The majority of FracTracker’s posts are generally considered articles. These may include analysis around data, embedded maps, summaries of partner collaborations, highlights of a publication or project, guest posts, etc.
Quick Sand: Frack Sand Mining in Wisconsin
Each silica sand mine displaces 871 acres of wetlands and more than 12 square miles of forests and agriculture land in Wisconsin to provide the shale gas industry with fracking proppant.
By Juliana Henao, Communications Intern
Silica sand is used by the oil and gas industry as a way to prop open the fractures made during fracking – and is also referred to as a proppant. The industry’s demand for silica sand is steadily increasing (i.e., 4-5K tons per shale lateral, +86 tons per lateral per quarter), directly affecting the Great Lakes, their ecosystems, and land use. Silica sand is often found in Wisconsin and Michigan, which have felt the effects of increased sand mining demands through altered landscapes, impacted ecosystem productivity, and altering watershed resilience; these impacts will only continue to increase as the demand for silica sand increases.
To better understand frack sand mining’s current and potential effects, FracTracker’s Ted Auch and intern Elliott Kurtz, with generous support from the Save The Hills Alliance, explored mining and land use changes data in West Central Wisconsin (WCW). In their research paper, Auch and Kurtz show the current and future environmental impacts of increased sand mining in WCW in order to supply the oil and gas industry with sand. Not only does this research illustrate what is at risk in the WCW landscape, it also showcases what sand mining has already done to the region.
Key Frack Sand Mining Findings
Land alterations due to silica sand mining in WI
Sixteen percent, or 2,396 square miles, of the West Central Wisconsin (WCW) is made up of wetlands or open waters. These and the other existing WCW landscapes are unquestionably profitable. The forests buffer climate change impacts – to date accumulating between 4.8-9.8 billion tons of CO2 assuming they are 65-85 years old – and have a current stumpage value of $253-936 million.
The 25 producing silica mines in this region occupy 12 square miles of WCW and have already displaced:
- 3 mi2 of forests
- 7 mi2 of agricultural land-cover
- 1.36 mi2 of wetlands (equal to 11% of all mined lands)
Formerly, these wetlands were one of three types:- 18% (158 acres) forested wetlands
- 41% (353 acres) lowland shrub wetlands, and
- 41% (361 acres) emergent/wet meadows
Breakdown of the current landscape types near these expanding mines, based on an analysis of satellite imagery
Why Wisconsin?
There are more than 125 silica sand mines throughout WCW, a stretch of ~16,000 square miles. Previously, the mining industry focused their efforts in Oklahoma and Texas’s Riley, Hickory/Brady, and Old Creek formations, where the land is not as agriculturally or ecologically productive as WCW. Now, more and more mines are being proposed and built in the WCW region. We wanted to determine what this change would mean for such an ecosystem diverse area of Wisconsin – many of which are considered “globally imperiled” or “globally rare” including oak savanna, dry prairies, southern dry-mesic forests, pine barrens, moist cliffs and oak openings.
The St. Peter Sandstone – along with the early Devonian and much smaller Sylvania Sandstone in Southeastern Michigan – is the primary target of the silica sand industry. Carbon-rich grassland soils cover 36% of the St. Peter, where they aid the ecosystem by capturing and sorting 20.9 tons of CO2 per year, as well as purifying precipitation inputs. This ecosystem, amongst many others around sand mining activities, will be dramatically altered if silica sand mining continues at its increasing rate. We will see CO2 capturing levels drop from 20.9 tons to 10.6 tons per acre per year if the highly productive temperate forests are not reassembled and reclaimed to their original acreage, as well as a significant loss (75%) in agricultural productivity on sites that are not reclaimed properly.
Out-of-state mining companies are settling into Wisconsin and displacing the land at a very high rate. As the president of Iowa’s Allamakee County Protectors Ric Zarwell told us by email “Frac sand mining companies do not come from the area where I live. So efforts to destroy landscapes for frac sand are going to involve Neighbors Opposing Invaders.”
A high demand in silica sand from the shale gas industry will continue to drive this influx of mining companies into WI, providing a potentially collapsed ecosystem in the future. Factors at play include additional – and often much larger – mines under consideration, the average shale gas lateral grows by > 50 feet per quarter, and silica sand usage will grow from 5,500 tons to > 8,000 tons per lateral (i.e., 85 tons per quarter per lateral). Auch and Kurtz’s research paper describes in detail where how much silica sand might be needed in the future, as well as a detailed set of maps depicting land cover and usage in WI.
Largest Coastal Spill in 25 years [in California]
By Kyle Ferrar, Western Program Coordinator
The Santa Barbara Pipeline Spill
On May 19, 2015, just 20 miles north of Santa Barbara, a heavily corroded section of pipeline ruptured spilling upwards of 101,000 gallons. The pipeline was operated by Plains All American LLC, based out of Houston Texas, and was used to move crude oil from offshore rigs to inland refineries. The spill occurred on a section of pipe running parallel to the coastline at a distance of only a tenth of a mile to the ocean. As a result, the ruptured oil traveled through a drainage culvert and onto the beach where 21,000 gallons spilled into the ocean. The oil spread into a slick that covered 4 miles of coastline, and has since spread to southern California beaches more than 100 miles to the south. Santa Barbara county officials immediately closed two beaches, Refugio and El Capitan, and southern California beaches were also closed June 3rd through June 5th. Commercial fishing has been prohibited near the spill, and nearly 300 dead marine mammals and birds have been found, as well as dead cephalopods (octopi).1
Mapping the Impacts
Santa Barbara 2015 Oil Spill at Refugio Beach. To view the legend and map full screen, click here.
