As usual, Tom Wilber brings a nuanced approach to the subject. Tom finds someone other than a gas industry PR person to talk about the subject, in the form of a Colgate geology professor, who comes across as Engelder Lite. Read more here: http://tomwilber.blogspot.com/
Tuesday, November 5, 2013
What are the prospects for New York’s shale reserves? Sociology, ideology weigh heavy in debate over geology
|Acton’s analysis shows green dots represent viable shale zones|
At Wednesday’s presentation, Brock provided a geological assessment that explained what is widely known about the Marcellus: Production is most viable in the thickest, richest sections at a certain depth, which tapper exponentially from an area just south of New York’s border with Pennsylvania. Acton supported Brock’s characterization with a separate analysis, now circulating on the Internet. Acton used production figures from Pennsylvania wells to assess yields corresponding with certain physical parameters of Marcellus geology, including depth, thickness, and thermal maturity, and then extrapolated the Pennsylvania data to model New York’s production. His conclusion: Reserves under the Empire State remain mostly unviable, with the exception of an area extending slightly into the Southern Tier, just north of the most lucrative part of the reserve in Susquehanna County Pennsylvania.
As with many arguments over shale gas, this one is not so much about the data, but how the data is framed in a broader campaign for or against development. Much of Thursday’s presentation amounted to casting old information in the context of current market conditions. Acton’s map, in fact, was similar to a map created by Terry Engelder, a Penn State geologist and shale authority who has prominently argued in favor of the economic benefits of drilling. Allstadt later used Engelder’s map to support the theme of the Cornell presentation: The New York shale gas cup is far more empty than full.
|A map by Engelder used by Allstadt shows conflicting interpretations|
Northrup pointed out that while the shale gas footprint in New York is vast, it’s functionally limited by geology, market restrictions, myriad moving parts of corporate portfolios and lease holds, complications and uncertainties posed by unresolved state policy, no drill zones proposed by the state, and bans by municipalities. I’ve heard both shale gas critics and proponents refer to this set of factors as strangulation by regulation. It’s a point that industry lawyer and lobbiest Tom West frequently makes at public talks: given the social resistance it faces in New York, the shale gas industry will simply move on to less restrictive and more productive territory.
Allstadt presented evidence that major companies have tested both the Utica and Marcellus shales in New York and found them unworthy. He cited a handful of test wells with underwhelming results drilled by companies such as Chevron, Gulf, Anschutz, Chesapeake and others prior to the shale gas boom. His point is worth noting, but also in need of context. These test wells were small in number and scattered over a large area. They were vertical wells that used low volumes of fracking solutions, prior to refinements and breakthroughs to adapt the process to Devonian shale. And they don’t correspond with leasing trends that took shape with a better geological understanding of the play that came after 2008. (XTO Energy, later bought by Exxon Mobil, paid $110 million dollars for 50,000 acres spanning parts of Broome and Delaware County in the spring of 2008 after wells were proven in northeastern Pennsylvania.)
By the account presented by Northrup and his party, New York is missing or has already missed the shale gas party. As for what Northrup characterizes as the hangover: New York remains an attractive disposal option for Pennsylvania producers because New York regulations, which haven’t been updated since the late 20th century, allow flow-back to be spread on roads and drill cuttings to be disposed of as conventional waste. Additionally, conventional wells in New York that were drilled and depleted decades ago make, by industry standards, suitable repositories for shale gas waste. From a geographical standpoint, New York is a strategic spot for infrastructure projects to store and transport gas to major northeast markets, and some of these projects are already well underway, including various pipelines and a controversial project to convert old salt mines on the shores of Seneca Lake to natural gas and propane vaults.
Given all these factors, what does New York’s future look like? Allstadt, who has both ample industry experience and a stake in development as an Upsate resident, said a drilling boom is unlikely, but expect some intensive drilling by maverick companies in communities bordering Pennsylvania. “There’s always somebody who has to take a shot somewhere, and instead of going to a casino they will drill,” he said. “These are the least reliable outfits. They will drill the wells as cheaply as possible.”
Predictably, the presentation drew admiration from anti-fracking activists and criticism from industry supporters. And while it was an academic exercise that will not alter the geology and arguably has little baring on markets or regulations, it represents a piece to a much larger rhetorical tug-of-war for the hearts and minds of policy makers and politicians. Science can be found on both ends of the rope. Bruce Selleck is a geologist at Colgate University who has identified the prospective area for shale gas development – or “fairway” — in New York to extend well into upstate New York, west to Chemung County, east to Sullivan County and north to Oneida County. The Marcellus shale alone is capable of producing 5 trillion to 10 trillion cubic feet of gas, by Selleck’s estimate. His take on the presentation at Cornell? “All the blah-blah-blah rhetoric in this ‘finding’ makes it clear that the folks involved don’t want to see gas development in New York – not surprising given the ‘experts’ involved.” He offered his assessment in a recent email, along with this elaboration:
That companies are dropping leases simply means they are not planning to drill the properties anytime soon, indicating their estimation of the value of the recoverable gas at current prices makes development in these frontier areas non-economic, in the near term. The dry gas market is flush right now, and will likely remain that way for 3-5 years. The lack of permitting of HVHF in NY is of course an additional factor.
Even if the Marcellus reserve is in the 5 TCF range in NY, development could prove attractively economic down the road when gas prices are higher. Five TCF of gas would require 2500-4000 wells to ultimately recover that resource. That scale of development would still bring significant royalties to landowners, along with other economic benefits, and all the negative impacts, as well.
The Utica is even more of an unknown in NY, so any statements made about its potential are based on very little data. I expect a few of the companies in NE PA will try the Utica at some point soon.
Was on a panel with Professor Selleck in Utica, and he struck me as perhaps a closet frackademic, Engelder Lite, when he defended New York’s lack of a severance tax as being unexceptional (it is not), which had much to do with shale shilling and little to do with geology. Had he come to the presentation he would know that we were addressing the spatial extent of the productive area – including the surface constraints on well pads, which are considerable – not reserve estimates – which ignore the real world constraints on the surface. The Utica has been tested much more thoroughly in New York than in N Pennsylvania – as Lou Allstadt explains in excellent detail. The notion that the geology of the New York Utica shale is not thoroughly understood is one of the on-going mythologies of New York frackademics. Prof. Selleck’s remark about “testing the Utica in NE Pa.” ignores the fact that the Utica has already been tested in New York just north of the Pennsylvania border – by Norse and Gastem. There are no Utica HVHF drilling permit applications on file with the DEC. If any wildcatter thought the Utica was productive in New York, there would be. Lou’s presentation will be online shortly and will address how test well results – in the not-so-mysterious Utica – and industry behavior reflects the predictions of Jerry’s model.