An Overview of Hydraulic Fracturing History Processes - - PowerPoint PPT Presentation

An Overview of Hydraulic Fracturing

• History
• Processes
• Technology
• Risks
• Trends

www.the-nrg-group.com

Daniel Mackay Managing Director, NRG Well Management Ltd

Section 1: Hydraulic Fracturing – A Brief History

An Overview of Hydraulic Fracturing

A Brief History…

• What is it…?
• Hydraulic Fracturing, or ‘Fracking’ is

‘simply’ the fracturing of subterranean rocks using hydraulic (fluid) pressure

• A fluid mixture is pumped into and

against the formation where it cracks, creating fissures which are held open using proppants, allowing hydrocarbons to flow to surface

• Most commonly used extracting oil

and gas from ’tight’ (low permeability) formations (generally shales)

• A common misconception..?
• Given the attention over the last 15 years
• r so, many people are under the

impression ‘Fracking’ is a new technology… ‘unconventional’ techniques have been in existence for nearly 150 years!

• Commercial Hydraulic Fracturing

(Fracking) has been in use since the 1940’s, pioneered in the USA with the use of acids on limestone formations, followed by the use of oil, then finally the water / proppant mixtures we see today

A Brief History…

• The Breakthrough and Rise of the USA
• The Fracking we are familiar with today really came about in the

early 1980’s as the technology was combined with horizontal drilling, and was used to exploit gas from shale formations in the USA

• Although already widespread in the USA and elsewhere in the

world, as the oil price boomed in the early 2000’s more and more money was invested

• Shale oil and gas was exploited, causing a seismic shift in the

energy market as the USA no longer relied on an energy policy dependent on importing oil and gas

• The USA was one of 19 global LNG exporters in 2017 and

accounted for 5% of the almost 40 Bcf/d global LNG market - up from nothing just a few years ago!

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A Brief History…

• What about the UK…?
• Hydraulic fracturing in the United Kingdom started in the

late 1970s with fracturing of the conventional oil and gas fields of the North Sea

• Since the early 1980’ its been used by approx. 200
• nshore oil and gas wells
• Cuadrilla (shown above) have recently fracked the first

well in the UK since 2011 and are flowing gas to surface after being shut down due to seismic activity levels out

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Photograph: Christopher Thomond for the Guardian

Section 2: Hydraulic Fracturing – The Processes

An Overview of Hydraulic Fracturing

The Process: Step #1 – Permission!

Getting Permission in the UK

Successfully dealing with the UK regulatory and local bodies involved in the fracking approval process is arduous, and in most cases almost impossible

• A Petroleum Exploration and Development Licence (PEDL)

is required from the OGA

• A series of steps are then taken to obtain permissions from

the landowner and council planning authorities

• The operator then requests a permit from the Minerals

Planning Authority (MPA), who together with the local planning authority, determine if an EIA, funded by the

• perator, is required.
• Two permits are required under the Water Resources Act

1991 and one permit required under the Control of Major Accident Hazards Regulations 2015 are obtained from the appropriate environmental agency, to ensure that onshore hydraulic fracturing operators fulfil strict environmental regulations

• The well then has to be well examined as per the DCR

Regulations which govern independent verification of well designs and operations in the UKCS

• And finally a hydraulic fracture plan (HFP) is required to be

agreed with OGA in consultation with the EA. Hydraulic fracturing consent (HFC) is then granted following an application to BEIS - once it has been reviewed by the Secretary of State and complies with requirements to mitigate any seismic risks.

The US Regulatory Regime on Fracking The US presents a very different regulatory environment when compared to the UK

• Various, and differing, laws can affect Fracking at the

local, state and federal level in the US, making it extremely complex and almost impossible to summarize

• Debates currently center around whether Fracking

should be regulated at these lower levels or at the federal level – there are good cases for both

• Interestingly Since 1997, as per the EPA, hydraulic

fracturing in the USA does not fall under the remit of the ‘Safe Drinking Water Act’ and EPA studies have demonstrated that it has no bearing on water quality

• A lot of federal moves to regulate Fracking in the USA

with Acts and proposed regulations have failed to become law, demonstrating the power that this technology and the lobbying energy industry has especially as it is making the USA secure in energy supply and resistant to market forces

The Process: Site Preparation & Spatial Constraints US Vs. UK!

