E
a
r
t
h
q
u
a
k
e

c
o
u
n
t
EARTHQUAKES (US MIDCONTINENT 1967-2012)
FIG. 1
Earthquake count (M 3)
1310uogr_10 10 9/24/13 2:53 PM
Unconventional Oil & Gas Report | September/October 2013 11
z
1
0
0
6
2
1
O
G
J
x
k
a
0
1
Source: Earthquake Science Center, USGS
MECHANISMS FOR INDUCING EARTHQUAKES
FIG. 2
Direct fuid pressure
effects of injection
(fuid pressure diffusion)
Changes in solid stress due to fuid
extraction or injection
(poro-thermoelastic effects, changes
in gravitational loading)
Well
Fault
Fault
Permeable
reservoir/aquifer
Permeable
reservoir/aquifer
Increase in
pore pressure
along fault
(requires high-
permeability
pathway)
Change in loading
conditions on fault
(no direct hydrologic
connection required)
Volume and/or mass change
vironmental Protection Agency has con-
sidered revising its guidelines to include
earthquake hazards, but this has been a
very slow process and will take time.
The recent increase from 2011 is
not all related to fracing, that is clear,
Ellsworth said. The frustrating part
is that for some of the areas that con-
tribute heavily to the increase, such as
central Oklahoma, we do not have clear
answers as to why, he added. The re-
gion is home to many different activities
including unconventional development
and enhanced recovery. Sometimes, the
source of earthquake events is clear-
ly identifiable. In Arkansas, we can
trace the increase in seismic events to
particular disposal wells, and attribute
the earthquakes that were induced to
them, Ellsworth said.
In areas like the Cogdell and North
Snider oil fields in West Texas, earth-
quakes can accompany secondary re-
covery activity. Its been known for
some time that earthquakes can be in-
duced in these fields, Ellsworth said.
Managing risks
Because current regulatory standards
revolve around protecting potable wa-
ter sources, timely reporting of injec-
tion volumes and pressures is lacking
in many instances.
According to Ellsworths findings,
the situation is far from ideal for man-
aging earthquake risk from injection ac-
tivities. Seismic monitoring capabilities
also are limited in many areas where
wastewater injection has increased,
which can prevent the timely detection
of small earthquakes that often presage
larger seismic events.
One of the methods that has been
widely discussed is the traffic light
system, which could help manage
earthquake risks, he said. Setting seis-
mic activity thresholds that prompt a
reduction in injection rate or pressure
is an effective method to manage high-
magnitude earthquake risks. Such sys-
tems have been used selectively since
the late 1960s. And, in the case of the
Youngstown earthquake in 2011, the
decision to stop injection in the asso-
ciated disposal well was based on seis-
micity from the day before, and seis-
micity near the well declined within a
month.
All of the examples for effective
management feature better seismic
monitoring capabilities than currently
exist throughout the US. Ellsworths
findings show that lowering the mag-
nitude detection threshold in regions
where injection wells are concentrated
to below Mw 2.0 would increase the ef-
fectiveness of the traffic light system as
the current US detection threshold of
Mw 3.0 in many of these areas would
have a limited value.
We need better reporting of infor-
mation on wastewater disposal than is
currently available, Ellsworth said. Im-
provements in the timeliness of reporting
injection data to regulatory agencies could
provide usable information on hydrologic
conditions potentially associated with in-
duced seismicity. Specific data such as vol-
umes and injection pressures reported on
a daily basis could provide better manage-
ment of risks. We would need improved
seismic monitoring so that the indications
of problems that are often seen in smaller
earthquakes would be detected in a timely
manner, Ellsworth reiterated.
Ultimately, better knowledge of the
subsurface near disposal well locations
is needed to develop a predictive un-
derstanding of the hazards posed by in-
duced earthquakes.
Because earthquakes are predomi-
nantly natural occurrences, it can be
extremely difficult to identify sources of
inducement in some cases. In Ohio and
Arkansas, disposal wells were identified
as a direct cause, but in most cases there
is no clear definition of a single source.
Increased earthquake occurrence in
the Midcontinent will require more re-
search, but there have been internation-
al examples of induced seismicity.
Since 1900, the Netherlands has
experienced almost 50 earthquakes of
Mw 3.0 or higher. The majority of these
seismic events have occurred in the
southern part of the country as a result
of natural causes. The Dutch govern-
ment has conceded that virtually all of
the earthquakes in the northern part
of the Netherlands are due to gas pro-
duction. Changes in rock strata as gas
is produced have led to an increase in
earthquakes in the region, causing mi-
nor damage to many homes. To date,
the most severe earthquake induced by
gas production registered Mw 3.5.
Gas production in the countrys
Groningen regionan area that con-
tains up to 1,800 natural faults in the
porous Rotliegend sandstone subsur-
faceis undergoing slow, natural sub-
sidence. The area has been a major nat-
ural gas resource in the country since
1963, and as a result of 50 years of de-
pletion, the ground surface above the
center of the Groningen field has sub-
sided by more than 25 cm (9.84 in.).
As early as 2003, the Netherlands
has enacted provisions within its Min-
ing Act that require a portion of the
revenues from gas production be divert-
ed into a Damage Guarantee Fund from
which citizens who have incurred dam-
age from induced earthquakes could
qualify for reimbursements. To date,
the fund contains 100 million.
More research is being carried out
by USGS and several leading universi-
ties, including Stanford, UT, and the
University of Oklahoma (OU). Weve
also seen some interest from several op-
erating companies, Ellsworth said.
Industry involvement
Operating companies are taking pre-
cautions whenever possible to prevent
triggering seismicity. While specific
cases are still open to debate, there is
an emerging scientific consensus that,
out of 30,000 disposal wells in the US,
cases are rare where seismic events
have been triggered, said Randy Keller,
director of the Oklahoma Geological
Survey (OGS) and Edward Lamb Mc-
Collough Chair in Geology and Geo-
physics at OU. Keller also believes that
the industry recognizes the risks and
is currently taking action to develop
techniques for mitigating further earth-
quakes.
OGS recently convened a workshop
(July 16, 2013) as a first step toward devel-
oping a set of recommended best practices
to address the issue of induced/triggered
seismicity. According to Keller, about 70
participants (the majority being from in-
dustry) shared ideas and experiences dur-
ing a series of technical talks and in break-
out sessions. Follow-up meetings and a
report will be forthcoming.
There are numerous cases where oil
and gas companies are conducting inter-
nal research, and some companies have
been very open in discussing this issue
and have sought input from the scientific
community, Keller said. While funding
remains a challenge for external, neutral
research groups, the dialogue about the
wider issue has grown within the indus-
try, according to Keller.
