Oil and Gas.....Something for Nothing?

I'm glad to see someone is looking at the bigger picture.

here is an email reta and i received from a concerned county resident.
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Below I've pasted a letter that I wrote to Senator Byrd's office. I'm super concerned about the consequences of gas drilling here, especially what our rights are with water. Who owns the water rights for this county? Can a gas company just suck up 1 million gallons of water to break each well open, only to leave me with no water or contaminated water? Everyone who has wells here depends on Karst aquifers... and the Greenbrier river is a big part of every part of our lifestyle here. Does the county commission have a say over what ouside companies can do with water here? I think everyone has a right to make their own decisions about their own land, but water is a communal issue, and since the oil and gas companies are exempt from the clean water act (per Rockefeller's office apparently), I think that our county better act fast to set down what rules we can about acceptable water use.
Please let me know what you know about this issue, and if the county commission has any jurisdiction over water rules. Thanks so much for all you do in the interest of all of us... Best,................

Senator Byrd,

I write your office with serious concern over the gas rights rush occurring in my home county, Pocahontas. I recently returned home after several years abroad (you helped with my newborn daughter's passport expediting, and I thank you much) to find many of my neighbors excited over the prospect of the free money in leasing their gas rights. Real estate agents are selling the rights (and I understand collecting a nice percentage) and gas company people are bringing fancy steaks to the annual courthouse picnic, where cold cuts are the norm. And it all makes me nervous.

It doesn't seem that there has been any public debate over the possible consequences of drilling wells here. There are rumors circulating that the drilling will bring a foul smell to the area, and could infect well water with gases and poisons (as you know well, we're not a 'town water' area... for most of us, wells are our only option). But most folks brush this suggestion off, because companies bought up gas rights here 20 years back, and no drilling ever happened. With the price of propane going up and then up again, it sure seems probable that someone will drill something this time around.

Besides the potential health risks that could come alongside drilling on karst ground (I understand that the gas could go anywhere inside the underground caves), I am also concerned to know what foul smell this may bring, and what the potential implications would be for our county's main breadwinner: tourism.

Clearly, the gas companies have no vested interest in presenting all sides of this issue. And we are a small community with no natural gas experts stepping up to inform the rest of us, so that we may make decisions for the future of our county from an educated position.

Can your office help find someone who knows all sides of this issue, and get them here to hold an information session and answer questions? If you can find the person, I'll gladly arrange the place and publicize. Short of that, does your office know who I might be able to call to educate myself on the potential 'cons' of natural gas drilling? Does your office have a position on this issue? Are you concerned that WV citizens are getting taken advantage of, and there will be long-term consequences that will harm us? Or perhaps I am more nervous than is warranted?

In a quick Google search this morning, I found the following from the book, Karst Geohazards: Engineering and Environmental Problems in Karst Terrane ...By Barry F. Beck, Felicity M. Pearson, P.E. LaMoreaux & Associates, National Groundwater Association (U.S.) “Meimann (1990) noted impacts to karst aquifers from activities associated with oil and natural gas drilling, including contamination by drilling fluids, hydrocarbons and oil field brines containing sodium, chloride, sulfates, sulfides, barium, cadmium, zinc, lead, chromium and strontium.”

While I'm not sure exactly what this means, as a new mother with well water on a farm surrounded by farms who have leased their gas rights, I want to know what rights and protections I have to keep the water my 8-month-old Ramona drinks safe.

Thanks so much for any help you can offer.

Here is a site worth looking at. I am concerned that land owners have little understanding of the impact of drilling on your land and your neighbors.
http://catskillmountainkeeper.org/node/290

MEMORANDUM

TO: Jim Zoia, Chief of Staff for Congressman Nick Rahall

FROM: Energy and Minerals Subcommittee Staff, x5-9297

RE: Information on the Shale Gas Boom and West Virginia

In response to the email inquiry from the Chairman's constituent, we assembled the following background on the Marcellus gas shale boom. Resources for additional information are noted at the end of the document.

Gas production from the Marcellus shale in West Virginia and across the Appalachian basin is the new “hottest thing” according to the natural gas industry—and is creating a reported “land rush” by companies vying for acreage and mineral rights. However, there is a dearth of reliable analysis on the scope of drilling in West Virginia, and on the potential impacts of the Marcellus shale development. Equally challenging for landowners is determining how to craft a contract for shale development that protects their rights and yields a fair return.

The Marcellus Shale

The Marcellus shale runs from the southern tier of New York, through Western Pennsylvania, into eastern Ohio, and through West Virginia, covering roughly 54,000 square miles. According to researchers at Penn State, the Marcellus shale could contain 50 trillion cubic feet of recoverable gas—more than double current annual U.S. natural gas production.

Commercially productive gas shale reservoirs in the United States are found between 500 and 11,000 feet. In West Virginia, most of the gas in the Marcellus shale, which is the deepest of the Devonian shales, is found at depths of 4,000-7,000 feet; typically these are areas with relatively little past gas development, where mineral rights have not been severed from the surface property.

