Presented at the 2011 SPE HFTC.

1. STATE AND FEDERAL REGULATION OF
HYDRAULIC FRACTURING:
A COMPARATIVE ANALYSIS
(SPE 140482)
Society of Petroleum Engineers
2011 Hydraulic Fracturing Technology Conference
The Woodlands, Texas
January 24-26, 2011
Authors:
J. Daniel (Dan) Arthur, P.E., SPEC
Bill Hochheiser
Bobbi J. Coughlin, EIT

2. INTRODUCTION
• How did this happen?
– Environmental Issues and Concerns
– ENGO Activism
– BP Deepwater Horizon
– Problem Occurrences
• Current status
– Regulatory developments
• Federal regulation options
• Thoughts for the future
2

3. ENVIRONMENTAL ISSUES AND
CONCERNS
3

4. GENERAL ENVIRONMENTAL ISSUES
• Hydraulic Fracturing Quebec protester
• Water Sourcing/
“Shale gas a
moratorium now”
Management
8/30/10
• Shallow system
methane
• New Development
Areas/Urban
• Well Site Selection NY EPA Scoping
Meeting 9/13/10
• Traffic, Wildlife, Noise,
NORM, Air Emissions
Mark Raffalo & Pete Seeger
address lawmakers at NYS capital
regarding moratorium, July 2010
4

5. HVHF Environmental Issues
• Groundwater protection
• Fracturing fluid chemistry
• Water sourcing
• Water disposal and reuse
5

6. SOURCING CHALLENGES
Barnett Shale Water Uses
• Options vary
Power
Generation
by location
3.70% Irrigation
Livestock
6.30% Shale Gas
2.30%
Wells
Industrial and
Mining
0.40%
and operator
• Competing
4.50%
Public Supply
82.70%
water users
and availability
must be
Groundwater Use in Barnett shale counties ranges considered
from 1.95 percent in Somervell County to 85 percent
in Cooke County
Water Well Well Produced Production
Flowback
sourcing drilling Completion water Operations
6

7. WATER DISPOSAL
• Underground Injection
• Treatment and Discharge
• Treatment and Reuse
• Municipal/Commercial Treatment Plants
• Commercial Disposal Facilities
7

8. GROUNDWATER PROTECTION
Pipeline to • Risk probability of
injectate reaching a
Christmas Flow
Tree Process and
USDW
Storage
Surface
Casing
– 1 in 200,000 to
Cement
Intermediate
1 in 200,000,000
Casing
Cement
Production
• Hydraulic fracturing
Casing
Tubing
– Multiple casings
– Short duration
Cement
– Vertical
Oil or Gas Zone
Well
Fluids
Perforations
separation
8

9. WELL SITE SELECTION
• Larger surface
disturbance
• Increased time on
location
• Increased traffic
• Sediment and
erosion control
• Ground compaction
leading to increased
storm water runoff
9

10. TRAFFIC ISSUES
• Road damage
• Traffic
restrictions
imposed by
ordinances
• Road repair
bonds
$50,000 to
$100,000 per
mile
• Road use
agreements
10

11. ENGO/PUBLIC ACTIVISM
11

12. SHALE GAS AND E-NGOS
• What are they?
– Nongovernmental organization with a focus on
environmental issues
• Funding
– Memberships
– Sales
– Grants
– Donations
– Governments ???
• Who are they?
– Large National and Multi-National
Organizations, address issues that cross
regional concerns and support local ENGOs
– Local organizations
12

13. ENGO TACTICS
Emotions
13

14. BP GULF SPILL VS. SHALE GAS
GOM Spill Shale Gas
• 35,050 feet deep • 1,000 to 13,500 feet
• Leaked into gulf deep
waters making • Onshore spills can
cleanup and be contained and
containment difficult cleaned up quickly
and long • Impacts would be
• Impacts are localized
widespread; 6,500 –
180,000 km2
14

15. Hydraulic Fracturing Regulatory Update
CURRENT STATUS
15

16. Federal Regulation…
• There are multiple areas in which federal
regulation could develop
– Disclosure: EPCRA?
– Full Regulation: SDWA/UIC
– New Program…
• Regardless of where, comparison
to the federal Underground
Injection Control (UIC) program
is reasonable to explore what
potential regulation “might”
look like…
• There are *many* complications!
16

