P Hagemeier-Chk - Env Impact of the Energy Industry

8/9/2019 P Hagemeier-Chk - Env Impact of the Energy Industry

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The Environmental Impactof the Energy IndustryPaul Hagemeier,Chesapeake Energy, Inc.VP – Regulatory Compliance


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Presentation Overview

Background on Chesapeake Energy

The National Petroleum Council’s North AmericanResource Development Study

The Environmental Impact of the Energy Industry

Life cycle and environmental footprint impacts

Regulatory challenges

Recommendations for Industry and Government


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Chesapeake Energy OverviewSecond-largest producer of U.S. natural gas and a Top 15 producer of U.S.liquidsMost active driller in U.S.

176 operated rigs currently – 100 drilling for natural gas and 76 drilling for liquids

Employ over 12,000 employees in 16 states

Applying unconventional thinking and state of the art technologies,Chesapeake has grown from a $50,000 startup in 1989 to a $30 billionenterprise today

Chesapeake is leading the effort to reduce American dependence on

unreliable, high-cost foreign oil and on dirty, high-carbon coal through thegreater use of natural gas in electrical generation and transportation networks

Leader in identifying and capturing world-class unconventional natural gas andliquids resources

In past 4 years, discovered five of America’s best unconventional plays: Granite Wash,

Mississippi Lime, Haynesville Shale, Tonkawa Tight Sand and Utica Shale


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Best Assets in the BusinessCaptured America’s largest natural gas and liquids resource base

Unparalleled inventory of U.S. onshore leasehold and 3D seismic

Diversified operational focusLeading positions in 12 of the Top 15 unconventional liquids-rich plays in

the U.S.Leading positions in 4 of the Top 5 best U.S. natural gas shale plays(having sold the Fayetteville)

High quality assets

PXP, BP, STO, TOT, CNOOC JVs and BHP Fayetteville sale validate assetquality and value

Exclusive focus onshore U.S. where the highest risk-adjusted returns in theindustry are available

1) Based on trailing 12-month average price required by SEC rules; 17.2 tcfe based on 10-year average NYMEX pricesNote: Risk disclosure regarding unproved resource estimates appears on page 45


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Conducted by theNational PetroleumCouncil (NPC) forSecretary of EnergyChu

“Prudent Development - Realizing thePotential of NorthAmerica’s Natural Gasand Oil Resources”

North American Resource Development Study

Prudent Development – Realizing the Potential of North America’s Natural Gas and Oil Resources


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Study Objectives

Reassess North American resource baseDescribe the operating practices and technologies thatwill be used to minimize environmental impacts

Assess North American supply and demand

Identify emission reductions stemming from increaseduse of natural gas

Advise on policy options that will allow prudent

development consistent with:Environmental protectionEconomic growthEnergy security



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Natural Gas is an Abundant ResourceFinding #1

Recent Estimates of Natural Gas Resources

Estimates10 years ago

CurrentEstimates

Advances in applicationof technology broughtthis about

Significant benefits foreconomy, environment,energy security

Realization of benefits

depends on responsibledevelopment practices



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Oil Resources are Also AbundantFinding #2

High production opportunities exist if access is

opened up

North America’s oil resource

base could also providesubstantial supply for decadesahead

World-class resource basins

Some in remote areas

offshore and in the ArcticAccess results fromtechnology leadership,sustained investment

U.S. and Canada together

now the world’s largest oilproducer

Future access depends upon allcompanies adhering to prudentdevelopment practices



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America Needs Natural Gas and OilNatural gas and oil are indispensable to our economy andstandard of living – for the foreseeable future

It’s true even as we diversify and use energy more efficiently

Abundant gas supply can help the global competitiveness of domesticindustries that use natural gas as a fuel and feedstock

Even so, we must still use these resources wisely – with cost-effectiveenergy efficient measures

Finding #3



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Benefits Depend Upon Prudent Development

Realizing the benefits of natural gas and oil requiresenvironmentally responsible development and delivery

The hoped-for benefits – economic, environmental, and energy security – depend on responsible production and delivery

Development in different areas require different approaches

Everywhere, natural gas and oil companies must use responsible practicesthat protect the environment

Regulators must evolve their own regulatory requirements to take accountof new information and practices

Finding #4



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Operation and Environment Task Group Focus

The evolution of environmental improvements and variationsacross play types

Evaluate the environmental footprint compared to otherenergy sources

The regulatory framework

Future technological advances

Sustainable principles that provide for the future



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The Geographic Reach of Natural Gas and OilDevelopment in N. American Wells is Large

