Emerging Centrifugal Technology in Shale Hydraulic Fracturing Waste Management: A U.S.-France-China Selected Environmental Comparative Analysis

Adams, James W., Jr., Stocker, Craig D., Lawson, Nicholas R., Houston Journal of International Law

I.   INTRODUCTION

II.  SHALE PLAY GEOGRAPHY, GEOGRAPHY AND
     ECONOMICS
     A. Introduction
     B. U.S. Shale Plays
     C. French Shale Plays
     D. Chinese Shale Plays

III. OVERVIEW OF HYDRAULIC FRACTURING

IV.  OVERVIEW OF CENTRIFUGAL TECHNOLOGY
     A. The Centrifuge Process
     B. Typical Applications

V.   SELECTED ENVIRONMENTAL REGULATIONS AND THE
     RELATIONSHIP BETWEEN CENTRIFUGAL TECHNOLOGY
     A. United States
     B. France
     C. China

VI. CONCLUSION

I. INTRODUCTION

As world energy use continues to increase, newly discovered natural gas shale plays in the United States, France, and China will become vital in satisfying future demand. (1) As a result, production from shale formations is one of the most rapidly expanding trends in international oil and gas exploration and production. (2) Hydraulic fracturing is the current technology of choice for developing most shale gas reserves. A key aspect of successful shale exploration and production is drilling waste management. (3) Drilling waste is generally composed of liquid and solid components, including water, caustic soda, various acids, methanol, and salt. (4) Many commentators have expressed serious concerns about the environmental impact of shale gas exploration and production, including hydraulic fracturing and how it will affect water supplies. (5)

The current approach to using hydraulic fracturing for shale development may be exemplified by three countries: (1) the U.S., (2) France, and (3) China. The U.S., through various state schemes, has utilized a combined approach ranging from variable bans to near laissez-faire approaches. (6) France has elected to ban the use of hydraulic fracturing for shale development. (7) China has given oil and gas exploration and production developers de facto free reign to utilize hydraulic fracturing. (8)

Shale gas in the United States is regulated though the same network of federal and state laws that control the production and exploration of conventional oil and gas. (9) Each individual state with oil and gas production typically has its own regulatory agency that controls the granting of well permits in that state and enforces state environmental laws. (10) These state agencies have broad powers in order to regulate drilling, well design and location, waste disposal, wildlife impacts, and pollution. (11) On the federal level, agencies like the Environmental Protection Agency, the Bureau of Land Management, and the U.S. Forest Service manage oil and gas development on federally-owned land and administer federal environmental laws. (12) Federal agencies can also grant primary jurisdiction for implementing federal environmental laws to states by approving of state programs that adopt similar standards to federal ones. (13)

In France, production and development of oil and gas is largely regulated by a department within the Ministry of Economy, Finance and Industry, whose mandate is to "define and put into operation the energy policy of France and the supply of raw materials." (14) Wastewater treatment requirements are defined and regulated by the Ministries of Health, Environment and Agriculture. (15) In conjunction with French agencies, European Union directives also regulate environmental quality including wastewater management. (16) Many wastewater treatment projects in France utilize activated sludge or aerated lagoon processes. (17)

In China, development and exploration of shale formations are nominally under the jurisdiction of the Ministry of Environmental Protection ("MEP"). (18) A set of environmental protection laws passed by the Chinese National People's Congress theoretically control all aspects of actions that affect the environment. (19) However, enforcement of these laws is still weak. (20) In fact, the MEP has only 2,200 employees nationwide, as compared to 18,000 employees of the EPA. (21)

The true power to regulate and enforce Chinese environmental statutes falls to local officials. (22) These officials are reluctant to act because they often have a personal financial stake in local businesses. (23) On the other hand, local enforcement in the U.S. stems from citizen suits, thereby buttressing EPA oversight. (24) Such citizen suits require only that the citizen show that violations of environmental law have lessened the aesthetic and recreational values that the citizen derives from natural resources. (25) In contrast, Chinese litigants must identify their precise harms, assign a monetary value to them, and demonstrate a direct causal link to the defendant's behavior. (26)

This article (1) compares selected U.S., French, and Chinese environmental law, which applies to shale plays; (2) elucidates current drillsite waste management technologies; and (3) posits solutions to shale development waste disposal through the use of new centrifugal drillsite technology.

