Responsible Energy Development: CAPP Guiding Principles and Operating Practices for Hydraulic Fracturing


Published on

Geoff Morrison, CAPP Manager of BC Operations, delivered this presentation at the Canadian Institute Energy Group’s 16th Annual BC Natural Gas Symposium in Vancouver on June 5th. Geoff spoke specifically on responsible energy development and CAPP’s Guiding Principles and Operating Practices for Hydraulic Fracturing within a global energy context.

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Responsible Energy Development: CAPP Guiding Principles and Operating Practices for Hydraulic Fracturing

  1. 1. BC Natural Gas SymposiumResponsible Energy DevelopmentCAPP Guiding Principles and OperatingPractices for Hydraulic Fracturingwithin a Global Energy ContextGeoff Morrison , Manager British Columbia OperationsVancouver, British ColumbiaJune 6, 2013
  2. 2. ● Natural Gas in the Global Context - Supply andDemand● Social Licence to Operate● Responsible Canadian Energy Program● CAPP’s Hydraulic Fracturing Guiding Principlesand Operating Practices● Natural Gas Dialogues and Natural Gas PollingOverview2
  3. 3. Global Primary Energy DemandIEA New Policies Scenario• Significant energy demandgrowth: Population, standards ofliving• Need all forms of energy: Increasing role forrenewables Continuing reliance onhydrocarbons Increasing role for non-conventional crude oil &natural gas• Environmental challenges• Technology is a key lever forsustainable growth 02,0004,0006,0008,00010,00012,00014,00016,00018,00020,0002010 2015 2020 2025 2030 2035million tonnes oil equivalentOther RenewablesBioenergyHydroNuclearNatural GasOilCoalSource: International Energy Agency World Energy Outlook 2012
  4. 4. Top 10 World Natural Gas Producersin 20110 5 10 15 20 25USRussian FederationCanadaIranQatarChinaNorwaySaudi ArabiaAlgeriaIndonesiaTrillion Cubic FeetSource: BP Statistical Review 2012Canada, is the 3rd largest producerof natural gas in the world.
  5. 5. N.A. natural gas supply –The opportunityShale gas supply agame-changer.Technologybreakthroughs.New producingregions.100 years + supply.Market growthopportunities(LNG exports,powergeneration,transportation).
  6. 6. Current Disposition of W. Canada’s Natural GasProduction (2012)TransCanada TransmissionMainlineTQ&MWestcoastKernRiverNorthwestNorthernBorderTransCanadaAlberta (NGTL)NGPLANRANREl PasoPG&ESoCalPGTTexasEasternPanhandleAlgonquinTranscontinentalANG/FoothillsNGPLNorthwest FoothillsEl PasoTranswesternTrailblazerM&NECNGIroquois PNGTSAllianceLakesGreatWest2.5 bcf/dMid West4.8 bcf/dEast1.1 bcf/dDomestic5.3 bcf/d
  7. 7. Source of Natural Gas Supply for Ontario &Quebec0. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Billioncubicfeet/dayCanadian gasImportsNOTE: Excludes Canadian gas re-imported.
  8. 8. BC’s Production & ResourcesConsumedin BC16%Exported toUSA41%Delivered toCanada43%Source: BC’s Natural Gas Strategy• Canada 6.4 trillion cubic feet (tcf)/year• BC ~ 1.3 tcf/year. – 3.5 Bcf/day300Tight gas250ShaleGas100CBMTrillion cubic feetSource: BC Natural Gas and Petroleum yours to explore 201093Conventional**includes offshore
  9. 9. ● B.C. home to some of NorthAmerica’s most promisingnatural gas plays: Horn Riverand Montney● Resource estimated at up to336 tcf● That’s enough supply to last atleast 100 years at currentdemand levels● B.C. is Canada’s second-largestproducer of natural gas, behindAlberta● Annual production is 1.3 tcf peryear● More than 20,000 wells drilledin B.C. since the early 1900sBritish Columbia’s natural gas resource9Source: B.C. OGC
  10. 10. ● $4 billion estimated for 2012● $6.7 billion invested in 2011● $70 billion invested up to 2010● $14 billion spent on acquisitions in B.C. gas plays by foreigncompanies from 2010 to dateInvestment in B.C.’s natural gas sector1002468102002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013FBilliondollarsCapital Investment in British Columbia
  11. 11. 05001 0001 5002 0002 5003 00020002001200220032004200520062007200820092010201120122012YTD2013YTD$millionsBritish Columbia Crown Land Sales11TTTTTT
  12. 12. Total Wells Drilled in Western CanadaSource – CAPP. Based on Rig Release04,0008,00012,00016,00020,00024,00028,0002003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013EDry/Susp.GasOil2008= 16,1002009= 8,1372010=10,6112011= 11,1159,0001,6009002012= 10,5052013 F= 11,5002011 2012 2013FAlberta 7,087 6,481 7,345British Columbia 560 359 375Saskatchewan 2,980 3,098 3,200Manitoba 471 670 580
