Production Grows – As Do Areas of Concern

Oil and natural gas production continued to grow in the United States in 2013 even as progress on new federal laws and regulations stalled – but local opposition to shale gas and oil development increased.

Canadian shale gas also ballooned – to 2.8 billion cubic feet per day in May 2013 – but still lagged behind its southern neighbor. Canadian shale gas represented only 15 percent of the country’s 2012 production, but jumped to 20 percent in 2013, as per the Canada National Energy Board and U.S. Energy Information Administration (EIA).

Outside North America, a dozen countries conducted exploratory shale gas drilling – but only China reported commercially viable production, according to EIA. China’s shale gas represented only one percent of the country’s total gas production.

U.S. Production Grew

U.S. oil and natural gas production grew substantially in 2013, but low gas prices continued to shift drilling activities away from natural gas. Below are just a few statistics (EIA data) to document these patterns:

  • In 2012 shale gas was 39 percent of U.S. dry gas production, and Marcellus production was 18 percent of U.S. production. By comparison, shale gas was 28 percent of production in 2011.
  • Natural gas marketed production is projected to have increased from 69.2 Bcf/d in 2012 to 70.4 Bcf/d in 2013.
  • The Henry Hub 2013 average price ($3.69 per thousand cubic feet, mcf, est.) was significantly above 2012 ($2.65/mcf), but nowhere close to the 2008 price of almost $8/mcf.
  • The Bakken Shale produced approximately one million barrels per day in December 2013, and increased oil production from the formation contributed to September 2013 domestic oil production being almost 20 percent over September 2012.
  • Oil well completions increased 18 percent while natural gas completions declined 30 percent, and total well completions increased 6 percent (American Petroleum Institute, third quarter 2013 compared to the third quarter 2012).
Federal Regulations

President Obama stated his intent to reduce greenhouse gas emissions, including reducing methane emissions from oil and gas operations, through executive branch actions because of congressional inaction, and many expected a rush of new regulations.

The early focus of this activity has been on coal-fired power plants, and almost no federal hydraulic fracturing regulations were finalized in 2013. The inaction may reflect longer times for the White House review process, plus the difficulty in dealing with the large number of comments received when draft rules and regulations were released.

The most recent White House regulatory agenda includes:

  • The Bureau of Land Management plans to release its new hydraulic fracturing rules in May 2014.
  • EPA’s draft guidance for hydraulic fracturing using diesel is not yet scheduled for release.
  • The U.S. Coast Guard has sent a draft regulatory proposal on barge transport of flow-back fluids from hydraulic fracturing to the Office of Management and Budget (OMB).

Preliminary ideas evidently include requiring barge operators to have certification of no hazardous materials in wastewater shipments – a potentially expensive and time-consuming requirement given that the fluid comes from multiple well sites.

State, Local Bans and Regulations

Local bans on hydraulic fracturing appeared around the country in 2013; the tally is about 400 state and local bans.

State bans or moratoria have been enacted in Maryland, New Jersey, New York and Vermont.

Most of the numerous local bans have not yet taken effect, and many are currently being fought in the courts. A few examples:

  • In Pennsylvania, the state Supreme Court ruled in December that the Marcellus Shale drilling law, Act 13, which allowed companies to drill anywhere in the state without regard to local zoning laws, is unconstitutional.
  • In Colorado, four municipalities have recently banned or suspended hydraulic fracturing. Governor (and past AAPG member) John Hickenlooper has expressed the position that the municipalities lack the authority to determine the use of the state’s natural resources.

Six states have strengthened their regulation of hydraulic fracturing: California, Colorado, Ohio, Pennsylvania, Utah and Wyoming; simultaneously, the governors of energy-producing states have reiterated their opposition to federal regulation of hydraulic fracturing. In late December the governors of 12 energy-producing states sent an open letter to Washington regulators and policy makers asking that regulation be left to the states.

Federal Legislation

Many Senate and House bills have been introduced on both sides of the safety debate, to either strengthen or weaken federal regulation of hydraulic fracturing – but no legislation that would affect hydraulic fracturing has passed either the House or the Senate, let alone both.

Both last year and this year the proposed bills focused on requiring disclosure of chemicals used in hydraulic fracturing fluid, or giving states the authority to regulate hydraulic fracturing on federal lands. 

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Policy Watch

Policy Watch - Edie Allison
Edie Allison began as the Director of the AAPG Geoscience and Energy Office in Washington D.C. in 2012.

