The Shale Game: Natural gas glossary
An explanation of terms and policies surrounding the Marcellus Shale gas drilling industry.
2005 Energy Policy: The G.W. Bush administration policy that has been criticized for stripping the teeth from the Clean Water Act and Safe Drinking Water Act with regard to hydrofracture drilling. A report for Congress explained those exemptions. The Frack Act, still in committee in Congress, seeks to reverse them.
Appalachian basin: The subterranean geologic formations that roughly follow the Appalachian Mountain range. Drillers have started to use the term to refer to any exploitable formations in this area – shale gas, oil or coal, regardless of whether they are found in the mountains at all. Drillers have claimed the Appalachian basin stretches from New York to Tennessee; others say it extends well into Canada or that it’s analogous to the entire eastern seaboard. The United States Department of Energy associates the Appalachian basin with the Marcellus Shale, the Devonian Shale, primarily of Ohio, and the Utica Shale in Virginia [Map (pdf link)].
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Brine: A salt water and chemical mix that is produced after fracking a well. This liquid comes out of the ground with very high Total Dissolved Solids (TDS) levels and often toxic substances such as barium and strontium. After use in fracking, brine must be treated as contaminated waste water
Clean Water Act: The federal law that regulates discharges into waterways.
Closed loop system (pdf link): Generally refers to drillers operating with a water cycle that is never exposed to the open air, unlike containment ponds. Closed loop drillers might operate on a well pad that is too isolated or too small to allow for construction of a pond.
Cryogenic plant: A type of natural gas processing plant that uses low temperatures to condense the collected natural gas to a liquid state, making it easier to separate the component hydrocarbons and transport the gas.
Department of Environmental Protection (DEP): This state agency has permitting and primary regulatory authority over the natural gas industry in the state.
Directional drilling: The process that allows drillers to sink a well to a certain depth and then aim it in a lateral direction toward a target area. Directional drilling allows greater access to hard to reach stores of gas or oil and it means drillers can cover more territory with one well.
Department of Conservation and Natural Resources (DCNR): The state agency that issues permits and enacts leasing policy for drilling on state-owned lands. The DCNR does not regulate wells. Currently close to half of all state lands are leased to drillers, including areas designated as wildlife preserves.
Delaware River Basin Commission (DRBC): This multi-state agency includes the governors of Pennsylvania, New Jersey, Delaware, and New York on its board. It regulates water withdrawals from the Delaware River as well as effluent into the river. It has been at the center of the debate over drilling in Northeastern Pennsylvania. Recently it issued an executive order halting most drilling in its watershed. It has promised to study the impacts of hydrofracturing and issue new permanent rules, possibly in the fall of 2010.
Dry gas: One of two types of raw natural gas, dry gas contains low amounts of condensable compounds, also called natural gas liquids or NGLs (such as butane and propane), making it more “pipeline ready.” Gas is considered to be “dry” when it is composed of almost entirely methane.
Environmental Protection Agency (EPA): Federal agency that regulates industrial impacts on the environment. Despite its environmental mandate, the EPA has shown little activity in Pennsylvania since Marcellus shale drilling began in 2005. The federal agency began a two-year study this summer aimed at considering new rules for the industry after 2012.
Exploration and Production companies (E & P): They are the first step in the process of harvesting natural gas; they find the natural gas, drill, and get the gas out of the ground. Midstream companies then collect and process the natural gas (using cryogenic or non-cryogenic plants). Pipeline companies then take over and transport the gas.
Fish and Boat Commission: Because of the Marcellus gas drilling impact on waterways, this state department has also emerged as an active regulator of Marcellus shale drilling in Pennsylvania.
Hydraulic fracturing (“fracking,”, “hyrdofracking”): The process of creating fractures in non-porous rock, such as Marcellus shale, using specially formulated water-based solutions forced into wells at extremely high pressure; the cracks in the rock allow for the release and collection of the natural gas.
The Frack Act: The Fracturing Responsibility and Awareness of Chemicals Act seeks to reverse some of the policies enacted in the 2005 energy policy and compel full disclosure of the chemicals, and specifically the concentrations of the chemicals used in hydraulic fracturing. Currently, the amount of each chemical is considered proprietary information. Democratic Senator Bob Casey (Pennsylvania) and Congresswoman Diana DeGette (Colorado) are the primary sponsors of the bill.
Frack fluid: This is the water-based compound drillers use to fracture the shale. It’s composed of very large amounts of water – up to several million gallons — mixed with any number of chemicals, plus sand. It is pumped into wells under very high pressure to break up underground rock formations, which releases natural gas. The environmental impact(pdf link) of frack fluid has been a running controversy in Pennsylvania, almost since Marcellus drilling began in the state.
Frack water recycling: The reuse of water or brine that comes up out of the well after the shale has been fractured. Companies treat the used fluid and dilute it with new fresh water. After Pennsylvania passed stricter limits on total dissolved solids (TDS) discharge, companies have been recycling more frack fluid.
Held by production: A legal process that allows exploration and production companies to extend the terms of the original contract for lease and royalties for the life of a producing well, even if that term goes beyond the stipulated term of the original lease.
Horizontal well: A technique in well drilling common to shale gas production that allows for fewer drill sites, while increasing the access to the reserves underground; used in combination with hydraulic fracturing. Injection wells: Deep wells used worldwide to dump contaminants, often suspended in water, so that they are more or less permanently sequestered below the aquifer. Injection wells (pdf link) are used by many industries. They are regulated by the Environmental Protection Agency, which also classifies them roughly by the type of liquid being put back into the ground.
