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The Curious Case of the Shrinking Utica Shale Play

Oil, Gas, and Brine Oh My!
By Ted Auch, Great Lakes Program Coordinator, FracTracker Alliance

It was just three years ago that the Ohio Geological Survey (OGS) and Department of Natural Resources (DNR) were proposing – and expanding – their bullish stance on the potential Utica Shale oil and gas production “play.” Back in April 2012 both agencies continue[d] to redraw their best guess, although as the Ohio Geological Survey’s Chief Larry Wickstrom cautioned, “It doesn’t mean anywhere you go in the core area that you will have a really successful well.”

What we found is that the OGS projections have not held up to their substantial claims. And here is why…

Background

The Geological Survey eventually parsed the Utica play into pieces:

  • a large oil component encompassing much of the central part of the state,
  • natural gas liquids from Ashtabula on the Pennsylvania border southwest to Muskingum, Guernsey, and Noble Counties, and
  • natural gas counties, primarily, along the Ohio River from Columbiana on the Pennsylvania-West Virginia border to Washington County in the Southeast quarter of the state.
Columbus Dispatch Utica Shale "play" map

Columbus Dispatch Utica Shale “play” map

Fast forward to the first quarter of 2015 and we have a very healthy dataset to begin to model and validate/refute these projections. Back in 2009 Wickstrom & Co. only had 53 Utica Shale laterals, while today Ohio is host to 962 laterals from which to draw our conclusions. The preponderance of producing wells are operated by Chesapeake (463), Gulfport (118), Antero Resources (62), Eclipse Resources (41), American Energy Utica (36), Consol (35), and R.E. Gas Development (34), with an additional 13 LLCs and 10 publicly traded companies accounting for the remaining 173 producing laterals. A further difference between the following analysis and the OGS one is that we looked at total production and how much oil and gas was produced on a per-day basis.

Analysis

Using an interpolative geostatistical technique known as Empirical Bayesian Kriging and the 962 lateral dataset, we modeled total and per day oil, gas, and brine production for Ohio’s Utica Shale between 2011 and Q1-2015 to determine if the aforementioned map redrawing holds up, is out-of-date, and/or is overly optimistic as is generally the case with initial O&G “moving target” projections.

Days of Activity & Brine Production

The most active regions of the Utica Shale for well pad activity has been much of Muskingum County and its border with Guernsey and Noble counties; laterals are in production every 1 in 2.1-3.4 days. Conversely, the least active wells have been drilled along the Harrison-Belmont border and the intersection between Harrison, Tuscarawas, and Guernsey counties.

Brine is a form of liquid drilling waste characterized by high salt loads and total dissolved solids. The laterals that have produced the most brine to date are located in a large section of Monroe County and at the intersection of Belmont, Monroe, and Noble counties, with total brine production amounting to 23,292 barrels or 734,000-978,000 gallons (Fig. 1).

Total Ohio Utica Shale Production Days 2011 to Q1-2015

Total Ohio Utica Shale Oil Production 2011 to Q1-2015

Total Ohio Utica Shale Gas Production 2011 to Q1-2015

Total Ohio Utica Shale Brine Production 2011 to Q1-2015

Figure 1. Total Ohio Utica Shale Oil, Gas, and Brine Production 2011 to Q1-2015

This area is also one of the top three regions of the state with respect to Class II Injection volumes; the other two high-brine production regions are Morrow and Portage counties to the west and southwest, respectively (Fig. 2).

Layout & Volume (2010 to Q1-2015, Gallons) of Ohio’s Active Class II Injection Wells

Figure 2. Layout & Volume (2010 to Q1-2015, Gallons) of Ohio’s Active Class II Injection Wells

However, on a per-day basis we are seeing quite a few inefficient laterals across the state, including Devon Energy’s Eichelberger and Richman Farms laterals in Ashland and Medina counties. Ashland and Medina are producing 230-270 barrels (8,453-9,923 gallons) of brine per day. In Carroll County, one of Chesapeake’s Trushell laterals tops the list for brine production at 1,843 barrels (67,730 gallons) per day. One of Gulfport’s Bolton laterals in Belmont County and EdgeMarc’s Merlin 10PPH in Washington County are generating 1,100-1,200 barrels (40,425-44,100 gallons) of brine per day.

Oil & Gas Production

Since the last time we modeled production the oil hotspots have shrunk. They have also become more discrete and migrated southward – all of this in contrast to the model proposed by the OGS in 2012. The areas of greatest productivity (i.e., >26,000 barrels of oil) are not the central part of the state, but rather Tuscarawas, Harrison, Guernsey, and Noble counties (Fig. 1). The intersection of Harrison, Tuscarawas, and Guernsey counties is where oil productivity per-day is highest – in the range of 300-630+ barrels (Fig. 3). The areas that the OGS proposed had the highest oil potential have produced <600 barrels total or <12 barrels per day.

Per Day Ohio Utica Shale Oil Production 2011 to Q1-2015

Per Day Ohio Utica Shale Gas Production 2011 to Q1-2015

Per Day Ohio Utica Shale Brine Production 2011 to Q1-2015

Figure 3. Per-Day Ohio Utica Shale Oil, Gas, and Brine Production 2011 to Q1-2015

The OGS natural gas region has proven to be another area of extremely low oil productivity.

Natural gas productivity in the Utica Shale is far less extensive than the OGS projected back in 2012. High gas production is restricted to discreet areas of Belmont and Monroe counties to the tune of 947,000-4.1 million Mcf to date – or 5,300-18,100 Mcf per day. While the OGS projected natural gas and natural gas liquid potential all the way from Medina to Fairfield and Perry counties, we found a precipitous drop-off in productivity in these counties to <1,028 Mcf per day (<155,000 Mcf total from 2011 to Q1-2015) or a mere 6-11% of the Belmont-Monroe sweet spot.

Conclusion: A Shrinking Utica Shale Play

Simply put, the OGS 2012 estimates:

  • Have not held up,
  • Are behind the times and unreliable with respect to citizens looking to guestimate potential royalties,
  • Were far too simplistic,
  • Mapped high-yield sections of the “play” as continuous when in fact productive zones are small and discrete,
  • Did not differentiate between per day and total productivity, and
  • Did not address brine waste.

These issues should be addressed by the OGS and ODNR on a more transparent and frequent basis. Combine this analysis with the disappointing returns Ohio’s 17 publicly traded drilling firms are delivering and one might conclude that the structural Utica Shale bubble is about to burst. However, we know that when all else fails these same firms can just “lever up,” like their Rocky Mountain brethren, to maintain or marginally increase production and shareholder happiness. Will these Red Queens of the O&G industry stay ahead of the Big Bank and Private Equity hounds on their trail?

