June 2011
By:
Matthew Francois,
Earl Hagström
Published by Aspatore Books, this special report, authored by lawyers from Sedgwick’s Hydraulic Fracturing Task Force, gives an overview of the hydraulic fracturing method of obtaining natural gas, focusing on the Marcellus Shale formation. The authors explore State and Federal Regulations, as well as regulatory permitting issues which may impact the development of Marcellus Shale resources. Also included is a brief outline of environmental litigation risks to exploration and production companies.
From the text:
The Marcellus Shale formation, extending from eastern Kentucky through West Virginia, Ohio, Pennsylvania, Maryland, and New York, is one of the largest and most significant new potential sources of natural gas in the United States. It is estimated to contain 200-500 trillion cubic feet of natural gas, enough to supply domestic demand for up to twenty years. Natural gas is considered to be a “bridge fuel” between current fuel sources and potential alternative fuel sources of the future. Because the Marcellus Shale is a “tight” formation, meaning it has limited permeability, horizontal drilling and hydraulic fracturing of the shale are used to enhance movement of the shale gas to the well-bore for extraction.
Hydraulic fracturing creates fractures in the natural gas reservoir through injection of millions of gallons of fluids under high pressure into the reservoir. The fractures may extend several hundred feet into the surrounding rock formation and allow fluid, in this case natural gas, to flow from the boundaries of the reservoir toward the wellbore. Although hydraulic fracturing has been used by the oil and gas industry for well over fifty years, recent technological advances have substantially increased recoverable gas reserves using this technique, including the substantial reserves in the Marcellus Shale.
Ongoing development of natural gas from the Marcellus Shale region faces numerous legal challenges, much of which is driven by perceived environmental risk posed by hydraulic fracturing. Recent and pending state and federal regulatory and legislative actions create a patchwork of inconsistent, multilayered, and evolving permitting requirements. In addition, a broad array of environmental litigation is expected to challenge every aspect of the exploration and production of the resource. Navigating the maze of evolving regulatory requirements and understanding the risks associated with both surface and subsurface elements of a hydraulic fracturing operation are crucial for companies seeking to develop and exploit the tremendous resources within the Marcellus Shale formation.