17. NEW OIL AND GAS REGULATION
• Many states are revising oil and
gas regulations to consider HVHF
and horizontal drilling.
– Ex: New York, Colorado, Wyoming, and
Pennsylvania now require some disclosure of
fracturing chemicals
• Proposed “Frac Act” would amend SDWA to:
– Include hydraulic fracturing regulation as part of
underground injection
– Give the EPA authority over hydraulic fracturing
– Require full disclosure of frac chemicals
17

18. Wyoming Regulations
• Rules were modified in response to direction from 2008 State
Legislature to promulgate a carbon sequestration unitization
rule and became effective September 15, 2010.
• Additional amendments to Title 30, Chapter 5 of the Wyoming
Code were made:
– Clarification of cementing requirement for plugging and abandonment of coal
bed methane wells
– Requirements for directional drilling reporting and certification
– Expansion of existing requirements for well stimulation
• Wyoming was first state to require chemical disclosure of
hydraulic fracturing fluids.
• Key requirements of the new regulations include:
– Identification of all water supply wells within ¼ mil of drilling and spacing unit
– Proposed Casing and Cementing Program with Well Application
– Stimulation Plan and Post Stimulation Reporting Requirements
– CBL Logs/Casing Pressure Tests
– Sundry Required with proposed stimulation plan required for approval
– Stimulation Record Requirements
18

19. Pennsylvania Regulations
• PA DEP promulgated revisions to Chapter 78 of 25 Pa.
Code to address issues related to Marcellus Shale
development and hydraulic fracturing
• Some key concerns that prompted the rules were:
– Potential groundwater contamination from fracturing
– Groundwater contamination caused by methane intrusion
– Chemical Disclosure of fracturing additives
• Key changes to the rules include
– Casing and cementing plan required with permit application
– Pressure testing prior to completions
– Control and disposal plan with application
– Pre-drilling and pre-alternation
– Quarterly mechanical integrity tests
– Stimulation Record requirements
– Maintenance of chemical records
19

20. Ohio Proposed Regulations
• Substitute Senate Bill 165 became effective June
30, 2010.
• First major revision of oil and gas rules in 25
years.
• Key drivers for new regulations:
– Address present day health, safety and social issues related to oil
and gas development
– Provide funding to administrate the regulatory program
– Ensure to rational citizen public faith and trust in the state
regulatory program
• Key changes to Chapter 1501 of the revised
Ohio Code include:
– Site Review prior to approval
– Opportunity for noise mitigation requirements
– Setbacks from occupied dwellings and other wells without
approval
– Mandatory pooling requirements
– MSDS Reports Required
– Temporary Inactive Well Status Requirements
– Stimulation Record Requirements
20

21. New York Regulations
• Draft Supplement to the Generic Environmental Impact
Statement for Oil and Gas released by DEP on September 30,
2009 to satisfy the State Environmental Quality Review Act.
– High volume hydraulic fracturing
– Horizontal drilling
• Some Key components of draft sGEIS:
– Environmental Assessment Form
– Visual Impacts Mitigation Plan
– Noise Impacts Mitigation Plan
– Greenhouse Gas Emissions Mitigation Plan
– Invasive Species Mitigation Plan
– Road use Agreements
– Local Floodplain Development Permit
– Pre-drilling water well surveys
– Post-Drilling Monitoring of water wells
– Stimulation Reporting Requirements
– Flowback water must be tested for NORM
– Drilling and Production Waste Tracking Form
21

22. West Virginia Regulations
• Two sets of proposed regulation changes have been drafted
for West Virginia:
– West Virginia Department of Environmental Protection (DEP)
• Revises existing Chapter 22 of West Virginia Code.
– Subcommittee A of the Joint Judiciary Committee of the 2011 Legislature.
• “Hydraulic Fracturing and Horizontal Drilling Gas Act” proposes a new
article, designated as §22-6A of West Virginia Code.
• Applies to wells drilled with horizontal drilling or fracturing with a
minimum of 5,000 bbls.
• Key changes proposed in drafts:
– Water Pollution Control Permit
– Department of Highways approval of well access
– Erosion and Sediment Control Plan
– Predrilling or Prealteration Surveys
– Water management plan
– Water Resources Protection Plan
– Stimulation Record and Completion Report Requirements
22