Injection wells in OH for disposing of oil and gas wastewater

Threats to Ohio’s Water Security

Ohio waterways face headwinds in the form of hydraulic fracturing water demand and waste disposal

By Ted Auch, PhD – Great Lakes Program Coordinator, and Elliott Kurtz, GIS Intern and University of Michigan Graduate Student

In just 44 of its 88 counties, Ohio houses 1,134 wells – including those producing oil and natural gas and Class II injection wells into which the industry’s waste is disposed. Last month we wrote about Ohio’s disturbing fracking waste disposal trend and the disproportionate influence of neighboring states. (Prior to that Ariel Conn at Virginia Tech outlined the relationship between Class II Injection Wells and induced seismicity on FracTracker.) This time around, we are digging deeper into how water demand is related to Class II disposal trends.

Ohio’s Utica oil and gas wells are using 7 million gallons of freshwater – or 2.4-2.8 million more than the average well cited by the US EPA.1 Below we explore the inter-county differences of the water used in these oil and gas wells, and how demand compares to residential water demand and wastewater production.

Please refer to Table 1 at the end of this article regarding the following findings.

Utica Shale Freshwater Demand

Data indicate that there may be serious threats to Ohio’s water security on the horizon due to the oil and gas industry.

OH Water Use

The counties of Guernsey and Monroe are next up with water demand and waste water generation at rates of 14.6 and 10.3 million gallons per year. However, the 11.4 million gallons of freshwater demand and fracking waste produced by these two counties 114 Utica and Class II wells still accounts for roughly 81% of residential water demand.

The wells within the six-county region including Meigs, Washington, Athens, and Belmont along the Ohio River use 73 million gallons of water and generate 51 million gallons of wastewater per year, while the hydraulic fracturing industry’s water-use footprint ranges between 48 and 17% of residential demand in Coshocton and Athens, respectively. Class II Injection well disposal accounts for a lion’s share of this footprint in all but Belmont County, with injection well activities equaling 77 to 100% of the industry’s water footprint (see Figure 1 for county locations and water stress).

Primary Southeast Ohio Counties experiencing Utica Shale and Class II water stress

Figure 1. Primary Southeast Ohio counties experiencing Utica Shale and Class II water stress

The next eight-county cohort is spread across the state from the border of Pennsylvania and the Ohio River to interior Appalachia and Central Ohio. Residential water demand there equals 428 million gallons, while the eight county’s 92 Utica and 90 Class II wells have accounted for 15 million gallons of water demand and disposal. Again the injection well component of the industry accounts for 5.8% of the their 7.7% footprint relative to residential demand. The range is nearly 10% in Vinton and 5.3% in Jefferson County.

The next cohort includes twelve counties that essentially surround Ohio’s Utica Shale region from Stark and Mahoning in the Northeast to Pickaway, Hocking, and Gallia along the southwestern perimeter of “the play.” These counties’ residents consume 405 million gallons of water and generate 329 million gallons of wastewater annually. Meanwhile the industry’s 69 Class II wells account for 53 million gallons – a 2.8% water footprint.

Finally, the 11 counties with the smallest Utica/Class II footprint are not suprisingly located along Lake Erie, as well as the Michigan and Indiana border, with water demand and wastewater production equalling nearly 117 billion gallons per year. Meanwhile the region’s 3 Utica and 18 Class II wells have utilized 59 million gallons. These figures equate to a water footprint of roughly 00.15%, more aligned with the 1% of total annual water use and consumption for the hydraulic fracturing industry cited by the US EPA this past June.

Future Concerns and Projections

Industry will see their share of the region’s hydrology increase in the coming months and years given that injection well volumes and Utica Shale demand is increasing by 1.04 million gallons and 405-410 million gallons per quarter per well, respectively. The number of people living in these 42 counties is declining by 0.6% per year, however, 1.4% in the 10 counties that have seen the highest percentage of their water resources allocated to Utica and Class II operations. Additionally, hydraulic fracturing permitting is increasing by 14% each year.2

Table 1. Residential, Utica Shale, and Class II Injection well water footprint across forty-two Ohio Counties (Note: All volumes are in millions of gallons)

Table1

Footnotes & Resources

1. In their recent “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources” (Note: Ohio’s hydraulically fractured wells are using 6% reused water vs. the 18% cited by the EPA).

2. Auch, W E, McClaugherty, C, Gallemore, C, Berghoff, D, Genshock, E, Kurtz, E, & Jurjus, R. (2015). Ramification of current and future production, resource utilization, and land-use change in the Ohio Utica Shale Basin. Paper presented at the National Environmental Monitoring Conference, Chicago, IL.

FracTracker map of the density of wells by U.S. state as of 2015

1.7 Million Wells in the U.S. – A 2015 Update


 

Updated National Well Data

By Matt Kelso, Manager of Data & Technology

In February 2014, the FracTracker Alliance produced our first version of a national well data file and map, showing over 1.1 million active oil and gas wells in the United States. We have now updated that data, with the total of wells up to 1,666,715 active wells accounted for.

Density by state of active oil and gas wells in the United States. Click here to access the legend, details, and full map controls. Zoom in to see summaries by county, and zoom in further to see individual well data. Texas contains state and county totals only, and North Carolina is not included in this map. 

While 1.7 million wells is a substantial increase over last year’s total of 1.1 million, it is mostly attributable to differences in how we counted wells this time around, and should not be interpreted as a huge increase in activity over the past 15 months or so. Last year, we attempted to capture those wells that seemed to be producing oil and gas, or about ready to produce. This year, we took a more inclusive definition. Primarily, the additional half-million wells can be accounted for by including wells listed as dry holes, and the inclusion of more types of injection wells. Basically anything with an API number that was not described as permanently plugged was included this time around.

Data for North Carolina are not included, because they did not respond to three email inquiries about their oil and gas data. However, in last year’s national map aggregation, we were told that there were only two active wells in the state. Similarly, we do not have individual well data for Texas, and we use a published list of well counts by county in its place. Last year, we assumed that because there was a charge for the dataset, we would be unable to republish well data. In discussions with the Railroad Commission, we have learned that the data can in fact be republished. However, technical difficulties with their datasets persist, and data that we have purchased lacked location values, despite metadata suggesting that it would be included. So in short, we still don’t have Texas well data, even though it is technically available.

Wells by Type and Status

Each state is responsible for what their oil and gas data looks like, so a simple analysis of something as ostensibly straightforward as what type of well has been drilled can be surprisingly complicated when looking across state lines. Additionally, some states combine the well type and well status into a single data field, making comparisons even more opaque.

Top 10 of 371 published well types for wells in the United States.

Top 10 of 371 published well types for wells in the United States.

