It’s Not the Well, It’s the Stimulation

One geochemist weighs in on successful shale wells

The answer was “over 2 million wells.”

The question, posed by Dan Jarvie, Consulting Geochemist at Realm Energy International to delegates at Shale Gas Results in Europe 2011 in Warsaw, Poland, was “how many wells of all kinds had been stimulated since first used in 1957?”

What’s more, he said that over 40,000 shale gas wells had been stimulated since the 1980s.

Mr. Jarvie’s talk was entitled Geochemical Assessment of European Unconventional Shale Resource Plays, but what he offered was a real life example of what can happen when a shale well in the Barnett in Texas allegedly contaminated the water supply in the Fort Worth Basin.

But first, he offered some perspective.

“Think back a bit,” Jarvie prompted the audience. “We all understand the Barnett. Here in Poland, think about 1991. George Mitchell [the godfather of hydraulic fracturing] was considered a lunatic. Who among you took 30 or 40 cores of shale in the last 10 years. Despite pressure from directors and staff Mitchell had the money and the stubbornness – had a smashingly unsuccessful vertical in 1991 – so it’s not the well, it’s how you stimulate it.”

He added: “Fracking or stimulation is new to a lot of people.”

Jarvie recalled that George Mitchell was sued for groundwater contamination.

“We have others to blame for some of these problems – some of these things happen naturally. Mitchell was sued, not god, because he had more money.”

He recalled that a driller, Range Resources, was alleged to have contaminated groundwater.

Speaking of the US Environmental Protection Agency (EPA), Jarvie said “I want them to be correct, to do good science and understand this. We found gas close to a Range Resources well, and they said it was thermogenic gas.”

The EPA had concluded that the gas had come from the Barnett shale.

“Water wells had been previously drilled that all contained gas,” he recounted, “while Range Resource’s well was drilled in 2009.”

According to Jarvie, it turned out that the gas in the stimulated Barnett Shale did not match gas in the water wells, neither in composition or isotopes. Texas’ Railroad Commission, he said, ruled in favor of Range Resources.

“Through isotope techniques we can identify specifically that the gas did not come from the Barnett. What did irritate me is that the EPA said ‘we’re going to continue to fight this.’”

Jarvie said he believed it was important to emphasize economic benefits to communities affected by unconventional drilling operations. Just take Dimmit Country near the Eagle Ford shale in Texas; it’s one of the poorest counties in the US.

“In 2010 the exploration and development of the Eagle Ford Shale play had created 6,800 jobs there paying $311 million. Over 12,000 additional jobs were created with salary earnings of over $500 million.”

By 2020, operations were expected to have created 68,000 positions, accounting for over $20 billion in total annual economic output. The state of Texas should earn over $1 billion in revenues.

Beyond that, according to Jarvie the Barnett shale had contributed significantly - $12 million - to Texas’s Denton County Independent School District.

The Utica shale, he said, was relevant to Poland. “I can’t show you any Silurian but I can show you Ordovician.”

Jarvie took a database and plotted it against the Barnett shale, saying that Polish shale did not have such high TOCs, but one could see some with liquids associated.

“Can there be too high thermal maturity? Yes,” he replied.

“In Poland you have to calibrate your logs - you can’t take something from the US, gas saturations, etc. If you have an absorption effect, it will not flow freely.”

Realm Energy’s activities in the Baltic and Podlasie Basins were briefly mentioned, as well as Poland’s corporate tax rate of 19% and royalties of 2%.

Regarding concessions, Realm holds three permits in Poland totaling 635,000 gross acres (465,000 net), two of which are exploration permits located in the Baltic basin, northern Poland and one in the Podlasie basin, in the country’s south-east.

Realm is also pursuing other unconventional plays in France and Germany. Among the selling points for pursuing its strategy in Europe, the company contends that the resource is there, with over 700 TCFs of potential and that there is geology which is analogous with that of the US. Europe’s excellent pipeline infrastructure and high natural gas prices don’t hurt either.

Speaking of the shale resource in North America, Jarvie said, “The US has the equivalent of two Saudi Arabia’s of natural gas, it’s a decision whether we want to pursue it. It has to be done in a responsible way. You have to have rules and follow them.”

He concluded: “I would recommend environmental monitoring before you drill.”