Unconventional Reservoir Development: The Role of Geoscience from a State Regulator s Perspective

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1 Unconventional Reservoir Development: The Role of Geoscience from a State Regulator s Perspective Nick Tew Alabama State Geologist and Oil and Gas Supervisor President, American Geosciences Institute Geological Survey of Alabama and State Oil and Gas Board of Alabama Energy From the Earth Oil and Gas Development: How Geoscience Makes a Difference

2 Oil and Natural Gas Regulation O&G regulation is primarily the purview of state oil and gas regulatory agencies On Federal lands, states are generally co-regulators with Federal agencies Most O&G, particularly in the eastern U.S., is produced from privately held mineral acreage Sedimentary basins and rocks that contain oil and natural gas are highly variable in nature and require detailed local knowledge of the geoscientific and engineering parameters that control accumulations and production One size does not fit all! Thus, regulatory processes and frameworks should always be informed by scientific and technical information from geoscientists and engineers and should take into account these local variations Paleozoic shale gas plays in complex geologic setting, Appalachian fold and thrust belt, Alabama

3 State Oil and Gas Board of Alabama Most state O&G regulatory agencies have similar authorities and functions; based on model statutes and frameworks Established in 1945, after first Alabama oil discovery in 1944 Grew out of assessment activities of Geological Survey of AL to determine oil and natural gas potential in the state Three member Board, appointed by Governor; Quasi-judicial body Staff Director State Geologist, serving as State Oil & Gas Supervisor Professional, experienced staff consisting of geologists, petroleum engineers, O&G attorneys, field inspectors, etc. Geological Survey of AL scientist conducting field tests, Natural Gas Test Well, Mobile Co., AL, 1902

4 State Oil and Gas Board of Alabama Regulatory agency of the State of Alabama with the statutory charge to: prevent waste and promote the conservation of oil and gas protect the correlative rights of owners ensure the protection of the environment ensure protection of health and safety of citizens OGB is granted broad statutory authority to promulgate and enforce rules and regulations that ensure orderly and proper development of Alabama s oil and natural gas resources Geological Survey of Alabama/State Oil and Gas Board Building, University of Alabama Campus, Tuscaloosa

5 Unconventional Hydrocarbon Reservoir Development in Alabama Coalbed methane production for over 30 years The CBM industry started in Alabama First comprehensive CBM legal & regulatory framework Lessons learned that can be applied to unconventional reservoir development, in general Shale gas development Conasauga Fm. Development Big Canoe Creek Field (2005) Mississippian and Devonian shales Future potential Mississippian Oil Sands of North AL Hydraulic Fracturing Operation for Coalbed Methane Development, Black Warrior Basin, Alabama

6 Coalbed Methane in Alabama Degasification experiments for mine safety began in the mid- 1970s Commercial production began in 1980 Currently close to 5,000 active wells in 20 fields Annual gas production between 105 and 121 Bcf for the last 20 years Over 2.5 Tcf cumulative gas production Over 1.7 billion barrels of water produced Drilling Operation for Coalbed Methane, Black Warrior Basin, Alabama

7 Alabama CBM Fields Black Warrior Basin Coal Stratigraphy

8 CBM Wells in Alabama Relatively shallow (<5000 ft.) Majority are vertical wellbores, typically encountering several coal groups/seams Coal seams are hydraulically fractured, typically several fracture stimulations per well Average about 100 Mcf of natural gas per day Coalbed Methane Hydraulic Fracturing Operation, Black Warrior Basin, Alabama

9 Production Characteristics and Water Disposal CBM production is pressure driven and usually requires dewatering of coals to lower hydrostatic pressure for gas production Water production is generally high early in a well s life and decreases rapidly Gas production generally peaks in the first few years, after peak water, then decreases In-stream disposal is the dominant practice for handling produced water in the Black Warrior Basin Treated to remove silt, clay, iron, and manganese compounds and aerated prior to disposal Coalbed Methane Production Site, Black Warrior Basin, Alabama

10 Shale Gas in Alabama Shale Gas Wells >50 Drilled None currently producing Lessons learned Science, technology, and approaches from other shale plays not necessarily transferrable Geoscientific understanding, coupled with appropriate technological approaches, integral to success Paleozoic Shale Gas Potential Conasauga Fm. (Cambrian) Devonian shales Floyd/Neal Shale (Mississippian) Alabama Shale Gas Plays

11 Cambrian and Devonian shale gas plays, Appalachian Fold and Thrust Belt These parameters must be fully understood in order to develop these resources and to effectively regulate development

12 Issues with Development Environmental Considerations Water Use & Availability HF Fluid Components Produced Water Management Regulatory Considerations Well Types, Construction, & Spacing Competing or Overlapping Agency Jurisdictions Competing Land Uses Drill Site in Area of Cultivation Tuscaloosa County, Alabama Vicinity of Brookwood, Alabama

13 Addressing the Issues within the Regulatory Framework Environmental Considerations Water Use & Availability Best Management Practices HF Operations Approval & Disclosure Produced Water Use & Disposal Options Regulatory Considerations Alternative Well Types, Construction, & Spacing Interagency Coordination Regulatory Adaptability to most effectively, efficiently, and safely develop the resource Shale Gas Drilling Operation, Appalachian Fold and Thrust Belt, Alabama

14 Regulatory Framework O&G Statutes, with Legislative amendments when necessary Rules & Regulations, with administrative changes & amendments, as appropriate Board hearings Special Field Rules for each new field established Significant Interaction with, and assistance from, national associations of states and national regulatory community to share experiences, expertise, and best practices Interstate Oil & Gas Compact Commission Ground Water Protection Council The Alabama Oil & Gas Goldbook

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16 Contact Information Nick Tew Geological Survey of Alabama/State Oil and Gas Board of Alabama Web: or