A broad cross-section of the petro-
leum industry realizes that the issue of
triggered or induced earthquakes can
no longer be ignored, Keller said.
Schematic diagram of mechanisms for inducing earthquakes
1310uogr_11 11 9/24/13 2:53 PM
12 Unconventional Oil & Gas Report | September/October 2013
A C T I V I T Y S N A P S H O T :
N O R T H D A K O T A B A K K E N
S o u r c e : No r t h D a k o t a O i l & G a s C o mi s s i o n , E S RI - B a s e Ma p S e r v i c e - Te r r i a n ( E x t r a c t e d A u g . 9 , 2 0 1 3 )
TOP FIVE PRODUCING COUNTIES (WELLS)
1. McKenzie County, ND
2. Williams County, ND
3. Mountrail County, ND
4. Bottineau County, ND
5. Dunn County, ND
TOP FIVE MOST ACTIVE COUNTIES (RIGS)
1. McKenzie County, ND
2. Mountrail County, ND
3. Dunn County, ND
4. Williams County, ND
5. Divide County, ND
McKenzie
Williams
Mountrail
Bottineau
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Billings
Burke
Bowman
Renville
Divide
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NORTH DAKOTA BAKKEN: TOP 10 COUNTIES (NUMBER OF WELLS)
NORTH DAKOTA BAKKEN: TOP FIVE DRILLERS (NUMBER OF RIGS) NORTH DAKOTA BAKKEN: TOP NINE OPERATORS (NUMBER OF COMPLETIONS)
NORTH DAKOTA BAKKEN: TOP TEN OPERATORS (NUMBER OF WELLS)
1310uogr_12 12 9/24/13 2:53 PM
Unconventional Oil & Gas Report | September/October 2013 13
MCKENZIE COUNTY, NORTH DAKOTA
W
illia
m
s
M
o
u
n
t
r
a
il
McKenzie
Dunn
WILLIAMS COUNTY, NORTH DAKOTA
Divide
Burke
McKenzie
Mountrail
W i l l i a m s
N
O
R
T
H
D
A
K
O
T
A
M
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T
A
N
A
Lake Sakakawea
T H E T O P F I V E P R O D U C I N G C O U N T I E S ( W E L L S )
S o u r c e : No r t h D a k o t a O i l & G a s C o mi s s i o n , E S RI - B a s e Ma p S e r v i c e - Te r r i a n ( E x t r a c t e d A u g . 9 , 2 0 1 3 )
1310uogr_13 13 9/24/13 2:53 PM
14 Unconventional Oil & Gas Report | September/October 2013
L
a
k
e

S
a
k
a
k
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Hook
arm
Williams
Burke
Mountrail
M
is
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Mckenzie
Dunn
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MOUNTRAIL COUNTY, NORTH DAKOTA
CANADA
UNITED STATES
R
e
n
v
i
l
l
e





Bottineau
R
o
l
e
t
t
e
McHenry
BOTTINEAU COUNTY, NORTH DAKOTA
1310uogr_14 14 9/24/13 2:53 PM
Unconventional Oil & Gas Report | September/October 2013 15
DUNN COUNTY, NORTH DAKOTA
McKenzie
Stark
Dunn
Dunn
M
e
rc
e
r
M
c
L
e
a
n
Mountrail
T H E T O P F I V E M O S T A C T I V E C O U N T I E S ( R I G S )
S o u r c e : No r t h D a k o t a O i l & G a s C o mi s s i o n , E S RI - B a s e Ma p S e r v i c e - Te r r i a n ( E x t r a c t e d A u g . 9 , 2 0 1 3 )
MCKENZIE COUNTY, NORTH DAKOTA
Rig locations
N
o
r
t
h

D
a
k
o
t
a
M
o
n
t
a
n
a
W
illiam
s
M
o
u
n
tra
il
McKenzie
Dunn
1310uogr_15 15 9/24/13 2:53 PM
16 Unconventional Oil & Gas Report | September/October 2013
MOUNTRAIL COUNTY, NORTH DAKOTA
Williams
Burke
Mountrail
M
is
s
o
u
r
i R
iv
e
r
Ward
Mckenzie
Van
Hook
arm
L
a
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S
a
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a
k
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Dunn
McLean
DUNN COUNTY, NORTH DAKOTA
McKenzie
Stark
Dunn
Dunn
M
e
r
c
e
r
M
c
L
e
a
n
Mountrail
Rig locations
Rig locations
1310uogr_16 16 9/24/13 2:53 PM
Unconventional Oil & Gas Report | September/October 2013 17
Williams
CANADA
UNITED STATES
B
u
r
k
e
Divide
N
o
r
t
h

D
a
k
o
t
a
M
o
n
t
a
n
a
Rig locations
Divide
WILLIAMS COUNTY, NORTH DAKOTA
Lake Sakakawea
W i l l i a m s
N
O
R
T
H

D
A
K
O
T
A
M
O
N
T
A
N
A
McKenzie
Lake Sakakawea
Burke
Mountrail
DIVIDE COUNTY, NORTH DAKOTA
Rig locations
1310uogr_17 17 9/24/13 2:53 PM
natural gas is around 300 bcfd. Between
now and 2025, we expect demand to
grow by 2.6% compounded annually,
she said, adding that when considered
against the decline of existing resourc-
es, suddenly the global challenge is no
longer 2.6%/year but increases to 8.8%/
year.
Most of the demand is being driven
by AsiaChina in particular. Within
the next decade, the industry will add
more infrastructure to meet rapidly in-
creasing energy demand. This com-
pounded annual growth represents
an estimate of $2.5 trillion in invest-
ments, Spomer said.
The global LNG marketplace ac-
counts for 19 import countries and 27
exporting countries. Because of large-
scale unconventional gas production,
the US has the privilege of being both,
which is unusual, Spomer said. Cur-
rently, the US exports LNG out of Alas-
ka and imports via the Gulf Coast.
Historically, LNG was used to mod-
ify stranded, low-cost gas and move
it to high-value markets, Spomer ex-
plained. That paradigm has now shifted
with both western Canada and the US
entering the export side. For these two
regions, gas is not necessarily stranded,
but it is looking for a higher market.
The company projects that by 2025,
LNG will represent 14% of global gas
consumption.
Global supply
When looking at what supplies are
available to meet this international de-
DENVER, Colo.Unconventional gas
is changing the dynamic within the
global gas trade network, Elizabeth
Spomer, senior vice-president, business
development, BG Group, told attend-
ees at the inaugural Unconventional
Resources Technology Conference in
Denver.