Companies have known about the gas shale reservoirs in the Marcellus for decades, but now rising energy demand and prices—combined with new horizontal drilling techniques and hydraulic fracturing—are making recovery of this “unconventional” gas economically feasible. A typical well is for conventional gas extraction is drilled straight down to a depth of about 2,000 to 3,000 feet. But in the Marcellus shale, companies are considering drilling down to depths of about 6,000 feet, then making a right angle to drill horizontally into the shale—a more costly venture but critical to efficient extraction of gas from shale. Horizontal drilling technology has been successfully used in the Barnett Shale, a 5,000-square-mile field in Texas with production of more than 1.2 billion cubic feet of natural gas a day. The other piece of technology which can markedly boost gas shale production is hydraulic fracturing, or “fracking,” in which water and sand is injected into the rock formation to fracture the shale.

A typical vertical well would cost roughly $800,000 to drill, but a horizontal well $3-4 million—thus today's interest in gas shale development is hugely dependent on the high energy prices. The growing transition from conventional to unconventional production which is occurring is evidenced by the number of rigs drilling horizontal wells nationwide. In the late 1990s, about 40 drilling rigs, or 6%, were drilling horizontally. As of May 2008, the number of rigs drilling horizontal wells has grown to 519 rigs, or 28% of the total.

At present, the most active drilling of the Marcellus shale across the Appalachian basin may be occurring in Pennsylvania, where as early as 2005, Range Resources-Appalachia began production. As of 2008, more than 450 suspected Marcellus wells had been permitted in PA alone.

There is virtually no data available on Marcellus production for West Virginia wells, according to the West Virginia Geological and Economic Survey (WVGES). Anecdotally, a petroleum geologist at the Survey reports seeing a lot of wells permitted in the Marcellus, including some horizontal wells, in counties such as Preston, Taylor, Wetzel, and Marshall in northern West Virginia. The Marcellus is not present in the southwestern-most part of West Virginia. There, the Lower Huron—a younger shale—is the reservoir of interest. According to the WVGES, horizontal shale wells (for both the Lower Huron and the Marcellus) have been permitted in at least 17 counties in the last year or so.

The West Virginia Oil and Natural Gas Association and the West Virginia Department of Environmental Protection similarly think the north-central part of the state is the prime area of focus for gas shale at the moment, though they suspect companies are not actually drilling many wells yet. They note that infrastructure could prove a major challenge for any significant commercial production of gas shale in West Virginia, with more compressor stations needed and more and better pipelines—construction that could take several years. Recent reports and newsclips also provide a sense of where gas shale drilling in West Virginia is occurring, and by which companies:

• PetroEdge is drilling a well in Wetzel County, and expects to drill in Marion and Ritchie counties; it has opened 41 Marcellus wells in West Virginia.
• Cabot Oil and Gas Corp. has drilled eight wells in southern West Virginia this year.
• Dominion has been testing the Marcellus for three years now and expects to drill its first five to six producing wells this year, in the north-central part of the state.
• Other players in West Virginia include Equitable Resources Inc. and Chesapeake Energy Co.

The degree to which there is a land rush occurring for Marcellus shale access is also evident in the rapidly inflating rental and royalty rates in West Virginia. According to the Executive Director of the West Virginia Surface Owners Association, “delay rentals”—payments made to mineral owners until the drilling begins—typically once ranged from $1 to $5 an acre per year; now some owners in West Virginia are getting $400 or more. For royalties, 1/8 used to be standard, now 18-20% can be negotiated. A good well can produce a million cubic feet of gas a day—making the landowner $12,000 a day, or a half million a year. (In Pennsylvania, a group of landowners formed an organization called the Northern Wayne Property Owners Alliance, representing about 10,000 acres of land. The group acts together in the signing of any leases, with goals of property protection, sensitivity to the environment and the community, and a contract that can be severed addressing royalties; some landowners in West Virginia are similarly beginning to work together to make sure they aren't undercut).

Potential Environmental and Community Issues

There are many uncertainties about the impacts of the gas shale fracturing process on the environment, landowners, and neighbors.

A top concern is the quantity of water needed for [Author ID1: at Mon Jul 14 15:18:00 2008 ]hydraulic fracturing. There is little specific information on the amount of water companies will use to drill the Marcellus Shale, but a million gallons or more per well is a widely cited estimated. (Some gas shale wells in Pennsylvania reportedly have required millions of gallons of water.) Amounts vary depending on whether the well is vertical or horizontal, the site-specific conditions, and the depth of the well. In the Barnett Shale in Texas, some vertical wells hydraulically fractured may use about 1.2 million gallons of water, but as much as 5-6 million gallons for horizontal wells--although, again, the water requirements there may be difference in the Marcellus. The water is either drawn from a well or from surface water. Potential impacts include aquifer depletion, stream flow depletion and disruption, and depletion of drinking water. In the Western states, water used for hydraulic fracturing is often put into pits where the fluids evaporate; in West Virginia, it is unclear how the drilling fluids, water, and waste that comes out of the wells will be managed. It might be stored in pits, in tanks, treated and sprayed on land, or hauled off.