The map above shows details of the oil spill, including the location on the coastline, the extent that the spill traveled south, and the Exxon offshore platforms forced to suspend operations due to their inability to transport crude to onshore refineries.
The dynamic map also shows the wildlife habitats that are impacted by this oil spill, putting these species at risk. This area of Central California coastline is incredibly unique. The Santa Barbara Channel Islands are formed and molded as colder northern swells meet warmer southern swells, generating many temperature gradients and microhabitats able to support an incredible amount of biodiversity. Many species are endemic to only this region of the California coastline, and therefore are very sensitive to the impacts of pollution. In addition to the many bird species, including the endangered Western Snow Plover and Golden Eagle, this area of coastline is home to a number of whale and porpoise species, and, as seen in the map, the Leatherback Sea Turtle and the Black Abolone Sea Snail, both threatened.
Figure 1. Offshore Drilling Near Santa Barbara from 2013
For California’s harbor seal populations, this kill event reinforces existing environmental pressures that have been shrinking the seal and sea lion (pinniped) communities, increasing the threat of shark attacks on humans. For the potential impact that this could have on California’s sensitive sea otter population, see FracTracker’s recent story on the West Coast Sea Otter.
In 2013, The FracTracker Alliance collaborated with the Environmental Defense Center on the report Dirty Water: Fracking Offshore California. The report showed that much of the offshore oil is extracted by hydraulic fracturing (Fig 1.), and outlined the environmental impacts that would result from a spill of this magnitude.
Clean Up Efforts
Workers are currently cleaning the spill by hand using buckets and shovels. These old fashioned techniques may be painstaking, but they are the least invasive and they are necessary to ensure that there is not additional damage to the sensitive ecosystems. Even scraping the coastline with wire brushes and putty knives cannot remove the stain of oil that has been absorbed by porous rocks. The oil will only wear away with time as it is diluted back into the ocean. Costs of the clean-up response alone have already reached $92 million, which is being paid by Texas-based Plains All American Pipeline. There have not been any reports yet on the financial impacts to the recreational and fishing industries.2
Prevention Opportunities
By comparison, the Santa Barbara oil spill in 1969 was estimated at 200 million gallons. After over 45 years, nearly a half decade, one would think that advancements in pipeline engineering and technology would prevent these types of accidents. Plains All American, the pipeline operator states that their pressure monitors can detect leaks the size of pinholes. Why, then, did the ruptured pipe continue to spill crude for three hours after the public was notified of the incident?
This section of pipeline (falsely reported by the media to be abandoned) was built in 1987. At capacity the pipeline could transport 50,400 gallons of oil per hour, but during the time of the spill the pipeline was running under capacity. Pipeline inspections had occurred in 2012 and in April of 2014, just weeks prior. The Pipeline and Hazardous Material Safety Administration said testing conducted in May had identified extensive corrosion of the pipeline that required maintenance. It is possible that this incident is an isolated case of mismanagement, but the data tell a different story as this is not an isolated event.
Plains released a statement that a spill of this magnitude was “highly unlikely,” although this section of the pipeline has experienced multiple other spills, the largest of which being 1,200 gallons. Just a year prior, May 2014, the same company, Plains, was responsible for a 19,000 gallon spill of crude in Atwater Village in Los Angeles County. According to a joint hearing of two legislative committees, the operators, Plains did not meet state guidelines for reporting the spill. According to the county, the operator should have been able to shut down the pipeline much faster.3 It is not clear how long the pipeline was actually leaking.
NASA Spill Visualizations
As a result of the spill and to assist with the clean-up and recovery, NASA’s Jet Propulsion Laboratory (JPL) in Pasadena, CA has developed new technology to track the oil slick and locate contamination of beaches along the coastline. The JPL deployed a De Havilland Twin Otter aircraft carrying a unique airborne instrument developed to study the spill and test the ability of imaging spectroscopy to map tar on area beaches. What this means is that from aircraft special cameras can take pictures of the beach. Based on the nature of the light waves reflecting off the beach in the pictures, tar balls and oil contamination can be identified. Clean-up crews can then be dispatched to these areas. On their website, NASA states “The work is advancing our nation’s ability to respond to future oil spills.”4 A picture generated using this technology, and showing oil contamination in water and on the beach, is shown below.
References
- Maza, C. 2015. California oil spill: Regulators, lawmakers scrutinize company response. Christian Science Monitor. Accessed 7/1/15.
- Chang, A. 2015. Workers clean up oil spill on California beaches by hand. The Washington Times. Accessed 7/5/15.
- Panzar, J. 2015. Official says pipeline firm violated state guidelines for reporting Santa Barbara spill. Los Angeles Times. Accessed 7/6/15.
