shale gas in the uk -...

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1 © 2016 Gaffney, Cline & Associates. All Rights Reserved. © 2016 Gaffney, Cline & Associates. All rights reserved. Terms and conditions of use: by accepting this document, the recipient agrees that the document together with all information included therein is the confidential and proprietary property of Gaffney, Cline & Associates and includes valuable trade secrets and/or proprietary information of Gaffney, Cline & Associates (collectively "information"). Gaffney, Cline & Associates retains all rights under copyright laws and trade secret laws of the United States of America and other countries. The recipient further agrees that the document may not be distributed, transmitted, copied or reproduced in whole or in part by any means, electronic, mechanical, or otherwise, without the express prior written consent of Gaffney, Cline & Associates, and may not be used directly or indirectly in any way detrimental to Gaffney, Cline & Associates’ interest. Séadhna Wilson and Adrian Topham 27 th April 2016 Shale Gas in the UK London Engineering Group

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© 2016 Gaffney, Cline & Associates. All rights reserved. Terms and conditions of use: by accepting this document, the recipient agrees that the document together with all information included therein is the confidential and proprietary property of

Gaffney, Cline & Associates and includes valuable trade secrets and/or proprietary information of Gaffney, Cline & Associates (collectively "information"). Gaffney, Cline & Associates retains all rights under copyright laws and trade secret laws of the

United States of America and other countries. The recipient further agrees that the document may not be distributed, transmitted, copied or reproduced in whole or in part by any means, electronic, mechanical, or otherwise, without the express prior

written consent of Gaffney, Cline & Associates, and may not be used directly or indirectly in any way detrimental to Gaffney, Cline & Associates’ interest.

Séadhna Wilson and Adrian Topham

27th April 2016

Shale Gas in the UK London Engineering Group

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Disclaimer

This presentations has been prepared exclusively for

discussion purposes during this event. The materials

presented should not be understood as GCA forecasts or

predictions of future industry conditions and they should not

be understood as a specific recommendation in respect of

any particular decision or course of action.

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▪ Introduction to shale gas and oil

▪ Myths and reality

▪ Moving from conventional to unconventional in the UK

▪ UK regulations and risk management

▪ Key messages

Contents

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Shale resources are usually part of a Petroleum System with other resources

Source: EIA

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Shale has little to no porous space meaning oil and gas cannot flow freely

▪ This means there is little space

between grains

▪ This means fluids do not move

easily through the rock

▪ Conventional reservoirs have

permeabilities of 1-1000mD

Shale has low porosity (<10%) Shale has low permeability (<0.1mD)

Source: OGP

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▪ Introduction to shale gas and oil

▪ Myths and reality

▪ Moving from conventional to unconventional in the UK

▪ UK regulations and risk management

▪ Key messages

Contents

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Groundwater contamination risk is reduced with steel and concrete casing

Source: BG

Surface Casing Cement

Steel Surface Casing

Production Casing Cement

Steel Production Casing

Production Tubing

Aquifer

Multiple Layers of Groundwater Protection

Shale groundwater contamination risk is no different in conventional

oil and gas production

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Hydraulic Fracturing at Preese hall caused a 2.3 ML earthquake

Sources: British Geological Society and “Preese Hall Shale Gas Fracturing – Review & Recommendations for Induced Seismic Mitigation”, Dr CA Green, Prof P Styles and DR BJ Baptie, 2012

Preese Hall

2.3 ML

Recorded UK Earthquakes, 2011 - 2016

Bubble size is

indicative of

magnitude

The UK has experience over 100 naturally occurring earthquakes of a

similar size to Preese Hall in the last five years

• Assessed maximum

earthquake of 3.0 ML – taken as

analogy with Coal Mining

Industry

• 3.0 ML at 2-3 km depth unlikely

to cause structural damage, but

is noticeable

• Similar earthquakes in UK have

caused superficial damage

DECC Commissioned Report Findings

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Water and sand are the dominant ingredients in Preese Hall Hydraulic Fracturing fluid

Water 97.9%

Sand 2.0%

Friction Reducer - Polyacylamide

Emulsion in Hydrocarbon Oil

<0.1%

Tracer - Water with Sodium Salt

<0.01%

Additives 2.1%

Cuadrilla Preese Hall Hydraulic Fracturing Fluid Composition (% Volume)

In the UK all additives must be disclosed and approved by the

Environment Agency

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Fracturing fluids in the USA have a diverse range of additives that are not always disclosed

Sources: “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources – Executive Summary”, EPA, 2015

“Analysis of Hydraulic Fracturing Fluid Data from the FracFocus Chemical Disclosure Registry 1.0”, EPA, 2015

Gas Production Type

Chemical

Median concentration

in hydraulic fracturing

fluid (% by mass)

Hydrochloric acid 0.078

Methanol 0.002

Distillates, petroleum,

hydrotreated light 0.017

Isopropanol 0.0016

Water 0.18

Ethanol 0.0023

Propargyl alcohol 0.00007

Glutaraidehyde 0.0084

Ethylene glycol 0.0061

Citric acid 0.0017

Sodium hydroxide 0.0036

Peroxydisulfuric acid,

diammonium salt 0.0045

Fluid Additives in USA

Isolated cases exist where drinking water has been contaminated

• No evidence that hydraulic

fracturing led to widespread,

systemic impact on drinking

water

• Isolated cases exist where

drinking water has been

contaminated

• Insufficient data to determine

frequency of impacts

• One or more ingredients were

claimed confidential in more

than 70% of disclosures to

EPA

Excerpts from Conclusions of

2015 EPA Report

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Shale gas extraction GHG emissions are comparable to conventional gas