Among all of the oil producing states, there are 371 different published well types. This data is “raw,” meaning that no effort has been made to combine similar entries, so “gas, oil” is counted separately from “GAS OIL,” and “Bad Data” has not been combined with “N/A,” either. Conforming data from different sources is an exercise that gets out of hand rather quickly, and utility over using the original published data is questionable, as well. We share this information, primarily to demonstrate the messy state of the data. Many states combine their well type and well status data into a single column, while others keep them separate. Unfortunately, the most frequent well type was blank, either because states did not publish well types, or they did not publish them for all of their wells.

There are no national standards for publishing oil and gas data – a serious barrier to data transparency and the most important takeaway from this exercise… 

Wells by Location

Active oil and gas wells in 2015 by state. Except for Texas, all data were aggregated published well coordinates.

Active oil and gas wells in 2015 by state. Except for Texas, all data were aggregated published well coordinates.

There are oil and gas wells in 35 of the 50 states (70%) in the United States, and 1,673 out of 3,144 (53%) of all county and county equivalent areas. The number of wells per state ranges from 57 in Maryland to 291,996 in Texas. There are 135 counties with a single well, while the highest count is in Kern County, California, host to 77,497 active wells.

With the exception of Texas, where the data are based on published lists of well county by county, the state and county well counts were determined by the location of the well coordinates. Because of this, any errors in the original well’s location data could lead to mistakes in the state and county summary files. Any wells that are offshore are not included, either. Altogether, there are about 6,000 wells (0.4%) are missing from the state and county files.

Wells by Operator

There are a staggering number of oil and gas operators in the United States. In a recent project with the National Resources Defense Council, we looked at violations across the few states that publish such data, and only for the 68 operators that were identified previously as having the largest lease acreage nationwide. Even for this task, we had to follow a spreadsheet of which companies were subsidiaries of others, and sometimes the inclusion of an entity like “Williams” on the list came down to a judgement call as to whether we had the correct company or not.

No such effort was undertaken for this analysis. So in Pennsylvania, wells drilled by the operator Exco Resources PA, Inc. are not included with those drilled by Exco Resources PA, Llc., even though they are presumably the same entity. It just isn’t feasible to systematically go through thousands of operators to determine which operators are owned by whom, so we left the data as is. Results, therefore, should be taken with a brine truck’s worth of salt.

Top 10 wells by operator in the US, excluding Texas. Unknown operators are highlighted in red.

Top 10 wells by operator in the US, excluding Texas. Unknown operators are highlighted in red.

Texas does publish wells by operator, but as with so much of their data, it’s just not worth the effort that it takes to process it. First, they process it into thirteen different files, then publish it in PDF format, requiring special software to convert the data to spreadsheet format. Suffice to say, there are thousands of operators of active oil and gas wells in the Lone Star State.

Not counting Texas, there are 39,693 different operators listed in the United States. However, many of those listed are some version of “we don’t know whose well this is.” Sorting the operators by the number of wells that they are listed as having, we see four of the top ten operators are in fact unknown, including the top three positions.

Summary

The state of oil and gas data in the United States is clearly in shambles. As long as there are no national standards for data transparency, we can expect this trend to continue. The data that we looked for in this file is what we consider to be bare bones: well name, well type, well status, slant (directional, vertical, or horizontal), operator, and location. In none of these categories can we say that we have a satisfactory sense of what is going on nationally.

Click on the above button to download the three sets of data we used to make the dynamic map (once you are zoomed in to a state level). The full dataset was broken into three parts due to the large file sizes.

Proposed Atlantic Coast Pipeline route

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

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.

Northeast Ohio Class II injection wells taken via FracTracker's mobile app, May 2015

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

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

Ohio Class II Injection Well trends In- and Out-Of-State, Cumulatively, and on Per Well basis (n = 248).

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

Ohio Class II Injection Well disposal as a function of freshwater demand by the shale industry in Ohio between Q3-2010 and Q1-2015.

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.

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 stabilizeat 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.

US Energy Leverage

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

Ohio Utica Shale Publicly Traded Companies Return

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.

US Economic Performance and Energ Industry Metrics

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.

Earthquake damage photo from Wikipedia

The Science Behind OK’s Man-made Earthquakes, Part 2

By Ariel Conn, Seismologist and Science Writer with the Virginia Tech Department of Geosciences

Oklahoma has made news recently because its earthquake story is so dramatic. The state that once averaged one to two magnitude 3 earthquakes per year now averages one to two per day. This same state, which never used to be seismically active, is now more seismically active than California. In terms of understanding the connection between wastewater disposal wells and earthquakes, though, it may be more helpful to look at other states first. Let us explore this issue further in Man-made Earthquakes, Part 2.

How other states handle induced seismicity

In 2010 and 2011, Arkansas experienced a swarm of earthquakes near the town of Greenbrier that culminated in a magnitude 4.7 earthquake. Officials in Arkansas ordered a moratorium on all disposal wells in the area, and earthquake activity quickly subsided.

In late 2011, Ohio experienced small earthquakes near a disposal well that culminated in a magnitude 4 earthquake that shook and startled residents. The disposal well was shut down, and the earthquakes subsided. Subsequent research into the earthquake confirmed that the disposal well in question had, in fact, triggered the earthquake. A swarm of earthquakes last year in Ohio shut down another well, and again, after the wastewater injection ceased, the earthquakes subsided.

Similarly in Kansas, after two earthquakes of magnitudes 4.7 and 4.9 shook the state in late 2014, officials ordered wells in two southern counties to decrease the volume of water injected into the ground. Again, earthquake activity quickly subsided.

A seismologist’s toolbox

A favorite saying among scientists is that correlation does not equal causation, and it’s easy to apply that phrase to the correlations seen in Ohio, Arkansas, and Kansas. Yet scientists remain certain that wastewater disposal wells can trigger earthquakes. So what are some of the techniques they use to come to these conclusions? At the Virginia Seismological Observatory (VTSO), two of the tools we used to determine a connection were cross-correlation programs and beach ball diagrams.

Cross-correlation

The VTSO research, which was funded by the National Energy Technology Laboratory, looked specifically at earthquake swarms that have popped up a couple times near a wastewater disposal well in West Virginia. We used a cross-correlation program to distinguish earthquakes that were likely triggered by the nearby well from events that might be natural or related to mining activity.

A seismic station records all of the vibrations that occur around it as squiggly lines. When an earthquake wave passes through, its squiggly lines take on a specific shape, known as a waveform, that seismologists can easily recognize (as an example, the VTSO logo in Fig. 1 was designed using a waveform from one of West Virginia’s potentially induced earthquakes.)

Virginia Tech Seismological Observatory logo

Figure 1. Virginia Tech Seismological Observatory logo w/waveform

For naturally occurring earthquakes, the waveforms will have some variation in shape because they come from different faults in different locations. When an injection well triggers earthquakes, it typically activates faults that are within close proximity, resulting in greater similarities between waveforms. A cross-correlation program is simply a computer program that can run through days, weeks, or months of data from a seismometer to find those similar waveforms. When matching waveforms indicate that earthquake activity is occurring near an injection well – and especially in regions that don’t have a history of seismic activity – we can conclude the earthquakes are triggered by human activity.