The entrance of US exports, the
extent of which remains speculative,
could have quite an impact on tradi-
tional trade routes, Spomer added. The
abundance of additional gas resources
is quite apparent, but the transporta-
tion and processing capacity required
to meet projected rises in demand is
somewhat less visible.
The Sabine Pass LNG terminal in
Cameron Parish, La., will expand up
to four liquefaction trains by the end of
2017. It is projected to be the largest
single consumer gas terminal within
the US, Spomer said. By virtue of the
rise of unconventional gas in the US
and Canada, she said, major demand
centers are being developed.
BG Group has been active at the
Lake Charles LNG terminal since 2001.
In early August, the company received
final approvals for its export license
from the US Department of Energy. The
company is expanding its unconven-
tional resource development efforts in
the US and in Canadas Montney and
Horn River shale play near Prince Ru-
pert, British Columbia.
Global demand
According to Spomer, total demand for
URTeC: LNG
Increased gas production from
shale rewires global supply grid
BG Groups Lake Charles terminal is to begin exporting LNG in 2019.
Photo by BG Group.
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Owego
Clay
Luray Logan
Salem
Paris
Keyser
Elkton
Celina
Medina
Ottawa
Warsaw
Easton
Urbana
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Louisa
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Tiffin
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Goshen
Marion
Warren
Accomac
Oakland
Spencer
Beckley
Hanover Mathews
Grafton
Milford
Madison
Indiana
Madison
Owenton
Batavia
Palmyra
Amherst
Bel Air
Towanda
Yorktown
Tionesta
New Kent
New City
McArthur
Leesburg
Scranton
Falmouth
Powhatan
Culpeper
Paterson
Freehold
Monterey
Napoleon
Somerset
Mayville
Lancaster
Jefferson
Ebensburg
Marlinton
Cynthiana
Salisbury
New
Elizabeth
Snow Hill
Bridgeton
Eastville
Lancaster
Maysville
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Frederick
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Lancaster
Rockville
Cumberland
Gloucester
Toms River
Berryville
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West Union
Washington
Lovingston
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Clearfield
Bridgeport
Georgetown
Flemington
Georgetown
Portsmouth
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Centreville
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Leonardtown
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Court House
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Morgantown
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Warm Springs Winfield
Wellsboro
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Newark
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New York
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Jim Thorpe
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WORCESTER
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ACCOMACK
SU
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WASHTENAW
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NEW KENT
ESSEX CAROLINE
WARREN
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CHESTERFIELD
ALBEMARLE
LOUDOUN
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CAROLINE
PRINCE
WILLIAM
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MONTGOMERY
ASHLAND
LORAIN
DELAWARE
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AUGLAIZE
SHELBY
MCKEAN
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ATLANTIC
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BUCKINGHAM
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BERKELEY
MIDDLESEX
MERCER
PHILADELPHIA
MINERAL
DELAWARE
MONTGOMERY
HUNTINGDON
FREDERICK
CUMBERLAND
SPOTSYLVANIA
GREENE ROCKINGHAM
AUGUSTA
ALEXANDRIA
CHAUTAUQUA
CATTARAUGUS
STEUBEN
ASHTABULA
CRAWFORD
FOREST ELK
CENTRE
CLARION
LYCOMING
POTTER
WARREN
MERCER
TRUMBULL
WARREN
HAMILTON
FLEMING
CAMPBELL
CLERMONT
KENTON
BUTLER
CLINTON
FAYETTE
GALLIA
PENDLETON GREENUP
GREENE
PREBLE
MASON
PICKAWAY
VINTON
HOCKING
ROWAN BATH
BOYD
WEBSTER
FAYETTE
BARBOUR
RANDOLPH
GRANT
HARDY
RITCHIE
BATH
PENDLETON
CLAY
POWHATAN
MADISON CULPEPER
FAUQUIER
BRAXTON
CALHOUN
MEIGS
BOONE
SOMERSET
LEWIS
MASON
MORRIS
HUNTERDON
ESSEX
SCHUYLKILL
WARREN
BUTLER
SOMERSET
TYLER
PRESTON
CAMBRIA
BLAIR
INDIANA
FRANKLIN
TAYLOR
WESTMORELAND
HAMPSHIRE
JEFFERSON
MONROE
MIDDLESEX
ARLINGTON WASHINGTON
SUSSEX
KING
WILLIAM
CHARLES CITY JAMES
CITY
KING AND
QUEEN
RICHMOND
CALVERT
PRINCE
GEORGES
FAIRFAX
KENT
LANCASTER
WESTMORELAND
NORTHUMBERLAND
MARYL AND
WEST VI RGI NI A
MARYL AND
PENNSYLVANI A
OHI O
NEW J ERSEY
DELAWARE
NEW YORK
UTICA
MARCELLUS
SMOKEHOUSE (CECORP)
COBB (MARKWEP)
KANAWHA SEPERATION PLANT (NISOURCE)
LIGHTBURN (DOMINION)
SCHULTZ (EXTERRAN)
SHERWOOD (MARKWEP)
MOBLEY (MARKWEP)
HASTINGS (DOMINION) VAPORIZATION PLANT (KMI)
MOUNDSVILLE FRAC I (TWC)
ELK (NISOURCE) CARLISLE (EXTERRAN)
TAYLOR (TWC)
WAYNESBURG (SINDICTM)
FORT BEELER (CAIMAN)
WEST UNION (DOMINION)
LEWIS PROCESSING (DOMINION)
CANTON
(MARATHON)
NEWELL
(ERGONINC)
AUGUSTA
(DOMINION)
WHITETAIL (ELKHORNE)
KANE (SHELL)
BRADFORD (ARG)
LEWIS RUN (ELKHORNE)
WARREN (REDAPPLE)
ROYSTONE (ELKHORNE)
LAFAYETTE (MSLOIL)
KEYSTONE (ELKHORNE) WARREN (PAPCO)
B W A (BBC)
SARSEN
(MARKWEP)
BLUESTONE
(MARKWEP)
HANOVERTON
(CECORP)
HARRISON
(CECORP)
HOUSTON (MARKWEP)
HOUSTON (MARKWEP)
HARRISON COUNTY
(MARKWEP)
MAJORSVILLE (MARKWEP) MAJORSVILLE (MARKWEP)
HARRISON COUNTY
(MARKWEP)
NATRIUM
(DOMINION)
NATRIUM
(DOMINION)
NOBLE COUNTY (MARKWEP)
HASTINGS EXTRACTION (DOMINION)
COPLEY RUN (DOMINION)
W.UNION (TPCC)
HURRICANE (ELKHORNE)
GALLIPOLIS FERRY
(NISOURCE)
ONTARI O
Marcellus & Utica 2012 | Natural Gas & Petroleum
Copyright 2012 PennWell's MAPSearch
800.823.6277 | mapsearch.com
Supplement to PennWell Co. Publications
This map includes information copyrighted by PennWell's
MAPSearch. This information is provided on a best efforts basis
and PennWell Corporation does not guarantee its accuracy, nor
warrant its fitness for any particular purpose. Such information has
been reprinted with the permission of PennWell Corporation. Data
used to create this map are available in GIS
as well as other digital formats from PennWell MAPSearch.
