The Risks And Rewards Of A Massive Fracking Campaign Planned For The Powder River Basin Of Wyoming

Originally published on Forbes.com on January 18, 2021

Horsehead pump oil well Wyoming USA

EDUCATION IMAGES/UNIVERSAL IMAGES GROUP VIA GETTY IMAGES

Horsehead pump oil well Wyoming USA. (Photo by: Andrew Woodley/Universal Images Group via Getty

Last week we highlighted a plan approved by the Bureau of Land Management to drill and frack 5,000 new oil wells in the Powder River Basin of Wyoming. Now let’s look under the hood to better understand the pros and cons of such a high stakes bonanza.

The approach here provides a starting checklist for assessing future proposals to develop oil and gas fields. One of the checkpoints is the threat of global warming, which nowadays looms like a shadow over plans like this one in the Powder River basin.

The rewards.

The decision was announced by BLM on December 23, 2020: Over the duration of ten years, “The project is expected to generate roughly 8,000 jobs and approximately $18 to $28 billion in federal revenues.” These are very large numbers for just Converse County.

One well drilled by Chesapeake flowed 3,000 barrels of oil equivalent per day (boepd), which is a very good shale-type well. For comparison, the best wells in the Permian make about 3,000 boepd. The Wall Creek – Turner wells in the Powder River basin have turned heads recently as they produced a third of the oil and a quarter of the gas in the Powder River basin between 2017 and 2018.

But there needs to be caution. Other projections from wells on federal leases imply the revenue for just Converse County would be considerably lower than the BLM projection.

Currently STIPS (for stipulations) are in place to stop well activity during the nesting season to protect hawks and sage-grouse. These limitations would be removed to enable continuous operation because the operators plan to drill up to 16 individual wells on any one drilling pad. The well operations would run more smoothly and be more efficient.

Because of smaller area, the play is unlikely to produce 1-million bopd (barrels of oil per day) like the Bakken just across the way in North Dakota, or the Delaware basin in New Mexico. Still, it would support the US being self-sufficient in oil, as well as provide energy security during the transition to renewables by 2050 (the common goal is net-zero greenhouse gas emissions by 2050).

The risks.

First, the Biden administration might restrict drilling in Converse County because the minerals that the BLM manage (which include oil and gas) lie beneath 64% of the total area, even though they manage only 6% of the surface area.

The BLM under the Biden administration and Deb Haaland as nominated Interior secretary could impose on federal leases (1) a leasing moratorium, (2) a drilling ban. Wyoming could miss out on $18 to $28 billion in federal revenues if the project is not developed (or considerably less according to other projections.)

Second, what if the shale-type technology of Figure 1 doesn’t work in the geology of Converse County? Experience tells us that if the layers contain a decent amount of oil and gas, and the fluid pressures in the oil and gas are above normal (called over-pressured) then the new technology has a very good chance of working because it creates its own reservoir of high-permeability cracks around a horizontal well.

Diagram Up to 40 separate fracking operations are applied along a horizontal well

Source: Ian Dexter Palmer

Figure 1. Up to 40 separate fracking operations are applied along a horizontal well (up to 2 miles)

Third, the operator group are in a hurry, as they anticipate 50 drilling rigs boring away continuously for five years. As trite as it sounds, smooth and continuous year-round well operations will have trucks rumbling by, pipes clanging on the drilling rig, and frac pumps booming into the night – and these might be pretty upsetting to the hawks and sage-grouse raising their young ones in nests on the ground. To be honest, evaluating the best course of action between those who love the hawks and those who value the industry is always difficult.

The proposal estimates that any surface disturbance in the long-term would be 1.4% of total surface area. The critical word is “long-term” since short-term disturbance would be substantially greater than this.

EOG, a principal in the operating group, have participated in studies that mapped raptor territories as well as nesting sites which can allow buffers to be installed as protection from the rig activities. The company has said they will manage wildlife concerns in a responsible way – whatever the final environmental impact statement says.

Water risk.

Fourth, a lot of water is needed to do as many as 40 separate fracking operations per well (Figure 1). A typical shale-type well will use up to 20 million gallons – enough to cover the grassed area of a football field to a height of 40 feet. The approved proposal includes roughly 50 wells to source the water from local aquifers. For the proposed number of 5,000 wells, this would mean 5,000 football stadiums covered with 40 ft of water in the grassed area – just to carry out all the fracking operations.

While this water use seems excessive, in other states like New Mexico and Pennsylvania its less than 1% of total water usage in the state (irrigation is the major user in New Mexico). Converse County is in a severe drought as of December 15, 2020, so if local water usage or aquifer losses are so large they compete with ranching or city water use, this needs to be closely monitored.   

Fifth, what is planned for produced water? Most shale-type wells produce salty water along with oil and gas. 30 new disposal wells are planned in the proposal because they are the cheapest way to get rid of the water. This raises a question because disposal wells can induce earthquakes, as has been well documented in Oklahoma and other western states.

The proposal says the operators “would consider recycling and re-use of flowback and produced water in the project area.” Environmentally, it would be good to reconsider because in other places, like the Marcellus shale, at least two-thirds of produced water is cleaned up and recycled to frac the next well. Disposal wells are rare. Of course, recycling such as this reduces the need for enormous volumes of fresh water for drilling and fracking operations.

Tribal nations.

Sixth, a dozen tribal nations have objected to the BLM decision to approve the 5,000 wells in Converse County. They worry the new development will damage the cultural history, as well as air and water quality, and treaty rights. As reported by Camille Erickson, the landowner and mineral estate is very complicated:

“The BLM manages about 6% of the surface acres and 64% of the mineral estate in the project area. The U.S. Forest Service, state of Wyoming and private landowners have rights to the rest. Over half the land is split estate lands, meaning the surface and mineral rights are not held by the same owner.”

Its not the only thing that’s complicated. The BLM is required to consult with the tribal nations. But this is a time-consuming process with many individual nations and 5,000 expected wells. The environmental impact process did take seven years. But truthfully neither the BLM nor the tribes have the personnel to check all the boxes, and things are left on the table.

As summarized by Erickson, “In other words, the federal government will be limited in where it can apply cultural and environmental reviews, or tribal consultations, the agency said. The responsibility to respect the rights of tribal nations’ rights shifts to the operators, state and private landowners.”

Global warming and climate change.

How do we assess the risk of additional global warming by producing oil and gas that will be burned to CO2, the primary greenhouse gas?

One way to do this is to examine the Production Gap. This reveals the US and nine other countries have ongoing plans and activities in oil production that exceed the goals of the Paris Agreement by as much as 100%. If the threat of global warming is taken seriously, the Production Gap needs to be taken seriously, and that implies the US and other countries need to bite the bullet and start reducing their oil and gas production somehow and somewhere.

BP is leading the way because it plans to reduce its oil and gas production 40% by 2030. Occidental, who are part of the Converse County proposal, seem to be caught in the middle. Surprisingly, they have made a very challenging commitment to net-zero carbon emissions by 2050 which would include all their footprint emissions plus emissions from all their products (such as oil and gas that would be produced in Converse County.)

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