Source: “Potential greenhouse gas emissions associated with shale gas extraction and use”, DECC, 2013

Selected Recommendations:

• Emissions should be kept as

low a level as is reasonably

practical (ALARP)

• Operators should monitor

their sites for GHG

emissions

• Shale gas production should

be accompanied by more

research into more effective

technologies, e.g.:

• Reduced emission

completion (REC)

• Self-healing cements

DECC 2012 Report on GHG Emissions from Shale Gas

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▪ Introduction to shale gas and oil

▪ Myths and reality

▪ Moving from conventional to unconventional in the UK

▪ UK regulations and risk management

▪ Key messages

Contents

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574 onshore wells have been drilled in the UK since 1996

Source: Oil and Gas Authority

0

10

20

30

40

50

60

20

16

20

15

20

14

20

13

20

12

20

11

20

10

20

09

20

08

20

07

20

06

20

05

20

04

20

03

20

02

20

01

20

00

19

99

19

98

19

97

19

96

Year

Number of Onshore UK Conventional Wells Drilled

Total = 574

Location of Onshore Conventional

Wells

A handful of

these wells have

been shale gas

exploration wells

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Unconventional vs. Conventional

▪ Well completion design more complex

• Greater emphasis on geomechanics for produceability

• Water usage 10,000-30,000 m3 similar to other industrial activities

• Fracturing control processes defined

▪ First 2 phases likely to have considerably more traffic

• How much will depend on the volumes required for fracturing

• Intelligent scheduling & onsite storage can reduce significantly

▪ Last 2 phases will be identical

https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk

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Example wellsites during drilling operation

Source: bartonwillmore.co.uk

Shale Gas–

Preese Hall

Conventional

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Example wellsites during fracturing operation & production operation

Fracturing

Operation

Production

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Poole Harbour is home to an ‘onshore’ oilfield development in an environmental sensitive area

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Canadian (onshore) shale play appraisal

Key:

Exploration

Appraisal

Development

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Appraisal to development: scale shift

Source: Oil & Gas Authority, 14th onshore oil & gas licensing round

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▪ Introduction to shale gas and oil

▪ Myths and reality

▪ Moving from conventional to unconventional in the UK

▪ UK regulations and risk management

▪ Key messages

Contents

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The UK has an established regulatory process for new exploration wells

Source: DECC DECC Guidance on fracking

1. PEDL

2. Landowner consent

3. EA water air waste

4. Local authority planning & local community

5. HSE well design

6. OGA seismicity

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2

3

4

5

6

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DECC has introduced a traffic light system to manage induced seismicity

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/270676/DECC_infographic_Traffic-light-system_finaldec13.pdf

• Baseline seismic monitoring to establish background seismicity in the area

of interest

• Characterisation of active faults using all available geological and

geophysical data

• Application of suitable ground motion prediction models to assess the

potential impact of any induced earthquakes

DECC Commissioned Report Recommended Control Measures

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Elements of Risk Register

▪ Identify risk, severity & lifecycle timing

▪ Both before mitigation (inherent risk) & after (residual risk)

▪ Categorise by Likelihood & Tolerability

ID -

1 Asset

Description ID -

2

Group Description

ID -

3

DescriptionTemporal description of

the risk eventProject Lifecycle Phase Lifecycle Phase Impacts

Inhe

rent

Im

pact

Ban

ding

Inhe

rent

Like

lihoo

d

Ban

ding

Inhe

rent

Ris

k

Leve

l

Interdependencies

Asset System Grouped Risks Risk Event

Likelihood

Cost

Optimistic

(£M)

Cost

Most

Likely

(£m)

Cost

Pessimistic

(£m)

Schedule

Optimistic

(weeks)

Schedule

Most Likely

(weeks)

Schedule

Pessimistic

(weeks)

Rationales Likelihood

Cost

Optimistic

(£M)

Cost Most

Likely (£m)

Cost

Pessimistic

(£m)

Schedule

Optimistic

(weeks)

Schedule

Most Likely

(weeks)

Schedule

Pessimistic

(weeks)

Rationales

Residual Risk Evaluation Point 1 - Assessment for the Exploration periodInherent Risk Evaluation Point 1 - Assessment for the Exploration period

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▪ Introduction to shale gas and oil

▪ Myths and reality

▪ Moving from conventional to unconventional in the UK

▪ UK regulations and risk management

▪ Key messages

Contents

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Key messages

▪ Shale gas risk is not significantly different from conventionals

▪ Control measures particular to shale gas development

include:

– Induced seismicity monitoring

– Full disclosure of fracture fluid composition

▪ The challenge is communicating the science and engineering

to the public and planning authorities

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Useful resources

1. DECC Office of Unconventional Gas and Oil

2. DECC Guidance on fracking: developing shale oil and

gas in the UK

3. UKOOG 14th Onshore Licensing Round

4. IOGP Gas from shale

5. IOGP NGS Facts

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Useful resources

1. https://www.gov.uk/government/groups/office-of-

unconventional-gas-and-oil-ougo

2. https://www.gov.uk/government/publications/about-shale-

gas-and-hydraulic-fracturing-fracking/developing-shale-

oil-and-gas-in-the-uk#contents

3. http://www.ukoog.org.uk/images/ukoog/pdfs/Round%201

4%20Explained.pdf

4. http://www.iogp.org/Gas-from-shale

5. http://www.ngsfacts.org/