Hydraulic Fracturing, Water Use, and Propose Rule Changes

Adam Wygant Section Chief Office Oil, Gas, and Minerals

60,000 Oil & Gas Wells Since 1925

Active Wells: • 4500 oil • 11,000 gas • 1300 water

injection & disposal

• 3000 gas storage

536 Permits Issued First Well 1929 Conway Township Current Active Wells 78 Gas Storage 25 Oil 9 Gas 2 Brine Disposal 2 Brine Production

Michigan Basin Intracratonic basin. Bowl shaped sedimentary deposits of ancient quiet marine deposition. Older formations are closer to the surface along basin margins and at great depth in the center of the basin with a maximum thickness of about 15,000 feet beneath the city of Midland.

Michigan’s Unconventional ‘Plays’ Unconventional reservoirs are characterized as having the source and reservoir in one rock. Very low porosity and permeability. The wells typically must be fracture completed to achieve commercial production. Antrim Shale (Late Devonian). Dark Brown to greenish gray Shale. High angle natural fractures along bedding planes between shale and carbonate. Natural fractures may also be attributed to glacial rebound. High organic content. Biogenic gas with a productive zone (500 to 2,000 feet). Natural gas production. A1 Carbonate (Late Silurian). Shaley dolomite. Varies from dolomite to limestone. Over pressured and potentially sour – moving basin ward increases in H2S. Source rock for the Niagaran Reef play. Dark Brown to greenish gray. Half dozen recent attempts to drill horizontals and hydraulically fracture – to date, no significant success. Several conventional A1 fields exist oil to gas condensate, to natural gas production. Utica-Collingwood (Late to Middle Ordovician). Utica is shale composed of compacted clay with minor silt and carbonate. Light gray to dark black. Organic content from 0.5% to 1.3% by weight. Collingwood is black fine-grained limestone grading toward shelly limestone of upper Trenton. 0-50 feet thick. Absent from southern, western, and eastern portions of the basin. Organic content from 2.5% to 6.0% by weight. Gas condensate and natural gas production.

1950s 1st Michigan Hydraulic Fracture

Completion

1950 – Present Approximately

12,000 wells completed with

hydraulic fracturing.

Mostly since the 1980s in vertical

wells in Michigan’s Antrim Shale Formation.

These Antrim Formation wells

were among the first unconventional gas

wells utilizing hydraulic fracturing completion in the

US.

History of Hydraulic Fracturing well completions in Michigan

Through wellbore deviation

technology advancements in

the 1980s.

Horizontal drilling in conjunction with hydraulic fracturing.

1980s-2000 Over 1,000

directional Antrim Wells with over 400

horizontal wells.

2008 to Present The combination of long

horizontal wells and hydraulic fracturing.

Initiation of the ‘High

Volume Hydraulic Fracturing’ (HVHF) in

Michigan

History of Hydraulic Fracturing in Michigan

Applications and permits

for wells with high-volume

hydraulic fracturing since 2008

• Well Location and Spacing • Drilling and Construction • Well Completion • Production Operations and Records • Plugging and Restoration

MICHIGAN’S OIL & GAS REGULATORY AUTHORITY

PART 615, SUPERVISOR OF WELLS. NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT (NREPA) ACT NO 451, 1994, AS AMENDED

Important Protections Prevention of Waste – Statute 326.61505 Protect Public Health and Safety (Rule 1014) Set Backs (Rule 301) Houses and Water Wells Noise (Rule 1015)(45 db@1320) (Rule 1016) Odor (Rule 1013) “shall not create nuisance odor” Spills and Losses (Rule 1008) Air Emissions (Rule 1010)(H2S Rule 1129) Ground Water (Secondary Protection & Monitoring)

Prevention of Fluid Mixing Top Priority

Production Casing

Intermediate Casing

Surface Casing 100 feet + below fresh water

WELL CONSTRUCTION

Fresh Water

Image 7

HYDRAULIC FRACTURING

High Pressure Fluid Creates Fractures in Rock

Fracturing Fluid:

99.5% Water & Proppant

0.5% Chemical Additives to Improve Effectiveness

Primary Focus for DEQ for Hydraulic Fracturing

• Perception Issue

• Migration of gas and fluids Well integrity/Well Construction • Water acquisition (SOW 1-2011). WWAT

• Chemical additives. (SOW 1-2011). MSDS

• Management of “flow back” Addressed in Part 615

• Induced Seismicity

WATER USE

• Deep horizontal well: Average: 5 million gallons Largest: 21 million gallons

• DEQ requires Water Withdrawal Assessment • DEQ does not approve withdrawal if adverse

resource impact • DEQ requires groundwater-level monitoring if

there is a water well within 1/4 mile or if within a sensitive area

Equivalent to: • 1,000 MW coal-fired power plant in 12 hours

• Irrigating 8 acres of corn in a growing season

• 0.3 inches of rainfall over one square mile

HOW MUCH IS 5 MILLION GALLONS?

