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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2010

Vol. 15, No. 36 Week of September 05, 2010

Water for shale gas on BC front burner

Severe drought, wildfires draws attention to importance of water; B.C. wants to avoid conflicts that have flared up in U.S.

Gary Park

For Petroleum News

British Columbia is a tinderbox, with record-setting heat triggering 300 wildfires and extreme fire warnings spread across 70 percent of the province.

Now, the sustained drought conditions, with rainfall in the northeast at only 30 percent of normal, have prompted the B.C. Oil and Gas Commission, or OGC, to suspend 80 water withdrawal permits on four basins in the northeastern Peace River watershed — the heart of an unconventional gas exploration and development frenzy.

In barring 20 companies — including Encana and Talisman Energy — from accessing the four systems, OGC has underscored one of the most troublesome aspects of the potential source of future B.C. wealth.

OGC grants short-term water withdrawal permits, while longer-term water use requires approval from the B.C. environment ministry.

The agency said the suspension of previously approved short-term water use is required to “maintain river flows for community water supply and for critical fish habitat,” adding it will need rainfall before the suspensions are lifted.

Looking for alternative sources

Water is a critical element of extracting shale gas from deep underground formations, which are fractured using high-pressure injections of drilling fluids.

Travis Davies, a spokesman for the Canadian Association of Petroleum Producers, welcomed OGC’s willingness to join with companies in finding alternative sources of water to support their activities.

He said the measures being taken are also proof that the regulations are in place to protect water in B.C.

“Industry respects the system and doesn’t want to negatively impact future access to water because it’s a critical part of our operations,” he said.

However, the current crisis does put the spotlight on a priority concern for the B.C. government, OGC and industry as exploration and development of the province’s shale gas resources gathers momentum.

Staying ahead of the curve

Water management, usage and disposal is a flashpoint in the U.S. shale plays in Texas, Louisiana, Arkansas, Pennsylvania and New York, putting pressure on B.C. to stay ahead of the curve and avoid possible conflict that could bring a halt to what is viewed as a substantial future source of revenue for the government.

OGC offered possible solutions in a report released in August and the government is ready to introduce an amended Oil and Gas Activities Act to increase OGC’s powers to manage water withdrawals.

Although drilling of the Horn River basin’s shale gas deposits has been confined to only a small number of test wells so far, operators are keeping a watchful eye on what measures are being taken in the U.S. relating to multistage hydraulic fracturing.

Water licenses for hydro power production comprise about 98 percent of the total water volume licensed in B.C., although only a minority cover the “consumptive” use of water that is removed from rivers and not returned directly to those systems. Oil and gas activity is defined as consumptive.

Changes to government legislation will involve tracking surface and subsurface water sources through expanded metering, measuring and reporting.

As well, OGC said fracturing fluids will be monitored for content through reporting procedures in addition to existing legislation that requires companies to have fluid composition available for an OGC audit for all drilling programs.

OGC Commissioner Alex Ferguson said his commission’s objective is to establish a baseline, which can be used for demonstration purposes and built on as needed.

Three aquifers identified

A study by Geoscience B.C., an industry-led, not-for-profit organization, and the Horn River Basin Producers Group has identified three aquifers as potential water sources for shale gas well completions and injection of spent fracturing fluids.

OGC has made it clear that the monitoring of fracturing fluid composition is an evolving matter, constrained by proprietary and competitive issues. Ferguson is optimistic the “right balance” will be found.

The OGC report said the normal depth of a potable water well for domestic use in northeast B.C. is about 60 feet to 500 feet, well above the depth of a typical oil and gas producing zone of about 2,600 feet to 10,500 feet.

Operators are not permitted to drill within 660 feet of a water well unless they have written permission from OGC, which said that restriction along with casing and cementing requirements should ensure protection of domestic water wells.

Mapping aquifers in Horn River basin

David Pryce, vice president of operations with the Canadian Association of Petroleum Producers, said the OGC report contributes to public awareness of the regulatory framework and demonstrates how important water use is to the industry.

Meanwhile, Geoscience and the Horn River producers are spending a combined C$9.5 million, half of it from the B.C. government, on the first phase of mapping subsurface aquifers in the Horn River basin.

The objective is to shrink the footprint of development by reducing the use of surface water and minimizing the impact on potable water.

Alternative to water being reviewed

Alternatives to water use are being explored by a number of companies, including Gasfrac Energy Services, which has used liquefied petroleum gas consisting mostly of propane rather than water or oil-based fracturing fluids.

Encana plans to test the use of alternative water sources at its Haynesville shale play in Louisiana, while working on an optimum frac design for Horn River to vary the per-frac water use, recycling some of the recovered water for continued fracturing or injecting it into a licensed disposal well.

A spokeswoman for Talisman said her company has a “comprehensive water strategy” for exploration of its vast Montney tight gas properties, including recovering water and drilling fluids that flow back out of its wells and recycling that flowback in subsequent drilling operations.

She said Talisman has so far been able to recycle 100 percent of its flowback.






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