Lease rates: How much a company pays for land or mineral rights. These are typically executed in five-year increments.
Liquified natural gas (LNG): Natural gas (often ethane or methane) converted to a liquid (via cryogenic processing) for transport or storage.
Mineral rights: Legal rights that allow for search and removal of minerals on a particular parcel of land.
Mud or drilling mud: Also referred to as drilling fluid, drilling mud is the oil- or water-based liquid compound used to lubricate and cool working drills. The specific ingredients vary according to company and drill site. As with fracking fluids, exploration and production companies are not required to publish the ingredients or their specific formulas.
Natural gas liquids (NGL): Components of natural gas (pdf link), such as propane, butane, pentane, hexane and heptane, that are liquid at surface temperatures and pressures (unlike other components of the natural gas, such as methane and ethane, that need to be cooled before they liquefy). Natural gas liquids are considered valuable by-products of natural gas processing. When natural gas contains NGL, it is called “wet gas;” without these compounds, it is called “dry gas.”
Pennsylvania Oil and Gas Act: State law that gives the Department of Environmental Protection regulatory and permitting authority over the oil and gas industry. DEP asserts that this law gives it primacy, even over local regulations, when it comes to permitting new wells, but the state Supreme Court has allowed local municipalities some authority regarding well zoning.
Pooling or land pooling: A legal process that allows exploration and production companies to compel unwilling land and mineral rights holders to lease or sell their land and/or mineral rights for exploration, drilling, or pipeline installation if enough of their neighbors have already agreed. Government agencies require a minimum number of acres of land before granting a well permit; with pooling, companies can collect smaller tracts of land that will accumulate to this total minimum acreage. Pooling is not a law in Pennsylvania, but there are legal proposals to make it so.
Propping agent: An additive to the frack fluid, often sand or other granular substance, that props open micro-fractures of the shale, allowing gas to seep into the well bore.
Pumping station or Compression station: These pump natural gas through pipelines at a rate of about 700 million cubic feet per day. They tend to be situated 50 to 100 miles apart.
Roughneck: Workers who maintain and operate a drill rig; usually unskilled or semi-skilled manual laborers with salaries ranging from $27,000 to $54,000. They usually work 12-hour shifts, and can be away from home for as many as six months at a time.
Royalties: The amount exploration and production companies pay to the mineral rights owners of a producing well. Pennsylvania state law requires this rate be no less than 12% of the market price per 1000 cubic feet of gas on the day that gas comes out of the ground. Often mineral rights owners have negotiated higher royalties. It has also been common for E&P companies to deduct well production expenses from these royalties.
Safe Drinking Water Act: Federal law that regulates drinking water quality.
Shale basin: An underground deposit of shale (pdf link), often in a layer that extends along a plane at a certain depth under the surface. There are many different types of shale, each with certain defining characteristics. Shale gas: Natural gas trapped in a shale formation.
Susquehanna River Basin Commission (SRBC): Regulatory body that governs water withdrawals from the Susquehanna River, but it does not have regulatory control over what flows into the river.
Total Dissolved Solids (TDS): The amount of salt and minerals that are suspended in water. TDS occur naturally in groundwater, but at high concentrations, TDS can be corrosive, and can cause ground (drinking) water to be classified as contaminated. New Pennsylvania Department of Environmental Protection rules on TDS discharges will take effect in January 2011, and will require discharges into Pennsylvania waterways to meet stricter standards of 500 parts per million.
Unconventional fuels: Any fuels that companies produce in ways other than traditional vertical oil wells. These include shale gasses and coal bed methane.
Vertical wells: Traditional gas and oil well technique (pdf link) that bores straight down into a reserve. Vertical wells may be cheaper to develop, but are considered to have a larger environmental footprint.
Well bore: This is the entire length of hole that the drill makes in the ground; there is a great deal of engineering software for the design and casing of a well bore, as it is integral to the overall structural integrity of the well.
Well casing: Steel or cement containment that is installed on the inside of the well bore intended to keep gas or oil from seeping out of the wells into the surrounding ground.
Wet gas: Natural gas that contains natural gas liquids, which are heavier than gaseous methane. Some of these, such as propane, butane, pentane, hexane, and heptane, may come out of the well in liquid form or may need to be processed. The Marcellus shale gas in Washington County has been described as a wet gas. Natural gas liquids are considered valuable by-products of natural gas processing.
Gas measurements:
MMBTU or MBTU: These can both mean 1 million BTUs. (MBTU can also stand for 1000 BTUs, so context is important.) A BTU is the British Thermal Unit. It is the amount of heat needed to increase the temperature of a pint of water by one degree Fahrenheit. An MMBTU is roughly comparable to 1000 cubic feet of natural gas.
$6 gas: $6 per MMBTU/1000 cubic feet of natural gas as priced on the international market. This is the point at which most analysts believe market returns will make shale gas profitable for companies operating in Pennsylvania. It is based on a roughly $4 million estimated cost per Marcellus well in Pennsylvania. The estimates for cost and profitability will vary according to region, state and local conditions.
CCF = One hundred (100) cubic feet.
MCF = One thousand (1000) cubic feet.
MMCF = One million cubic feet.
TCF = One trillion cubic feet.
BCF = One billion cubic feet.
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