Book Cliffs to be Fracked

[Big Fin]

Maybe the best way of dealing with it is to make the standards higher that the oil companies must comply with and set up better environmetal policies to coincide. make it a win win for all, not just the rich guys fronting the cash.

I completely agree.

I would go one step further. If these activities are supposedly so wildlife friendly, then have the companies who are awarded the leases secure surety bonds or post their own bonds for the amount of impact they will have. If this is supposedly such low risk activity to wildlife and water, then the bond should be an inconsequential cost of doing business.

Let the market take care of the risk, not the politicians.

Everytime this is tossed out as an idea, many in the resource industries state that such bonding requirements would make it unfeasible, due to cost of bonding. Well, if the bonding is so expensive, it is because of the huge risk of negative impacts, exactly what we are told is not the case.

By politicians waiving the guidelines/standards bonedog mentions, it is in effect a subsidy; a welfare handout. It lowers production costs and increases negative impacts. Even if it is not a direct payment, any economic analysis would conclude that removal of operating costs and shifting risks and negative impacts to others is a subsidy. To me, subsidies such as that are welfare, just the same as any other government handout.

I have made this argument so many times and every time it ends up in a circular equation when talking with those who out of one side of their mouth want to say their is no risk or damage and out the other side of their mouth claim that bonding for risk/damage would bankrupt them.

Which is it? It can't be both. Either their is no risk and the cost to bond is peanuts, or if the cost to bond is high, the risk experts who know risk analysis have determined the risk is ridiculously high.

I could go on and on about the handout welfare programs this kind of government activity really represents. I have nothing against oil and gas, mining, logging (I come from a logging family). Hell, I use everyone of those things.

I am just tired of being fed such lines of BS about "no impact from our activities" on one hand and "bonding would bankrupt us" on the other hand. I am also tired of the entrenched industries getting all this subsidy and making it impossible for the market to allow competing ideas to come forward and compete on a level playing field. So long as those charged with representing the people and the public interest in their resources do not look at all the cost-benefits, this kind of subsidy is going to continue.

I wonder how much Anadarko would have paid for Book Cliffs leases if they were told you can explore and extract, but you must post a bond for the risks/impacts your activities have on the land, water, and wildlife? I wonder what a risk management company would charge Anadarko for a bond on such activity in an area as remarkable as the Book Cliffs?

I suspect that risk management company would charge a large fortune, which would be a reflection of the risk Anadarko's activities could have on permanent long-term impairment to the leased lands, making the amount Anadarko would have paid for such leases, far less as they now have to absorb or manage the risk of their activity rather than shift it to the public. It appears the UT State Land Board wants to shift all the risk to the citizens of the state.

 

[Big Fin]

I know nothing about this deal or even what Play they are after, but I will say that if it goes ahead with today's technology with Directional Drilling and the like the impact will be much less than if it was done 15 years ago. We are drilling wells 330' off the south line of a section and the bottom hole will be 330' from the north line of the same section. I have also been doing some laterals that stretch close to 9000', that really reduces the footprint of the exploration companies. The backroom deals and such, well only a few people ever know about those. John

John, what you provide seems like it could mitigate a lot. Any idea of why do we not see that happening on the public lands of the west? We see it happen on private lands. We see it happen in areas with higher visibility along coasts or larger populations.

Any idea of why we don't see it much out here? Seems strange that these companies tell us they can do this, but they seldom do; at least in the public lands of the west.

I am far from an expert on the topic, but it causes me to conclude that doing so is more expensive, so they do it the old/cheaper way. They talk about the new ways as a sales pitch, but on the ground out here, for some reason not clear to me, they don't do it very much. Or, at least not the places I end up hunting.

 

[BuzzH]

Draftstud, I really want to believe what you claim...but I dont see that a whole lot in Wyoming.

Apparently its much cheaper to punch roads and well pads than it is for directional drilling.

 

[bonedogg]

if bonding is a deterrent, implicate timing restrictions and have them fund the policing of such. The problem up here happens when you have the Fish and game guys looking at oil and gas applications more than doing the job they intended to do in the first place. if its winter range, restrict activity at those times, if its weeds, force them to clean their equipment before and after entering these areas. The cost of doing business may deter them for now, but with the US's dwindling reserves the ol' government looks at new ways of making it happen. When I watch a US drilling shows and see guys wearing wife beaters on the rig it makes me wonder what safety standards exist?