Total: 4.3 Million Wells

Source: IHS / HPDI

Wells per 100 square miles

1-50

51-250

251-500

501-1000

> 1000



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The History of Continuous ImprovementShould Inform Policy

Legal & regulatory

changes

Drilling Activity

Span of 150+ years

Technology Changes



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Oil and Gas Development is RegulatedFrom Start to Finish

Leasing Land

SeismicAssessments

Site Preparation

Drilling

Well Completion

Production

Restoration



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National Petroleum CouncilRecommendations

Support Prudent Natural Gas and Oil ResourceDevelopment and Regulation

Establish Regional Councils of Excellence

Adopt Policies for More Effective Regulation

Commit to Community Engagement

Develop Consistent Methodologies for Environmental

Footprint Analysis



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The Environmental Impactof the Energy Industry


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National Energy Picture71% of petroleum isused for transportation91% of coal is used togenerate electricity100% of nuclear is used

to generate electricity51% of renewables are usedto generate electricity

atural gas is versatile34% Industrial

34% Residential/commercial

29% Electrical generation

3% Transportation

Source: Energy Information Administration, AnnualEnergy Review 2008, June 2009, Table 1.3 and Figure 2.0.

In 2008 the U.S. consumed over 99.2 quadrillion Btu’s of energy.

93 percent of energy consumed is from nonrenewable sources

U.S. EIA, “U.S. Primary Energy Consumption by Source and Sector, 2008,” Annual Energy Review 2008 (June 2009),

http://www.eia.doe.gov/emeu/aer/pecss_diagram.html (accessed January 2010).; U.S. EIA, “Table 2.1d: Industrial Sector Energy Consumption, Selected Years,1949- 2008,” Annual Energy Review 2008 (2009), available at http://www.eia.gov/FTPROOT/multifuel/038408.pdf.U.S. EIA, “Annual Energy Outlook”, DOE/EIA -0383(2010), April 2010, Appendix A - Table A6, available at http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2010).pdf


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Concerns Voiced By NGOs & Public

EnergySource NRDC Union of

ConcernedScientists

The NatureConservancy The WildernessSociety Sierra Club

BiofuelsGHGs, soil, aquaticsystems, wildlife

Air/GHGs, land use,habitat, soil impacts

Land use changes,carbon balance

Land degradation, water use& quality

Land, air, water, farming,food impact

CoalMountaintops, GHGs, landand aquifer impacts

Mining impacts,emissions, GHGs,wastes, water

Air emissions, GHGs,water, wildlife

Coal plants are big polluters,GHGs

GHGs, air, water, land,food chain, mining impacts

GeothermalSiting in sensitiveenvironments

Air and water pollution,siting, subsidence,waste

Habitat, land usechanges, wildlife

Land, habitat, lower watertables, air emissions, wateruse

Siting near surfacefeatures & sensitiveenvironments

HydroSpecific concern notidentified

Land impacts, wildlife,river system changes

Aquatic ecosystems,fisheries, land usechanges

Land and wildlife impacts(renewables in general)

Water quality, fishpassage, streamflow, landinundation

Natural GasLand, Water, Air,Exemptions, Health

Air emissions waterpollution, oil spills

GHGs, habitat, water,wildlife

Wildlife/habitat, water, GHGs Damage to frontier areas,CBM water impacts

NuclearReleases of radio-activity,health, aquifers

Risks of accidents, risksfrom waste storage anddisposal

Specific concern notidentified

Specific concern notidentified

Mining impacts, risk ofaccidents, risks fromnuclear wastes

OilLand, Water, Air,Exemptions, Health

Air emissions waterpollution, oil spills

GHGs, habitat, water,wildlife

Wildlife/habitat, water, GHGs Damage to frontier areas,CBM water impacts

SolarSpecific concern notidentified

Land use, habitat, wateruse, hazardousmaterials

Habitat, land usechanges, wildlife

Impacts on deserts, toxicmaterials, water use, spills

Land impacts, materials,construction

WindOffshore: marinemammals, birds, coastalenvironment

Land use, bird deaths,noise, visual impacts

Habitat, land usechanges, wildlife,cumulative effects

Land and soil, habitat,bird/bat deaths, noise, visual

Visual, habitat, bird and batimpacts, marine andcoastal


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The National Discussion

When I want your opinion I'll give it to you. ( Laurence J. Peter )

Every man has a right to be wrong in his opinions. But no man hasa right to be wrong in his facts. ( Bernard M. Baruch )

Environmental NGOs

Natural Gas and Oil Industry

Power Industry

Renewables Industry

EPA

SEC

DOE

Community Groups

State Regulators

Local Regulators

DOICongress

The public

http://en.proverbia.net/citasautor.asp?autor=15666http://en.proverbia.net/citasautor.asp?autor=10510http://en.proverbia.net/citasautor.asp?autor=10510http://en.proverbia.net/citasautor.asp?autor=15666


