We continue with the great article from Bloomberg.com
Managing a Windfall
Pennsylvania is no stranger to energy euphoria. Edwin Drake drilled the world’s first successful oil well in 1859 in Titusville, 240 miles west of the Switzers’ home in Dimock. Now it’s learning to manage its latest windfall.
In October, companies will be required to disclose the chemical composition of fracking water, says John Hanger, secretary of Pennsylvania’s Department of Environmental Protection. The department is doubling its number of oil and gas enforcers to 193.
Switzer says it’s about time. She says she’s had nothing but trouble since Houston-based Cabot arrived in 2006. It sank 50 wells in 2009 and plans 81 this year. Convoys loaded with drilling rigs, pipes and compressors crisscross the village. Her creek ran red with spilled diesel after a truck slid on ice and hit a tree. Some neighbors are moving. Switzer wants Cabot shut down instead.
Methane Migration
The Switzers and 31 neighbors are suing Cabot for negligence. The company had until June 1 to respond. Cabot spokesman George Stark declined to comment on the suit.
Separately, and without acknowledging any wrongdoing, Cabot agreed with Pennsylvania officials on April 15 to stop drilling in Dimock for a year, cap three wells with casings that the state deemed defective and pay a $240,000 fine.
Ken Komoroski, a Cabot attorney, says there’s no proof drilling polluted Dimock’s water. He says loose soil collapsed at a well, snapping the drilling pipe and dragging the bit 1,700 feet (520 meters) underground. Methane may have migrated through the cavity into aquifers as Cabot recovered the bit, he says. Cabot now tests for methane and uses latex to ensure well casings are cemented properly.
‘More Like Texas’
“In the big picture, drilling is going very well,” Komoroski says. “Pennsylvania is going to look more like Texas.”
Shale gas pioneer Mitchell can take credit if that happens. His parents, Greek immigrants who ran a dry cleaning store, put him through Texas A and M University, where he majored in geology and petroleum engineering. In 1946, he started consulting for a company he later bought and renamed Mitchell Energy and Development Corp.
“We tried propane, diesel, anything you can think of,” says Mitchell, who uses a motorized scooter to zip around in his Houston office, where he greets emissaries from China and Europe who have been bitten by the shale bug. “Water with a small amount of sand worked best.”
Better Bet
By 1993, Mitchell had developed shale gas extraction into a viable business. Rivals didn’t pay attention until prices rose in tandem with oil and passed $4 a decade later. Mitchell sold his company to Oklahoma City-based Devon Energy Corp. for $3.1 billion in 2002. Since then, he has invested $25 million in Alta Resources LLC, which has five wells near Montrose in northeastern Pennsylvania and may drill 500 more.
Mitchell says shale gas is a better bet than oil. A typical gas well near Fort Worth costs $4 million and is virtually assured of success. In the Gulf of Mexico, oil companies spend $300 million drilling through 1,000 feet of water and 35,000 feet of rock and can still come up empty.
“They decided they better start working on shale gas,” he says.
Persistent Risk
While Chesapeake’s McClendon, 50, expects offshore drilling to become more difficult, shale gas has its own drawbacks, Neftex’s Wells says.
“With deep-water exploration, there is a very small risk of a catastrophic event,” he says. “With shale gas, there is a persistent risk of long-term contamination of groundwater. This doesn’t have easy-to-see TV imagery, like oiled-up seabirds. It needs scientific explanation for which the public is not trained.”
The Doghouse
BP had started looking for gas before the oil spill. In 2008, it paid Chesapeake $1.75 billion for rights on 90,000 acres near Stuart, Oklahoma, 100 miles south of Tulsa. BP has since tripled initial output from wells on this land to 10 million cubic feet a day.
On a sunny February afternoon, workers prepare new wells using a road grader to scrape flat a 5-acre patch called the drill pad. They’ll cover the area with rubber and surround it with 18-inch-high berms to contain any spilled liquid from fracking or drilling debris. They’ll bore as many as eight wells in the pad.