23. HF Chemical Disclosure Registry
• The GWPC has led the development of
a HF Chemical Disclosure Registry.
• The Registry is currently a voluntary
system to facilitate disclosure of
details (including additives) used in
fracturing.
• The system provides a common
template for data to be submitted by
industry.
• GWPC is currently working with states
and industry to get companies
registered and to start populated the
system.
• The registry will facilitate public data
searches and queries of data
submitted by industry.
23

24. Inject vs. Fracturing
• The Underground Injection Control
(UIC) Program is managed under the
SDWA.
• There are many similarities between
fracturing and injection.
• There are also MANY differences!
• Current regulation between injection
and fracturing is similar.
24

25. Description
• Underground Injection Hydraulic Fracturing
• The subsurface • The creation of fractures within
emplacement of fluids by a reservoir that contains oil or
well injection; and excludes natural gas to increase flow
and maximize production.
– (i) the underground • A hydraulic fracture is formed
injection of natural gas for when a fluid is pumped down
purposes of storage; and the well at pressures that
– (ii) the underground exceed the rock strength,
injection of fluids or
causing open fractures to form
propping agents (other
than diesel fuels) pursuant in the rock.
to hydraulic fracturing • The goal is typically to form
operations related to oil, complex fracture networks
gas, or geothermal within the targeted production
production activities. zone.
25

26. REGULATORY PROGRAMS
• Underground Injection Hydraulic Fracturing
• SDWA UIC Program • Hydraulic Fracturing is most
commonly managed by state
– Established to protect usable O&G regulatory agencies
or potentially usable • State O&G regulatory
groundwater aquifers from agencies have existing
underground injection regulations designed to
activities (i.e., USDWs). protect groundwater supplies
• Program Implementation from possible impacts due to
O&G activities.
– Direct Implementation (DI) – • State environmental agencies
The oversight of a UIC may also have a role in
program by an EPA Regional regulating activities related to
office. hydraulic fracturing
– State Primacy – Granted for – For example, in Arkansas, the
all or part of the UIC AOGC and ADEQ both have
roles for gas development
program, e.g., for certain and HF.
classes of injection wells.
26

27. UIC PROGRAM REGULATORS
The UIC Program requirements were developed by EPA and • EPA has delegated
designed to be adopted by states, territories, and tribes. primacy for the UIC
program for all well
classes to 33 states
and 3 territories
• EPA shares UIC
program
responsibilities in 7
states
• 10 states, 2
territories, and all
Tribal Nations have
the UIC program
implemented by
EPA
27

28. STATE OIL & GAS PROGRAMS
There are 27 states that account for 99.9 percent of the • In 2008 there were
oil and natural gas production in the United States. 33 states that
reported oil or
natural gas
production
 State O&G
Programs
 Prevent waste of oil
& gas resources
 Conserve oil & gas -
efficient recovery of
the resource
 Protect the
correlative rights of
mineral owners
28

29. Program Protection Targets
• Underground Injection Hydraulic Fracturing
• Defined by Regulation, • Hydraulic fracturing is
Underground Source of managed within state oil &
gas programs
Drinking Water (USDW) –
• It is generally common that
– An aquifer that supplies or states have statute(s)
contains a sufficient relative to providing a clean
quantity of ground water to and healthful environment
supply a public water within the state
system • Protection of water
– fewer than 10,000 mg/l resources (groundwater and
surface water) is a priority
total dissolved solids within every state and a
• Not an exempted aquifer priority of every oil & gas
regulatory program
29

30. Applicable Well Types
• Underground Injection Hydraulic Fracturing
• Hazardous Waste Injection • Conventional Oil & Gas
• Industrial Waste Injection • Unconventional Gas
• Municipal Waste Injection • Unconventional Oil
• Enhanced Oil Recovery • CO2 Sequestration
• Brine Disposal • Water Supply Wells
• Solution Mining • Injection Wells
• Aquifer Storage/Recovery – Classes I - V
• Aquifer Recharge
• Other
30