Data Sources:
Energy Industry GIS data - PennWell MAPSearch
World Terrain Base Map Service - ESRI Inc. (ArcGIS Online)
0
25
50
12.5
Miles
ABBREVIATIONS
Facilities & Infrastructure
OTHER FACILITIES
Facilities Color - Coded by Commodity
Truck Unloading Facilities
Distribution/Receiving Terminals
Underground Storage Facilities
Storage/Tank Farm/Terminals
Shales
Marcellus
Utica
MI
PA
NY
NC
VA
IN
OH
KY
TN
ME
WV
VT NH
MA
CT
NJ
SC
MD DE
RI
DC
ON
QC
QC
NB
Refineries
LPG Fractionators
Gas Processing
MAJOR FACILITIES
LNG Terminals
MARCELLUS AND UTICA
SHALES REGION
Proposed / Under Construction
ARG BBC CAIMAN
CALSPEC
CECORP
CIBRO DOMINION
ELKHORNE
ENBRID ERGONINC
EXTERRAN
IMP KMI
MARATHON
MARKWEP
MSLOIL
NISOURCE
PAPCO PHOENP
REDAPPLE
SHELL SINDICTM
SUNCOR
TPCC TWC VEC
American Refining Group Inc.
Belden and Blake Corporation
Caiman Energy LLC
Calumet Specialty Products Partners LP
Chesapeake Energy Corporation
Cibro Petroleum Products Inc.
Dominion
Elkhorn Energy LLC
Enbridge Inc.
Ergon Inc.
Exterran
Imperial Oil Ltd.
Kinder Morgan Inc.
Marathon Petroleum Corporation
MarkWest Energy Partners L.P.
MSL Oil and Gas Corporation
NiSource
Papco Inc.
Phoenix Petroleum Company
Red Apple Group Inc.
Shell Oil Company
Sindicatum Sustainable Resources
Suncor Energy Inc.
TPC Corp.
The Williams Companies Inc.
Valero Energy Corporation
Lake Erie
Lake St. Clair
Atlantic Ocean
Delaware Bay
Chesapeake
Bay
State / National Capitals
Cities
Pump Stations Compressor Stations
PIPELINES
Crude Oil
LPG/NGL
Natural Gas
Refined Products Other
Trunklines
Gathering
Advertise your company on
PennWells latest map:
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WHITETA TT IL (ELKHORNE)
KKAANNEE ((SSHHEELLLL))
BBRRAADDFFOORRDD ((AARRGG))
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mand, Spomer believes Canada and
North American shale gas will contrib-
ute heavily.
BG Group is in the early phase of
developing its LNG terminal in west-
ern Canada in the Prince Rupert area.
The challenge of Canada involves lo-
cation and pipeline right-of-ways,
Spomer said. Canadas western coast
is flanked by two mountainous ter-
rains and environmentally sensitive
areas. Our current location, which
BG secured two years ago, is one of the
few sites with coastal access, Spomer
said. The LNG terminal will be sup-
plied from operations in the prolific
Montney and Horn River shales; both
of these emerging plays will contrib-
ute to overall LNG demand within the
next few years.
BG Group began importing LNG to
Lake Charles in 2001. For the last de-
cade, the company has held the rank as
the largest importer of LNG to the US.
Weve had a lot of experience bring-
ing ships into this facility; now we will
use the same Coast Guard authoriza-
tion and the same 225 ships/year to
export gas out of the US, Spomer said.
Generally, exports from the US will
be sold to international markets equal
to or greater than market prices. BG
Groups Lake Charles project is being
jointly developed with Energy Transfer
Equity LP, and BG Group is responsi-
ble for managing the design and con-
struction of the facility. It currently has
100% off-take at this time. According
to the company, the terminal is now in
the pre-FEED process. Construction is
set to begin in mid-2015, with an an-
ticipated in-service date in mid-2019.
Market growth
The majority of currently proposed
LNG terminals are along the US Gulf
Coast with the Everett Terminal in
Boston being the only facility that has
yet to apply for export authorization.
Approximately 30 bcfd of export proj-
ects are being proposed, Spomer said.
The interesting feature is what
this will mean for the global market.
Mexico currently demands 2 bcfd of
gas, and some projections for future
demand are up to 10 bcfd by the end
of the decade, Spomer said. The US
could end up exporting more gas to
Mexico than any other market. This
will depend on changes to Mexicos
regulatory policies.
The Mexican government is actively
working to encourage domestic pro-
duction, but the cost structure is not
in place to compete with low-cost pro-
duction coming from the US in Texas
Eagle Ford shale and in the Permian
basin.
The largest single area of new de-
mand growth is projected to be in
southwest Louisiana, where exports
and industrial demand will increase,
Spomer added. Some projections pre-
dict incremental increases as high as
7 to 10 bcfd.
Future grid
The consensus is that unconventional
export via LNG will be a global game-
changer. While it creates challenges
and opportunities for transportation
across the existing grid structure, new
large-scale demands are in flux.
Traditional trade flows such as
from the western sedimentary basins
in the US to eastern Canada are al-
ready null, Spomer said, and these
are now being reviewed for conver-
sion to oil pipelines.
Pipelines coming from the Mar-
cellus are now moving southeast and
into southwest Louisiana. Texas gas
will most likely move west and south
into Mexico. Its a fascinating time to
be active in this market as we see this
phenomenal infrastructure being com-
pletely rewired, Spomer said.
Bakken Shale / North Dakota
Multiple wells: avg. 9600-ft laterals
Avg. 24-hr IP rate: 2578 boe/d
90-day avg. production rate: 795 boe/d
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We maintain distribution and transloading facilities in Houston and across
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1310uogr_19 19 9/24/13 2:53 PM
20 Unconventional Oil & Gas Report | September/October 2013
DENVER, Colo.Technology will
transform the future of the oil and gas
industry. We believe there is a non-
trivial chance that unconventional res-
ervoirs may contain more recoverable
oil and gas than all of the conventional
reservoirs combined, said Greg Lev-
eille, general manager, unconventional
resources, ConocoPhillips.
