Many oil and gas companies, when working in shale plays such as the Bakken, Niobrara, and Marcellus, find their hands are full managing production issues such as well spacing and depth, hydraulic fracturing design, water resources, and sustained gas production.

However, experience shows that in many cases it is navigating the social and environmental issues that separate successful operators from those who see their expenses and timelines grow.

Decisions made in the production arena have many impacts on social and environmental risks. For example, a well that is sited to access a prolific reservoir and has a surface location in a sensitive environment will typically result in project delays to accommodate needed permitting and mitigation.

Careful consideration of both production and social and environmental factors at the planning stages of a well can improve the return on investment.

This is particularly a concern in situations where the time remaining on a land lease is short and there is pressure to "produce it or lose it."

Experience shows that production risks and the social and environmental aspects of a project are interrelated. Failure to address any one of these aspects will likely cause unforeseen difficulties that can turn what might have been a profitable venture into a costly learning experience.

Production factors impact non-production risks

Many production considerations have direct and indirect impacts on the social, environmental, and regulatory risks associated with shale plays, all centering on water. These include:

  • How the water is sourced – even in comparatively awater-rich Pennsylvania, there are potentially many competing uses for water;
  • Transporting the water with many truck-loads, possibly over roads that were originally designed for horse-drawn traffic;
  • Storing water onsite prior to use, whether in tanks or in-ground impoundments;
  • Storing the produced water and managing risks to groundwater or surface water due to a release;
  • Reusing water and the implications this may have on its utility for frac purposes;
  • Treating flowback and produced water, possibly in public or commercial water treatment facilities, to the required standards before discharging it; and
  • Disposing of water through deep-well injection and addressing the shortage of sites that are geologically suitable for injection.

A growing area of concern related to water has to do with reinjection. Even where the rock mass is suitable for this, there are often concerns about potentially induced seismic activity.

diagram

The network of natural fractures stimulated by hydraulic fracturing is constrained within the shale due to presence of the quenching layer. (Image courtesy of Golder Associates)

Publicity about earthquakes related to deep geothermal projects has raised concerns about earthquakes that might be associated with reinjection of produced water. A good understanding of the rock mass can help manage these risks as well as provide reassurance to stakeholders, including local residents and regulatory authorities.

Understanding existing fracture network

Knowledge of the fracture network helps determine:

  • The financial risk involved by understanding how far the frac will extend, which is a factor in how much hydrocarbon resource can be extracted from a well;
  • Optimal well spacing to maximize recoveries while minimizing the number of wells required;
  • A wider range of options for the surface well location to avoid locations near inhabited areas or where there are vulnerable ecosystems such as wetlands;
  • Optimal direction and depth of the producing leg of the well and trajectories;
  • The amount of water that will be needed and how much will be produced; and
  • Whether fractures can be expected to terminate due to a low stiffness layer and quenching fractures so these do not extend past the intended formations.

Transparent decision-making reduces conflict

The large water volume requirements of virtually all unconventional plays create interest among stakeholders, who have concerns that need to be addressed.

Good understanding of the reservoir itself and good decisions about water can help defuse potential conflicts. Fortunately, there have been many developments in the way decisions are made, taking into account the complex relations between production, social, and environmental issues.

Using tools such as triple bottom-line analyses helps improve decision-making from a production viewpoint – and it also helps demonstrate good stewardship to stakeholders, showing that the company is taking due precautions to manage potential risks.

In stakeholder meetings and presentations, it is helpful to clearly explain the decisions made in the way a project is designed, including the location of wells and how the water impacts will be managed.

Transparency goes a long way to answering stakeholder concerns and minimizing the potential for delays and increased expenses. By illustrating the data and analyses used in the decision-making process for resource development using visual/graphical tools that clearly present the data, a company can provide a more compelling communication tool than asking an already skeptical audience to simply trust that their concerns are being considered.

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