SPECIAL REPORT: THE GREAT SHALE GAS RUSH
Exploring the promise and challenge of a new energy supply.
Harlan Shober remembers how cars lined Hickory Ridge Road in the spring of 2008 with curiosity-seekers hoping for a glimpse of the first Marcellus shale gas flare in Chartiers Township, Pennsylvania.
“I live on an opposite hill, where I could see the top of the flare, and my house was rumbling, it was that loud,” recalls Shober, president of the township board of supervisors. “It was overcast, and the flame would bounce up against the clouds. You could see the glow from Pittsburgh,” 25 miles away.
The eerie sight heralded the arrival of a new phase of life in this rural community of 7,200 people—one of the hottest spots in Pennsylvania’s Marcellus shale boom, with more than 40 natural gas wells drilled here in the past two years.
But the fiery scene that takes place above ground after wells are completed in certain circumstances—a controlled burn-off of initial gas for several days—is not as dramatic as what is happening more than a mile beneath the surface.
There, a new combination of old oil industry technologies has unlocked a giant resource geologists thought was unattainable for 75 years.
(See Photos: "The Science of Shale Gas")
An Unconventional Approach
The conventional way to produce natural gas is to drill and extract it out of “traps,” or folds and pockets in underground sandstone layers. Scientists have long known there was also natural gas in the soft rock layer called shale, formed by millions of years of heat and pressure from dead algae that mixed with mud at the deep bottom of ancient seas that once covered land in Pennsylvania and elsewhere. Geologists believe the gas found in sandstone traps seeped out of this rich source rock.
When it became clear that gas companies were successfully tapping the largest such rock formation in North America, the Marcellus shale, in December 2007, Pennsylvania State University geologist Terry Engelder did the calculations based on 54,000 square miles (14 million hectares) of rock he gauged to be the right geological age for gas prospecting. “I remember thinking, ‘Merry Christmas, America, you don’t know what’s out there,’ ” he says. “It’s going to be a real treat.”
Engelder had studied shales for decades. He was especially interested in learning why black shales, including the Marcellus, had a natural fracture pattern different from that of any other rock. His conclusion, back in 1990, was that the fractures were due to the shale’s stores of pressurized methane, the major constituent of natural gas. Indeed, throughout the long oil and gas history of the Appalachian Mountains, where the world’s first oil well was drilled in 1859, drillers have known of “shows” of gas from the shale, brief blasts that would blow methane-charged water out of the hole, or tangle the drilling lines. There was even a notorious month-long gas blowout in 1940 from a well drilled near the Pennsylvania border in Whitesville, New York (map). At the time, people speculated that the drillers on the Crandall Farm site had hit a fault line. But Engelder says it is clear they hit the Marcellus shale, early proof of how much gas was stored in the rock at extremely high pressure.
Geologist Bill Zagorski, now a vice president of the gas company Range Resources, knew about the shale history in 2003, when he was working on a problematic well southwest of Pittsburgh. Although Range is now based in Fort Worth, Texas, the company had its roots in Ohio and the Appalachian Basin, and so had an active conventional exploration and production operation in Pennsylvania. Zagorski’s division, then known as Great Lakes Energy, was aiming for a promising trap in the Oriskany sandstone, 8,500 feet (2,590 meters) below the surface, and 2,000 feet (610 meters) below the Marcellus shale. The Oriskany was the bread-and-butter target for the small oil and gas firms that were still making modest finds Pennsylvania. It was a decent business, although too trivial for major oil companies.
But in this well, which had seemed such a good prospect, the drillers came up with nothing. “Well, nobody likes a dry hole, but it was an expensive dry hole,” Zagorski says. “We were kind of at a crossroads on what to do.”
Coincidentally, Zagorski had a chance to visit a geologist friend in Texas, who was studying the implications of an exciting development unfolding in the Barnett shale near Dallas-Fort Worth. Iconoclastic oilman George Mitchell, with years of effort that flew in the face of conventional industry wisdom, had earlier succeeded in coaxing gas out of the shale by hydraulic fracturing (fracking). The “slick” water frack that proved successful was different from the type the oil industry had been using for more than 50 years to get wells to produce. Mitchell used a huge volume of water and fewer of the gel-like chemicals that reduce friction. A logical step for saving money in the energy-industry bust of the late 1990s, it happened to fracture the shale more effectively. Sand mixed into the water kept the paper-thin shale fractures propped open to allow the gas to release.