There is an abundance of resourc-
es yet to pursue, but mankind has
consumed about 1,850 billion boe
within the last 150 years, Leveille
said. He and several other panelists
recently shared views on technologies
that may transform the future of en-
ergy resources at the Unconventional
Resource Technology Conference held
in Denver.
Currently, global consumption of
oil and gas is equal to 50 billion boe/
year. Around the turn of the century,
governments and industry were both
expressing concerns that the world
was running out of oil and natural
gas, Leveille said. Discussions began
to form around the need for alterna-
tives such wind, solar, and other non-
hydrocarbon-based sources.
According to the US Energy Infor-
mation Administration, unconven-
tional resources now represent an
endowment of 7,000 tcf of gas and
340 billion bbl of oil. Technology ad-
vances we might expect from uncon-
ventional reservoirs really have to do
with the size of the unconventional re-
source revolution in the time since the
onset of focus on these technologies,
Leveille said.
Unconventional reservoirs are
typically identified as reservoirs hav-
ing less than 0.1 md of permeability.
In regions that contain the richest
sources of conventional oil and gas re-
serves, unconventional resources have
not yet been accessed, Leveille said.
Once these are factored in, global un-
conventional resources may perhaps
rival all of the conventional sources
of oil and gas weve been pursuing for
the last 150 years.
Technological transformation
There is no shortage of innovation and
research into promising new technol-
ogy to unlock the complexity of the
unconventional reservoir system. That
was the view taken by Doug Valleau,
director, unconventional resources
technology, Hess Corp.
The main goal of technology is to
enable producers to operate better,
faster, cheaper, and safely. Valleau re-
ferred to this as the functional goal of
URTeC: TECHNOLOGY
Advanced technology rebuilds global hydrocarbon resource base
The Eagle Ford shale was widely considered noncommercial in 2006. This rig is one of more than 250 working to develop the
play, expected to become one of the largest in the US. Photo by ConocoPhillips.
1310uogr_20 20 9/24/13 2:53 PM
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technology. Another goal for technol-
ogy is to provide additional safety and
advanced environmental quality that
protects other natural resources, he
said.
Given the relatively short time since
the onset of work in unconventional
resources, technology advancement
is an encouraging endeavor. When
you think about making technologi-
cal changes, if you can change the re-
covery factor by only a small amount,
the volumes are absolutely enormous,
Leveille said.
Reservoir modeling
Driving the need for advanced tech-
nologies, unconventional reservoirs
are complex and require greater un-
derstanding of the fundamental phys-
ics of these nanopore systems, ac-
cording to Valleau. Modeling and
simulation are two areas that will
revolutionize unconventional devel-
opment. Because of the extreme het-
erogeneity of the rock strata, geologic
models require much greater detail
and a much better understanding of
the regional and local stress, he said.
Integration of geoscience and geo-
mechanics is an important step to-
ward advanced reservoir engineering.
From my perspective as a petrophysi-
cist, weve never had as much core data
to hold our feet to the fire, said Mike
Mullen, president, Stimulation Petro-
physics. Modern core data provide a
defined sense of minerology. In the
past with most conventional reservoirs,
determining whether clay was present
and not present often sufficed, Mul-
len said. Today, companies can query
how much clay is present, how the clay
may react with certain processes, and
how the clay is composed. Questions
on the true value of porosity and the ac-
tual permeability of a core sample can
be answered with certainty, which pro-
vides for better reservoir models. We
can now be more precise with our in-
terpretation, Mullen said.
Advanced reservoir data allow geo-
physicists to better present reservoir in-
formation in cases where management
teams can actually use these data to
make financial decisions. Most com-
panies have not had this ability be-
fore, Mullen said. The integration of
this data interpretation is the challenge
as many petrophysicists have created
summaries on a variety of sources that
never get passed over into other disci-
plines that could make use of them, he
added.
Its not good enough to simply pick
the right play, ConocoPhillips Leveille
said. As an example, Eagle Ford acreage
was vastly available in 2006. It could
have been just as productive as any acre-
age in the world as far as commercial
returns, or a company could have sunk
a lot of capital into the region with lit-
tle return based on flow rates, Leveille
said. It is necessary to identify the sweet
spots, and this is not always easy to do.
Within the next 5 to 10 years, ad-
vancements in reservoir modeling and
data acquisition will be important as
companies move into international re-
gions in search of unconventional re-
sources with very little data compared
to what is available in North America.
Well design
Modern unconventional resource de-
velopment requires many frac stages
to create an extensive flow network.
Frac models must now have greater
levels of complexity to represent how
we fracture into the reservoir, Val-
leau said. Because multiphase sys-
tems grow through micro-nanopore
networks in unconventional reser-
voirs, simple, planar frac models no
longer represent the full complexity
that is created by most frac jobs. Its
equally challenging to predict where
the proppant is and where it is deliv-
ered to within the fracture network,
he added.
All of these aspects will need to
be integrated into the next generation
of reservoir models to provide better
understanding of how to increase pro-
duction while also lowering cost, Val-
leau said. Effectively stimulated rock
should be capable of showing the ef-
1310uogr_21 21 9/24/13 2:53 PM
22 Unconventional Oil & Gas Report | September/October 2013
fective outcome of the fracs. We all
want to know where the frac propa-
gates, where the proppant lands, what
portion of the reservoir is producing,
and what is the effectively stimulated
volume, he added.
Hess will be presenting its re-
search on 4D microseismic at the
Society of Petroleum Engineers an-
nual meeting in October. We have
actually done this in one experiment,
and we believe we can directly image
the actual producing volume from
the fracture of propagation, Valleau
said.
Deeper understanding of funda-
mental physics involving multiphase
flow in unconventional reservoirs
is under way. Imaging of the actual
nanopore system under normal tem-
peratures and pressures is leading to
numerical models that can be used
to further predict reservoir behavior
and will help us better understand
enhanced oil production and process-
ing, Valleau said. The end result will
be confidence in predicting reservoir
performance, thereby allowing for
better identification of sweet spots.
The optimization of completion de-
sign and development plans will also
serve the industry in the years to come.
The industry spends large amounts
of time figuring out the right comple-
tion technique and proper well spacing
(laterally and vertically) for thousands
of wells in a variety of unconventional
plays, Leveille said. This will change
as we begin to understand the physical
principles involved in fracturing and
producing from nanodarcy reservoirs.
To date, a large percentage of the
wells drilled and completed draw very
little data from downhole. According
to Leveille, as the industry develops
better devices to understand what is
happening in the wellbore, this will
begin to change very rapidly.