II. SHALE PLAY GEOGRAPHY, GEOGRAPHY AND ECONOMICS

A. Introduction

The U. S., France, and China all contain significant shale plays. In the U.S., the major known shale plays include the Bakken, Barnett, Eagle Ford, Haynesville, and Marcellus. (27) In France, the major shale play is the Paris Basin, which covers roughly half of the nation. (28) In China, the major shale plays include the so-called "Southern Area," which includes the Sichuan Basin, and the Northern Area, including the Songliao Basin. (29)

B. U.S. Shale Plays

As stated, the major known shale plays in the U.S. are the Bakken, Barnett, Eagle Ford, Haynesville, and Marcellus. (30) The Marcellus shale play is the largest and most widely recognized gas field in the United States. (31) The Marcellus stretches across a number of northeastern states, including Ohio, New York, and West Virginia, encompassing an area the size of Greece. (32)

[ILLUSTRATION OMITTED] (33)

As the price of natural gas increases, all of these states stand to experience a high rate of activity. (34) Estimated recoverable reserves in the Marcellus have ranged from 1.9 trillion cubic feet ("TCF") by a 2002 publication from the United States Geological Survey to 262 TCF by the Department of Energy's estimation in 2009. (35) Though these numbers indicate enormous reserves of natural gas, current technology may only able to unlock a fraction of these estimates. (36) Access to the Marcellus shale play was limited for a time, as New York enacted a complete moratorium on hydraulic fracturing while data on environmental and health concerns was compiled. (37) Recently the moratorium has been lifted in places where contamination to drinking water is unlikely, though areas near major watersheds are still protected as a general precaution. (38)

Where the Marcellus shale formation is one of the most recognized and largest fields in the United States, the Bakken shale may be the most prolific and profitable. Stretching out over an area covering parts of Montana, North Dakota and up into Canada, the Bakken shale play presents an entirely different set of operational hurdles than other fields. (see Map No. 1). Extreme weather and a lack of pipeline or other resource transportation infrastructure has been a major limiting agent in Bakken production. Estimated recoverables in the Bakken formation vary depending on the source, though the United States Geological Survey reported estimates of 3.0 to 4.3 billion barrels of oil recoverable. (39) As an oil rich field, the Bakken is currently attractive due to the high value margin of oil as opposed to natural gas. (40) Toreador Resources Corporation, which owns a substantial amount of leases in the Paris Basin shale, has presented data illustrating the many similarities between the geology of the Bakken formation and the Paris Basin shale. (42) (see Graph No. 1).

The Barnett shale is the birthplace for modern shale exploitation. Directional drilling and hydraulic fracturing were pioneered in the Barnett to great success. During the past decade, Barnett became the testing ground for many of the techniques used around the United States today. (43) Not only has the Barnett been a testing ground for technology, but also important for observing the cultural impact from urban drilling. From an efficiency standpoint, the Barnett shale is also the highest producer of gas, with a proven recoverable greater than 2.35 TCF of gas and estimates ranging from 27-30 TCF. (44)

C. French Shale Plays

In France, the major shale play is the Paris Basin. (see Map No. 2 below).

[ILLUSTRATION OMITTED] (45)

The Paris Basin extends from Paris and central France east, with some of the best prospects lying in the Champaign region. (46) In fact, it is very likely that oil reserves could be tapped underneath the Eiffel Tower, though, as discussed below, fracking has been banned in France. (47) The Paris Basin shale is important because the play is oil rich, close to market, and located in a stable economic environment. (48) As stated above, the geology of the Paris Basin is often compared to the U.S. Bakken formation in the United States. Sources disagree on the potential of the Paris Basin, and whether it could produce similarly to the Bakken, but cumulative production of conventional wells has been about 285 million bbls. (49) Though, like the U.S. Bakken, the Paris Basin could benefit greatly from directional drilling and hydraulic fracturing techniques.

Hydraulic fracturing techniques have been banned in France. (50) Politically, the process has been highly controversial, with a number of large lease permits going out to producers in 2010 only to be halted in mid 2011 based on fears about the practices effect on drinking water. (51) With New York partially lifting its moratorium and EPA research on the horizon, it remains to be seen whether France will lift its ban in the future, however, other European countries with shale potential, like Poland, will explore their own resources. (52)

D. Chinese Shale Plays

In China, the major shale plays are the Southern and Northern Formations. Map No. 3 below shows the Southern Area and the Sichuan Basin as well as the Northern Area and the Songliao Basin. (see Map No. 3 below).