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Examples of Energy Impacts

Wind farm in San Gorgonio Pass, CA Sempra Energy Solar Farm,El Dorado, NV

Mountaintop removal coal mine in

southern WV

Nuclear Reactor (Three Mile Island)


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Total U.S. Freshwater Use

U.S. freshwater usewas equal to 349

billion gallons / day(in 2005)

Thermoelectric is thedominant freshwateruse sector

Public Supply12.66%

Irrigation36.65%

Aquaculture2.51%Mining

0.66%Domestic1.10%

Livestock0.61%

Industrial4.87%

Thermoelectric40.94%

Source: Kenny, J.F., Barber, N.L., Hutson, S.S., Linsey, K.S., Lovelace, J.K., and Maupin, M.A., 2009, Estimated use of water in the United States in 2005: U.S.Geological Survey Circular 1344, 52 p.


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Water Intensity of Raw FuelsGals MMBtu

Deep Shale Natural Gas:0.6 – 3.8Natural Gas: 1 – 3Coal (no slurry transport): 2 – 8

Nuclear: 8-14Conventional Oil: 8-20Fuel Ethanol (irrigated corn):2,500-29,100

Biodiesel (irrigated soy):14,000-75,000Hydrogen (electrolysis 100-200)

1 10 100 1000 10000 100000

Other Natural Gas

Deep Shale Gas

Coal (no slurry transport)

Nuclear (processed Uranium ready to use in power …

Convetnional Oil

Synfuel - Coal Gasification

Petroleum from Shale Oil (in-situ retorting)

Coal (with slurry transport)

Petroleum from Shale Oil (Surface Retorting)

Petroleum from Tar Sands (Oil Sands)

Synfuel - Coal Liquid (Fischer-Tropsch)

Enhanced Oil Recovery

Fuel Ethanol (irrigated corn)

Biodiesel (irrigated soy)

Gallons of Water

E n e r g y S o u r c e

Sources: Matthew E. Mantell (Chesapeake Energy Corporation), “Deep Shale Natural Gas: Abundant, Affordable, and Surprisingl y Water Efficient,” paper prepared forPresentation at the 2009 GWPC Water/Energy Sustainability Symposium, Salt Lake City, Utah, September 13-16, 2009; and U.S. DOE, “Energy Demands on Water Resources,” reportto Congress on the Interdependency of Energy and Water (December 2006), Table B-1.

Gallons of water used per million Btu produced

Water Intensity: Theamount of waterneeded to extract, mine,or grow materials thatare processed and laterused for energy ortransportation fuels


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Surface Disturbance by Energy SourceAcres

Nuclear: 169Shale Gas: 496Wind Turbines: 1,943*Conventional Natural Gas: 2,051

Coal – Surface Mines: 2,054Conventional Oil: 2,236Geothermal: 2,381Concentrating Solar: 17,241

Photovoltaic: 31,786Hydroelectric: 172,241Bio Diesel (soy): 4,214,227

1 10 100 1000 10000 100000 1000000 10

NuclearGas - Shale Gas

Coal -Underground Mines

Oil -Shale Oil

Wind

Conventional Gas

Coal -Surface Mines

Gas -CBNG

Conventional Oil

Geothermal

Solar - CSP

Solar - PV

Hydroelectric

Biodiesel from soy

Surface acreage disturbance incurred in the generation of1,000 MW of “new” energy for the national electric grid

Horizontal scale islogarithmic

*Wind turbines only accounts for the surface disturbed for the pad andaccess routes not the entire farm.