- NASA. 2015. NASA Maps Beach Tar from California Oil Pipeline Spill. NASA Jet Propulsion Laboratory California Institute of Technology. Accessed 7/7/17.
An urgent need? Atlantic Coast Pipeline Discussion and Map
By Karen Edelstein, Eastern Program Coordinator
This article was originally posted on 10 July 2015, and then updated on 22 January 2016 and 16 February 2016.
Proposed Pipeline to Funnel Marcellus Gas South
In early fall 2014, Dominion Energy proposed a $5 billion pipeline project, designed provide “clean-burning gas supplies to growing markets in Virginia and North Carolina.” Originally named the “Southeast Reliability Project,” the proposed pipeline would have a 42-inch diameter in West Virginia and Virginia. It would narrow to 36 inches in North Carolina, and narrow again to 20 inches in the portion that would extend to the coast at Hampton Roads. Moving 1.5 billion cubic feet per day of gas, with a maximum allowable operating pressure of 1440 psig (pounds per square inch gage), the pipeline would be designed for larger customers (such as manufacturers and power generators) or local gas distributors supplying homes and businesses to tap into the pipeline along the route, making the pipeline a prime mover for development along its path.
The project was renamed the Atlantic Coast Pipeline (ACP) when a coalition of four major US energy companies—Dominion (45% ownership), Duke Energy (40%), Piedmont Natural Gas (15%), and AGL Resources (5%)— proposed a joint venture in building and co-owning the pipeline. Since then, over 100 energy companies, economic developers, labor unions, manufacturers, and civic groups have joined the new Energy Sure Coalition, supporting the ACP. The coalition asserts that the pipeline is essential because the demand for fuel for power generation is predicted more than triple over the next 20 years. Their website touts the pipeline as a “Path to Cleaner Energy,” and suggests that the project will generate significant tax revenue for Virginia, North Carolina, and West Virginia.
Map of Proposed Atlantic Coast Pipeline
View map fullscreen – including legend and measurement tools.
Development Background
Lew Ebert, president of the North Carolina Chamber of Commerce, optimistically commented:
Having the ability to bring low-cost, affordable, predictable energy to a part of the state that’s desperately in need of it is a big deal. The opportunity to bring a new kind of energy to a part of the state that has really struggled over decades is a real economic plus.
Unlike older pipelines, which were designed to move oil and gas from the Gulf Coast refineries northward to meet energy demands there, the Atlantic Coast Pipeline would tap the Marcellus Shale Formation in Ohio, West Virginia and Pennsylvania and send it south to fuel power generation stations and residential customers. Dominion characterizes the need for natural gas in these parts of the country as “urgent,” and that there is no better supplier than these “four homegrown companies” that have been economic forces in the state for many years.
In addition to the 550 miles of proposed pipeline for this project, three compressor stations are also planned. One would be at the beginning of the pipeline in West Virginia, a second midway in County Virginia, and the third near the Virginia-North Carolina state line. The compressor stations are located along the proposed pipeline, adjacent to the Transcontinental Pipeline, which stretches more than 1,800 miles from Pennsylvania and the New York City Area to locations along the Gulf of Mexico, as far south as Brownsville, TX.
In mid-May 2015, in order to avoid requesting Congressional approval to locate the pipeline over National Park Service lands, Dominion proposed rerouting two sections of the pipeline, combining the impact zones on both the Blue Ridge Parkway and the Appalachian Trail into a single location along the border of Nelson and Augusta Counties, VA. National Forest Service land does not require as strict of approvals as would construction on National Park Service lands. Dominion noted that over 80% of the pipeline route has already been surveyed.
Opposition to the Pipeline on Many Fronts
The path of the proposed pipeline crosses topography that is well known for its karst geology feature—underground caverns that are continuous with groundwater supplies. Environmentalists have been vocal in their concern that were part of the pipeline to rupture, groundwater contamination, along with impacts to wildlife could be extensive. In Nelson County, VA, alone, 70% of the property owners in the path of the proposed pipeline have refused Dominion access for survey, asserting that Dominion has been unresponsive to their concerns about environmental and cultural impacts of the project.
On the grassroots front, 38 conservation and environmental groups in Virginia and West Virginia have combined efforts to oppose the ACP. The group, called the Allegany-Blue Ridge Alliance (ABRA), cites among its primary concerns the ecologically-sensitive habitats the proposed pipeline would cross, including over 49.5 miles of the George Washington and Monongahela State Forests in Virginia and West Virginia. The “alternative” version of the pipeline route would traverse 62.7 miles of the same State Forests. Scenic routes, including the Blue Ridge Parkway and the Appalachian Scenic Trail would also be impacted. In addition, it would pose negative impacts on many rural communities but not offset these impacts with any longer-term economic benefits. ABRA is urging for a programmatic environmental impact statement (PEIS) to assess the full impact of the pipeline, and also evaluate “all reasonable, less damaging” alternatives. Importantly, ABRA is urging for a review that explores the cumulative impacts off all pipeline infrastructure projects in the area, especially in light of the increasing availability of clean energy alternatives.