 

[Oak]

The ability to directionally drill is based primarily on the geology of the formation and the depth of the gas. I have heard that in areas of WY the gas is too shallow to be directionally drilled.

Here is a photo I took of a pad with 51 wells. I believe I heard that this is the most wells from a single pad in NA, but I can't confirm that.

Any thoughts on whether petroleum prices will go up or down in the future? Does the value of the Land Board's asset go up or down over time? Is now the best time for them to sell their asset?

 

[bonedogg]

One thing our fish and game/Alberta energy regulator has done in the last few yrs is implicating rules for our crown/state lands to which the companies must follow existing linear disturbances, butt up against existing dispositions if they already exist within 250 meters and setbacks to the top of the banks of all water bodies. Roads are shared and no costs are takin on by the state /province or its taxpayers.

 

[BRI]

Good discussion, Thanks! I agree these companies probably have the ability to do things a bit more "wildlife friendly" but don't because they are more expensive to do and because they are not required to.

The next conundrum I see is quantifying impacts and determining what's negatively acceptable? Anyone who thinks there isn't any negative impacts is foolish but finding that level to accomodate the majority is difficult. Say they come out and say a project will negatively effect Mule Deer. What level of population decrease would be acceptable to you? No decrease? 10%? 20%?

 

[DRAFTSTUD]

Sorry Fin, Buzz, I was away for awhile! This method which Oak shows being done is a costly way, but the trade off is that you can use a "Super Pad" and get the most production with the least impact. Next year will be my 40th year doing this and it is just in the last 5-10 years that I have seen it take off. As I said earlier, I don't know what play or depth they are going after. The companies that hired my company were going after a Shale Play named the Haynesville Shale.
The drillers would drill 8000' down and then whipstock out and be at a 90 degree turn within 300' to hit the shale staying within that shale for close to a mile, then perforating the zone 12-14 places. That should show you how many wells it could replace. Now the kicker is this, when we started gas was $13 MCF after a year it was $4.50 and they are still drilling these 4-6 million dollar wells. I know we did over 2000 wells during this time and THAT is why everyone is hustling for an Oil Play.
We talk about how it seemed backroom deals were done and they probably were, but here is the way the Haynesville hit our area. When the Landmen started leasing it started at $2-300 per acre with a 1/5th royalty. As we were used to seeing $150 an acre alot of people signed pretty fast, especially those in the O&G Industry. I had a Geologist that was asked by his Church to handle their Lease, he got them $300 an acre. Here is the kicker, he was a Senior Geologist and the company he worked for was one of the main players in this and he knew zip! Leases started going for up to $30,000 an acre with a 1/4 royalty!
OK, here is where I tell it like you don't want to hear, If companies can come in and drop 2-3 billion on Leases and Development, what do you have to offer the state to keep them out? And I hunt the West and love my time out there, heck it kills me when I get out around Sweetwater, TX and see those Wind Turbines, old west my azz!
My area around Shreveport, LA was one of the most exploited areas in the world when oil booms were hitting in the early 1900's. They used to dig ponds to pump their oil into the old structures are still here, huge Rigs standing out in the woods or in a "Duck Pond" which is really an old Oil Pond. But if you did not know your history you would not know the vast amounts of oil came from this area as it almost looks pristine in areas. My hope is there can be a way for both Sportsmen and O&G Companies to share the same ground, but it will have to be done before an area is Leased, not after or it's game over. John

 

[Big Fin]

Thanks, John. Very helpful to have the insight of someone who sees how it happens and has been in it for years.

I don't think anyone is saying that we find some way to keep out energy companies who are dropping billions on leases. Hell, we need the energy. That said, I would like to find a way for them to operate in a way that lessens the impact on the land and somehow be required to account for those impacts by bonding or other market models. I suspect if the market valued all aspects of the equation, drilling in some of these high priority wildlife areas would be unfeasible until energy supply gets so tight that energy pricing is high enough to justify compensating for the impacts to these high quality wildlife areas.

