O IL & G AS P RODUCTION T RANSPORTATION I MPACT S TUDY - PowerPoint PPT Presentation

O IL & G AS P RODUCTION T RANSPORTATION I MPACT S TUDY Presentation to Boulder County Board of County Commissioners December 6, 2012

S TUDY O BJECTIVES o I d e n t i f y p o t e n t i a l i m p a c t s o f o i l a n d g a s i n d u s t r y o n B o u l d e r C o u n t y r o a d s o E s t i m a t e g e n e r a l m a g n i t u d e o f : – O i l & g a s r e l a t e d t r u c k t r a f f i c – I n c r e m e n t a l r o a d d e t e r i o r a t i o n a n d s a f e t y c o s t s o D e v e l o p a c o s t r e c o v e r y m e c h a n i s m t h a t a l l o w s t h e C o u n t y t o o f f s e t i n c r e a s e d r o a d d e t e r i o r a t i o n a n d s a f e t y c o s t s o I n t e g r a t e s t u d y r e s u l t s w i t h f o r t h c o m i n g o i l & g a s l a n d u s e r e g u l a t i o n s

S ERVICE D ELIVERY C HALLENGES o O i l & g a s i n d u s t r y h a s u n u s u a l c h a r a c t e r i s t i c s … – D i s p e r s e d – R o a d i n t e n s i v e – M i g r a t o r y – E v o l v i n g : d r i l l i n g t o p r o d u c t i o n – U n c e r t a i n p a c e a n d i n t e n s i t y o f d e v e l o p m e n t – U n c e r t a i n t r a f f i c p a t t e r n s

S TUDY P ROCESS D IAGRAM

S TUDY A REA

T RIP G ENERATION – C LUSTERED D EVELOPMENT o S o u r c e s i n c l u d e Truck Trips r e c e n t p l a n n i n g Phase 1 pad, 4 wells d o c u m e n t s f r o m : Construction Pad and Road Construction 87 Drilling Drilling Rig 93 – P e n n s y l v a n i a Drilling Fluid and M aterials 270 Drilling Equipment (casing, drill pipe, etc) 453 – N e w Y o r k Completion Completion Rig 42 – U t a h Completion Fluid and M aterials 170 10 Completion Equipment (pipe, wellhead, etc) – T e x a s Fracturing Equipment (pump trucks, tanks, etc) 317 Fracture Water 4,152 Fracture Sand 191 o A s s u m e s c l u s t e r e d Flowback Water Disposal 1,400 d e v e l o p m e n t , Total Development Trips 7,184 h o r i z o n t a l d r i l l i n g , Annual Production Trips Per Pad 730 h y d r a u l i c f r a c t u r i n g Sources: o F o u r w e l l s , o n e p a d "Impacts on Community Character of Horizontal Drilling and High Volume Hydraulic Fracturing in M arcellus Shale and Other Low-Permeability Gas Reservoirs", o N a t i o n a l s t u d i e s NTC Consultants, September 2009 and February 2011. a d a p t e d t o o b s e r v e d "Highway Freight Traffic Associated with the Development of Oil and Gas Wells", Utah Department of Transportation, October 2006. p a t t e r n s i n Wa t t e n b e r g / N i o b r a r a "Potential Development of the Natural Gas Resources in the M arcellus Shale", National Park Service, December 2008

S CENARIO D EVELOPMENT o T h r e e s c e n a r i o s o R a n g e o f h y p o t h e t i c a l o u t c o m e s o B a s e d o n e x p e c t e d s p a c i n g ( C O G C C ) a n d p l a u s i b l e r i g a l l o c a t i o n s o A c c e l e r a t e d S c e n a r i o – A b o u t 3 0 p a d s p e r y e a r o v e r 9 y e a r s ( 1 0 r i g s ) – 8 2 4 p r o d u c i n g w e l l s ( 2 0 3 1 ) o S t e a d y S c e n a r i o – A b o u t 1 5 p a d s p e r y e a r o v e r 1 6 y e a r s ( 5 r i g s ) – 8 2 4 p r o d u c i n g w e l l s ( 2 0 3 1 ) o L o w S c e n a r i o – A b o u t 3 p a d s p e r y e a r o v e r 1 6 y e a r s ( 1 r i g ) – 1 8 0 p r o d u c i n g w e l l s ( 2 0 3 1 )

S CENARIO D EVELOPMENT N EW AND P RODUCING W ELLS 140 900 800 120 700 100 600 Cumulative Producing Wells Annual New Wells Drilled 80 500 400 60 300 40 200 20 100 0 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Year New Wells (Accelerated Scenario) New Wells (Steady Scenario) New Wells (Low Scenario) Producing Wells (Accelerated Scenario) Producing Wells (Steady Scenario) Producing Wells (Low Scenario) A n n u a l p r o d u c i n g w e l l s b u i l d o v e r t i m e a s n e w w e l l s a r e d r i l l e d a n d c o m p l e t e d