From a 14-story white rig with a blue platform, workers in a control room called the doghouse use computers to manipulate hydraulic lifts that arrange 30-foot sections of black pipe into rows. Mechanical claws screw one pipe to a volleyball-size drill bit studded with diamonds and the other pipes to each other. An 11-ton rotating clamp called a top drive pushes the pieces into the pad to start the well.
How Fracking Works
Within 10 Feet
The bit and drilling pipes, which are surrounded by three rings of metal casings cemented in place to protect aquifers, go down 8,000 feet. Workers activate a motor in the pipe, which has a slight bend near the bit, so that 1,000 feet of drilling produces a 90-degree turn.
After probing for 3 miles, the driller, from his perch in the doghouse, can place the bit within 10 feet of his target, says Bryant Chapman, BP’s vice president for North American gas operations.
Next comes fracking. Workers park 40 tractor-trailers loaded with pumps, sand, chemicals and portable containment tanks on the pad and spend three days blasting 5 million gallons (19 million liters) of water into the well.
As much as 40 percent flows back out. In Texas, the water is injected into underground rock. In Pennsylvania, which lacks suitable deep-rock formations, the water gets recycled or goes to treatment plants.
Fracking worries people far from Stuart and Dimock. New York City serves 8 million residents from a watershed so pristine it’s exempt from federal filtration requirements.
“We firmly believe, based on the best available science and current industry and technological practices, that drilling cannot be permitted in the city’s watershed,” Mayor Michael Bloomberg said in an April press release.
Bloomberg is the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.
Range CEO Pinkerton says New York’s leaders are ignoring facts.
“They’re cuckoo for Cocoa Puffs,” he says, quoting a 1960s breakfast cereal slogan.
Squaring Off
Pinkerton, 56, says all Marcellus wells that will ever be built will use less water than one nuclear plant and that damage from coal mines is much worse than shale drilling.
As the drilling debate intensifies, shale gas supporters and opponents are squaring off along the Delaware River, the waterway U.S. General George Washington crossed on Christmas Day in 1776 to defeat Hessian mercenaries.
In April, Pennsylvania issued a permit for the first of up to nine exploratory shale wells in the river basin for New York- based Hess Corp. and Houston-based Newfield Exploration Co. The first well will be 2.5 miles west of the Delaware and 15 miles north of Honesdale.
Pat Carullo says drilling is a beast that can’t be tamed. Carullo, 56, co-founded Damascus Citizens for Sustainability, which wants case-by-case reviews of new wells.
“The gas industry thought they could spread money around like pimps and drill anywhere in the watershed,” he says. “I’ll be dead before that happens.”
Preserving the Farm
Marian Schweighofer, executive director of the Northern Wayne Property Owners Alliance, is rooting for shale gas. If commercial drilling is banned in the river basin, she’d lose out on income for the 712-acre farm in Tyler Hill that’s been in her family for four generations. Marian and her husband Edward, both 54, have gotten $500,000 from Hess so far.
Jack Ivey is contemplating the riches shale gas can bring. He leased 111 acres in Montrose to Mitchell’s Alta for $310,800. Ivey, 80, hopes for at least $346 a day from the first well if gas prices hold up. Royalties may reach $1,734 a day with five more wells.
“Hopefully, I’ll live five or six years so I can get some of this money,” he says.
Mitchell predicts companies will win public support for drilling in Pennsylvania the way they did in Texas.
“With money,” he says, and pauses, as if no elaboration is needed.
Learning From Dimock
Billions of dollars — and energy for the 21st century — are at stake. In Australia, Beach Energy Ltd. wants to explore an area that may hold 200 TCF of shale gas. China may produce a quarter of its gas from shale deposits in the next 20 years, the DOE says.
Before Schweighofer’s group signed on for drilling, members toured Dimock and met Victoria Switzer. They hired a lawyer and insisted on stronger well casings than Pennsylvania requires and that farmers be allowed to keep drilling equipment out of their best fields.
Switzer, now a shale gas veteran, says she hopes the world can learn from her and her neighbors that there are costs as well as benefits from unlocking a treasure the Earth has guarded for hundreds of millions of years.