Environmental and political opposition to the pipeline has been strong, especially in western Virginia. Friends of Nelson, based in Nelson County, VA, has taken issue with the impacts posed by the 150-foot-wide easement necessary for the pipeline, as well as the shortage of Department of Environmental Quality staff that would be necessary to oversee a project of this magnitude.
Do gas reserves justify this project?
Dominion, an informational flyer, put forward an interesting argument about why gas pipelines are a more environmentally desirable alternative to green energy:
If all of the natural gas that would flow through the Atlantic Coast Pipeline is used to generate electricity, the 1.5 billion cubic feet per day (bcf/d) would yield approximately 190,500 megawatt-hours per day (mwh/d) of electricity. The pipeline, once operational, would affect approximately 4,600 acres of land. To generate that much electricity with wind turbines, utilities would need approximately 46,500 wind turbines on approximately 476,000 acres of land. To generate that much electricity with solar farms, utilities would need approximately 1.7 million acres of land dedicated to solar power generation.
Nonetheless, researchers, as well as environmental groups, have questioned whether the logic is sound, given production in both the Marcellus and Utica Formations is dropping off in recent assessments.
Both Nature, in their article Natural Gas: The Fracking Fallacy, and Post Carbon Institute, in their paper Drilling Deeper, took a critical look at several of the current production scenarios for the Marcellus Shale offered by EIA and University of Texas Bureau of Economic Geology (UT/BEG). All estimates show a decline in production over current levels. The University of Texas report, authored by petroleum geologists, is considerably less optimistic than what has been suggested by the Energy Information Administration (EIA), and imply that the oil and gas bubble is likely to soon burst.
Natural Gas Production Projections for Marcellus Shale
David Hughes, author of the Drilling Deeper report, summarized some of his findings on Marcellus productivity:
- Field decline averages 32% per year without drilling, requiring about 1,000 wells per year in Pennsylvania and West Virginia to offset.
- Core counties occupy a relatively small proportion of the total play area and are the current focus of drilling.
- Average well productivity in most counties is increasing as operators apply better technology and focus drilling on sweet spots.
- Production in the “most likely” drilling rate case is likely to peak by 2018 at 25% above the levels in mid-2014 and will cumulatively produce the quantity that the Energy Information Administration (EIA) projected through 2040. However, production levels will be higher in early years and lower in later years than the EIA projected, which is critical information for ongoing infrastructure development plans.
- The EIA overestimates Marcellus production by between 6% and 18%, for its Natural Gas Weekly and Drilling Productivity reports, respectively.
- Five out of more than 70 counties account for two-thirds of production. Eighty-five percent of production is from Pennsylvania, 15% from West Virginia and very small amounts from Ohio and New York. (The EIA has published maps of the depth, thickness and distribution of the Marcellus shale, which are helpful in understanding the variability of the play.)
- The increase in well productivity over time reported in Drilling Deeper has now peaked in several of the top counties and is declining. This means that better technology is no longer increasing average well productivity in these counties, a result of either drilling in poorer locations and/or well interference resulting in one well cannibalizing another well’s recoverable gas. This declining well productivity is significant, yet expected, as top counties become saturated with wells and will degrade the economics which have allowed operators to sell into Appalachian gas hubs at a significant discount to Henry hub gas prices.
- The backlog of wells awaiting completion (aka “fracklog”) was reduced from nearly a thousand wells in early 2012 to very few in mid-2013, but has increased to more than 500 in late 2014. This means there is a cushion of wells waiting on completion which can maintain or increase overall play production as they are connected, even if the rig count drops further.
- Current drilling rates are sufficient to keep Marcellus production growing on track for its projected 2018 peak (“most likely” case in Drilling Deeper).
Post Carbon Institute estimates that Marcellus predictions overstate actual production by 45-142%. Regardless of the model we consider, production starts to drop off within a year or two after the proposed Atlantic Coast Pipeline would go into operation. This downward trend leads to some serious questions about whether moving ahead with the assumption of three-fold demand for gas along the Carolina coast should prompt some larger planning questions, and whether the availability of recoverable Marcellus gas over the next twenty years, as well as the environmental impacts of the Atlantic Coast Pipeline, justify its construction.
Next steps
The Federal Energy Regulatory Commission, FERC, will make a final approval on the pipeline route later in the summer of 2015, with a final decision on the pipeline construction itself expected by fall 2016.
UPDATE #1: On January 19, 2016, the Richmond Times-Dispatch reported that the United States Forest Service had rejected the pipeline, due to the impact its route would have on habitats of sensitive animal species living in the two National Forests it is proposed to traverse.
UPDATE #2: On February 12, 2016, Dominion Pipeline Company released a new map showing an alternative route to the one recently rejected by the United States Forest Service a month earlier. Stridently condemned by the Dominion Pipeline Monitoring Coalition as an “irresponsible undertaking”, the new route would not only cross terrain the Dominion had previously rejected as too hazardous for pipeline construction, it would–in avoiding a path through Cheat and Shenandoah Mountains–impact terrain known for its ecologically sensitive karst topography, and pose grave risks to water quality and soil erosion.