Even less clear is the degree to which fracturing threatens water quality. The process typically injects some chemicals into the well, and may also disturb, distribute, and bring to the surface chemicals from the rock formations. Industry asserts that approximately 35,000 wells are hydraulically fractured annually in the U.S., with no harm to groundwater since the techniques inception decades ago. And in 2004, the EPA concluded that hydraulic fracturing fluids injected into wells in coal bed methane production pose minimal threat to drinking water (although others have questioned whether the study was scientifically sound).

Accordingly, federal regulation of the chemicals used in hydraulic fracturing is minimal. The Energy Policy Act of 2005 specifically prohibited regulation of hydraulic fracturing (except when diesel fluids are used) from the Safe Drinking Water Act. At a hearing before the House of Representatives Committee on Oversight and Government Reform in October 2007, Chairman Waxman criticized this “loophole” which “gives oil and gas companies the ability to pump toxic chemicals into drinking water with little or no accountability.” At that hearing, the National Resources Defense Council testified that hydraulic fracturing is a suspect in impaired drinking water in Alabama, Colorado, New Mexico, Virginia, West Virginia, and Wyoming.

Particularly frustrating for those concerned about potential health impacts from fracturing is that it can be very difficult to find out what chemicals are used for fracturing; companies can claim the information is proprietary. Some citizens and health and environmental experts have urged requirements that companies publically report the chemicals they use for oil and gas exploration and development.

Another valid concern for landowners and their neighbors are potential impacts to the surface of their land and environs. Individual vertical wells require pads of 3 to 5 acres each for the rigs, equipment, pits, storage tanks, and other machinery; horizontal wells may require more land area. Roads for access and transport and transmission lines for delivering the gas off site are needed. Usually wells are developed as fields of many wells, sometimes covering many acres. A standard lease may provide few protections for surface owners, and may include clauses which could be detrimental to surface owners (or their neighbors) in terms of water management, well spacing, and so on.

Additional Information

“Shale Gas: Focus on the Marcellus Shale,” Lisa Sumi, Oil and Gas Accountability Project/Earthworks, May 2008; Available online at http://www.earthworksaction.org/pubs/OGAPMarcellusShaleReport-6-12-08.pdf Lisa Sumi's number is 970-799-2589.

James Martin, Chief, Office of Oil and Gas, Department of Environmental Protection, (304) 926-0450.

Transcript from the a House of Representatives Hearing on Oil and Gas Development: Exemptions from Health and Environmental Protections, Committee on Oversight and Government Reform, Wednesday, October 31, 2007; transcript available online at: http://oversight.house.gov/documents/20071217173600.pdf

Katharine (“Lee”) Avery, West Virginia Geological and Economic Survey; avary@geosrv.wvnet.edu; 304-594-2331

David McMahon, and attorney and a founder of West Virginia Surface Owner Rights Organization; wvdavid@wvdavid.net; 304-415-4288. See also the West Virginia Surface Owners Rights website: http://www.wvsoro.org/ and publications provided there:

http://www.wvagriculture.org/images/Executive/LeasingAdviceWVa2008-05-16.pdf

http://www.wvsoro.org/oil_and_gas_guide/oil_gas_surface_owner_guide2004v4.pdf

EIA: http://tonto.eia.doe.gov/energy_in_brief/natural_gas_production.cfm?featureclicked=1&

“The Marcellus Shale—An Old “New” Gas Reservoir in Pennsylvania,” by John Harper, in Pennsylvania Geology, Vol. 38, No. 1.

According to WVGES, many wells were permitted in the later part of 2007, and may have been producing for few months. Operators report individual well and annual production data on March 31 for the proceeding calendar year, so WVGES expects the most informative data will not be available until Spring 2009. The Department of Environmental Protection in West Virginia tracks oil and gas well permits by county, but said it could not provide data on total permits in the state or county specifically for gas shale development in the Marcellus.

Corky DeMarco, Executive Director, West Virginia Oil and Gas Association 304-343-1609

Testimony submitted to the House Committee on Oversight and Government Reform, by David Bolin, Deputy Director of the State of Oil and Gas Board of Alabama, October 31, 2007.

Another issue in West Virginia is a dispute over whether wells into the Marcellus formation are statutory “deep wells” requiring well spacing and royalty sharing, or whether they are statutory “shallow wells” allowing the rule of capture. The West Virginia Surface Owners Right Organization supports designation as deep wells to minimize the number of wells drilled and to assure that more surface owners get to consent to the well location and get a fair share of royalties. The State Oil and Gas Conservation Commission has ruled that Marcellus wells are statutory deep wells.

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Here are some YouTube links to show gas well drilling and fracing:

↑Natural Gas Exploration: "Fracing" a Gas Well↑

↑Frac Job↑

↑Frac Job in Northern Alberta↑

↑Natural Gas Drilling↑

↑What Oil & Gas Drilling Looks Like from the Air, Wyoming↑

And this last one cannot be embedded here, so here's the link:
Hydraulic Fracturing

Here is a very good article from the WV Highlands Conservancy web site:
http://wvhighlands.org/wv_voice/?p=713