Shale Gas Developmentand Hydraulic Fracturing New Brunswick Building Trades Council Angie Leonard, Senior Advisor, CAPP June 26, 2012
Presented By The Canadian Association of The New Brunswick Oil & Petroleum Producers (CAPP) Natural Gas Association (NBONGA) New Brunswick O&NG Task Group
What Is CAPP?● CAPP’s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public and stakeholders in the communities in which we operate.● CAPP represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada.● CAPP’s member companies produce more than 90 per cent of Canada’s natural gas and crude oil with revenues of about $100 billion-a-year.
What Is NB Oil & Natural Gas Association?● In 2011 the NBONGA was formed to facilitate the effective exploration, development, production, transmission and distribution of New Brunswick’s hydrocarbon resources in an environmentally safe and sustainable manner● In December, 2011 the NBONGA and CAPP joined to form a Task Group● The Task Groups objective is to engage with communities, business leaders, governments and people interested in an open, fact-based dialogue about natural gas and oil development
Advancing the 3Es the 3Es● Generating Economic Benefits Jobs and revenues across North America● Providing Energy Security Safe, secure and reliable energy Large energy resource potential● Providing Environmental Stewardship Strong regulations Technology advances
Global Primary Energy Demand• Significant energy demand growth: Population, standards of living• Need all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons Increasing role for non- conventional crude oil & natural gas• Technology is a key lever for sustainable growth Production Cost competitiveness Environmental performance
How will demand be met? •2010 •2000 •Existing Conventional •(WCSB) •Produced •Northern •Produced •Existing Conventional •(WCSB) •Offshore •Offshore •Shale Gas •Northern •Coalbed Methane •Tight Gas •390 TCF* •70 years of supply •700 - 1300 TCF* •100+ years of supply • Technological advances have “unlocked” vast unconventional gas resources. • Resource assessments are ongoing (GSC, NEB, and others) in many new areas, and new opportunities continue to emerge (Eastern Canadian shale gas, etc.) •*Estimated Recoverable Marketable Gas
Economic ImpactsARKANSAS:● Market Value (2010) - $13.1 billion● Employment(2008) – 9,164 ONG industry● Industry average salary $72,579; state average $36,800 (2010) Source: State of Arkansas 2011
NB Proven and Potential Resources •Source: DNR NB
Current Natural Gas and Oil Industryin New Brunswick:● First oil well drilled at Dover in 1859● 300 wells were drilled in NB by 2010● Since 1990, 40 Oil wells drilled and 40 Natural Gas wells● 30 Natural Gas wells are currently producing● 9 wells have been horizontally drilled, 5 gas and 4 oil● Since 1990 49 wells have been fraced in NB
Exploration Process:Normally 4 Stages: 1. Initial exploration • airborne techniques such as gravity gradiometry, this covers large areas and seeks significant geological structures, which have the potential to contain hydrocarbons. 2. Geochemical surveys • on the ground may be conducted, such as soil gas hydrocarbon geochemistry. 3. Geophysical surveys (seismic) • looking for specific locations where hydrocarbon may exist in significant quantities (hydrocarbon traps) 4. Drill exploration wells If successful the wells would be prepared for production, if not the company would move to another target.
Geophysical Exploration (Seismic):1. Used to identify underground geological structures such as faults, fractures and petroleum bearing formations and aquifers.2. A seismic wave is created on the surface of the ground using a controlled energy source (Vibroseis truck, or small explosive charge). •Vibroseis truck •Seismic charge
Geophysical Exploration (Seismic): 3. Seismic wave travels into the earth and is reflected off of subsurface formations back to surface where it is recorded by receivers (geophones). 4. Analyzing the time it takes for the seismic waves to reflect off of subsurface formations and return to the surface, a geophysicist can map subsurface formations and anomalies.