31. Permitting
Underground Injection Hydraulic Fracturing
• Owner/Location/Operator • Owner/Location/Operator
• Area of Review • Residential/Municipal well review
• Facility description • Well site construction/chemical
• Geological data storage
• Surrounding land owners • Geological data/target formation
• Plugging & Abandonment Plan
• Drilling/proposed depth
• Specification and source of
disposal fluids • Proposed well completion data
• Public records – all other • Well construction details
wells/surface water/surface
facilities /known faults • Proposed fracture schema
• Performance bond/corrective • Pits and tanks proposed
action proposal/contingency & • Traffic Plans/Road Use Agreements
monitoring plans
• Operating plan • Source water withdrawal permits
31

32. Area Considerations
Underground Injection Hydraulic Fracturing
• Area of Review • Pre-Site Assessment
Analysis – Geological considerations
– ZOEI – Potential interfering wells
– Presence of artificial
penetration – Area water supply wells
– Springs – Surface and topographical
– Water wells challenges
– Wells penetrating the – Water sourcing
injection zone
• USDW identification • Other active production
• Confining interval • Abandoned wells
• Geological
considerations
32

33. Casing and Cementing
Underground Injection Hydraulic Fracturing
• Surface casing set below • Surface casing setting
lowermost USDW and depth typically
cemented to surface established by state for
(generally) purposes of protecting
• Well casing and usable quality
cementing program must groundwater from oil
prevent fluid movement and/or gas development
into or between USDWs activities
• Injectate confined to • Some states include well
permitted injection casing and cementing
interval programs in permits
33

34. Groundwater Protection
Underground Injection Hydraulic Fracturing
• Primary goal of the UIC • The protection of water
program is the protection of resources is a primary
USDWs objective of every state
• Program is applicable from • State oil and gas regulations
the wellhead down – Permitting of wells
• Performance and risk-based – Surface casing requirements
measures utilized – Rules adapted based on risk and
historical industry performance
– Prevention of fluid movement
into or between USDWs – Orphan well programs
– No-migration petition for – SI, TA and abandoned wells
hazardous waste wells – Use of tanks and pits
– Re-occurring mechanical – Waste handling and spills
integrity testing – Etc.
34

35. Well Integrity
Underground Injection Hydraulic Fracturing
• Most injection wells must • Operators commonly test
demonstrate internal and wells before perforating to
external mechanical assure the well’s integrity is
integrity ready for fracturing
• For Class II wells, typical activities
internal integrity tests are
required once every 5 • Surface equipment and
years piping is routinely tested
• Some injection wells may • Testing may not be
be required to have required, but is done as a
continuous monitoring best practice
equipment to assure
integrity is maintained • Continuous monitoring is
employed during fracturing
35

36. Pressure Management
Underground Injection Hydraulic Fracturing
• Injection permits are • Surface pressures sufficient
generally granted with a to overcome friction and
maximum allowable injection initiate fractures in the
pressure production zone are utilized
• It is common for wells to • High friction factors are
have a PMax determined by the common due to fracture fluid
fracture gradient of the top make-up (e.g., slurry)
of the injection zone • Pressures maintained below
• Pressures exceeding the pressure ratings of well
tubulars and surface
injection zone fracture
equipment (e.g., wellhead)
gradient are allowed by rule
• Pressures are maintain for
• Wells may inject up to the
duration of fracturing job
PMax throughout the life of the (e.g., a few hours per stage)
well
36

37. Operating Procedures
Underground Injection Hydraulic Fracturing
• Permanent facility typical • Temporary equipment
brought on-site for each
• Designed for continuous or fracturing
batch process • Fracturing typically done on
• Continuous monitoring a stage-by-stage basis
optional for Class II wells • Number of stages does not
(many wells inject on a necessarily influence the
total volume used for a
vacuum) single well
• Detailed operations depend – Increased number of stages
on well type (e.g., typically means less overall
volume per stage
waterflooding vs. SWD) • Continuous monitoring of
pressures, rate, density, etc.
37

38. Fluid Characterization
Underground Injection Hydraulic Fracturing
• Injection characterization is • Primary fluids are disclosed
part of the permitting as part of the completion
process report
• The extent of • MSD Sheets are made
available upon request
characterization is generally
dependant on the well class • Historically, the make-up of
some products are
and fluid proposed for
maintained as proprietary
injection and have not been reported
• The UIC program allows for • Recently, multiple states are
some characterization modifying rules to require
details to be maintained as full disclosure of fracturing
confidential information additives
38