In 2002, a bigger firm, Devon Energy, had purchased Mitchell’s company. Now, a year later, Devon attacked the shale by combining fracking with another technique that was its specialty—horizontal drilling. The results were stupendous.
By continuing to drill sideways after a vertical well had reached its geological target, it was possible to reach far more rock surface area. Long touted as a method that reduced the environmental footprint on the surface, horizontal drilling also allowed a company to reach huge volumes of gas from just one well.
Zagorski realized on his Texas visit that the success of the Barnett shale had profound implications for Pennsylvania. His team had just drilled through the Marcellus shale on its way to its unsuccessful hole in the sandstone. “I’m thinking, ‘Oh, my God, we’ve got the same thing right in the middle of our own acreage possessions in Washington County.’ ” And the Marcellus shale was four times the size of Barnett, underlying 60 percent of Pennsylvania as it stretches from West Virginia into New York.
Zagorski smiles today when he thinks of the then-audacious proposal his team made to try something new on a dry hole where the company already had seemingly thrown away $5 million to $6 million. “We were saying, ‘Let’s spend some more money on this well and try to salvage a larger idea,’” he says.
Jeffrey Ventura, who had just joined Range as chief operating officer, knew what was happening in the Barnett shale and gave the go-ahead. In October 2004, Range performed the first hydraulic fracture on a well in the Marcellus shale. When the high flow rates came back, “That’s when we knew,” Zagorski says.
A Massive Resource Unlocked
What they found—and it took at least three more years of experimental wells to confirm it—was that the Marcellus shale could produce at a rate some four orders of magnitude higher than conventional Pennsylvania wells. Those figures are measured in thousand cubic feet, or Mcf (based on the Latin word for “thousand”). Conventional wells in the Keystone State yielded 100 Mcf to 500 Mcf of natural gas per day. Horizontal wells in the Marcellus shale, which underground typically reach out 3,500 feet from the wellhead, now yield from 1 million Mcf to as high as 10 million Mcf or 15 million Mcf per day.
Speculation swirls around the ultimate amount of gas that might be recovered, especially because shale wells never produce as much in subsequent years as they do in their first. But the industry maintains that although there is a rapid initial decline, with the average production falling by half in the second year and by 80 percent by the eighth year, it expects the wells to produce at a steady lower level for 30 years.
Due to numerous uncertainties, estimates of the total potential of the Marcellus shale formation range from 50 trillion cubic feet to 500 trillion cubic feet. Even at the low end of that large range, it would be one of the most significant reservoirs of natural gas in the world. Zagorski marvels at the Marcellus, together with the other shales around the United States: Barnett in Texas, Haynesville in Louisiana, Fayetteville in Arkansas. “The gas shales—these have been the most significant oil and gas finds I've ever seen in my whole career,” he says. He’s confident that similar shales will be found elsewhere in the world, possibly in Europe, which for many years has been dependent on Russian for imports of natural gas.
For now, the technology and limited number of rigs capable of the work are all in the United States, with the location of the Marcellus in Pennsylvania especially advantageous.
The populous mid-Atlantic market pays a relatively higher price than the South for energy, at the same time that exploration and finding costs are dramatically lower in the Marcellus than in the Barnett and the other shales around the United States.
“It’s very repeatable,” says Range spokesman Matt Pitzarella. “Every well in Washington County is either good or great.”
Certainly the major energy companies from around the world think it’s worth descending on Pennsylvania. The U.K.-Netherlands giant, Royal Dutch Shell*, Norway’s Statoil, Japanese companies Mitsui and Sumitomo, and India’s Reliance Industries all have bought stakes in Pennsylvania’s Marcellus shale in the past two years.
The Water Challenge
The effort to refine technology continues as the Marcellus shale boom expands, and some of the biggest challenges have to do with water.