OH Class II Injection Wells – Waste Disposal and Industry Water Demand
By Ted Auch, PhD – Great Lakes Program Coordinator
Waste Trends in Ohio
Map of Class II Injection Volumes and Utica Shale Freshwater Demand in Ohio. Explore dynamic map
It has been nearly 2 years since last we looked at the injection well landscape in Ohio. Are existing disposals wells receiving just as much waste as before? Have new injection wells been added to the list of those permitted to receive oil and gas waste? Let’s take a look.
Waste disposal is an issue that causes quite a bit of consternation even amongst those that are pro-fracking. The disposal of fracking waste into injection wells has exposed many “hidden geologic faults” across the US as a result of induced seismicity, and it has been linked recently with increases in earthquake activity in states like Arkansas, Kansas, Texas, and Ohio. Here in OH there is growing evidence – from Ashtabula to Washington counties – that injection well volumes and quarterly rates of change are related to upticks in seismic activity.
Origins of Fracking Waste
Furthermore, as part of this analysis we wanted to understand the ratio of Ohio’s Class II waste that has come from within Ohio and the proportion of waste originating from neighboring states such as West Virginia and Pennsylvania. Out of 960 Utica laterals and 245+ Class II wells, the results speak to the fact that a preponderance of the waste is coming from outside Ohio with out-of-state shale development accounting for ≈90% of the state’s hydraulic fracturing brine stream to-date. However, more recently the tables have turned with in-state waste increasing by 4,202 barrels per quarter per well (BPQPW). Out-of-state waste is only increasing by 1,112 BPQPW. Such a change stands in sharp contrast to our August 2013 analysis that spoke to 471 and 723 BPQPW rates of change for In- and Out-Of-State, respectively.
Brine Production
Figure 1. Ohio Class II Injection Well trends In- and Out-Of-State, Cumulatively, and on Per Well basis (n = 248).
For every gallon of freshwater used in the fracking process here in Ohio the industry is generating .03 gallons of brine (On average, Ohio’s 758 Utica wells use 6.88 million gallons of freshwater and produce 225,883 gallons of brine per well).
Back in August of 2013 the rate at which brine volumes were increasing was approaching 150,000 BPQPW (Learn more, Fig 5), however, that number has nearly doubled to +279,586 BPQPW (Note: 1 barrel of brine equals 32-42 gallons). Furthermore, Ohio’s Class II Injection wells are averaging 37,301 BPQPW (1.6 MGs) per quarter over the last year vs. 12,926 barrels BPQPW – all of this between the initiation of frack waste injection in 2010 and our last analysis up to and including Q2-2013. Finally, between Q3-2010 and Q1-2015 the exponential increase in injection activity has resulted in a total of 81.7 million barrels (2.6-3.4 billion gallons) of waste disposed of here in Ohio. From a dollars and cents perspective this waste has generated $2.5 million in revenue for the state or 00.01% of the average state budget (Note: 2.5% of ODNR’s annual budget).
Freshwater Demand Growing
Figure 2. Ohio Class II Injection Well disposal as a function of freshwater demand by the shale industry in Ohio between Q3-2010 and Q1-2015.
The relationship between brine (waste) produced and freshwater needed by the hydraulic fracturing industry is an interesting one; average freshwater demand during the fracking process accounts for 87% of the trend in brine disposal here in Ohio (Fig. 2). The more water used, the more waste produced. Additionally, the demand for OH freshwater is growing to the tune of 405-410,000 gallons PQPW, which means brine production is growing by roughly 12,000 gallons PQPW. This says nothing for the 450,000 gallons of freshwater PQPW increase in West Virginia and their likely demand for injection sites that can accommodate their 13,500 gallons PQPW increase.
Where will all this waste go? I’ll give you two guesses, and the first one doesn’t count given that in the last month the ODNR has issued 7 new injection well permits with 9 pending according to the Center For Health and Environmental Justice’s Teresa Mills.
Unconventional Drilling Activity Down In Pennsylvania
By Matt Kelso, Manager of Data & Technology
Wells Spudded (Drilled)
Figure 1: Newly drilled unconventional wells in Pennsylvania peaked in 2011.
Unconventional oil and gas drilling is well established in Pennsylvania, with over 9,200 drilled wells, an additional 7,200 permitted locations that have not yet been drilled, and 5,300 violations all happening since the turn of the millennium. It took a while for the industry to gather steam, with just one unconventional well drilled in 2002, and only eight in 2005. But by 2010, that figure had ballooned to 1,599 wells, which was greater than the previous eight years combined. There were 1,956 wells drilled in 2011, representing the peak for unconventional drilling activity in Pennsylvania (Figure 1).
None of the three full years since then, however, have seen more than 70% of the 2011 total. Halfway through 2015, the industry is on pace to drill only 842 unconventional wells statewide, which would be the lowest total since 2009, and only 43% of the 2011 total.
Pennsylvania Shale Viewer. Click here to access the full screen view with a legend, layer details, and other tools.
Taken cumulatively, the footprint on the state is immense, as is shown in the map above, and impacts remain for some time. Of Pennsylvania’s 9,234 unconventional wells 8,187 (89%) are still active. Only 474 wells have been permanently plugged so far, with 570 given an inactive status, and one well listed as “proposed but never materialized,” despite being included on the spud report.