Beach Balls

Any earthquake fault, whether it’s active or ancient, is stressed to its breaking point. The difference is that, in places like California that are active, the natural forces against the faults often change, which triggers earthquakes. Ancient faults are still highly stressed, but the ground around them has become more stabilized. However at any point in time, if an unexpected force comes along, it can still trigger an earthquake.

Beach ball diagrams of 16 of the largest earthquakes in Oklahoma in 2014, all showing similar focal mechanisms, which is indicative of induced seismicity.

Figure 2. Beach ball diagrams of 16 of the largest earthquakes in Oklahoma in 2014, all showing similar focal mechanisms, which is indicative of induced seismicity.

Earthquake faults don’t all point in the same direction, which means different forces will affect faults differently. Depending on their orientation, some faults might shift in a north-south direction, some might shift in an east-west direction, some might be tilted at an angle, while others are more upright, etc. Seismologists use focal mechanisms to describe the movement of a fault during an earthquake, and these focal mechanisms are depicted by beach ball diagrams (Figure 2). The beach ball diagrams look, literally, like black and white beach balls. Different quadrants of the “beach ball” will be more dominant depending on what type of fault it was and how it moved (See USGS definition of Focal Mechanisms and the “beach ball” symbol).

When an earthquake is triggered by an injection well, it means that the fluid injected into the ground is essentially the straw that broke the camel’s back. Earthquake theory predicts that the forces from an injection well won’t trigger all faults, but only those that are oriented just right. Since we expect that only certain faults with just the right orientation will get triggered, that means we also expect the earthquakes to have similar focal mechanisms, and thus, similar beach ball diagrams. And that’s exactly what we see in Oklahoma.

Cross-correlation programs and beach ball diagrams are only two tools we used at the VTSO to confirm which earthquakes were induced, but seismologists have many means of determining if an earthquake is induced or natural.

Limitations of science?

With so much strong scientific evidence, why can people in industry still claim there isn’t enough science to officially confirm that an injection well triggered an earthquake? In some cases, these claims are simply wrong. In other cases, though, especially in Oklahoma, the problem is that no one was monitoring the disposal wells and the earthquakes from the start. Well operators were not required to publicly track the volumes of water they injected into wells until recently, and no one monitored for nearby earthquake activity. The big problem is not a lack of scientific evidence, but a lack of data from industry to perform sufficient research. Scientists need information about the history, volume, and pressure of fluid injection at a disposal well if they’re to confirm whether or not earthquakes are triggered by it. Often, that information is proprietary and not publically available, or it may not exist at all.

At this point though, two other factors make direct correlations between injection wells and earthquakes in Oklahoma even more difficult:

  1. So many wells have injected signficiant volumes of water in close enough proximity that pointing a finger at a specific well is more challenging.
  2. A large number of wells have injected water for so many years, that the earthquakes are migrating farther and farther from their original source. Again, pointing a finger at a specific well gets harder with time.

What we know

We know what induced seismicity is and why it occurs. We know that if a wastewater injection well disposes of large volumes of fluids deep underground in a region that has existing faults, it will likely trigger earthquakes. We know that if a region previously had few earthquakes, and then sees an uptick in earthquakes after wastewater injection begins, the earthquakes are likely induced. We know that if we want to understand the situation better, we need more seismic stations near disposal wells so we can more accurately monitor the area for seismicity both before and after the well becomes active.

What don’t we know?

We don’t know how big an induced earthquake can get. Oklahoma’s largest earthquake, which was also the largest induced earthquake ever recorded in the United States, was a magnitude 5.6. That’s big enough to cause millions of dollars of damage. Worldwide, the largest earthquake suspected to be induced occurred near the Koyna Dam in India, where a magnitude 6.3 earthquake killed nearly 200 people in 1967.

Can an earthquake that large occur in the central U.S.? The best guess right now: yes.

Seismologists suspect that an induced earthquake could get as big as the size of the fault. If a fault is big enough to trigger a magnitude 7 or 8 earthquake, then that is potentially how large an induced earthquake could be. In the early 1800s, three earthquakes between magnitudes 7 and 8 struck along the New Madrid Fault Zone near St. Louis, Missouri. Toward the end of the 1800s, a magnitude 7 earthquake shook Charleston, South Carolina. In those two areas, injection wells could potentially trigger very large earthquakes.

We have no historic record of earthquakes that large in Oklahoma, so right now, the best guess is that the largest an earthquake could get there would be between a magnitude 6 and 6.5. That would be big enough to cause significant damage, injuries, and possibly death.

The solution

What’s the take-home message from all of this?

  • First, the science exists to back up the conclusion that wastewater injection wells trigger earthquakes.
  • Second, if we want to get a better feel for which wells are more problematic, we need funding, seismic stations, and staff to monitor seismic activity around all high-volume injection wells, along with a history of injection times, volumes and pressures at the well.
  • Third, this is a problem that, if left unchecked, has the potential to result in major damage, incredible expense, and possibly loss of life.

Induced earthquakes are a real phenomenon. While more research is necessary to help us better understand the intricacies of these events and to identify correlations in complex cases, the general cause of the earthquake swarms in Oklahoma and other states is not a mystery. They are man-made problems, backed up by decades of scientific research. They have the potential to create significant damage, but we have the wherewithal to prevent them. We don’t need to go to the extreme of shutting down all wells, but rather, we just need to be able to monitor the wells and ensure that they don’t trigger earthquakes. If a well does trigger an earthquake, then at that point, the well operators can either experiment with significantly decreasing the volume of water that’s injected, or the well can be shut down completely. Understanding and acknowledging the connection between injection wells and earthquakes will make induced seismicity a much easier problem to solve.

Organic farms near drilling activity in the U.S. and Ohio

The US Food, Energy, Water Interface Examined
By Ted Auch, Great Lakes Program Coordinator

With the emergence of concerns about the Food, Energy, Water (FEW) intersection as it relates to oil and gas (O&G) expansion, we thought it was time to dig into the numbers and ask some very simple questions about organic farms near drilling. Below is an analysis of the location and quantity of organic farms with heavy drilling activity in Ohio and nationally. Organic farms rely heavily on the inherent/historical quality of their soils and water, so we wanted to understand whether and how these businesses closest to O&G drilling are being affected.

Key Findings:

  1. Currently 11% of US organic farms are within US O&G Regions of Concern (ROC). However, this number has the potential to balloon to 15-31% if our respective shale plays and basins are exploitated, either partially or in full,
  2. 68-74% of these farms produce crops in states like California, Ohio, Michigan, Pennsylvania, and Texas,
  3. Issues such as soil quality, watershed resilience, and water rights are likely to worsen over time with additional drilling.