Surface coal mine size is based on: Average distrubed 3,863.8 acres/yr – Source: Office of Surface Mining Reclamation and Enforcement (OSMRE). “Regulation of Active Coal Mines.” In 2002 Annual Report.http://www.osmre.gov/Reports/AnnualReport/2002/2002_AR_Regulation_of_Active_Mines.pdf (accessed March 2010).Average production 3,365,858 tons/yr – Source: U.S. EIA. “Table 1:Coal Production and Number of Mines by State and Mine Type, 20 08- 2007.” Annual Coal Report DOE/EIA-0584 (2008). September 2009. http://www/eia.doe.gov/cneaf/coal/page/acr/table1.html (accessed July 7, 2010).Subsurface coal mine size is based on: Conversations with industry (off the record) and regulatory officials (Ohio Department of Natural Resources) Includes mine mouth, coal washing, etc. Average 14 0 acres Average production 538,951 tons/yr – Source: U.S. EIA. “Table 1: Coal Production and Number of Mines by State and Mine Type, 200 8—2007.” Annual Coal Report DOE/EIA-0584 (2008). September 2009. http://www.eia.doe.gov/cneaf/coal/page/acr/table1.html (accessed July 7, 2010) .Conventional gas, Proxy: Massard Gas Field, N. AR, Average production: 36,547 MCF/yr/well Average ac res disturbed: 2.24 ac – Source: BLM. Louisiana: Reasonably Foreseeable Development Scenario for Fluid Minerals . BLM Eastern States, Jackson Field Office. March 2008.CBNG, Proxy: Powder River Basin, WY, Acreage production: 30,021 MCF/yr/well – Source: Wyoming Oil and Gas Conservation Commission. Webpage. n.d. http://wogcc.state.wy.us/ (accessed March 2010)Average acres distrubed: 2.0 ac – Source: BLM. Draft Supplement to the Montana Statewide Oil and Gas Environmental Impact Statement and Amendment of the Powder River and Bi llings Resource Management Plans. Miles City, MT: December 2006Shale gas, Proxy: Barnett Shale, TX, Average production: 150,185 MCF/yr/well – Source: Railroad Commission of Texas. “Newark, Ea st (Barnett Shale) Field: Discovery Date – 10-15- 1981.” http://www.rrc.state.tx.us/data/fielddata/barnettshale.pdf (accessed Mar ch 2010)Average acres distributed: 1.23 ac/well – based on 7.4 acres for a 6 well pad – Source: ALL Consulting and the Ground Water Prot ection Council (GWPC). “Modern Shale Gas Development in the United State: A Primer.” Prepared for the U.S. Department of Ene rgy Office ofFossil Energy and National Energy Technology Laboratory, Washington, DC. April 2009.


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Visual Impact Comparison

Visual impact: the alteration of anaesthetic experience of a viewshed. It ishighly subjective; therefore, quantifyingvisual impacts can be complex

This study focused on skyline impairmentand surface disturbance which allow adegree of scaling

WindTurbine1 5 MW

262.46’)

WindTurbine2 3 MW

393.70’)

Statue ofLiberty

301.25’)

Nuclear HybridCooling Tower

169.04’)

Natural DraftCooling Tower

500’)

PumpJack15’)

GasWellhead

6’)

HighVoltageTower

82’)

“Geothermal Heating: Geothermal Energy Environmental Impact.” Geothermal Heating Report © 2007. http://www.geothermalheatingreport.com/geothermalenergyenvironmentalimpact.html (accessed January 2010).Iowa Energy Center. “How Tall are Wind Turbines?” http://www.energy.iastate.edu/renewable/wind/howtallareturbines.htm (accessed January 2010).

New York State Department of Environmental Conservation (NY DEC). “Natural Gas Development Activities and High -Volume Hydraulic Fracturing.” Chapter 5 in Draft Supplemental Generic Environmental Impact Statement on the Oil,Gas and Solution Mining Regulatory Program. 2009 (5-22)U.S. Nuclear Regulatory Commission (U.S. NRC). Generic Environmenta l Impact Statement for License Renewal of Nuclear Plants: Main Report (NUREG-1437, Volume 1). May 1996 http://www.nrc.gov/read ing-rm/doc-

collections/nuregs/staff/sr1437/v1/index.html (accessed January 2010).


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Almost All Impact Is Local


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EPA’s Approach to Natural Gas – Study,Regulation, Guidance and Policy

Regulation and policy development under existingauthorities:

New air regulations

Guidance to provide framework for use of diesel fuel in hydraulic fracturingfluids

Guidance on wastewater pits and impoundment construction

Regulations and guidance for treatment and disposal of productionwastewater

Evaluating injection induced seismicity

Hydraulic Fracturing Study

Enforcement initiative


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The dministration’s pproach to Natural Gas

Even so, the industry is under a great deal ofscrutiny:

EPA investigations

Department of Interior Review of On Shore Rules

Secretary of Energy Advisory Board

Securities and Exchange Commission


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Tying It Together

Comparative environmental cost – keep national policymaking and regulation in perspective

Expect and support effective state regulation

Focus on local impacts and drive continuousimprovement

Engage communities in plans and education

Develop effective practices for local conditions


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This is a $30 Million Factory

Never closesEmploys dozens for decades

6 to 8 can be co-located on a

single 1 to 3 acre padThat’s $180M -$240M in totalvalue for one site

Supports salaries, taxes,schools and charities


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The Environmental Impactof the Energy Industry Paul Hagemeier,Chesapeake Energy, Inc.VP – Regulatory Compliance

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P Hagemeier-Chk - Env Impact of the Energy Industry