Permits & Violations
The number of permits and violations issued have been declining over the past five years as well.
Figure 2: Five years of unconventional oil and gas activity in Pennsylvania, July 2010 through June 2015.
Figure 2 shows the monthly totals of permits, wells, and violations over the last 60 months. Linear trendlines were added to the chart to give a visual representation of changes over time if we ignore the noise of the peaks and troughs of activity, which is an inherent attribute of the industry. Each of the three trendlines has a negative slope1, showing downward trends in each category.
In fact, permits for new wells are declining more rapidly than the drilled wells, and violations issued are declining at a still faster rate. Over the course of five years, these declines are substantial. In July 2010, the smoothed totals that are “predicted” by the trendline show 304 permits issued, 159 wells drilled, and 128 violations issued per month. 60 months later, one would expect 213 permits, 81 wells drilled, and just 12 violations issued2.
Location of Drilling Activity
The oil and gas industry has been more selective about where unconventional wells are being drilled in recent years, as well. Altogether, there are unconventional wells in 39 different counties, with 32 counties seeing action in both 2010 and 2011. That number is down to 22 for both 2014 and the first half of 2015. There has been drilling in 443 different municipalities since 2002, with a maximum of 241 municipal regions in 2011, which shrank to 161 last year, and just 88 in the first half of 2015.
Summary of unconventional wells drilled in each Pennsylvania county by year, through June 30, 2015. Click here to access the full screen view with a legend, layer details, and other tools
Clicking on any of the counties above will show the number of unconventional wells drilled in that county by year since the first unconventional well was spudded in Pennsylvania back in 2002. The color scheme shows the year that the maximum number of unconventional wells were drilled in each county, with blues, greens, and yellows showing counties where the activity has already peaked, oranges showing a peak in 2014, and red showing a peak in 2015, despite only six months of activity. 30 of the 39 counties with unconventional wells in the state saw a peak in activity in 2013 or before.
Notes
- The equations for the three trendlines are as follows:
- Permits: y = -1.5128x + 303.81
- Wells: y = -1.2939x + 158.95
- Violations: y = -1.9334x + 127.53
- The lowest actual value for each category are as follows:
- Permits: 117, in July 2012
- Wells: 43, in February 2015
- Violations: 16, in August 2014.
Offshore Oil and Gas Drilling: Risks to the Sea Otter
By Emily Watson, FracTracker Summer Intern
Sea otters, an endangered keystone species, are at risk due to offshore oil and gas drilling spills. Along the west coast of the U.S., this marine mammal’s habitat is commonly near offshore drilling sites, specifically in California and Alaska.
Sea Otters – a Keystone Species
Sea otter numbers used to range from several hundred thousand to more than a million. Today, there are estimated to be just over 106,000 in existence worldwide, with fewer than 3,000 living in California. Their habitats range from Canada, Russia, Japan, California and Washington, but the majority of all wild sea otters are found in Alaskan waters.
Sea otters play a significant role in their local environments, and a much greater ecosystem role than any other species in their habitat area. Sea otters are predators, critical to maintaining the balance of the near-shore kelp ecosystems, and are referred to as keystone species. Without this balancing act, coastal kelp forests in California would be devoured by other aquatic life. Sea otter predation helps to ensure that the kelp community continues to provide cover and food for many of the marine animals. Additionally, kelp plays a tremendous role in capturing carbon in the coastal ecosystems. In that sense, sea otters also inadvertently help to reduce levels of atmospheric carbon dioxide.
Oil Spills and their Health Implications
Recently, Alaska and California, home to a wide variety of marine life, have been popular areas for offshore oil and gas drilling, which may include the use of fracking to extract hydrocarbons. Oil spills are a great concern for the sea otter; unlike other marine animals that may be able to eventually rid themselves of the oil, contact with the oil causes the sea otters fur to mat, preventing insulation, which can lead to hypothermia. Additionally, the ingestion of toxic oil chemicals while cleansing their fur can cause liver and kidney failure, as well as severe damage to their lungs and eyes.
Because their numbers are low and their geographic location area is rather small compared to other sea otter populations, the California sea otter is especially vulnerable, and could be devastated by oil contamination.
Prince William Sound, Alaska
Exxon Valdez cleanup. Photograph by Natalie Fobes, National Geographic
On March 24, 1989, the tanker vessel Exxon Valdez ran aground on Bligh Reef in Prince William Sound, Alaska, spilling an estimated 42 million liters of Prudhoe Bay crude oil. This incident affected marine life throughout western Prince William Sound, the Gulf of Alaska, and lower Cook Inlet. An estimated 3500–5500 otters from a total population of about 30,000 may have died as a direct result of the oil spill. Oiling and ingestion of oil-contaminated shellfish may have affected reproduction and caused a variety of long-term sublethal effects. Necropsies of sea otter carcasses indicated that most deaths of sea otters were attributed to the oil, and pathologic and histologic changes were associated with oil exposure in the lung, liver, and kidney. Studies of long-term effects indicate that the sea otter population in the Prince William Sound area suffered from chronic effects of oil exposure at least through 1991. While some populations may recover after a spill, it would seem that the threat of oil pollution impacts is intensified for populations in deteriorating habitats and to those that are in decline.