39. Volume Variations
Underground Injection Hydraulic Fracturing
• Injection rates/volumes • Fluid volumes depend on the
depend on well, formation, and type of HF technique utilized
operational objectives • HV slickwater fracturing on
• Common for wells to inject horizontal wells commonly use
1,000 to over 20,000 barrels of 2-5 million gallons of water
fluid per day per well over 10 – 20 stages
• Injection and disposal wells • The number of stages is
may or may not be continuous, dependant upon the interval to
but typically operate year- be fractured (a vertical well
round for multiple years may use only one stage),
thickness of the target zone,
• Not uncommon for wells to be lithology of the formation, and
used for injection for 20+ other factors
years
39

40. Future Regulation of Hydraulic Fracturing
THOUGHTS ON THE FUTURE
40

41. Anticipating the Future
• State’s continue to evaluate and pursue
changes to existing regulations.
• EPA’s study on Hydraulic Fracturing
continues moving forward.
• Many cities and urban areas are involved and
have and/or are developing local
ordinances/restrictions.
• A variety of other federal and state agencies
are now involved:
– U.S. Army Corps of Engineers
– State DOTs
– U.S. FWS
– Bureau of Land Management
– Others
• Many issues are gaining momentum
• Understanding the issues will be key.
41

42. Recommendations
• Pre-site assessments is
imperative
• Developing baseline
information is critical
• The process of completing a
well must include similar levels
of detail and planning for the
shallow portion of the well as
for the production zone.
• Incorporate environmental
considerations into planning at
the well and regional levels.
Photo courtesy of Range Resources
42

43. Contact Information
J. Daniel Arthur, P.E., SPEC
ALL Consulting
1718 S. Cheyenne Avenue
Tulsa, Oklahoma 74119
www.ALL-LLC.com
Citation Information
Arthur, J. Daniel, Hochheiser, B., Coughlin, B. (ALL Consulting).
“STATE AND FEDERAL REGULATION OF HYDRAULIC FRACTURING: A COMPARATIVE ANALYSIS”
(SPE 140482)
Society of Petroleum Engineer’s 2011 Hydraulic Fracturing Technical Conference
The Woodlands, Texas, January 24-26, 2011
43

44. Additional information available for review, but not
presented due to time constraints
EXTRA SLIDES
44

45. Abstract
While hydraulic fracturing is a well-developed technology that has been used for more
than 40 years, its wide-spread use for coal-bed natural gas and shale gas
development has raised questions about the appropriate regulatory approach to
ensure that groundwater resources are protected. In response to recent public
concerns about hydraulic fracturing, Congress introduced the Fracturing
Responsibility and Awareness of Chemicals Act (FRAC Act). The FRAC Act would
amend the Safe Drinking Water Act (SDWA) to regulate hydraulic fracturing under the
same laws and regulations that are used for the Underground Injection Control (UIC)
program. Proponents of the FRAC Act assert that federal regulation is necessary to
ensure protection of groundwater resources. Opponents argue that federal regulation
creates a one-size-fits-all approach that is inefficient and protects poorly. In
addition, they argue that states are best suited to regulate hydraulic fracturing given
their ability to tailor regulatory requirements to local conditions. This paper will
provide an overview of state regulation of hydraulic fracturing including some of the
various approaches taken, different levels of regulatory detail, and recently adopted
changes as well as changes that have been proposed, but not yet adopted. The paper
will also examine how hydraulic fracturing would likely be regulated under the SDWA
and discuss the pros and cons of federal regulation of hydraulic fracturing from the
stand point of both regulatory burden to the industry and the potential for improved
environmental protection.
45

46. NEW AREA DEVELOPMENT
• General feeling of • Fear and lack of
distrust of “BIG knowledge creates
OIL” trepidation among
mineral and non-
mineral owners
• Education of public
takes time
• Lack of infrastructure
• Misinformation
abounds
46

47. URBAN DEVELOPMENT
• Scrutiny and greater concern
because of proximity to
populous
• Local government
ordinances:
– Restrict operation times
– Reduced noise levels
– Lighting restrictions
– New setbacks
– Restrict truck traffic
47