Methods

To answer this broad question, we divided organic farms in the United States into three categories, depending on whether they were within the:

  1. Core (O&G Wells < 1 mile from each other),
  2. Intermediate (1-3 miles between O&G Wells), or
  3. Periphery (3-5 miles between O&G Wells) of current activity or Regions of Concern (ROC).1

Additionally, from our experience looking at O&G water withdrawal stresses within the largely agrarian Muskingum River Watershed in OH we decided to add to the ROCs. To this end we worked to identify which sub-watersheds (5-10 miles between O&G Wells) and watersheds (10-20 miles between O&G Wells) might be affected by O&G development.

Together, distance from wells and density of development within particular watersheds make up the 5 Regions of Concern (ROCs) (Table 1).

Table 1. Five ROCs under this investigation and what they look like from a mapping perspective

Label Distance Between Wells Mapping Visual
Core < 1 mi  Table1_1
Intermediate 1-3 mi
Periphery 3-5 mi  Table1_2
Sub-Watershed 5-10 mi  Table1_3
Watershed 10-20 mi

We generated a dataset of 19,515 US organic farms from the USDA National Organic Program (NOP) by using the Geocode Address function in ArcGIS 10.2, which resulted in a 100% match for all farms.2

We also extracted soil order polygons within the above 5 ROCs using the NRCS’ STATSGO Derived Soil Order3 dataset made available to us by Sharon Whitmoyer at the USDA-NRCS-NSSC-Geospatial Research Unit and West Virginia University. For those not familiar with soil classification, soil orders are analogous to the kingdom level within the hierarchy of biological classification. Although, in the case of soils there are 12 soil orders compared to the 6 kingdoms of biology.

The National Organic Farms Map

This map shows organic farms across the U.S. that are located within the aforementioned ROCs. Data include certifying agent, whether or not the farm produces livestock, crops, or wild crops along with contact information, farm name, physical address, and specific products produced. View map fullscreen

National Numbers

Figure 1. Total and incremental number of US organic farms in the 5 O&G ROCs.

Figure 1. Total and incremental number of US organic farms in the 5 O&G ROCs.

Nationally, the number of organic farms near drilling activity within specific regions of concern are as follows (as shown in Figure 1):

  • Watershed O&G ROC – 2,140 organic farms (11% of North American organic farms)
  • Sub-Watershed O&G ROC – 1,319
  • Periphery O&G ROC – 752
  • Intermediate O&G ROC – 455
  • Core O&G ROC – 183

Ohio’s Organic Farms Near Drilling

The following key statistics stood out among the analyses for OH’s 703 (3.6% of US total) organic farms. Figures 2 & 3 show how many farms are near drilling activity and injection (disposal) wells in OH. Click the images to view fullsize graphics:

 Figure 2. OH Organic Farms Proximity to Drilling Activity

Figure 2. OH Organic Farms Proximity to Drilling Activity

 Figure 3. OH Organic Farms Proximity to Injection (Disposal) Wells

Figure 3. OH Organic Farms Proximity to Injection Wells

Potential Trends

If oil and gas extraction continues along the same path that we have seen to-date, it is reasonable to expect that we could see an increase in the number of organic farms near this industrial activity. A few figures that we have worked up are shown below:

  • 2,912 Organic Farms in the US Shale Plays (15% of total organic farms)
    • 2,044 Crop Producers, 918 Livestock operations, 41 Wild Crops
  • 6,179 in US Shale Basins (31%)
    • California, 1,334; Colorado 297; Illinois 286; Indiana 334; Iowa 239; Michigan 504; Missouri 118; New York 834; Ohio 510; Pennsylvania 449; Texas 394; Wisconsin 271
    • 4,100 Crop Producers, 1,386 Livestock operations, 61 Wild Crops
  • 1,346 in US Tight Gas Plays (7%)
    • 948 Crop Producers, 434 Livestock operations, 22 Wild Crops
  • 2,754 in US Tight Gas Basins (14%)
    • 2,010 Crop Producers, 875 Livestock operations, 48 Wild Crops

Soils at Risk Due To Shale Activity

Another way to look at these five ROCs when asking how shale gas build-out will interact with and/or influence organic farming is to look at the soils beneath these ROCs. What types of activity do they currently support? The productivity of organic farms, as well as their ability to be labeled “organic,” are reliant upon the health of their soils even more so than conventional farms. Organic farms cannot rely on synthetic fertilizers, pesticides, herbicides, or related soil amendments to increase productivity. Soil manipulation is prohibitive from a cost and options perspective. Thus, knowing what types of soils the shale industry has used and is moving towards is critical to understanding how the FEW dynamic will play out in the long-term. There is no more important variable to the organic farmer sans freshwater than soil quality and diversity.

The soils of most concern under this analysis are the Prairie-Forest Transition soils of the Great Lakes and Plains, commonly referred to as Alfisols, and the Carbon-Rich Grasslands or Mollisols (Figure 4 & 5). The latter is proposed by some as a soil order worthy of protection given our historical reliance on its exceptional soil fertility and support for the once ubiquitous Tall Grass Prairies. Both soils face a second potential wave of O&G development, with a combined 18,660 square miles having come under the influence of the O&G industry within the Core ROC and an additional 58-108,000 square miles in the Intermediate and Periphery ROCs. If the watersheds within these soils and O&G co-habitat were to come under development, total potential Alfisol and Mollisol alteration could reach 273,200 square miles. This collection of soils currently accounts for 43-47% of the Core and Intermediate O&G ROCs and would “stabilize” at 50-51% of O&G development if the watersheds they reside in were to see significant O&G exploration.

Figure 4. Prairie-Forest Transition soil - Courtesy EarthOnlineMedia

Figure 4. Prairie-Forest Transition soil – Courtesy EarthOnlineMedia

Figure 5. Carbon-Rich Grasslands soil - Courtesy USDA’s NRCS

Figure 5. Carbon-Rich Grasslands soil – Courtesy USDA’s NRCS

Figure6_BakkenSoils

Figure 6. The five soil orders within the Bakken Shale formation in Montana and North Dakota.

These same soils sit beneath or have been cleared for much of our wheat, corn, and soybean fields – not to mention much of the Bakken Shale exploration to date (Figure 6, above)

The three forest soil orders (i.e., Spodosol, Ultisol, and Andisol shown in Figures 7-9) account for 9,680-20,529 square miles of the Core and Intermediate O&G ROCs, which is 22 and 17% of those ROC’s, respectively. If we assume future exploration into the Periphery and Watershed ROC we see that forest soils will become less of a concern, dropping to 14-15% of these outlying potential plays, with the same being true for the two Miscellaneous soil types. The latter will decline from 28% to 25% of potential O&G ROCs.