  13. 13. Significant Economic driver and revenue generator for B.C.● 12,000 people directly employed in B.C. natural gas sector● $1.35 billion 2009/2010 gov’t revenues (royalties, landsales) ~60% of total direct revenues from B.C. resource industries 4 per cent of total provincial revenues● Has been as high as $2.6 billion 2005/06(B.C. Natural Gas Strategy)● Largest source of natural resource revenue in 2011/2012fiscal yearImpact over next 25 years from natural gas development:● By 2035, direct employment could reach 40,000 people● Taxes and royalties will exceed $160 billion(CERI 2011)Economic benefits to British Columbia13
  14. 14. Outlook for Global LNG Trade● Global LNG trade has almosttripled since 1997.● Increases in global gasconsumption will drivegrowth in LNG trade.● LNG is about 7% of allnatural gas produced.● LNG market will account foran increasing share ofglobal natural gas trade -liquefaction capacity ~doubles over the next 2decades.Projected Global Natural Gas ConsumptionSource: EIA 2011 International Energy Outlook10.9214.6922.123.5328.78051015202530351997 2002 2008 2009 2010Bcf/dLNG Trade - Historical
  15. 15. B. C. Production – New Market Opportunity Case15
  16. 16. B. C. Production – Market Constrained Case16
  17. 17. Industry key success factorsKey success factors: Attract investment capital (supply & infrastructure) Maintain / enhance support from public & stakeholdersCompetitivenessFiscalRegulatoryMarket Access (infrastructure & tolls)CostsSocial LicencePerformance + Communications = Social licence
  18. 18. Industry reputation / social licence –key elementsPerformance + Communication● Performance Continuous industry improvement:• Technology is the key enabler.• Industry operating practices raise bar on industry performance. Solutions-oriented advocacy for balanced policy. Robust & predictable regulatory framework. Science-based monitoring, 3rd party validation, transparent reporting.● Communications & Outreach: Messaging – balanced, fact-based, solutions–oriented. Delivery – diversity of mediums, approaches, spokespersons. Strong focus on outreach / engagement – local / regional / national. Grounded in performance improvement.
  19. 19. • People Health effects of hydraulic fracturing additives.• Land Surface footprint. Induced seismicity. Wildlife disruption.• Air Air quality during extraction, processing, deliveryand end-use.• Water Drinking-water contamination – migration ofmethane and fracturing additives. Volumes of water used. Handling and disposal of fluids.• GHGs Emissions from production & processing.Public concerns about shale gas
  20. 20. Responsible Canadian Energy Program● Canadian Responsible Energy represents a collectivecommitment by CAPP’s members to: Measure our performance Find new and innovative approaches to reduce our environmental footprint Ensure every worker returns home safely every day Continue to improve the ways in which we communicate and engage thepublic and other stakeholders
  21. 21. Through the CAPP RCE program,Canada’s oil and gas industry works to: Reduce the amount of freshwater required perbarrel equivalent of production Safeguard the quality of regional surface andgroundwater resourcesOur safety record: 175,000 wells fractured safely in B.C. andAlberta without an incident of harm to drinkingwater, according to regulators Robust regulations and industry best operatingpractices are key to earning our social licenceto operateResponsible Canadian Energy- water objectives21
  22. 22. Guiding Principles for Hydraulic Fracturing12345We will safeguard the quality and quantity of regional surface andgroundwater resources, through sound wellbore construction practices,sourcing fresh water alternatives where appropriate, and recycling waterfor reuse as much as practical.We will measure and disclose our water use with the goal of continuing toreduce our effect on the environment.We will support the development of fracturing fluid additives with theleast environmental risks.We will support the disclosure of fracturing fluid additivesWe will continue to advance, collaborate on and communicatetechnologies and best practices that reduce the potential environmntalrisks of hydraulic fracturing.