48. WATER SOURCING
• Options available to meet water needs for
drilling and fracturing
• Surface Water
• Groundwater 4,000,000 Fracturing Water
Drilling Water
• Municipal Water
3,500,000
3,000,000
• Industrial Water 2,500,000
• Recycled
2,000,000
1,500,000
Produced Water 1,000,000
• Collected Water
500,000
0
• Private Water Barnett Fayetteville Haynesville Marcellus
Purchases Total Water in Gallons to Drill and Fracture
1,000,000 gallons = ~3,785 m3
48

49. GAS LAND – THE MOVIE
“[Hydraulic fracturing]
blasts a mix of water
and chemicals 8,000
feet into the ground.
The fracking itself is
like a mini-earthquake.
… In order to frack,
you need some
fracking fluid – a mix
of over 596 chemicals.” 49

50. Wildlife Issues
• Habitat Loss
• Habitat
Fragmentation
• Disrupted wildlife
Mountain Plover
Charadrius montanus
patterns from
Woodland Caribou increased traffic
and noise
Rangifer tarandus dawsoni
• Utility corridors
invite unwanted
off-road traffic
Blue heart
Wolverine Gulo gulo
Buchnera americana
50

51. NOISE
Noise restrictions may be
required by local ordinances
or because of wildlife issues.
Sound blankets and barriers
are often used to mitigate
issues in sensitive areas.
51

52. CLASS II INJECTION WELLS
• Inject fluids associated with oil and
natural gas production. Most of the
injected fluid is salt water (brine), which
is brought to the surface in the process
of producing (extracting) oil and gas.
• Inject Beneath the lowermost USDW.
• EPA Inventory lists 143,951 Class II
wells in operation in the United States,
injecting over 2 billion gallons of brine
every day.
• Most oil and gas injection wells are in
Texas, California, Oklahoma, and
Kansas.
52

53. Fluids Disposition
Underground Injection Hydraulic Fracturing
• Injectate varies • Water and proppant
depending on well type – Water typically fresh to
and permit conditions brackish
• Class II Fluids – Proppant is typically sand, but
may be resin-coated or
– Fluids brought to surface in
conjunction with O&G production ceramic
– Fresh water • Multiple types of fracs
– Exempt waste fluids: Produced
fluids, drilling fluids, drill cuttings, – Slickwater, foam, etc.
rig wash, well completion fluids,
workover waste, gas plant • Chemical additives
dehydration waste, gas plan – Additives vary
sweetening waste, spent filters and
backwash, packing fluids, produced – Biocides, corrosion inhibitors,
sand, production tank bottoms, scale inhibitors, clay
etc. stabilizers, friction reducer,
oxygen scavenger, gel, iron
control…
53

54. Financial Responsibility
Underground Injection Hydraulic Fracturing
• Financial responsibility is a • States require bonding for O&G
requirement of the UIC producing wells
program • Bonding requirements vary by
• Financial responsibility is state, but are generally tied to
typically tied to plugging costs plugging liability
of the well • State agencies have a variety of
• A plugging plan and cost tools relative to enforcement
estimate may be required for should problems arise
permitting
• Blanket bonds are acceptable
• Some individual well bonds
54

55. Reporting
Underground Injection Hydraulic Fracturing
• Reporting varies depending on • Summation of hydraulic
well type fracturing activities have
• For Class II wells, annual historically be reported on the
reporting of monthly average well completion report
and maximum rate and • Some states require service
pressure data is most common tickets (e.g., Arkansas)
• Depending on permit • Several states have been
conditions/requirements, water modifying reporting rules,
source information or water including requiring summary
analysis may also be required details by fracturing stage
55

56. Risk Probability
Underground Injection Hydraulic Fracturing
• Per a 1989 API and DOE study • HF events for most well types
for basins with “reasonable” (including shale gas wells) occur
likelihood of corrosion, risk through multiple installed
probability of injectate concentric casings over a short
duration with considerable
reaching a USDW ranged from
vertical separation (thousands of
one in 200,000 to one in 200 feet) of confining type zones
million for wells injecting on a between the production zone and
continuous basis the lowermost USDWs
• Many states implement the • Using the same technique as
Risk Based Data Management implemented for the 1989
System and are able to assess API/DOE study, risks of fracturing
risk probability on an ongoing fluids reaching a USDW would
generally be far less probable
basis
than for injection wells
56