Figure 7. Ultisol, - Courtesy of the University of Georgia

Figure 7. Ultisol – Courtesy of the University of Georgia

Figure 8. Spodosol - Courtesy of the Hubbard Brook Experimental Forest

Figure 8. Spodosol – Courtesy of the Hubbard Brook Experimental Forest

Figure 9. Andisol – Courtesy of USDA’s NRCS

Figure 9. Andisol – Courtesy of USDA’s NRCS

Figure 10. Histosol, - Courtesy of Michigan State University

Figure 10. Histosol, – Courtesy of Michigan State University

If peripheral exploration were to be realized, another soil type will have to fill this gap. Our analysis demonstrates this gap would be filled by either Organic Wetlands or Histosols, which currently constitute <200 and 529 square miles of the Core and Intermediate ROCs, respectively (Figure 10). For so many reasons wetland soils are crucial to the maintenance and enhancement of ecosystem services, wildlife migration, agricultural productivity, and the capture and storage of greenhouse gases. However, if O&G exploration does expand to the Periphery ROC and beyond we would see reliance on wetland soils increase nearly 15 fold (i.e., 16% of Lower 48 wetland soil acreage).

The quality of these wetlands is certainly up for debate. However, what is fact is that these wetlands would be altered beyond even the best reclamation techniques. We know from the reclamation literature that the myriad difficulties associated with reassembling prior plant wetland communities. Finally, it is worth noting that a similar uptick in O&G reliance on arid (i.e., extremely unproductive but unstable) soils is may occur with future industry expansion. These soils will, as a percent of all ROCs, increase from 7% to 9% (i.e. 10-11% of all lower 48 arid soil acreage).

What do these changes mean for the agriculture industry in OH?

If these future O&G exploration scenarios were to play out, we estimate 20-22% of Southern Acidic Forest, Prairie-Forest Transition, Miscellaneous Recent Origin, and Carbon-Rich Grassland soils will have been effected or dramatically altered due to O&G land-use/land-cover (LULC) change nationally (Figure 11). This decline in productivity is likely familiar to communities currently grappling with how to manage a dramatically different landscape post-shale introduction in counties like Bradford in PA and Carroll in OH. The effects that such alteration has had and will have on landscape productivity, wildlife habitat fragmentation, and hydrological cycles is unknown but worthy of significant inquiry.

These questions are important enough to have received a session at Ohio Ecological Food and Farming Association’s (OEFFA) 2015 conference in Granville last month and were deemed worthy of a significant grant to The FracTracker Alliance from the Hoover Foundation aimed at quantifying the total LULC footprint of the shale gas industry across three agrarian OH counties. Early results indicate that every acre of well-pad requires 5.3 acres of gathering lines along with nearly 14 miles of buried pipelines – most of which are beneath high quality wetlands. This study speaks to the potential for 20-30% of the state’s Core Utica Region – or 10-15% of the Expanded Utica Region4 – being altered by shale gas activity.

Figure 11. National distribution of soil types within the 5 ROCs under consideration: 1) Forest Soils, 2) Prairie/Agriculture soils, 3) Organic Wetlands, 4) Miscellaneous soils, 5) Dry Soils.

Figure 11. National distribution of soil types within the 5 ROCs under consideration: 1) Forest Soils, 2) Prairie/Agriculture soils, 3) Organic Wetlands, 4) Miscellaneous soils, 5) Dry Soils.

Figure 11 Description:

  • Forest Soils – Northern and Southern Acidic Forests, Volcanic Forests,
  • Prairie/Agriculture – Prairie-Forest Transition and Carbon-Rich Grasslands,
  • Organic Wetlands
  • Miscellaneous – Recent and Intermediate Origins,
  • Dry Soils – Dry Calcium Carbonite and Clay-Rich Shrink/Swell Clays

Conclusion

The current and potential interaction(s) between the O&G and organic farming industries is nontrivial. Currently 11% of US organic farms are within what we are calling O&G ROCs. However, this number has the potential to balloon to 15-31% if our respective shale plays and basins are exploited, either partially or in full. Most of these (68-74%) are crop producers in states like California, Ohio, Michigan, Pennsylvania, and Texas.

Issues such as soil quality – specifically Prairie-Forest, Carbon Rich Grasslands, and Wetland soils – watershed resilience, and water rights are likely to become of more acute regional concern as the FEW interactions become increasingly coupled. How and when this will play out is anyone’s guess, but its play out is indisputable. Agriculture is going to face many staunch challenges in the coming years, as the National Science Foundation5 wrote:

The security of the global food supply is under ever-increasing stress due to rises in both human population and standards of living world-wide. By the end of this century, the world’s population is expected to exceed 10 billion, about 30% higher than today. Further, as standards of living increase globally, the demand for meat is increasing, which places more demand on agricultural resources than production of vegetables or grains. Growing energy use, which is connected to water availability and climate change, places additional stress on agriculture. It is clear that scientific and technological breakthroughs are needed to produce food more efficiently from “farm to fork” to meet the challenge of ensuring a secure, affordable food supply.

References and Endnotes

  1. The above regions were determined by generalizing a compilation of Oil & Gas wells generated by FracTracker’s Matt Kelso last March: Over 1.1 Million Active Oil and Gas Wells in the US.
  2. An additional 69 organic farms were geo-referenced in Canada and 7,524 across the globe for a similar global analysis to come.
  3. Description of STATSGO2 Database and associated metadata here.
  4. Core Utica Regions include any county that has ≥10 Utica permits to date and Expanded Utica Region includes any county that has 1 or more Utica permits.
  5. By the Mathematical and Physical Sciences Advisory Committee – Subcommittee on Food Systems in “Food, Energy and Water: Transformative Research Opportunities in the Mathematical and Physical Sciences”

11% of organic farms near drilling in US, potentially 31% in future

By Juliana Henao & Samantha Malone, FracTracker Alliance

Currently, 11% (2,140 of 19,515 total) of all U.S. organic farms share a watershed with active O&G drilling. Additionally, this percentage could rise up to 31% if unconventional O&G drilling continues to grow.

Organic farms represent something pure for citizens around the world. They produce food that gives people more certainty about consuming chemical-free nutrients in a culture that is so accustomed to using pesticides, fertilizers, and herbicides in order to keep up with booming demand. Among their many benefits, organic farms produce food that is high in nutritional value, use less water, replenish soil fertility, and do not use pesticides or other toxic chemicals that may get into our food supply. To maintain their integrity, however, organic farms have an array of regulations and an extensive accreditation process.

What does it mean to be an organic farm?