  23. 23. Operating Practices for Hydraulic Fracturing23
  24. 24. Practices put Principles into actionWellbore Constructionand Quality Assurance Comply with regulatoryrequirements and goodengineering practices Confirm wellbore integrity priorto fracturing Integrity can be evaluatedthrough field inspection andwellbore logging at anypoint in the life of the well Undertake remedial actions,when requiredI
  25. 25. Practices put Principles into actionFracturing Fluid Additive Disclosure Publicly disclose all information on fracturing fluid additivesII
  26. 26. Additives27
  27. 27. Practices put Principles into actionWater Sourcing, Measurement and Reuse Reduce overall use of freshwater Measure water quantity Monitor water sourcing Make water sourcing, measurement and reuse practicespublicly availableIII
  28. 28. ● Shell Canada and the City ofDawson Creek Reclaimed WaterProject - The facility treats municipalwaste water for use in Shell’sGroundbirch natural gas venture andthe City of Dawson Creek’s municipaloperations.● The Debolt Water TreatmentPlant – The first of its kind in NorthAmerica and a joint venture betweenEncana and Apache Canada in theHorn River Basin, takes sour, salinewater from the Debolt formation touse for hydraulic fracturing.● The Montney Water Project – Aproject between 7 natural gasproducers, Geoscience BC, the B.CGovernment, the City of DawsonCreek and UNBC, is designed toprovide an inventory of waterresources in the Montney region.Industry in Action29
  29. 29. Practices put Principles into actionBaseline Groundwater Testing Baseline groundwater testing prior todevelopment and monitor over time Sourcing freshwater alternatives andrecycling Share data collected as legallypermittedIV
  30. 30. Practices put Principles into actionFracturing Fluid Additive Risk Assessment &Management Create demand for more environmentally sound fracturingfluids Assess potential risks and mitigate these risks Make processes fordeveloping well-specific risk manage-ment plans publiclyavailableV
  31. 31. • CAPP sponsored thedevelopment of a tool toclassify fracturing fluidadditives according to potentialhealth and environmental risks• Identify and manage potentialhealth and environmental risksassociated with these additives Builds awareness Selection of fracturing fluidswith lower risk profiles, wherepossible• Develop risk managementplans for each well fractured Part of overall corporate riskmanagement programCAPP Hydraulic Fracturing Fluid Additive ScreeningTool32
  32. 32. Practices put Principles into actionFluid Transport, Handling, Storage and Disposal Mitigate potential risks of accidental spills Ensure quick response to accidental spills Make fluid transport, handling, storage and disposal practicespublicly availableVI
  33. 33. Practices put Principles into actionAnomalous Induced Seismicity: Assessment, Monitoring,Mitigation and Response Assess the potential for anomalous induced seismicity Comply with applicable regulatory requirements and employ soundwellbore construction practices Where assessment indicates potential for anomalous inducedseismicity, establish procedures for:• Wellbore placement and drilling design• Personnel preparedness• Monitoring• Mitigation and response, including suspension of operations if requiredVII
  34. 34. Implementation of Operating PracticesCAPP Operating Practice Implementation StatusFracturing Fluid Additive Disclosure • Mandatory disclosure in BC & AB on• Advocating for mandatory disclosure across CanadaFracturing Fluid Additive Risk Assessment& Management• Developed a CAPP chemical screening tool to increase awarenessof risks and drive selection of ‘greener’ products• Tool training sessions were offered for member companies andservice providers in Q1Baseline Groundwater Testing • New West Partnership has oversight for development of regionalgroundwater monitoring policies/protocolsWell Construction & Quality Assurance • Process for conformance was developed, for individual companymodification and adoptionWater Sourcing, Measurement & Reuse • Process for conformance was developed, for individual companymodification and adoptionFluid Transport, Handling, Storage &Disposal• Process for conformance was developed, for individual companymodification and adoptionAnomalous Induced Seismicity:Assessment, monitoring, mitigation andResponse• Six new seismic monitors will be added in NEBC – total of eight
  35. 35. ● CNGI (CAPP, the Canadian Gas Association, the Canadian EnergyPipeline Association, Canadian Natural Gas Vehicle Association andthe Canadian Society for Unconventional Resources) engaged abroad group of stakeholders in Halifax, Moncton, Montreal,Ottawa, Toronto, Red Deer, Fort St. John and Vancouver● Brought together Canadian business, environmental,sustainability, academic, aboriginal and community leaders toinvolve Canadians in a larger discussion of the economic,environmental and energy security and reliability dimensions ofnatural gas.● A report on what we heard and industry’s response was released inApril. This is being used as a foundation for future discussionswith governments and the public at large.Natural Gas Dialogues36
  36. 36. Impressions of Natural / Shale Gas – National resultsFor each of the following, indicate if your overall feelings are positive, neutral or negative.
  37. 37. Impressions of Natural / Shale Gas – BC only resultsFor each of the following, indicate if your overall feelings are positive, neutral or negative.
  38. 38. Summary●Huge opportunity for Canada●Need to be competitive●Social Licence to Operate●Principles and Practices: Guide development Inform and complement regulations Consistently deliver responsibleoperations across Canada Continue to develop the resourcesafely
  39. 39. Natural Gas Fact Book: Fracturing Animation: More Information40