Drilling Operations: ● Shale zone accessed through vertical, then directional or horizontal drilling ● Shale gas formations are deep in NB (1500m to greater than 2000m) ● Water aquifers are typically 100-250m deep ● 3 layers of steel casing and grout: Surface casing Intermediate casing Production casing
How does hydraulic fracturing work?● Approximately 4,000 cubic meters (4 million litres) of water is used to fracture each stage of a well● Total water used at the 4 major Shale Plays in the US is less than 1% of total water usage in each state● Fracing fluid consists of 99.51% water and sand and 0.49% chemical additives● All chemical additives are disclosed by industry to regulators before fracing occurs
Hydraulic Fracturing (Fracing) - con’t ● Flow back water is recycled for reuse in other fracs or sent to designated, regulated waste disposal centers ● Time to build a well pad, drill well, frac and complete well is generally 6-8 weeks ● Once well is in production the well head and water storage tanks are left on site and the remainder of the well pad is reclaimed ● Each well pad is approximately 3-5 acres and can accommodate up to 20 wells
Multi-Well Pads Vertical Well Pad Horizontal Well Pad Advantages of Multi-Well Pads: •Source: ERCB 2011 • Reduction of land use for the pad, access roads & pipelines • Easier monitoring of site and enforcement of regulations • Conducive to establishing and enforce traffic/trucking corridors • Optimization of location • Establish and enforce noise, light, air emission and water plans
What does this mean for Canada?● Jobs (Upstream from Western Canada Natural Gas) 317,000 – the number of jobs natural gas sector is expected to provide (direct, indirect and induced) across Canada by 2035 9,693,000 – number of person years of employment provided by natural gas industry between now and 2035 $339 billion – amount natural gas employees will earn over next 25 years● Revenue, Royalties, Taxes (To all Canada from Western Can. NG) $15.1 billion – amount natural gas provided in export revenue $1.5 trillion – natural gas expected to contribution to Canada’s GDP over the next 25 years $199 billion – natural gas industry will generate in royalties $170 billion – natural gas industry will generate in federal taxes $130 billion – natural gas industry will generate in provincial taxes
Types of Economic BenefitsDirect Benefits: the spending by natural gas companies and other sectors of the economy that are also stimulated by these expendituresIndirect Benefits: supply chain opportunitiesInduced Benefits: rounds of transactions throughout the economy set of by workers, hired directly or indirectly, spending their wages on goods and services
Canadian Jobs created by UpstreamNG Industry in British Columbia (thousands) •Incremental 110,000 jobs! • Social infrastructure concerns (schools, hospitals) • Training requirements (highly specialized and technical) • Could be more factoring in pipelines and LNG infrastructure.Source: CERI: Economic Impacts of Drilling and Operation of Gas Wells in Western Canada – June 2011
Natural Gas Workforce Information:(Marcellus Shale Education and Training Center) ● Each well requires 420 individuals working in 150 different occupations to complete and produce gas from one well ● Each well creates approx 13 Direct FTE’s per year ● If you include Direct, Indirect and Induced jobs the estimates are 32 – 58 FTEs per well, varies by jurisdiction ● If 200 wells per year…2,600 Direct jobs per year and 6,400 to 11,600 total jobs per year, supported by the natural gas industry
Supply Chain Opportunities:● Construction, manufacturing and transportation● Drilling, completion and production● Geological and geophysical● Pipeline and associated infrastructure● Environmental & other consulting services● Legal & land● Natural gas distribution● Service industries, logistics & distribution● Retail, food, health, education & financial services
Not Just Traditional NG Businesses:● Work boots, uniforms & uniform cleaning● Well pad cleaning● Alternate housing – RVs, mini-homes● Fencing● Concrete● Landscaping & irrigation● Security, EMTs● Engineers, lawyers, accountants, surveyors, etc● Home sales, hotels, restaurants, entertainment, retail, auto sales (especially pickup trucks)● Catering
Impressions of Energy Sources Positive Neutral Negative Solar 90% 7% 3% Wind 82% 12% 6% Hydro electricity 75% 21% 4% Bioenergy made from household garbage 72% 21% 7% Bioenergy made from animal waste 57% 31% 12% Bioenergy made from forest residues 49% 39% 12% Bioenergy made from crops 45% 30% 25% Canadian natural gas 44% 39% 17% Natural gas 38% 39% 23% Hydrogen 34% 51% 15% Oil from Canadian sources 29% 33% 38% Nuclear 29% 31% 40% Oil from Canadas oil sands 23% 27% 50% Shale or unconventional gas 12% 47% 41% Coal 5% 18% 77% Oil from imported sources 2% 18% 80% 0% 20% 40% 60% 80% 100%•Harris Decima, June 2011
Guiding Principles for HydraulicFracturing1. We will safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical.2. We will measure and disclose our water use with the goal of continuing to reduce our effect on the environment.3. We will support the development of fracturing fluid additives with the least environmental risks.4. We will support the disclosure of fracturing fluid additives.5. We will continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing.
Summary…Based on:• Positive effects on NB’s economy• NB’s energy needs and energy portfolio• Cleanest burning fossil fuel• Industry’s commitment to: • Responsible development • Accountability and transparency • Strong regulatory frameworks and enforcement policies • Lessons learned from other jurisdictions and history • Scientific research and continued industry improvements
The Ask… Support Responsible Exploration and Development of Shale Natural Gas in NB
THANK YOUQUESTIONS? Angie Leonard Senior Advisor, NBAngie.Leonard@capp.ca www.capp.ca