Open dialogue with regulators, landowners and continual technological improvements will be key in addressing concerns with hydraulic fracturing, according to some service companies presenting at Wednesday's TD Newcrest unconventional oil and gas forum.
In the U.S., there's unease amongst lawmakers about the usage of hydraulic fracturing which could impede the development of the Marcellus shale gas play, particularly on the New York side. Questions have been raised about possible environmental and community impacts. Most concerns are related to water use and management and the composition of the fluids used for fracturing the shale.
Last month, the Pennsylvania Department of Environmental Protection (DEP) ordered EOG Resources Inc. to suspend its natural gas drilling operations in the state after a well blowout. The company is developing the Marcellus there. Following a 40-day suspension of operations in Pennsylvania, EOG and contractor C.C. Forbes LLC were recently permitted to resume all well completion activities.
The DEP said the company and C.C. Forbes lost control of the well while performing post-fracturing well cleanout activities. The fines assessed to EOG and C.C. Forbes for $353,400 (US) and $46,600, respectively, will cover the cost of DEP's response to the incident and the investigation.
In addition to the financial penalties, DEP ordered EOG to implement practices and take nine corrective actions to avoid a repeat of this incident. C.C. Forbes was ordered to implement similar practices and to take six corrective actions.
Calfrac Well Services Inc. and seven other pressure pumping companies received a request in February for information from the Congress of the United States Committee on Energy and Commerce regarding the practice of hydraulic fracturing. The company hasn't yet released details of that correspondence.
Tom Medvedic, the company's senior vice-president, corporate development, told the TD Newcrest conference that on the environmental side, Calfrac is engaged with its customers on educating the public, regulators and politicians about how the business operates.
"Clearly, there's been a lot of changes in the environment in the U.S., in particular," he said. "We've had a large growth profile in areas like the Fayetteville in Arkansas, Pennsylvania."
The latter isn't a traditional jurisdiction for the industry but has seen a tremendous increase in activity as producers chase shale gas in the Marcellus.
"Quite frankly, the regulators are, I think, trying to catch up with the changes that have taken place in the business," Medvedic said. "Together as an industry, we need to be very proactive in managing that whole information flow.
"We've been involved in the process with the U.S. Congress along those lines and provided all the information that's been requested and spent time in one-on-one meetings in trying to explain what the business is and how it operates."
The dialogue, he added, will take time.
"If I were to project what it looks like 12 to 24 months from now, perhaps there is going to be increased regulation," Medvedic said. "I guess my view is that it may take a little more time, it may take a little more reporting and regulation, but from our perspective, it will be business as usual.
"But, there's going to be a process that will be involved in getting that regulatory environment stabilized to a similar extent that what we see in Alberta."
Dale Dusterhoft, chief executive officer of Trican Well Service Ltd., said industry will need continual development of environmentally friendly fluids and dialogue with landowners.
The Committee on Energy and Commerce in May sent information requests to six other companies, including Trican.
Dusterhoft said the company worked with one of its clients four years ago to develop a fluid in Canada where it could frac close to groundwater as it developed coalbed methane resources.
"That fluid had to be completely environmentally friendly; drinking water standard," he said. "It can be done. It takes the customer to work with you, it takes education on the regulatory bodies."
U.S. producer Range Resources Corporation on Wednesday announced a voluntary disclosure initiative of Marcellus shale hydraulic fracturing additives. Beginning immediately, Range will voluntarily submit to the DEP additional information about additives used in the process of hydraulic fracturing of natural gas wells in Pennsylvania.
Range's disclosure initiative will provide regulators, landowners and citizens an accounting of the additives used at each well site, along with their classifications, volumes, dilution factors and specific and common purposes, the company said in a news release. The information will be submitted to the DEP as part of the company's well completion reports and on its website.
Range is currently using four additives in the hydraulic fracturing of its natural gas wells in the Marcellus shale. These highly diluted and common additives collectively make up about 0.14% of the hydraulic fracturing fluid with the remaining 99.86% comprised of water and sand.
Approximately 0.04% of the fluid and sand mixture is considered hazardous in a concentrated form, according to federal regulatory classifications, and like most common household chemical substances in diluted form, pose no harm, the company said. In partnership with its service companies, Range has reduced the number of additives and is continuing its research to further refine materials used in the hydraulic fracturing process.
Dan Themig, president and chief executive officer of Packers Plus, said there's likely going to be an evolution toward more technical solutions instead of simply increasing water use and proppant to improve well results.
"I don't think it's always going to be a bigger frac with more stages," he said. "I think some of the forces that are going to move it that way aren't necessarily forces within our industry, but it's things like water usage and disposal issues and things like that in some areas aren't that comfortable with our industry."