The accreditation process for an organic farm is quite extensive. USDA organic regulations include:

  • The producer must manage plant and animal materials to maintain or improve soil organic matter content in a manner that does not contribute to contamination of crops, soil, or water by plant nutrients, pathogenic organisms, heavy metals, or residues of prohibited substance.
  • No prohibited substances can be applied to the farm for a period of 3 years immediately preceding harvest of a crop
  • The farm must have distinct, defined boundaries and buffer zones, such as runoff diversions to prevent the unintended application of a prohibited substance to the crop or contact with a prohibited substance applied by adjoining land that is not under organic management.

There are additional regulations that pertain to crop pest, weed, and disease standards; soil fertility and crop nutrient management standards; seeds and planting stock practice standards; and wild-crop harvesting practice standards, to name a few. A violation of any one of these USDA regulations can mean a hold on the accreditation of an organic farm.

The full list of regulations and requirements can be found here.

Threats Posed by Oil & Gas

Nearby oil and gas drilling is one of many threats to organic farms and their crop integrity. With a steady expansion of wells, the O&G industry is using more and more land, requiring significant quantities of fresh water, and emitting air and water pollution from sites (both in permitted and unpermitted cases). O&G activity could not only affect the quality of the produce from these farms, but also their ability to meet the USDA’s organic standards.

To see how organic farms and the businesses surrounding wells are being affected, Ted Auch analyzed certain dynamics of organic farms near drilling activity in the United States, and generated some key findings. His results showcase how many organic farms are at risk now and in the future if O&G drilling expands. Below we describe a few of his key findings, but you can also read the entire article here.

Key Findings – Organic Farms Near Oil & Gas Activity

Explore this dynamic map of the U.S. organic farms (2,140) within 20 miles of oil & gas drilling. To view the legend and see the map fullscreen, click here.

Of the 19,515 U.S. organic farms in the U.S., 2,140 (11%) share a watershed with oil and gas activity – with up to 31% in the path of future wells in shale areas. Why look at oil and gas activity at the watershed level? Watersheds are key areas from which O&G companies pull their resources or into which they emit pollution. For unconventional drilling, hydraulic fracturing companies need to obtain fresh water from somewhere in order to frack the wells, and often the local watershed serves as that source. Spills can and do occur on site and in the process of transporting the well pad’s products, posing risks to soils and waterways, as well.

Figure 1, below, demonstrates the number of organic farms near active oil & gas wells in the U.S. – broken down by five location-based Regions of Concern (ROC).

Farm-Chart1

Figure 1: Total and incremental numbers of US organic farms in the 5 O&G Regions of Concern (ROC).

The most at-risk farms are located in five states: California, Ohio, Michigan, Texas and Pennsylvania. Learn more about the breakdown of the types of organic farms that fall within these ROCs, including what they produce.

Out of Ohio’s 703 organic farms, 220 organic farms are near drilling activity, and 105 are near injection (waste disposal) wells.

Conclusion

More and more O&G drilling is being permitted to operate near organic farms in the United States. The ability for municipalities to zone out O&G varies by state, but there is currently no national restriction that specifically protects organic farms from this industrial activity. As the O&G industry expands and continues to operate at such close proximities to organic farms in the US, there are a variety of potential impacts that we could see in the near future. The following list and more is explained in further detail in Auch’s research paper:

  • A complete alteration in soil composition and quality,
  • A need to restore wetland soils that are altered beyond the best reclamation techniques,
  • A dramatic decline in organic farm and land productivity,
  • A changing landscape,
  • Wildlife habitat fragmentation, and
  • Watershed resilience … to name a few.

PA feature image taken by Sara Gillooly, 2013

Is Carroll Co. truly the king of Ohio’s Utica counties?

Yes and No…

By Ted Auch, Great Lakes Program Coordinator, FracTracker Alliance

We know from the most recent Ohio Department of Natural Resources (ODNR) permitting numbers that Carroll County, Ohio is home to 26% (461 of 1,778) of the state’s Utica permits and 43% (312 of 712) of all producing wells as of the end of Q3-20141 (Figure 1). But does that mean that the county will continue to see that kind of industrial activity for the foreseeable future? The primary question we wanted to ask with this latest piece is whether the putative “king” of the state’s Utica shale gas counties is indeed Carroll County.

Ohio’s Utica Permits within & adjacent to the Muskingum River Watershed as of February, 2015.

Fig 1. Ohio’s Utica Permits within & adjacent to the Muskingum River Watershed as of February, 2015

To do this we compiled an inventory of annual (2011-2012) and quarterly OH shale gas production numbers for 721 laterals throughout southeast OH.

Permitting and production numbers are not necessarily part and parcel to determine if Carrol Co is truly the king. We decided to investigate the production data and do a simple compare and contrast with the rest of the state’s 409 laterals on one side (ROS) and the 312 Carroll laterals on the other – focusing primarily on days of production and resulting oil, gas, and brine (Table 1 and infographic below).

Carroll vs. ROS Results

Permitting Numbers Breakdown

Monthly and cumulative Utica Shale permitting activity in Carrol County, OH vs. the Rest of State (ROS) between September 2010 and January 2015

Fig 2. Monthly & cumulative Utica Shale permitting activity in Carrol County, OH vs. the ROS between September 2010 & January 2015

Between the initial permitting phase of September 2010 and January 2105 the number of Utica Shale permits issued in the ROS has averaged 29 per month vs. 10 per month in Carroll County. Permitting actually increased twofold in the ROS in the last 12 months (Figure 2). Conversely, permitting in Carroll County seems to have reached some sort of a steady state, with monthly permitting declining by 23% in the last 12 months. Carroll’s Utica permits generally constituted 47% of all permitting in OH but more recently has dipped to 44%. Newer areas of focus include Belmont, Guernsey, Noble, and Columbiana counties, just to name a few.

Production Days

Days in production is a proxy for road activity and labor hours. Carroll’s wells have the rest of the state beat for that metric, with an average of 292 (±188 days) days. The state average is 192 days, with significant well-to-well variability (±177 days). If we assume there was a total of 1,369 possible production days between 2011 and the end of Q3-2014, these averages translate to 21% and 14% of total possible production days for Carroll and ROS, respectively.

Oil Production

Carroll falls short of the ROS on a total and per-day basis of oil production, although the 442-barrel difference in total oil production is likely not significant. Carroll wells are producing 74 barrels of oil per day (OPD) (±73 OPD) compared to 96 OPD (±122 OPD) for the rest of the state; however, well-to-well variability is so large as to make this type of comparison quite difficult at this juncture. Fifty-seven percent of OH’s 11,361,332 barrels of Utica oil has been produced outside of Carroll County to date. This level of production is equivalent to 16,231 rail tanker cars and roughly 00.18% of US oil production between 2011 and 2013.