Right now, energy pricing is not high enough for extraction to fund mitigation and still allow it to be feasible in these sensitive areas. Thus, agencies tend to remove/lower the mitigation requirements to make it profitable/feasible, resulting in energy being extracted from areas that make no economic sense at this time, or at least not economically sensible if all costs are accounted for,

It seems there is a more wildlife-friendly way to do this on landscapes that have very sensitive and high quality wildlife values. Maybe I am naive to think there is a better way. I am probably more naive to think that all agencies will operate in the open transparency of public process.

Thanks again, John.

 

[DRAFTSTUD]

Well I see no end to the Gas Bubble we have now. I did see where in Utah there was a possible oil play that at the time was suppose to be the next big thing. But that was 5 or 8 years ago, I did some mapping for some folks out of Denver and that is the last I heard of it. Every Geologist has his Spindle Top. LOL John

 

[MN Public Hunter]

I think you are all just mad cause anyone can get in and hunt versus you using helicopters to hunt the spot....hahaha

 

[bigeasygator]

John, what you provide seems like it could mitigate a lot. Any idea of why do we not see that happening on the public lands of the west? We see it happen on private lands. We see it happen in areas with higher visibility along coasts or larger populations.

Oak and Draftstud more or less nailed it. There's a lot of factors that go into drilling wells and having commercial (read "profitable") oil and gas wells. While directional drilling has its place, there are limitations in the technology and drilling some of these wells are not just more costly but also riskier from a well control (ie, ability to drill the well safely) standpoint depending on the reservoirs we are talking about. Additionally, some of these reservoirs do not lend themselves to horizontal wells, for example, that could be drilled from a single location.

Generally, the reserves we are talking about are in tight shale that is deposited in layers vertically on top of one another. Sometimes these individual layers may only be 10' thick, but when you stack up 20 or 30 of them and frac into them you all of a sudden have commercial volumes (in otherwords, drilling into a single layer with a horizontal well won't get you that kind of recovery). In these kind of reservoirs you can imagine what kind of a development plan would net you the most recovery -- it would be one in which aerially I could space wells out to ensure I had good horizontal sweep across a reservoir with a number of vertical wells that would tap into these layers. Good for business...bad for your footprint.

I do work as a production engineer for an oil company. I can't speak for all of them, but I can promise you nothing is done without first discussing HSE (Health, Safety, and the Environment). While I think we recognize that it's impossible to have a zero impact operation (the only way to do that is not be there), we put a tremendous amount of resources into trying to minimize our impact on the environment and take action to do so in certain areas (like shutting down certain operations during peak breeding seasons for specific animals).

Often times, I'd say these actions don't go far enough to please certain groups -- and some of that's to be expected given the nature of the business. I do also understand that talk in a conference room doesn't necessarily translate to results in the field -- but we do try to stay vigilant to ensure we're acting in a responsible and ethical way.

I fully believe that we can come to a suitable compromise on how we develop these valuable resources whilst minimizing the impact on these wild places and creatures we hold dear. I know these words won't necessarily fix anything, but if nothing else I hope it gives some level of comfort that there are people on the inside that do care and companies that are trying to do right. Ok...I'll get off my soapbox...I leave for my New Mexico elk hunt in 2 hours and I've gotta finish packing!

 

[Big Fin]

........

I fully believe that we can come to a suitable compromise on how we develop these valuable resources whilst minimizing the impact on these wild places and creatures we hold dear. I know these words won't necessarily fix anything, but if nothing else I hope it gives some level of comfort that there are people on the inside that do care and companies that are trying to do right. Ok...I'll get off my soapbox...I leave for my New Mexico elk hunt in 2 hours and I've gotta finish packing!

Yup, it does, bigeasy. Thanks for taking the time to provide that.

And please, post the story about the big NM elk you will arrow next week.

 

[bigeasygator]

Yup, it does, bigeasy. Thanks for taking the time to provide that.

And please, post the story about the big NM elk you will arrow next week.

Thanks Randy. It's something I'm passionate about, on both sides of the fence. And I'll definitely report back on the hunt!

 

[fowladdict]

I wonder where BGF and SFW stand on this? Not that I really care...

 

[Ben Lamb]

I wonder where BGF and SFW stand on this? Not that I really care...

Right next to the Energy company is my guess.

 

[DRAFTSTUD]

Now Ben, no need to make the Energy Company look as bad as BGF & SFW! LOL John