Santa Barbara Coast, California
LA Santa Barbara Oil Spill Cleanup – Photo by: Brian van der Brug / Los Angeles Times
On Tuesday, May 19, 2015, a pipeline was found to be leaking into the Santa Barbara Coast in California. This broken pipeline, owned by Plains All American, spilled approximately 105,000 gallons of crude oil into the ocean, according to various news reports, stretching out into a 4-mile radius along the central California coastline.
These waters are home to an array of shore birds, seals, sea lions, otters and whales. Numerous amounts of marine life have been found washed up on the shore, including crabs, octopuses, fish, birds, and dolphins. Elephant seals, sea lions, and other marine wildlife have been taken to Seaworld in San Diego for treatment and recovery.
The Santa Barbara accident occurred on the same stretch of coastline as spill in 1969 that – at the time – was the largest ever incident in U.S. waters and contributed to the rise of the American environmental movement. Several hundred-thousand gallons spilled from a blowout on an oil platform, and thousands of seabirds were killed and numerous ocean wildlife, including sea lions, elephant seals, and fish perished.
Conclusion
Overall, the ocean is home to a great diversity of marine wildlife, all of which are vulnerable to oil contamination. Offshore gas drilling is a significant threat to the survival of sea otters and other marine life, wherein spills and accidents could cause health problems, toxicity, and even death. Oil spills are exceptionally problematic for sea otters, due to the vulnerable state of this animal and its endangered species state. Keeping keystone species healthy is instrumental to maintaining a well flourished ecosystem, while protecting habitats for a large array of marine and wildlife. The potential impacts on CA sea otters and other marine life due to events such as the 2015 oil spill in California should not be taken lightly.
Ohio’s Shale Oil and Gas Firms Disappoint Shareholders
By Ted Auch, Great Lakes Program Coordinator
A financial crisis seems to have been averted as the price of crude oil is beginning to stabilize – at least for now. One must wonder how such a volatile market affects oil and gas’ Wall Street, private equity, and pension fund followers, however. We have found that many oil and gas (O&G) shares have experienced steep valuation declines in the last few years for companies operating in Ohio.
Share[d] Values
To approach such a broad question, we focused our assessment on Ohio and looked at the share performance of the 17 publicly traded firms operating in the Ohio Utica region since the date of their respective first Utica permits. The Date of First Permit (DFP) ranges between 12/23/2010 for Chesapeake Energy to 3/20/2013 for BP.
Across these 17 companies there are, quite expectedly, winners and losers. On average their shares have experienced 3.75% declines in their valuation or -00.81% per year in the last several years, however. This might be why many of Wall Street and The City’s major banks have limited – or ended – their lines of credit with energy firms from Ohio to the Great Plains. Others are still picking off the highly leveraged losers one by one for pennies on the dollar (Corkery and Eavis, 2015; Staff, 2014). This cutoff of credit and disturbingly high levels of debt/leverage may explain why we found, in a separate analysis, that while cumulative producing oil and gas wells have increased by 349% and 171%, respectively, the rate of permitting needed to maintain and/or incrementally increase these production rates has been 589%.
Cross-Company Comparisons
Figure 2. Annual change in share price (%) for 17 publicly traded firms operating in the Ohio Utica shale since their date of first permit
The biggest losers in Ohio’s oil and gas world include Chesapeake Energy. Chesapeake (CHK) is also the largest player in the Buckeye State based on total permits and total producing laterals, accounting for 41% and 55%, respectively. CHK has seen its shares decline on average by 9.1% each year since their DFP (Figure 2). Antero (-10.7% per year), Consol Energy (-7.8%), and Enervest (-12.1%) have experienced similar annual declines, with investors in these firms having seen their position shrink by an average of 37%. Eclipse shares have declined in value by nearly 20% per year, which pales in comparison to the 30-33% annual declines in the share price of Halcon, Atlas Noble, and XTO Energy.
Conversely, the biggest winners are clearly Carrizo (+49% per year), PDC Energy (+41%), and to a lesser degree smaller players like EQT (+22%), Hess Ohio (+8.4%), and Anadarko (+7.9%). Interestingly, the second most active firm operating in Ohio is Gulfport Energy, and their performance has been somewhere in the middle – with annual returns of 10.3%.
Out of State – The Bigger Picture
But before the big winners light up celebratory cigars, it is worth putting their performance into perspective relative to the rest of the field as it were. In an effort to be as fair as possible we chose the Dow Jones Industrial Average and S&P 500 – two indices that everyone has heard of because they are viewed as broad indicators of US economic growth. Incidentally, the DJIA includes the O&G companies Exon and Chevron. Exon is a multinational firm not involved in Ohio’s Utica development, while Chevron is involved. Additionally, the S&P 500 includes those two firms, as well as 39 other energy firms. Nine of those currently operate in Ohio. To assess these companies’ performance with the most energy-centric indices we have compared Ohio Utica players to the S&P 500’s Energy Index, which strips away all other components of its more famous metric, as well as the Vanguard Energy Index Fund. The latter is described by Vanguard as the following on the Mutual Funds portion of its website:
This low-cost index fund offers exposure to the energy sector of the U.S. equity market, which includes stocks of companies involved in the exploration and production of energy products such as oil, and natural gas. The fund’s main risk is its narrow scope—it invests solely in energy stocks. An investor should expect high volatility from the fund, which should be considered only as a small portion of an already well-diversified portfolio.