The Process: Methods Involved…

• There are generally 4 stages involved in the overall

process:

• Drilling
• Generally straight forward, a vertical well is drilled to approx. 2,000 – 3,000m and

kicked off to horizontal using geo-steering technology to place the well – these horizontal sections can be thousands of feet long

• Care is taken to case and cement across the water table, ensuring no groundwater

contamination

• Perforation & Isolation
• The cased well is perforated using shaped charges, which are detonated at

selected locations in the production zone, also making slight fractures into the formation

• These sections are then hydraulically isolated from one another
• Stimulation (hydraulic fracturing)
• A high-pressure fluid (usually water) containing chemical additives and

a proppant is injected into a wellbore to create an extensive system of small cracks in the formation, In turn providing the pathway for hydrocarbons to flow to surface

• When the hydraulic pressure is removed from the well, the small grains of

hydraulic fracturing proppant hold the fractures open when the pressure is released.

• Flowback
• With the well fully fracked, the injected fluid is flowed back to surface however it

can contains high levels of salt and be contaminated with radioactive material

• Ideally this will be re-injected for future fracking operations, or disposed of

downhole (currently not permitted by UK authorities) - otherwise it has to be treated to remove all containments before being put back in water supply

Section 3: Hydraulic Fracturing – Technology

An Overview of Hydraulic Fracturing

The Technology – Fluids!

Fracking Fluids

• Fluids are a very a controversial aspect of the

Fracking Process

• Its estimated a 100 billion gallons a year of fluid is

used for fracking in the USA

• The Main purpose of the fluids are to extend

fractures, and carry proppant into the fractures

• Most of the operators Intellectual property lies in

the formulation of these fluids, so the recipes are trade secrets….? Hence how do you gauge risk to groundwater contamination?

• In the UK companies are obliged to report the

chemicals used, however not in the USA, although Baker have fully disclosed their formulas – unlike HAL and SLB

The Technology – Fluids!

The fracturing fluid varies depending

• n fracturing type desired, and the

conditions of specific wells being fractured - The fluid can be gel, foam,

• r water-based.

While most fluid formulations are different they will generally follow the same recipe: typically a slurry of water, proppant, and chemical additives. Additionally, gels, foams, and compressed gases, including nitrogen, carbon dioxide and air can be

• injected. Typically, 90% of the fluid is water and

9.5% is sand with chemical additives accounting to about 0.5%. However, fracturing fluids have been developed using liquefied petroleum gas (LPG) and propane in which water is unnecessary

The Technology – Proppants

The proppant is a granular material that prevents the created fractures from closing after the fracturing treatment. Types of proppant include silica sand, resin-coated sand, bauxite (Aluminium

• re), and man-made ceramics.

The choice of proppant depends on the type of permeability or grain strength

• needed. In some formations, where the

pressure is great enough to crush grains

• f natural silica sand, higher-strength

proppants such as bauxite or ceramics may be used. The most commonly used proppant is silica sand, though proppants of uniform size and shape, such as a ceramic proppant, are believed to be more effective

Section 4: Hydraulic Fracturing – Risks and Risk Management

An Overview of Hydraulic Fracturing

Risks & Risk Management: Overview

• Risks posed are generally similar to

Conventional wells

– Fracking poses a wide range of risks to

• perators, however the operational risks

associated with unconventional wells are very similar to conventional wells

• ‘Major Risks’ in public eye due to

perception

– The major issues the public sees – groundwater contamination, seismic activity do not constitute the greatest risks posed by fracking operations when viewed from a frequency / severity scale

• Spatial constraints are Key!

