03 May 2017

Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 18

Topics discussed in this week’s Report include:

  • Bureau of Land Management and National Park Service to review oil and gas regulations.
  • Department of Energy approved LNG export terminal in Texas.
  • Oklahoma panel recommended reuse of hydraulic fracturing wastewater as an alternative to underground disposal.
  • Study found no evidence of groundwater contamination due to hydraulic fracturing.
  • Total S.A. announced plans to invest US$500 million in Argentina shale gas formation.

Federal

Bureau of Land Management and National Park Service to review oil and gas regulations. In response to President Donald Trump’s March 28 executive order on promoting energy independence and economic growth, the Bureau of Land Management (BLM) and National Park Service (NPS) announced they would review oil and gas regulations for national wildlife refuges and national parks that were finalized the day after the presidential election. The executive order specifically referenced both regulations. The BLM rule increased regulations for new and modified oil and gas wells in national wildlife refuges, setting new standards for all operations, including drilling activities, waste management and unused infrastructure. The NPS rule imposed similar requirements while also extending regulations to existing wells that had been unregulated. Industry opposed the regulations, arguing that they duplicated existing state requirements.

Department of Energy approves LNG export terminal in Texas. The Department of Energy (DOE) recently approved a US$10 billion liquefied natural gas (LNG) export terminal proposed by Golden Pass Products, LLC, a joint venture of ExxonMobil Corp. and Qatar Petroleum International Ltd. The LNG terminal will be co-located with an existing LNG import terminal near Sabine Pass, Texas, and will export LNG to countries without free trade agreements with the United States. When completed, the terminal will export up to 2.21 billion cubic feet of natural gas per day. DOE concluded that the proposed terminal was not inconsistent with the public interest after considering economic, environmental and energy security effects. The Federal Energy Regulatory Commission had previously approved construction of the terminal.

States

Oklahoma panel recommends reuse of hydraulic fracturing wastewater as an alternative to underground disposal. The Oklahoma Produced Water Working Group recently issued a report recommending reuse of hydraulic fracturing wastewater as an alternative to underground disposal, which has been linked to seismic activity in Oklahoma. The group recommended that challenges to water reuse be addressed through targeted regulations and legislation.   The working group was formed by the state in 2015 to find alternative uses for hydraulic fracturing wastewater.  The report concluded that treatment of wastewater for reuse in hydraulic fracturing would cost US$0.57 per barrel, excluding transportation costs, making it competitive with fresh water. It concluded that other options, such as desalinization for use in irrigation or power generation, would be too expensive and thus impractical at this time. However, the group recommended further evaluation of using evaporation to reduce the volume of wastewater as a further alternative.

Studies

Study finds no evidence of groundwater contamination due to hydraulic fracturing. A recent study of hydraulic fracturing published in Geochemica et Cosmochimica Acta found no evidence of groundwater contamination, but the article did report there was evidence of surface water contamination due to hydraulic fracturing wastewater spills. Over three years, researchers from Duke University, Pennsylvania State University, Stanford University and the French Geological Survey studied 112 drinking wells in northwestern West Virginia. The study, which evaluated wells both before and after hydraulic fracturing occurred, found no change in salts, trace metals or hydrocarbons in groundwater. However, the study did find increased levels of certain constituents in surface water that was traced to accidental spills of hydraulic fracturing wastewater. The authors noted that the study was unique to the geology of northwestern West Virginia and was not necessarily representative of other geologic formations.

Markets

Total S.A. announces plans to invest US$500 million in Argentina shale gas formation. Total S.A. recently announced plans to invest US$500 million over the next three to four years in the Vaca Muerta shale gas formation in Argentina. The investments will occur in the Aguanda Pichana Este license that is co-owned by YPF SA, Wintershall Energia SA and Panamerica Energy LLC. The investment is part of Total S.A.’s plan to invest in 10 large-scale oil and gas ventures over the next two years. As an incentive for the investment, Argentina has extended a program that guarantees a minimum price for natural gas through 2021.

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