[ILLUSTRATION OMITTED]

Shale gas resources in China consist of both marine-based areas and terrestrial basins. There are three major marine-based areas: the marine shale in the Southern China Area (Southern Area), the marine shale on the Northern China Area-Gansu Corridor (Northern Area), and the marine shale in the Tarim Basin. (54) The terrestrial basins are as follows: the Songliao Basin, the Bohai Bay Basin, the Shanganning Basin, the Junggar Basin, and the Tuha Basin. (55) An in-depth analysis and compilation of geological data for the Chinese shale formations is attached: (56)

Area or      Formation    Gas            Thickness
Basin        Age          Bearing        (m)
                          Area (1000
                          [km.sup.2])

Southern     Z-J          30-50          200-300
  Area
Northern     0, C-P       20-25          50-180
  Area
Tarim        E-0          13-15          50-100
  Basin
Songliao     C-P, K       7-10           180-200
  Basin
Bohai        Ek-s         5-7            30-50
  Basin
Ordos        C-P, T3      4-5            20-50
  Basin
Junggar      C-J          3-5            150-250
  Basin
Tuha         C-J          0.8-1.0        150-200
  Basin

Area or      TOC           [R.sub.0]    Prospective
Basin        %             (9/0         Resource
                                        [10.sup.12]
                                        [m.sup.3]

Southern     1.0-23.49     2.0-4.0      33-76
  Area
Northern     1.0-7.0       1.5-2.5      22-38
  Area
Tarim        2.0-3.0       0.9-2.4      14-22.8
  Basin
Songliao     0.5-4.57      0.9-2.0      5.9-10.5
  Basin
Bohai        1.5-5.0       1.0-2.6      4.3-7.4
  Basin
Ordos        2.0-22.21     0.8-1.3      3.4-5.3
  Basin
Junggar      0.47-18.47    1.2-2.3      2.6-5.3
  Basin
Tuha         1.58-25.73    0.8-2.0      0.7-1.1
  Basin

While shale resources in China are abundant, development of those resources has not been as prolific as in the U.S. (57) The China-U.S. development discontinuity has a number of causes.

First, the marine basin in the Southern Area (the Sichuan Basin) is considered a much older formation than the American shale formations. (58) The deeper location of this formation necessitates deeper drilling, and the associated higher cost to explore, exploit, and produce has been a major deterrence to more systematic and committed development. (59)

Second, due to the age of the Southern Area Formation, the [R.sub.0.sup.60] value is, on average, 0.7% to 2.1% higher than the American formations. (61) As a result, the TOC (62) value is lower. (63) This exacerbates the higher cost of development of the Chinese shale plays, as each successful well will see less production compared to its American counterpart. Third, post formation seismic activity, mostly in the Sichuan Basin and the associated Southern Formation, has caused shifts and disconnects in the shale formation. In some extreme cases, the shale has been exposed, and a significant amount of organic hydrocarbons have escaped. (64) Fourth, surface geology has significant influence on development costs. The most developed American shale formations, the Barnett, the Marcellus, and the Bakken are all located on fairly even plains, (65) whereas the major Chinese formations: the Northern and Southern Formations, are mostly located in mountainous regions. (66) Development of mountainous regions has a higher development cost due to increase cost of the necessary infrastructure (i.e. pipelines, roads, etc.).

III. OVERVIEW OF HYDRAULIC FRACTURING

Hydraulic fracturing is defined as "a mechanical method of increasing the permeability of rock, and thus increasing the amount of oil or gas produced from it. The method employs hydraulic pressure to fracture the rock." (67) Hydraulic fracturing has become a critical process in shale gas development. The process has been utilized in more than one million wells drilled in the United States, and is gaining favor in unconventional shale plays worldwide. (68)

IV. OVERVIEW OF CENTRIFUGAL TECHNOLOGY

While the use of centrifugal technology in the oil and gas industry is an emerging technology, centrifuges and related technology have existed for many years. In its simplest form, a centrifuge is comprised of a fixed base or frame and a rotating part in which a mixture is placed and then spun at a high speed. Capitalizing on forces such as gravity and inertia, this process separates materials of different densities, and can be an extremely efficient process in respect to drill site waste management. (69) The push to introduce centrifugal technology goes back to early 2000's …

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Publication information: Article title: Emerging Centrifugal Technology in Shale Hydraulic Fracturing Waste Management: A U.S.-France-China Selected Environmental Comparative Analysis. Contributors: Adams, James W., Jr. - Author, Stocker, Craig D. - Author, Lawson, Nicholas R. - Author. Journal title: Houston Journal of International Law. Volume: 34. Issue: 3 Publication date: Summer 2012. Page number: 561+. © 2009 Houston Journal of International Law. COPYRIGHT 2012 Gale Group.

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