Nanotechnology
On a global scale, nanotechnology in-
novation is paving the way for further
advancements, and nanolaminants
are being evaluated for high-strength,
low-weight, and high-heat tolerances.
Functionalized coatings of all types
will become ever more important in
unconventional development. For ex-
ample, nanoscale particulates are be-
ing added to drilling fluids to improve
flexibility in high-temperature, high-
pressure scenarios, thereby reducing
fluid loss.
Downhole sensor technology also
will see advances through the advent
of nanotech engineering. Research-
ers are working on advanced sensors
capable of being injected with the
proppant to record and then be inter-
rogated for information, Valleau said.
FRACING WITHOUT FLUID REMOVES WATER FROM UNCONVENTIONAL RESOURCE MIX
An unconventional frac job requires 5 million gal of water on
average. About 50-80% of this amount will flow back to sur-
face within the first few weeks of production. In many cases,
this flowback is being treated and reused on subsequent wells.
Where commercial disposal wells are available, produced
water is often reinjected at a lower cost than recycling. Dry
fracing, or waterless fracing, may soon take water out of the
equation for some operators.
Obtaining fresh water can be problematic in arid regions
such as in South Texas, a region prone to drought. In other
regions, such as Pennsylvanias Marcellus shale, disposing of
water through deep well injection is extremely limited. Opera-
tors typically recycle and reuse water or transport via truck to
disposal wells in Ohio.
According to a study published by World Resources Insti-
tute, nearly 47% of all unconventional wells are located in ar-
eas with high or extremely high baseline water stress. Limited
supply and risks of contamination will translate into technologi-
cal advancement within the next few years. Recycling and re-
use technology is already used in many North American plays,
but newer methods may remove water from the equation.
Closing the loop
Industry problems are often addressed through technological
solutions. Calgary-based GasFrac Energy Services Inc. devel-
oped its closed-loop stimulation process in 2008, which uses a
propane-butane gel to produce hydraulic fractures in horizontal
wells. The company has used the process in more than 2,000
completions in 758 locations in Canada and the US.
The waterless system has recently made headway in the
Eagle Ford shale of South Texas. The company has opened a
base in Floresville, Tex., and its system is improving produc-
tion for some operators. San Antonio-based BlackBrush Oil &
Gas LP has announced its success in using the technology to
avoid finding and managing access to freshwater in its Eagle
Ford operations. To date, the companies have completed 20
wells using gas in place of water with a 100% increase in initial
production.
It has to be applied to the right well, explained Eric Tu-
dor, spokesman for GasFrac. Deeper wells can be problem-
atic as gas can prove more difficult to pressurize downhole.
Using hydrocarbons to fracture these wells, which tend to
be under-saturated, is ideal, Tudor said. The clay effectively
optimizes completion as the gas does not react with clay.
Effective frac lengths turn out to be longer than those created
with water. Ultimately, this enables higher initial and long-
term production.
The LPG gel properties include low surface tension, low
viscosity, and low density, along with solubility within naturally
occurring reservoir hydrocarbons. The system also has the
ability to evenly distribute proppant with the gelled slurry dur-
ing pumping, which decreases the chance of proppant settling
within the formation. The gel regains permeability with the
stimulated hydrocarbons, allowing 100% recovery within the
early phase of production.
One risk associated with the process is the use of flam-
mable natural gas. The system is completely closed-loop,
Tudor said, adding, The industry is well-versed in handling
flammable liquids safely.
Using flammable material in hydraulic fracturing has raised
some skepticism. Unrelated to this system, Houston-based
eCORP Stimulation Technologies LLC reported in April that
it plans to develop a system to render liquid propane as a
nonflammable stimulation fluid. Should the system work, it
could dramatically widen the application of waterless fracing
throughout North America.
Technology expansion
From an atmospheric standpoint, propane, butane, and
pentane are not greenhouse gases. With relatively short at-
mospheric lifetimes, there are no essential concerns drawn
from fracing with gas as opposed to water.
Geographically, South Texas is well-suited for the out-
growth of waterless fracing. Propane used for the process
is supplied from Corpus Christi, Tex., on the Gulf Coast.
For the Eagle Ford shale, this ample supply of gas ensures
seamless activity with no real pressure on demand. While
the companys Eagle Ford operations are well supplied,
moving to liquids from the field is most likely a natural
evolution for the process. With a big enough project, using
liquids-rich gas may become feasible in time, Tudor said.
Onsite recycling of natural gas is a next step as the tech-
nology is advanced.
In 2012, fewer than
5% of wells stimulated in
the US used fluids other
than water. As recycling
technology advances, and
waterless fracing continues
to spread, more water may
be left at its source in the
coming years. While water
can be considered an am-
pleyet finiteresource,
the landscape for its open
use is continually evolving,
particularly where uncon-
ventional development is
concerned. According to
Tudor, Freshwater may
not be used in the same
way 10 years from now.
And water management
may not be an issue for
unconventional resource
developers within the next
decade.
GasFrac first deployed its system in 2008. This was the companys first dual crew project
completed on the Cardium and Falher formations in the Edson, Alta., Canada area.
1310uogr_22 22 9/24/13 2:53 PM
Unconventional Oil & Gas Report | September/October 2013 23
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Other innovations on the horizon in-
clude nanothermite, which is an ex-
plosive proppant (or popcorn prop-
pant) that may have potential benefits
in some applications.
A new class of surfactants utiliz-
ing nanomaterials has the potential to
alter surface properties that could be
pumped with the primary completion
job and possibly improve recovery from
day one.
Filtration is another area where re-
search is showing some improvements
to technology. There are commercial
filtration technologies that can re-
move contaminants and provide oil/
water separation. On the horizon op-
erators will be using these techniques
in a downhole application by remov-
ing CO
2
and H
2
S before these can
reach the surface, Valleau said.
Environmental stewardship
Flare gas and water use are two of
the biggest topics drawing criticism
for unconventional resource develop-
ment. Mitigating or eliminating the
industrys footprint with these two is-
sues may go far in easing some of the
skepticism faced by the industry.
Flare gas is on everyones mind,
Valleau said. The question of reduc-
tion, use, and selling flare gas is cur-
rently being addressed through tech-
nology research and development
and will see continued improvement
throughout the next few years.
Opportunities for gas reinjection
are already in use but are not always
practical. Pipeline infrastructure
development takes time, and it can
be costly to take the risk of install-
ing upfront prior to having a good
understanding of the materiality of a
specific shale play, Valleau said.
Onsite use of f lare gas is possibly
one of the more interesting trends
now manifesting in unconventional
development. Hess is now converting
its rig f leet in the Bakken to natural
gas power, which is providing a sav-
ings of nearly $30,000/well.