About 4 million gallons (15 million liters) of water are required for each frack, far more than the 100,000 gallons conventional Pennsylvania wells once required. No public water system could provide that volume of water at the rate needed—some 4,200 gallons (16,000 liters) per minute. To haul it would require 1,500 truck trips per well, says Range spokesman Pitzarella. Some companies store the water in tanks. Range has about 15 large man-made ponds in southwestern Pennsylvania—water impoundments lined with high-density polyethylene—each of which stores up to 12 million gallons of water. Range begins planning to fill each impoundment months before a frack; it typically takes 90 days to purchase the water from local suppliers or withdraw it from local waterways. The process is regulated by the state, which monitors when water levels are too low. A contractor is hired to lay temporary pipeline from impoundment to well, stretching as far as seven miles, and the water is pumped to the site when fracking begins.
If shale development continues to grow in the Marcellus, water usage for well fracking could reach 650 million barrels per year in Pennsylvania, New York and West Virginia, concluded a report done earlier this year for the U.S. Department of Energy and state authorities. It sounds like a lot until it’s compared to the other water uses in the three states. It would total less than 0.8 percent of the 85 billion barrels drawn yearly out of watersheds in the three states, said the study by ALL Consulting of Tulsa, Oklahoma. Coal and nuclear power plants, in particular, draw many times more water.
But the greater challenge is how to dispose of the large amount of wastewater after drilling. (Related: "A Dream Dashed by the Rush on Gas") Range says about 25 percent of the water it uses in fracking rushes to the surface of the well immediately after the frack is completed, with 20 percent more produced slowly and captured in tanks for the life of the well.
During the well’s initial stage, companies may flare the gas, both to test the volume and to enable them to collect the produced wastewater. Flaring is seen as a safer way to manage the gas that simply allowing it to vent into the air. But the industry increasingly has been moving to “green completions,” capturing the initial gas and sending it into a pipeline instead of flaring—a process that becomes easier to do when the pipeline infrastructure in the area is fully built out. Range says, for instance, that the infrastructure is advanced enough now in Washington County that it no longer flares there. In any case, after the frack fluid is captured, the well is capped with a group of pipes and valves, commonly known as a “Christmas tree,” that direct the gas into into the pipeline and processing system.
Texas has many deep underground injection wells, regulated by the U.S. Environmental Protection Agency, where companies dispose of the salty and chemical- and mineral-laden shale wastewater. But Pennsylvania doesn’t have many of these sites, and the state’s requirements, which have been tightened since the shale business began, limit the options for disposal. The wastewater is about 9 percent salt, more saline than seawater, which is about 3.5 percent salt. If it sits stagnant, it can develop a stench because it is prone to bacterial growth.
Beginning one year ago, Range Resources tried a new approach—reusing the wastewater to frack new wells. By filtering the water to remove solids that might interfere with equipment and treating the water with antibacterial agents, the company found it could get the water clean enough to reuse in fracking. The company now is using 100 percent of its wastewater to frack new wells (although because of the large volumes needed, the company still has to add fresh water to the mix.) And the company says in the impoundments where it stores the wastewater until use, it includes bird netting, security and privacy fencing, solar-powered aeration, liner that is six times thicker than that used in landfills, and electronic monitoring to notify officials if there is a leak.
But the amount of wastewater that will be produced in the growing shale gas business is great enough that research is continuing on what to do with it. “It’s going to be a portfolio approach with water disposal,” says Pitzarella of Range. “We still need to reuse water, we are going to have to do some distillation and crystallization and different things. We’re still going to need underground injection.”
Back in Chartiers Township, Supervisor Shober says he’s watched with fascination at how gas producers try different approaches and tweak technology to come up with a slightly different plan at each site. “I heard one of the guys from Texas say every well has its own character,” he says.
The township has had public meetings to learn about the fracking process, and is reviewing its ordinances aimed at minimizing disturbance to neighbors. Although Shober still fields complaints about noisy compressors and the like, he feels the township’s residents have welcomed the gas industry. “Any time change comes in, the first thing is you are fearful,” he says. “But once you understand, and you have the knowledge and you know what’s going on, you tend to accept the change and you move forward.”
Read the entire special report, with photos, interactive map and illustration of the process, at THE GREAT SHALE GAS RUSH.