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Ohio Utica Shale

Water is big topic at World Shale Summit in Texas

By Bob Downing Published: October 24, 2012

From OhioShale blog/Houston Chronicle:

The need for huge volumes of water is a growing challenge for oil and gas companies working in shale formations, despite dramatic improvements in drilling speeds that have lowered other costs, energy executives said Wednesday.

Speaking at the World Shale Oil & Gas Summit at the George R. Brown Convention Center downtown, executives said that companies now can drill miles-long wells in a matter of days, cutting down budgets for work that just three years ago would have taken weeks.

But drilling technology used in the shale, notably hydraulic fracturing, requires millions of gallons of water, often brought in by the truckload.

"To give you perspective, I'd say that a Marcellus well, a $6 million well, about $1.5 million is just moving water on that well," said Steven Mueller, chief executive officer of Southwestern Energy. "So if you could actually get rid of that, then you'd save quite a bit of money."

Executives of several companies highlighted the substantial costs and potential opportunity in reducing volume or increasing recycling of water used in drilling shale and other unconventional wells.

It's estimated that the industry will drill 1 million unconventional wells by 2035, said Salvador Ayala, vice president of marketing and technology for Schlumberger's well production services division. Using existing technology, each would require millions of gallons of water in multiple stages, he said.

'Everybody's mind'

"The water scarcity issue is something that has to be in everybody's mind," he said.

Hydraulic fracturing is a drilling technique that uses a mix of water, sand and chemicals to blast into dense underground rock and free up trapped oil and gas.

Mueller said some new fracturing technologies don't use water, substituting propane, carbon dioxide or nitrogen, but these are more expensive and don't create the kinds of fractures producers need.

Finding a technology that meets economic and technical requirements is "the holy grail of what we're trying to do as an industry," he said.

That effort has prompted substantial investment, said Bobby Tudor, CEO of energy-oriented investment banking firm Tudor, Pickering Holt & Co.

"When the industry faces a big problem, typically there is a profit opportunity for somebody somewhere," Tudor said. "And this is a big issue. One of the interesting things that we've seen is a flood of capital toward this problem."

It's also a priority because concerns about water use in fracturing go beyond cost, said Michael Yeager, CEO of BHP Billiton Petroleum.

"We have economic incentive to reduce that. We have environmental incentive to reduce that. We have landowner relations incentive to reduce that," Yeager said. "So I think the question can only be grounded in, we have our shoulder into these sort of things on a 24-hour-a-day basis to improve them and I'm confident that we will improve them."

Channel fracturing

Schlumberger has made progress with a technique called channel fracturing that has cut water use by more than 50 percent, Ayala said. But most companies haven't adopted the process, which also cuts the use of sand and other materials, he said.

As American companies focus on improving shale operations, others from around the world are watching.

More than 100 industry professionals from around the world are attending the summit, which continues through Friday.

Speaker from China

Among the speakers Wednesday was the deputy director general of China's National Energy Administration, Zhang Yuqing, who described his country's plan to partner with Western companies to learn from the successes in American shale plays that could be applied overseas.

"We are going to introduce, study and then master advanced technologies from other countries and build our self-independent innovation capabilities ultimately," he said.

Other speakers touched on the anticipated growth in demand for natural gas, which is expected to spur production for decades, despite current low prices for the resource that many described as unsustainable.

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.