Water management also will contin-
ue to be an issue as newer technology
brings more and more unconventional
reservoirs into commercial reach. Sev-
eral technologies are developing that
have the potential to drastically reduce
the amount of fresh water used to de-
velop unconventional reservoirs.
In the order of nonacqueous
stimulation, waterless fracing might
seem new, but CO
2
and alcohol foams
have been used for many years, Val-
leau said. In the mid-2000s patents
were granted for propane stimula-
tion. There are some concerns from
an environmental standpoint on using
a flammable gas as a medium for hy-
draulic fracturing, but the process has
been carried out safely in several areas
within the last few years.
New technologies are emerging that
are suggesting that improvements can
be made to the propane by rendering
it inflammable, Valleau said. If this
technology proves out, it could revolu-
tionize our water use in the industry.
Water management technology will
continue to minimize freshwater use,
improve profitability, and increase the
industrys water stewardship. Drill-
ing and completions and enhanced oil
recovery consume large amounts of
water in the US. Much of this water
comes from ground and surface water
resources. Trucking produced water
to disposal sites adds stress to road-
ways, and the process of wastewater
injection has come into focus in recent
years for its association with new seis-
micity, Valleau said.
The rise in water use in unconven-
tional development has increased the
need to treat and reuse flowback water,
which has led to many new technolo-
gies. Molecular filtration is costly, but as
well may soon become more economic,
Valleau said.
Im confident that within three to
five years we will have engineered an
economic solution to the industrys wa-
ter issues. Leveille added, There will
1310uogr_23 23 9/24/13 2:53 PM
24 Unconventional Oil & Gas Report | September/October 2013
NETL: CLEANING FLOWBACK WATER FOR REUSE YIELDS MULTIPLE BENEFITS
come a day when the industry will not
need potable water for fracturing opera-
tions.
With modern and continuing ad-
vances in treating produced water and
saline brines, it is possible that the fu-
ture of unconventional development
could be carried in a waterless fashion.
Integrative methods
The industry is founded on expertise, and
it will take the integration of advanced
technology to move it forward into a bet-
ter view from its various stakeholders.
The unconventional resource boom
is the biggest energy success story thus
far in the 21st century. Conversations
about peak oil are rarely heard. Be-
cause it is now such a large endowment,
natural gas is no longer referred to as
a bridge fuel to alternative energies
such as wind and solar. Whats hap-
pened with hydrocarbons is amazing,
Leveille said. Unconventional resource
technology has basically replaced all of
the hydrocarbons consumed since the
dawn of the industry more than 150
years ago. As technology continues to
advance, reservoirs that are considered
noncommercial today may be commer-
cial opportunities in the future.
Editors note: Comments were presented
at the first annual Unconventional Re-
sources Technology Conference (URTeC), a
joint effort among SPE, SEG, and AAPG,
held in Denver, Aug. 12-14, 2013.
Eric Smistad
Technology Manager, Unconventional
Resources, National Energy Technology
Laboratory, US Department of Energy
The contribution to the US energy sup-
ply from unconventional natural gas
sources, such as shale, is increasing
dramatically due in large part to ad-
vanced hydraulic fracturing. To release
natural gas from a shale deposit, 3 to 5
million gal of water plus hydraulic frac-
turing additives and proppants (sand)
are pumped under high pressure down
a shale gas well.
Often, this water is trucked in from
remote locations. About 20-80% of
this water returns to the surface as frac
flowback water. Much of the flowback
and produced water, or frac water, has
a high total dissolved solids (TDS) level
(>50,000 ppm). Although frac water is
increasingly being reused in subsequent
frac jobs, much of the frac water is still
disposed of by deep well injection.
A significant problem in the Marcellus
shale play is that the number and capac-
ity of nearby injection sites is severely
limited. For example, since Pennsylvania
has only seven class II injection wells,
frac water is trucked into Ohio for dispos-
al. In other plays, such as the Barnett,
water availability for frac operations is
limited. In addition, recent studies have
shown that within a typical county-sized
shale gas development area, the supply
of frac water eventually exceeds the
demand for source water for subsequent
hydrofracturing operations.
Cleaning options
To avoid both supply and disposal
limitations, and thus to enable further
shale gas development, an economical
process to recover frac water as clean
water and salt is required. A research
project being undertaken by GE Global
Research (GEGR), with funding from
NETL, is examining ways to pretreat frac
water for thermal recovery of clean water
and a salable salt product.
Frac water recovery by thermal
evaporation is commercially practiced in
a growing number of shale gas applica-
tions. To avoid scaling on heat transfer
surfaces and to enable reliable evapora-
tor operation, incoming frac water must
be pretreated to remove scale-causing
ions such as iron and manganese as
well as suspended solids and dissolved
organics.
Current pretreatment methods
typically use flocculation, mechanical
separation (e.g., inclined plate clarifier),
and filtration (e.g., filter press). Current
evaporation processes yield a distilled
water product and a brine concentrate,
which is typically disposed of by deep
well injection.
This project is focused on identifying
economical pretreatment techniques to
recover additional water and a salable
salt (NaCl) product from high-TDS frac
waters. The objective is to pretreat frac
water to remove hardness, including
barium and radium. Barium removal will
enable the salt product to meet toxic-
ity characteristic leaching procedure
(TCLP) specifications. Radium is a key
naturally occurring radioactive material
(NORM). Radium removal will enable
the salt product to be safely used, for
example, as a road deicer, and will mini-
mize worker radiation exposure.
Three pretreatment approaches for
frac water softening were considered:
chemical treatment, adsorption/ion
exchange, and nanofiltration. Chemical
treatment in the form of lime softening
and optional sulfate precipitation for
barium removal is practiced for soften-
ing chlor-alkali brine. Calcium hydroxide
(lime) and/or caustic soda are added
to precipitate scale-forming species.
Lime softening may be conducted in
a clarifier and generates a precipitate
(lime sludge), which is filter pressed and
may be either land filled or calcined to
recover the lime.
Evaluation of the relative merits of the
proposed pretreatment technologies for
water and salt recovery first required a
clear definition of the range of frac water
feed composition to be treated. This
project focused on the Marcellus shale,
but included frac water sample charac-
terization from the Marcellus, Barnett,
and Woodford shales.
In addition, target purity specifica-
tions were established for pretreated
frac water to ensure economic opera-
tion of the thermal equipment. Process
material and energy balances were
conducted for each process option to
generate preliminary cost estimates.
Each process option was evaluated with
respect to performance and cost, and
consideration was given to the adaptabil-
ity of each process to mobile operation.