T RAVEL M ODEL R OADWAY N ETWORK

T RIPS PER D AY (A NNUAL A VERAGE ) N o B o u l d e r C o u n t y - m a i n t a i n e d r o a d i s e x p e c t e d t o e x c e e d t h e e x i s t i n g c a p a c i t y t h r e s h o l d d u e t o a d d e d o i l a n d g a s t r i p s

A VERAGE D AILY T RIPS BY S TAGE For one pad with four wells Approximate Duration

H EAVY V EHICLE I MPACTS o L o a d e d w a t e r t r u c k – 6 , 5 0 0 – 1 1 , 0 0 0 t i m e s t h e l o a d i m p a c t o f a p a s s e n g e r c a r o R i g t r u c k – 2 0 , 0 0 0 – 3 0 , 0 0 0 t i m e s t h e l o a d i m p a c t o f a p a s s e n g e r c a r

L OADS ON R OADWAY N ETWORK • Vehicle M iles of Travel (VM T) increase is less than 1% over background • Load increase is 20 – 160% over background

T YPES OF M ITIGATION Road Roadway Road Type M itigation Activity Deterioration Safety Unpaved/ Gravel Increased frequency of: • Grading X • Gravel application X • Dust suppression X Asphalt Roads • Good/ Fair condition • Increased overlay frequency X • Poor condition • Expedited reconstruction X • Sub-standard shoulders • Shoulder widening X Concrete Roads • Incremental reduction in X service life – expedited reconstruction

C UMULATIVE C OSTS BY S CENARIO Road Average Safety Total Scenario Deterioration Annual Costs Costs Costs Costs (Range) $0.5M Low $5,980,000 $2,110,000 $8,090,000 ($0.1M – $0.9M ) $1.7M $24,760,000 $2,830,000 $27,590,000 Steady ($0.7M – $2.6M ) $1.7M Accelerated $24,460,000 $2,840,000 $27,300,000 ($0.4M – $4.0M ) Costs are 16-year cumulative figures in current year dollars.

R OAD D ETERIORATION AND S AFETY F EE o I s o l a t e s o i l & g a s i m p a c t s o n c o u n t y r o a d s o D e s i g n e d t o r e c o u p t h e i n c r e m e n t a l c o u n t y c o s t a s s o c i a t e d w i t h r o a d d e t e r i o r a t i o n a n d s a f e t y o B a s e d o n b l e n d o f t h e t h r e e s c e n a r i o s a n d a v e r a g e t r i p l e n g t h s o F e e d e s i g n e d t o b e a p p l i e d i n t h e o i l a n d g a s l a n d u s e a p p l i c a t i o n p r o c e s s

F EE C ALCULATION M ETHODOLOGY Fees per pad and well are averaged across the three scenarios

O IL & G AS R OADWAY F EES Road Safety Deterioration Total Fee Fee Fee $1,200 - Pad $1,200 $30,700 $6,200 Well $36,900 Fees are in current year dollars.

S UMMARY o A v e r a g e - b a s e d m e t h o d o l o g y r e c o g n i z e s c u r r e n t u n c e r t a i n t i e s : – L o c a t i o n o f d r i l l i n g i s u n k n o w n – T r a f f i c p a t t e r n s u n k n o w n – P a c e o f f i e l d d e v e l o p m e n t u n c e r t a i n – Wa t e r s o u r c e s a r e u n k n o w n o F e e s b a s e d o n a p p o r t i o n m e n t o f e x p e c t e d i n c r e m e n t a l r o a d c o s t s p e r p a d a n d p e r w e l l o M a j o r i m p a c t i s r o a d d e t e r i o r a t i o n o F e e s a r e a t o o l t o r e c o v e r c o s t s d u r i n g p e r i o d w h e n t r a n s p o r t a t i o n i m p a c t s a r e m o s t i n t e n s e —w e l l d e v e l o p m e n t

QUESTIONS

C UMULATIVE C OSTS BY S CENARIO A LTERNATIVE M ETHODOLOGY FOR P OOR C ONDITION A SPHALT R OADS * Road Average Safety Total Scenario Deterioration Annual Costs Costs Costs Costs (Range) $0.3M Low $3,120,000 $2,110,000 $5,230,000 ($0.1M – $0.4M ) $1.1M $13,990,000 $2,830,000 $16,820,000 Steady ($0.6M – $1.3M ) $1.2M Accelerated $15,860,000 $2,840,000 $18,700,000 ($0.7M – $2.0M ) Costs are 16-year cumulative figures in current year dollars. * M ethodology for poor condition asphalt roads the same as for good/ fair condition roads; based on overlay depth required to offset O&G truck impacts.