Living With a Natural Gas Well

1
Living With a Natural Gas Well

• Ed Ireland, Ph.D.Executive DirectorBarnett
  Shale Energy Education Council

2
Barnett Shale Energy Education Council

• A community resource that provides information to
  the public about the natural gas related
  activities in the Barnett Shale region of north
  Texas
• The mission of BSEEC is to promote energy
  education and best practices as it relates to oil
  and gas leasing, drilling, production,
  transportation and marketing in the Barnett
  Shale.

3
Founding Members

• Chesapeake Energy
• Dale Resources
• Devon Energy
• EnCana Oil Gas

• EOG Resources
• Four Sevens Resources
• XTO Energy

4
Accomplishing Our Mission

• Web site www.bseec.org
• Printed materials distributed through community
  centers and public libraries
• Speaking to interested groups
• Publishing timely articles in local newspapers
  and other publications

5
What is the Barnett Shale?
6
What is the Barnett Shale?

• Layer of rock 7,000 feet below the surface and
  250-350 thick
• Stretches from Montague and Clay counties on the
  north to Waco west to Palo Pinto and Erath and
  east to Dallas and Ellis counties
• First well was drilled in 1981 by Mitchell Energy
  which was acquired by Devon Energy in 2002 but
  production only became economically feasible in
  about 2000 due to improvements in recovery
  methods.
• Urban concentration Sweet spot is centered
  over Fort Worth

7
Barnett Shale 20 County Area
8
Why Should We Care About the Barnett Shale?
9
Why Should We Care About the Barnett Shale?

• It is the source of many jobs and an economic
  stimulus to the regions economy

10
Barnett Shale The Big Picture(based on 2007
levels)

• Activity in the Barnett Shale is growing faster
  than expected
• The area has received 8.2 billion in annual
  output (8.1 of total output) and
• 88,293 new permanent jobs to date (8.9 of total
  jobs)
• This performance represents a net gain of more
  than 50 in a single year.
• (estimates from The Perryman Group study released
  April, 2008)

11
(No Transcript)
12
Why Should We Care About the Barnett Shale?

• It is the source of many jobs and an economic
  stimulus to the regions economy
• It is a significant part of the total U.S. supply
  of natural gas

13
(No Transcript)
14
(No Transcript)
15
(No Transcript)
16
Why Should We Care About the Barnett Shale?

• It is the source of many jobs and an economic
  stimulus to the regions economy
• It is a significant part of the total U.S. supply
  of natural gas
• Natural gas is the bridge fuel to cleaner,
  renewable fuels

17
(No Transcript)
18
How will natural gas be used?

• Electricity generation
• Home heating
• Various industrial uses
• Chemical feed stocks
• Natural gas vehicles

19
(No Transcript)
20
Natural Gas as the Transportation Bridge Fuel but
to what?

• Natural gas and NGVs are the logical energy
  pathway and technology bridge to hydrogen or ??
• Natural gas is 87 95 methane
• Methane is CH4 80 hydrogen
• Market acceptance of gaseous fuel compression,
  storage vessels, engine maintenance
• Electric vehicles are not suitable in large
  trucks
• Still a LONG way to go before hydrogen vehicles
  are commercially viable and represent a
  significant impact

21
What is the Nature of Urban Drilling?
22
(No Transcript)
23
Urban Drilling - Operations

• Multiple wells off of one pad
• Lots of Directional Engineering Work
• Sound abatement
• No mess no reserve pits, frac ponds Closed
  Loop

24
Urban Drilling
25
Drilling Rig Acoustical Barrier Walls
26
SOUND ABATEMENT
27
Where are we headed?
28
Recent Events

• Rapid decline in natural gas prices
• Credit crunch

29
(No Transcript)
30
Impact of these events on Barnett Shale Companies

• All rescinded outstanding lease offers
• All announced that any new leases will be at
  significantly lower signing bonuses
• Most announced some level of cutbacks in Barnett
  Shale operations, some large and some small

31
What can we expect in the future?

• Slow upward drift in natural gas prices unless
  there is a major event
• Resumption of leasing at pre-boom levels (5,000
  per acre bonuses)
• Steady increase in drilling and production

32
Natural Gas Futures(/MCF)

• Mar 2009 4.59
• Jul 2009 5.03
• Nov 2009 5.76
• Dec 2009 6.38
• Nov 2010 6.97
• Feb 2013 8.40