Oil and gas companies injected hundreds of millions of gallons of hazardous or carcinogenic chemicals into wells in more than 13 states from 2005 to 2009, according to an investigation by Congressional Democrats.
The chemicals were used by companies during a drilling process known as hydraulic fracturing, or hydrofracking, which involves the high-pressure injection of a mixture of water, sand and chemical additives into rock formations deep underground. The process, which is being used to tap into large reserves of natural gas around the country, opens fissures in the rock to stimulate the release of oil and gas.
Hydrofracking has attracted increased scrutiny from lawmakers and environmentalists in part because of fears that the chemicals used during the process can contaminate underground sources of drinking water.
“Questions about the safety of hydraulic fracturing persist, which are compounded by the secrecy surrounding the chemicals used in hydraulic fracturing fluids,” said the report, which was written by Representatives Henry A. Waxman of California, Edward J. Markey of Massachusetts and Diana DeGette of Colorado.
The report, released late Saturday, also faulted companies for at times “injecting fluids containing chemicals that they themselves cannot identify.”
The inquiry over hydrofracking, which was initiated by the House Energy and Commerce Committee when Mr. Waxman led it last year, also found that 14 of the nation’s most active hydraulic fracturing companies used 866 million gallons of hydraulic fracturing products — not including water. More than 650 of these products contained chemicals that are known or possible human carcinogens, regulated under the Safe Drinking Water Act, or are listed as hazardous air pollutants, the report said.
A request for comment from the American Petroleum Institute about the report received no reply.
Some ingredients mixed into the hydraulic fracturing fluids were common and generally harmless, like salt and citric acid. Others were unexpected, like instant coffee and walnut hulls, the report said. Many ingredients were “extremely toxic,” including benzene, a known human carcinogen, and lead.
Companies injected large amounts of other hazardous chemicals, including 11.4 million gallons of fluids containing at least one of the toxic or carcinogenic B.T.E.X. chemicals — benzene, toluene, xylene and ethylbenzene. The companies used the highest volume of fluids containing one or more carcinogens in Colorado, Oklahoma and Texas.
The report comes two and a half months after an initial report by the same three lawmakers that found that 32.2 millions of gallons of fluids containing diesel, considered an especially hazardous pollutant because it contains benzene, were injected into the ground during hydrofracking by a dozen companies from 2005 to 2009, in possible violation of the drinking water act.
A 2010 report by Environmental Working Group, a research and advocacy organization, found that benzene levels in other hydrofracking ingredients were as much as 93 times higher than those found in diesel.
The use of these chemicals has been a source of concern to regulators and environmentalists who worry that some of them could find their way out of a well bore — because of above-ground spills, underground failures of well casing or migration through layers of rock — and into nearby sources of drinking water.
These contaminants also remain in the fluid that returns to the surface after a well is hydrofracked. A recent investigation by The New York Times found high levels of contaminants, including benzene and radioactive materials, in wastewater that is being sent to treatment plants not designed to fully treat the waste before it is discharged into rivers. At one plant in Pennsylvania, documents from the Environmental Protection Agency revealed levels of benzene roughly 28 times the federal drinking water standard in wastewater as it was discharged, after treatment, into the Allegheny River in May 2008.
The E.P.A. is conducting a national study on the drinking water risks associated with hydrofracking, but assessing these risks has been made more difficult by companies’ unwillingness to publicly disclose which chemicals and in what concentrations they are used, according to internal e-mails and draft notes of the study plan.
Some companies are moving toward more disclosure, and the industry will soon start a public database of these chemicals. But the Congressional report said that reporting to this database is strictly voluntary, that disclosure will not include the chemical identity of products labeled as proprietary, and that there is no way to determine if companies are accurately reporting information for all wells. In Pennsylvania, the lack of disclosure of drilling ingredients has also incited a heated debate among E.P.A. lawyers about the threat and legality of treatment plants accepting the wastewater and discharging it into rivers.
We basically feel that due to the cost of investment of many large industrial companies, these companies are forced often to fudge on safety since threats arise during the unfolding of the investment that can kill the investment.
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