This number of rail tanker cars is equivalent to 6% of the US DOT-111 fleet, or 184 miles worth of trains – enough to stretch from Columbus to Pittsburgh.

Natural Gas

The natural gas story is mixed, with Carroll’s 312 wells having produced 13,430 MCF more than the ROS wells. On a per-well basis, however, the latter are producing 3,327 MCF per day (MCFPD) (±3,477 MCFPD) relative to the 2,155 MCFPD (±1,264 MCFPD) average for Carroll’s wells. Yet again, well-to-well variability – especially in the case of the 409 ROS wells – is high enough that such simple comparisons would require further statistical analysis to determine whether differences are significant or not.

The natural gas produced here in OH currently amounts to roughly 00.51% of U.S. Natural Gas Marketed Production, according to the latest data from the EIA.

Waste – Brine

From a waste generation point of view, the ROS laterals have produced 41 more barrels of brine per day (BPD) than the Carroll laterals and 1,465 BPD since production began in 2011. On a per-day basis, the ROS laterals are producing more oil than waste at a rate of 1.92 barrels of oil per barrel of brine waste. Conversely, since production began these respective sums result in Carroll County laterals having produced 1.56 barrels of oil for every barrel of brine vs. the 1.40 oil-to-brine ratio for the ROS. Finally, it is worth noting that the 7,775,130 barrels of brine produced here in OH amounts to 13% of all fracking waste processed by the state’s 235+ Class II Injection wells.

What do these figures mean?

As we begin to compare OH’s Utica Shale expectations vs. reality we see that the “sweet spot” of the play is truly a moving target. The train seems to have already left – or is in the process of leaving – the station in Carroll County (Figures 3 and 4). It seems two of the most important questions to ask now are:

  1. How will this rapidly shifting flow of capital, labor, and resources affect future counties deemed the next best thing? and
  2. What will be left in the wake of such hot money flows?

Answers to these questions will be integral to the preparation for the inevitable sudden or slow-and-steady decline in shale gas activity. These dropouts are just the most recent in a long line of boom-bust cycles to have been foisted on Southeast OH and Appalachia. Effects will include questions regarding watershed resilience, local and regional resource utilization (Figures 5 and 6), social cohesion, tax-base uncertainty, roads, and a rapidly changing physical landscape.

Whether Carroll County can maintain its perch on top of the OH shale mountain is far from certain, but whether it will have to begin to – or should have already – prepare for the downside of this cliff is fact based on the above analysis.

Additional Figures and Charts

Table 1. Carroll County, OH production days and production of oil, gas, and brine on a per-day basis and in total between 2011 and Q3-2014 vis à vis the “Rest of State”

Variable Carroll (312) Rest of State (409)
Max Sum Mean Max Sum Mean
Total Days 914 91,193 292±188 898 78,430 192±177
Oil (Barrels)
Per Day 453 23,190 74±73 601 39,109 96±122
Total 83,098 4,838,147 15,507 129,005 6,523,185 15,949
Gas (MCF)
Per Day 6,774 672,391 2,155±1,264 18,810 1,360,923 3,327±3,477
Total 2,196,240 168,739,064 540,830 3,181,013 215,706,401 527,400
Brine (Barrels)
Per Day 941 18,516 59±87 810 40,839 100±120
Total 36,917 3,105,260 9,953 99,095 4,669,870 11,418
Oil Per Unit of Brine
Per Day 1.25 1.92
Total 1.56 1.40

Figures 3a-d. Spatial distribution of Carroll County Utica Shale production days, oil (barrels), natural gas (MCF), and brine (barrels) on a per-day basis.

Spatial distribution of Carroll County Utica Shale production days

Fig 3a. Spatial distribution of Carroll Co. Utica Shale production days

Spatial distribution of Carroll County Utica Shale oil (barrels) production on a per-day basis

Fig 3b. Spatial distribution of Carroll Co. Utica Shale oil (barrels) production on per-day basis

Spatial distribution of Carroll County Utica Shale natural gas (MCF) production on a per-day basis

Fig 3c. Spatial distribution of Carroll Co. Utica Shale natural gas (MCF) production on per-day basis

Spatial distribution of Carroll County Utica Shale brine (barrels) production on a per-day basis

Fig 3d. Spatial distribution of Carroll County Utica Shale brine (barrels) production on a per-day basis

Figures 4a-d. Spatial distribution of OH Utica Shale production days, oil (barrels), natural gas (MCF), and brine (barrels) on a per-day basis.

Ohio Utica Shale Total Production Days, 2011-2014

Fig 4a. Ohio Utica Shale Total Production Days, 2011-2014

Ohio Utica Shale Total Oil Production (Barrels), 2011-2014

Fig 4b. Ohio Utica Shale Total Oil Production (Barrels), 2011-2014

Ohio Utica Shale Total Natural Gas Production (MCF), 2011-2014

Fig 4c. Ohio Utica Shale Total Natural Gas Production (MCF), 2011-2014

Ohio Utica Shale Total Brine Production (Barrels), 2011-2014

Fig 4d. Ohio Utica Shale Total Brine Production (Barrels), 2011-2014

Figures 5a-d. Histograms and Spatial distribution of OH Utica Shale total hydrochloric acid (HCl, gallons) and silica sand (tons) demands.

Histogram of OH Utica Shale total Hydrochloric Acid (HCl, gallons)

Fig 5a. Histogram of OH Utica Shale total Hydrochloric Acid (HCl, gallons)

Spatial distribution of OH Utica Shale total Hydrochloric Acid (HCl, gallons)

Fig 5b. Spatial distribution of OH Utica Shale total Hydrochloric Acid (HCl, gallons)

Histogram of OH Utica Shale total Silica Sand (10^3 Tons)

Fig 5c. Histogram of OH Utica Shale total Silica Sand (10^3 Tons)

Spatial distribution of OH Utica Shale total Silica Sand (Tons)

Fig 5d. Spatial distribution of OH Utica Shale total Silica Sand (Tons)

Figures 6a-b. Histograms and Spatial distribution of OH Utica Shale total resource utilization in terms of pounds per lateral.

Histogram of OH Utica Shale total materials used (10^6 Pounds)

Fig 6a. Histogram of OH Utica Shale total materials used (10^6 Pounds)

Spatial distribution of OH Utica Shale total materials used (Pounds)

Fig 6b. Spatial distribution of OH Utica Shale total materials used (Pounds)

Endnote

1. Additionally, all of Carroll County’s permitted wells lie within the already – and increasingly so – stressed Muskingum River Watershed (MRW) which has been a significant source of freshwater for the shale gas industry courtesy of the novel pricing schemes of its managing body the Muskingum Watershed Conservancy District (MWCD) (Figure 1). Carroll laterals are requiring 5.41 million gallons per lateral Vs the state average of 6.58 million gallons per lateral.

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