– The largest risks are on the surface and are site dependent – space and environmental constraints play a major part in this like topography, location geology, available infrastructure etc.

Risks & Risk Management: The Range of Risks….

• Large numbers of wells, constrained pads, high density distribution and associated logistical operations (vehicle

traffic, waste management)

General Health & Safety

• Contamination of surface and groundwater
• Greenhouse gas emissions
• Light / Noise pollution

Pollution Risks

• Blowout risks highest during the completion phase, generally blowout risk from drilling is negligible
• Main causes are the same though, inadequate well design, human error
• Flow capacity is less due to nature of formations

Blowout Risk

• Changes in political stances of hydraulic fracturing is a major risk, fueled by media attention and public opinion

Political Risk

• Seismic activity due to fracking is a high probability risk, however its not unique to the fracking process
• Studies have shown that anything below 3.5-4 on Richter scale doesn’t pose a serious risk to surface

infrastructure

• In tectonically unstable regions is very difficult to correlate fracking with increase in seismic activity

Environmental Risks

Risks & Risk Management: Risk Impacts at Each Stage of Process….

Stage Impact Type Densely Populated Moderately Populated Sparsely Populated

All Injury High High High Activists Severe Medium to High Low to Medium Preparation Vehicle Accidents High Medium Low Air Pollution High Medium Low Drilling Blowout Low to Medium Low Low Noise High Medium Low Fracking Water Pollution Low to Medium Low Low Seismic Activity Medium to High Medium Low to Medium Production Subsidence Medium to High Medium Low to Medium Water Disposal Low to Medium Low Low Decom Methane Emission Low Low Low Blowout Low Low Low

The impact of each risks varies across each stage of the Fracking process, and is affected by spatial constraints and how populated the area is

Section 5: Hydraulic Fracturing – Future Trends

An Overview of Hydraulic Fracturing

Future Trends: America!

• The Trump Factor

– Started By Obama and continued by the Trump administration…there is major growth in the USA’s oil and gas production, which should cover +/-75% of ‘new’ global demand – This is helped by increased demand from China and India – Impacts will be felt on the global energy market, especially in the middle east and Russia – Some statistics:

• North Dakota is Producing as Much Oil as the Entire

Country of Venezuela (The Daily Caller, 9/17/2018)

• U.S. shale oil production to rise to 7.6 million barrels

per day in October (Reuters, 9/18/2018)

• U.S. overtakes Russia, Saudi Arabia as world's largest

crude producer (World Oil, 9/12/2018)

Future Trends: Technology & Efficiency

• Efficiency is key!

– One of the most impressive facets of the rapid rise in U.S. production since 2016 is that it has been achieved with an active rig count that is about 40% lower than it was just a half-decade ago. – This reality demonstrates how important technological advancement and efficiency gains are to the oil and gas industry

• Reducing the time to drill

– Impressive gains in efficiency have significantly reduced the time it takes to drill, frac and complete each well. – Some producers I've talked to report that wells that used to take 25-30 days to drill and complete now take only 10-12 days to get

• done. Thus, each active rig is able to drill more wells than was

formerly possible

• Advancements in technology

– Rapid advancements in drilling, fracking and completion technologies are resulting in impressive per-well productivity gains. – These advancements include things such as more powerful rigs able to drill longer horizontal laterals; more sophisticated drill stem and surface technologies that allow drillers to more accurately target the formation's sweet spots during the drilling process; advancements in fracking fluids that result in more formation rock being fractured, thus freeing up more gas and liquids to flow into the pipes, and many others.

NRG Contact Details

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In the event that further discussion, questions and clarification are required please use any of the following contact details: Daniel Mackay, Managing Director, NRG Well Management

daniel.mackay@nrgltd.com +44 (0) 7956 163 972

Website: http://www.the-nrg-group.com Office: +44 1224 864222 Address: 1 St Devenick’s Place, Cults, Aberdeen, AB15 9LN