Hydraulic Fracturing in Canada

1. Hydraulic Fracturing in Canada
Richard Dunn
Vice President, Regulatory and Government Relations,
Encana Canadian Division
Brussels| January 22| 2013

2. Overview
 Encana Profile
 Industry Response to Stakeholder
Shale Gas Concerns
 Encana’s Experience
Shale pics
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3. Encana Corporation
Aggressively pursuing liquids growth
Production Volumes
Greater Sierra • 2011 Actual:
(inc. Horn River) Natural Gas (MMcf/d) 3,333
Cutbank Ridge Liquids (Mbbls/d) 24
(inc. Montney)
Peace River Arch • 2012 Forecast:
3,000
Bighorn Natural Gas (MMcf/d)
Liquids (Mbbls/d) 30
Duvernay
Coalbed Methane
Clearwater Oil
Collingwood/Utica
Deep Panuke
Jonah
Niobrara/Mancos DJ Niobrara
Piceance
Mississippian Lime
San Juan
Eaglebine
Existing Key Resource Play
Haynesville
Texas New Liquids Play
Tuscaloosa
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4. Western Canada
Significant Unconventional Plays
Western Canada
Estimated Gas In Place
Horn River (GIP):
Shale
Alberta: 3400 Tcf
BC: 1200 Tcf
Total: 4600 Tcf
Total Canadian Production:
Montney Silt
~6Tcf/year
Duvernay
Deep Basin Shale
Tight Gas
Coal Bed
Methane
Encana Land 3

5. North American Gas Production by Type
Conventional, Tight Gas/CBM, and Shale
Long term growth in shale production offsets conventional declines.
Bcf/d
Forecast
48 bcf/d
~50%
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Source: Encana Fundamentals, IHS

6. Benefits of Shale Gas Development
 Security of supply
– New unconventional natural gas reservoirs have uncovered hundreds
of years of North American supply
 Improved competitiveness
– LNG exports have the potential to add $ 1 trillion to Canada’s GDP
– Sustained low NG prices saving North American manufacturing
operations upwards of $11B annually
 GHG emission reductions
– Conversions to natural gas fired power generation have caused U.S.
energy-related emissions dropped to a 20 year low in 2012 (1992
levels)
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7. Working with Canadian Governments
 Canadian operators work under rigorous regulatory regimes that
have been set out by our provincial and federal regulators
– Provide effective and efficient operating frameworks that enable both
environmental protection and resource development.
 Important for industry (Canadian Association of Petroleum
Producers – CAPP) to work with governments to develop mutual
understanding of technical, business and social considerations
– Leads to improved policy and regulations, delivering “win – win” results
 Operating practices developed by CAPP complement robust
regulations
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8. Public Concerns About Shale Gas
“Frac fluids contain
Transparency dangerous chemicals that
aren’t disclosed to public”
“Fracturing can have
Water Quality adverse effects on drinking
water”
Water “Fracturing uses enormous
Quantity amounts of water”
“Fracturing & associated
Seismicity waste-water disposal cause
earthquakes”
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9. Industry Response to Public Concerns
CAPP Guiding Principles for Hydraulic Fracturing
 Guiding Principles:
– Protection of quality and quantity of
fresh water
 Hydraulic Fracturing :
– Fracturing fluid additive disclosure
– Baseline groundwater testing
– Wellbore integrity
– Water sourcing and reuse
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10. CAPP Hydraulic Fracturing Operating Practices
Recognized in the IEA Golden Rules for Hydraulic Fracturing
 Fracturing Fluid Additive Disclosure
 Fracturing Fluid Additive Risk Assessment
 Baseline Groundwater Testing
 Wellbore Construction and Quality Assurance
 Water Sourcing, Measurement and Reuse
 Fluid Transport, Handling, Storage and Disposal
 Anomalous Induced Seismicity
http://www.capp.ca/canadaIndustry/naturalGas/ShaleGas/Pages/default.aspx#operating
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11. 1 Fracturing Fluid Additive Disclosure
Public Concern: “Frac fluids contain undisclosed dangerous chemicals”
Industry Response:
• Publicly disclose, on a well-
by-well basis, the chemical
ingredients in additives
used
 Additive name, supplier, purpose,
chemical name & maximum
concentrations
• BC and Alberta have moved
to make disclosure
mandatory
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12. 2 Fracturing Fluid Additive Risk Assessment
Public Concern: “Fracturing can have adverse effects on drinking water”
Industry Response:
• Identify and manage potential
health and environmental risks
associated with these additives
 Builds awareness
 Selection of greener fracturing fluids
with lower risk profiles, where possible
• Develop risk management
plans for each well fractured
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13. 3 Wellbore Construction and Quality Assurance
Public Concern: “Fracturing can have adverse effects on drinking water”
Industry Response:
• Comply with rigorous
provincial regulatory
requirements and good
engineering practices
• Confirm wellbore integrity
prior to fracturing
• Undertake remedial actions,
when required
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14. 4 Water Sourcing, Measurement and Reuse
Public Concern: “Fracturing
uses enormous amounts of
water”
Industry Response:
• Evaluate available water
supply sources
 Recycled water
 Saline groundwater
 Wastewater sources
 Fresh groundwater
 Surface water
• Measure and report
government regulated
water withdrawals
• Reuse water as much as
practical
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15. 5 Anomalous Induced Seismicity
Public Concern: “Fracturing & associated waste-water disposal cause earthquakes”
Industry Response:
• Assess the potential for anomalous
induced seismicity
• Monitor during operations
• Implement procedures to mitigate
anomalous induced seismicity as
required
• Consistent with the
recommendations from the
regulator’s (OGC) investigation
www.bcogc.ca/node/8046/download?documentID=1270
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16. Encana Experience
Fracturing Fluid Additive Disclosure
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17. Encana Experience
Fracturing Fluid Additive Risk Assessment
 Developed a Responsible Products Program
– Assessed ingredients being used in hydraulic fracturing fluids
against government health and environmental criteria
 Program has influenced product selection and procurement
– Eliminated use of diesel, benzene, arsenic, cadmium, chromium,
lead & mercury in completions products
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18. Encana Experience
Water Sourcing, Measurement and Reuse
Debolt Source Water Plant
 A result of aquifer mapping
of the region
− Industry/government
effort to understand
groundwater capacity
 Uses water from deep,
sub-surface, saline aquifer
for hydraulic fracturing
operations
 Benefits include:
– Eliminating use of
surface water
– Less traffic, dust
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19. Encana Experience
Anomalous induced seismicity
• Installed microseismic arrays to monitor the events
• Results of both Encana and the OGC’s investigations were consistent:
− No event posed risk to public safety, worker
safety or the environment
− Seismic events were contained within the
production zone (~2.6 km below surface)
− Localized and specific to this particular shale gas
formation
− Can be safely managed using prescribed
operating practices
Microseismic activity
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20. Conclusion
• Industry develops natural gas resources responsibly and efficiently
– Provides security of energy supply while providing benefits to
the economy and environment
– Governed by rigorous regulatory regimes, both at the federal
and provincial levels
– Addressing operational concerns about hydraulic fracturing
through CAPP practices, which is driving the right behaviors
• Development of greener chemicals
• Finding alternative water sources
• Managing anomalous seismic events
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