Research results
Work on this project began in August
2009. To date, GEGR has characterized
frac water samples from seven Mar-
cellus shale wells (Pennsylvania), two
Woodford shale wells (Oklahoma), and
three frac water disposal facilities in the
Barnett. The samples were measured
for chemical composition, including
NORMS.
The research has identified frac
water composition and flow rate design
ranges for fixed and mobile treatment
systems.
Ion exchange has been ruled out as
a softening technique to remove high
hardness levels (e.g. >5,000 ppm)
based on cost and calculated volumes
of regeneration chemicals and rinse
water. Nanofiltration also has been ruled
out as a softening technique to remove
high hardness levels based on the high
volume of waste concentrate produced.
GEGR has developed an Aspen/OLI
model for chemical treatment of frac
water for hardness removal, calculated
material balances and costs for lime and
sulfate precipitation frac water pretreat-
ment (softening) processes, and sum-
marized NORM composition data from
13 New York Marcellus gas wells (from
NYSDEC SDGEIS report).
Studies have demonstrated the im-
portance of removing NORM from frac
water for applications involving recovery
of a salt product. Processes such as
calculating material balance for sulfate
precipitation pretreatment of frac water
were undertaken. Research has clearly
defined levels of frac water 226Ra
concentration for a given frac water
barium concentration that would result
in BaSO4-RaSO4 precipitate that is ac-
ceptable for RCRA-D landfill disposal.
A paper was presented on this topic at
2010 International Water Conference.
Part of the process also served to de-
velop scintillation counting methods and
a gamma spectrometry method to mea-
sure NORM in both raw frac water and
frac water that had been pretreated for
NORM removal. Lab experiments were
conducted that demonstrated adsorp-
tion/ion exchange and chemical treat-
ment processes for NORM removal from
frac water. Technologically enhanced
NORM (TENORM) disposal options and
costs have been identified.
In the lab, researchers assembled
an apparatus to simulate thermal brine
concentrator and crystallizer (for thermal
water and NaCl recovery). As a result,
preliminary tests were conducted to
characterize scaling during thermal
frac water concentration. This project
initially targeted frac water softening as a
pretreatment technique to enable higher
water recovery and recovery of a salable
salt product by thermal evaporation and
crystallization. Preliminary investigation
showed that NORM is rather prevalent
in frac water, particularly in the Marcel-
lus, and that NORM removal from frac
water is an important step in recovering
a salable salt product from NORM-con-
taining frac water. It was demonstrated
on the lab scale that both adsorption/
ion exchange and chemical treatment
are effective methods for NORM removal
from frac water. GEGR conducted ex-
perimental and computational studies
of the effectiveness and economics of
each technique for a range of frac water
composition.
Potential impacts
While direct frac water reuse (as source
water in subsequent hydrofracturing
operations after minimal pretreatment)
is an effective method for frac water
disposal, frac water recovery to generate
clean water and a salable salt product is
essential to long-term shale gas develop-
ment.
Effective recovery and reuse of frac
water may benefit the environment by
greatly reducing the net consumption
of fresh water. In addition, truck traffic,
noise, and dust pollution could be sig-
nificantly reduced in some areas. Finally,
decreasing the amount of frac water
currently being re-injected into disposal
wells could alleviate the possible risks
of long term contamination of the water
supply.
1310uogr_24 24 9/24/13 2:53 PM
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26 Unconventional Oil & Gas Report | September/October 2013
quantities and the absence of a duty on
behalf of the defendants to develop all
potentially economic strata, the court
chose not to terminate the defendants
lease.
Stephen Boone is an
associate in Bracewell &
Giulianis Houston office.
He represents develop-
ers, exploration and
production companies,
private equity funds,
purchasers, sellers,
borrowers and lenders in upstream and
midstream oil and gas transactions.
Bryan Loocke is a part-
ner in the firms Houston
office. He represents in-
ternational and domestic
clients in the oil and gas
sector with a particular
focus on joint venture
transactions, unconven-
tional and shale oil and gas transactions,
and Gulf of Mexico transactions.
Stephen Boone
Bryan Loocke
Bracewell & Giuliani
On June 21, the Superior Court of Penn-
sylvania held that a lessee does not owe
a duty to a lessor to develop each and
every economically exploitable strata
under an oil and gas lease.
In early 2012, plaintiffs Terry L.
and Carol A. Caldwell sued Kriebel Re-
sources Co., Range Resources Appala-
chia LLC, and others regarding an oil
and gas lease executed on Jan. 19, 2001.
The lease provided for a primary term
of 24 months with drilling requrements
and extended terms on production.
A number of shallow wells were
drilled, which the defendents claimed
were suitable to hold the lease terms.
The plaintiffs suit, filed in 2012, al-
leged that the defendents breached the
implied duty to develop the property by
not drilling deeper wells to exploit the
valuable Marcellus shale and, based on
such potential unexploited value, the
current production did not amount to
production in paying quantities.
The trial court sustained certain pre-
liminary objections raised by the defen-
dants which resulted in a dismissal of
plaintiffs claims. In Terry L. Caldwell
et al. v. Kriebel Resources Co. et al.
(1305 WDA 2012), the Court affirmed
the trial courts dismissal of the case.
Regarding the duty to develop,
plaintiffs argued that without direct
Pennsylvania case law on point, the
Court should follow a Louisiana case,
Goodrich v. Exxon Co., 608 So.2d
1019 (La. App. 1992), which held that
Exxons duty to develop as a reason-
ably prudent operator included the
obligation to develop valuable oil-pro-
ducing sands underlying the leased
premises. Based on this rationale,
plaintiffs alleged that there is an im-
plied duty to develop all strata, not
simply to extract shallow gas... The
court rejected the application of the
Goodrich rationale and held that the
MARCELLUS
No implied duty to develop particular strata in Pennsylvania
specific terms of the lease controlled.
According to the ruling, production
from various shallow wells was suffi-
cient to hold the entirety of the leased
estate. Because the lease provided for
the continued validity of the lease upon
production of gas and allows for the
guarantee of delay rentals if no gas is
produced, the court found that it was
not compelled to follow Louisiana
law.
The court also rejected the plaintiffs
claim that the concept of paying quan-
tities should be based on all poten-
tial gas strata underlying the lease and
should impose an obligation relating to
good faith. The court quickly dismissed
this claim and made clear that paying
quantities in Pennsylvania merely re-
quires the well to consistently pay a
profit, however small. It is of no legal
effect that the extent of the profit pro-
duced from these shallow wells is not
to the extent appellants desire. Due
to the continued production in paying
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