Policy Watch

Policy Watch is a monthly column of the EXPLORER written by the director of AAPG's  Geoscience and Energy Office in Washington, D.C. *The first article appeared in February 2006 under the name "Washington Watch" and the column name was changed to "Policy Watch" in January 2013 to broaden the subject matter to a more global view.

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D.C. Bound: Congressional Visits Days Slated for March 10-12

Want to participate in this year’s AAPG Congressional Visits Days (CVD)?

If so, the deadline to register is looming.

This year’s AAPG CVD event will be held March 10-12, but the registration deadline is Feb. 10.

AAPG Congressional Visits Days event annually provides an opportunity for AAPG members to discuss petroleum science and energy issues with decision makers in the legislative and executive branches of the federal government.

It also is an exciting introduction to the world of politics that will provide the tools to use at the local and state levels once you return home. AAPG staff will provide training and briefing materials, and schedule the meetings.

This year’s CVD:

  • Starts with an afternoon briefing on how Congress works; the legislative process; ways to make your visits successful; and issues that are of concern to Washington.
  • On the second day, gives participants the chance to visit the executive branch and congressional committee offices.
  • The third day is devoted to small-group visits to senators’ and representatives’ offices.

To register or get additional information contact Edith Allison, 
GEO-DC’s Energy and Geoscience policy director, at eallison@aapg.org
or (202) 643-6533.

To reserve lodging, contact the 
Army and Navy Club by Feb. 10, at (202) 628-8400; or email toFrontDeskPOS1@armynavyclub.org.

– Edith Allison

See Also: Bulletin Article

West Edmond field, located in central Oklahoma, is one of the largest oil accumulations in the Silurian–Devonian Hunton Group in this part of the Anadarko Basin. Production from all stratigraphic units in the field exceeds 170 million barrels of oil (MMBO) and 400 billion cubic feet of gas (BCFG), of which approximately 60 MMBO and 100 BCFG have been produced from the Hunton Group. Oil and gas are stratigraphically trapped to the east against the Nemaha uplift, to the north by a regional wedge-out of Hunton strata, and by intraformational diagenetic traps. Hunton Group reservoirs are the Bois d'Arc and Frisco Limestones, with lesser production from the Chimneyhill subgroup, Haragan Shale, and Henryhouse Formation.

Hunton Group cores from three wells that were examined petrographically indicate that complex diagenetic relations influence permeability and reservoir quality. Greatest porosity and permeability are associated with secondary dissolution in packstones and grainstones, forming hydrocarbon reservoirs. The overlying Devonian–Mississippian Woodford Shale is the major petroleum source rock for the Hunton Group in the field, based on one-dimensional and four-dimensional petroleum system models that were calibrated to well temperature and Woodford Shale vitrinite reflectance data. The source rock is marginally mature to mature for oil generation in the area of the West Edmond field, and migration of Woodford oil and gas from deeper parts of the basin also contributed to hydrocarbon accumulation.

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In reservoir engineering, hydrodynamic properties can be estimated from downhole electrical data using heuristic models (e.g., Archie and Kozeny-Carman's equations) relating electrical conductivity to porosity and permeability. Although proven to be predictive for many sandstone reservoirs, the models mostly fail when applied to carbonate reservoirs that generally display extremely complex pore network structures.

In this article, we investigate the control of the three-dimensional (3-D) geometry and morphology of the pore network on the electrical and flow properties, comparing core-scale laboratory measurements and 3-D x-ray microtomography image analysis of samples from a Miocene reefal carbonate platform located in Mallorca (Spain).

The results show that micrometer- to centimeter-scale heterogeneities strongly influence the measured macroscopic physical parameters that are then used to evaluate the hydrodynamic properties of the rock, and therefore, existing models might not provide accurate descriptions because these heterogeneities occur at scales smaller than those of the integration volume of the borehole geophysical methods. However, associated with specific data processing, 3-D imagery techniques are a useful and probably unique mean to characterize the rock heterogeneity and, thus, the properties variability.

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See Also: CD DVD

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See Also: Energy Policy Blog

Comment period is open for the EPA proposed rule that would require CCS, carbon capture and storage. The Environmental Protection Agency (EPA) proposed rule, "Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units," is open for comment until March 10.

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See Also: Hedberg

NOTE: New Date!!

The conference aims to bring together professionals from academia, government agencies and industry who are actively involved in pushing the technical limits and application of basin modeling.

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