Water Use Antrim Shallow Hydraulic Fracturing (Late 1980’s to Mid 1990’s): 11,000 Wells, 40,000 gallon average fracture, 440 Million Gallons over 7 years, 62 Million Gallons Per year

Consumptive Water Use – All Users in Michigan: 600 million gallons per day (Great Lakes Commission, 2011 Great Lakes Annual Water Use Report, May 2013 Issue No. 21) 219 billion gallons per year

Current Michigan Trends 2013 35 Million Gallons Used For Hydraulic Fracturing 0.02% of Michigan Consumptive Water Use Equivalent to irrigating 56 acres of corn for growing season

Permitted Undrilled – Pending Water Withdrawal Approvals 14 wells at 12 million gallons average = 168 million gallons Equivalent to irrigating 269 acres of corn for growing season

Water Use for Hydraulic Fracturing

Taken From Office of Oil, Gas, and Minerals Records for High Volume Completions

GROUNDWATER CONTAMINATION

• Michigan well construction and casing regulations protect groundwater against contamination

• No instances of groundwater contamination form hydraulic fracturing in Michigan

FLOWBACK WATER MANAGEMENT Fracturing Operation Flowback Contained in Tanks

Hauled by Truck Disposal Well

SPILL CONTAINMENT

• Secondary containment requirements

• Reporting and cleanup requirements

• Open pits allowed only for fresh water

CURRENT REGULATIONS ON CHEMICAL DISCLOSURE

• Material Safety Data Sheets posted at site • Some chemicals subject to federal trade

secret protections • DEQ posts MSDSs on website • Company must disclose details to medical

professionals

AIR QUALITY PROTECTION

• DEQ requires capture of methane gas and flaring

• EPA recently imposed conditions similar to Michigan’s

IMPROVED ACCESS TO INFORMATION

DEQ is Enhancing the Permit Application List • Information more clear and accessible • Will show roads, residences, land features • Email address for comments or questions Website: www.michigan.gov/deqoilgasminerals

Summary & Looking Forward 12,000 wells have been fractured in Michigan. Many sizes, compositions, and strategies. No evidence of adverse impacts to the environment or public health. Current interest is focused on drilling long laterals into unconventional reservoirs at depths of 4,000 to 10,000 feet deep. Current University of Michigan Graham Institute Study. Technical reports just released this month. Final integrated assessment reports are due out in mid-2014. EPA’s Study due out in late 2014.

Review regulations - modify as needed .

DRAFT PROPOSAL FOR RULES REVISION

Four Main Issues: •Water withdrawals •Baseline water sampling •Monitoring and reporting •Chemical additive disclosure

Water Withdrawal

• Codifies requirement for Water Withdrawal Assessment Tool • Withdrawal not approved if adverse impact Baseline Sampling • Baseline water well samples within 1/4 mile

Monitoring and Reporting

• Install monitor well to check water levels • Plan for preventing loss of water in supply

wells • Receive advance approval before each

HVHF • Notify DEQ 48 hours in advance • Measure and report pressures and

volumes

Chemical Disclosure

• Disclose chemical information online at FracFocus.org

Chemical name and concentration Chemical family and trade name for

trade secret chemicals

Other Rule Issues Well location rules more flexible Terms clarified on forming of drilling

tracts and designating well locations

NEXT STEPS • DEQ continually updates regulations for oil

and gas production • Copy of the proposed rule changes are

available on the DEQ website • Continue to meet with stakeholders to

perfect the draft proposal • New rules should be in place by fall of 2014

Useful links: MDEQ-OOGM: http://www.michigan.gov/ogs GeoWebFace: http://ww2.deq.state.mi.us/GeoWebFace/ US EPA HF page: http://www2.epa.gov/hydraulicfracturing U of M study: http://graham.umich.edu/knowledge/ia/hydraulic- fracturing/technical-reports MOGPEF video: http://www.mogpef.org/video_shale/index.html FracFocus: http://fracfocus.org/ Energy In Depth: http://energyindepth.org/ PEAS 800-292-4706 Adam W Wygant, Supervisor , Permitting and Technical Services Section DEQ- Office of Oil, Gas, and Minerals wyganta@michigan.gov 517-897-4828

OFFICE OF OIL, GAS, AND MINERALS