In reviewing these four indices we found that they have outperformed the 17 oil and gas firms here in Ohio or the Ohio Energy Complex (OEC), with annual rates of return (ROR) exceeding 35% (Figure 3). This ROR value was not approached or exceeded by any of the 17 OEC firms except for PDC Energy and Carrizo. However, these two companies only account for 2.8% of all Utica permits and 4.4% of all producing Utica laterals to date. Even if we remove the broader indicators of economic growth and just focus on the two energy indices we see the US energy space ROR has experienced annual growth rates of 33% or 7% below the broader US economy but impressive nonetheless. With such growth in the number of companies drilling for oil and gas, it is likely that we will see significant consolidation soon; some of the world’s largest multinationals like Exxon and Total may step in when all of the above are priced to perfection, which is something Exxon’s Chariman and CEO, Rex Tillerson, eluded to in a speech in Cleveland last June.
Figure 3. Annual % Return of Two Broad Economic and Two Energy Specific Indices.
The performance of the OEC indicates investors and/or lenders will not tolerate such a performance for much longer. Just like our country’s Too-Big-To-Fail banks, boards, CEOs, and shareholders were bailed out, it seems as though a similar bubble is percolating in the O&G world; the same untouchables will be protected by way of explicit or implicit taxpayer bailouts. Will Ohioans be made whole, too, or will they be left to pick up the pieces after yet another natural resource bubble bursts?
References
Corkery, M., Eavis, P., 2015. Slump in Oil Prices Brings Pressure, and Investment Opportunity, The New York Times, New York, NY.
Staff, 2014. Shale oil in a Bind: Will falling oil prices curb America’s shale boom?, The Economist, London, UK.
Utica Drilling in Pennsylvania
In Pennsylvania, the vast majority of unconventional oil and gas activity is focused on the Marcellus Shale formation, a Devonian period deposit of black shale with a high hydrocarbon content, which requires horizontal drilling and large scale hydraulic fracturing to produce enough oil and gas to make the drilling economically viable. This formation was created about 390 million years ago, when organic-rich deposits accumulated in what is now the Appalachian Mountains, but was at that time a shallow sea. Down below the base of the Marcellus lies the Utica Shale, an Ordovician period formation, with almost the same geographic extent as the Marcellus, but the deposits were placed there about 65 million years earlier.
Utica permits and violations in Pennsylvania. Click here to access the legend and other map tools.
In neighboring Ohio, it is the Utica that gets most of the attention, with 937 permitted wells, as opposed to just 20 for the Marcellus. In Pennsylvania, the reverse is true: there are 16,110 permitted Marcellus wells, but only 279 permits for Utica wells. Part of the reason for this is because the subsurface characteristics of these formations vary widely, especially in terms of thickness and depth. With changes in depth come changes in temperature and pressure, which are key criteria in hydrocarbon formation. In other words, the same formation that produces considerable quantities of gas and valuable liquid hydrocarbons in eastern Ohio may be economically unviable just a county or two over in western Pennsylvania.
Utica shale permits, drilled wells, violations, and violations per well for Pennsylvania, through June 19, 2015.
Utica drilling permits have been issued in 19 different counties in Pennsylvania, with wells having been drilled in 15 of those. The violations per well (VpW) score for Utica wells in the Keystone State is 0.9, meaning that there are nine violations issued for every 10 wells that have been drilled. It is worth noting, however, that only 36 of the 114 drilled wells have received violations, meaning that some wells have been cited on multiple occasions.
Of particular note is Bradford county, the site of only one Utica well, but 19 items on the compliance report. The problematic Bayles 1 well was run by three different operators before being permanently plugged. This well also has two “Drill Deeper” permits, and as a result, it is likely that the first six violations assessed to this well were issued before it was associated with the Utica Shale, as they precede the most recent spud date for the well in June, 2005. Most of the violations for this well seem to be for pit violations and discharges to the ground and nearby stream.
Wells drilled into the Utica Formation in Pennsylvania, by year and current status.
In terms of drilling activity, it appears to have peaked in 2012, calling into question whether the industry considers the formation to be economically viable in Pennsylvania. Of the 28 wells drilled since the beginning of 2014, Tioga County has seen the most activity with 11 wells drilled, followed by five wells in Butler County, then three in Lawrence County. If we think of drilling activity as a sort of positive feedback from the industry – meaning that they like what they see and want to keep exploring – then only Tioga County seems to be holding the attention of the various operators who have been active in the Utica Shale. Given the Utica activity in Ohio, one might have thought that counties on the western edge of the state – especially Beaver, Lawrence, and Mercer – would have shown the most promise, but this appears not to be the case.
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