When it comes to defining an unconventional gas well, Pennsylvania draws a line in the sand. Specifically, state Department of Environmental Protection regulations say any shale well drilled and fracked below the Elk sandstones is unconventional.
The Elk group refers to a stack of sand formations found above the Marcellus Shale in the western part of Pennsylvania. Deposited about 375 million years ago, the sandstones have served as a border for the past several years between the traditional oil and gas industry in Pennsylvania and the growing Marcellus activity that the DEP was figuring out how to regulate.
That definition didn’t make everyone happy. Geologists, for example, were trained to judge an unconventional well by the nature of the rock it penetrates, not by where it sits relative to a particular deposit.
But, however simplistic, the Elk division wasn’t much of a problem as long as there were two distinct groups of wells: the ones drilled by the old shallow oil and gas operators and the new Marcellus wells that sprawled horizontally a mile under the earth and swallowed millions of gallons of water and sand to release the gas trapped inside.
The Elk line may not cut it anymore. A debate has erupted over whether it can still be used to effectively define well types.
To call the debate heated would be to elevate a very technical discussion to the status of an argument. Nevertheless, the conflict may determine how a growing number of shallow wells being developed in the same way as Marcellus wells — drilled horizontally and fracked — will be regulated.
Penneco Oil Co. in Delmont, Horizontal Exploration in Indiana, Pa., and Warren County-based Pennsylvania General Energy are among a handful of companies targeting sandstone formations above the Elk with techniques currently common in unconventional wells.
Because these formations are under less pressure, they require less power and fracking fluid to develop. These wells are regulated as conventional — they pay less money to the state and have a less stringent environmental burden placed on them than fracked shale wells.
The effort to keep it that way has become more urgent as traditional oil and gas producers fight to stave off the recent regulations enacted to target Marcellus and other shale development, such as tighter environmental controls, more aggressive reporting requirements and fees.
The Pennsylvania Independent Oil and Gas Association, a Wexford trade group, would like it spelled out — for the purpose of all future oil and gas regulations — that a conventional well, “irrespective of technology or design,” is a well drilled to produce gas from anything other than a shale formation or from shale that’s above the base of the Elk.
There are other stipulations in the trade group’s proposed definition, including that any wells drilled anywhere for the purpose of monitoring, geologic logging, secondary and tertiary recovery, or injection of waste be deemed conventional.
Last month, a group of Pennsylvania senators introduced legislation to define conventional wells based on PIOGA’s suggested definition and to expressly exclude them from regulations governing unconventional wells.
Kevin Moody, vice president of the oil and gas group, wrote to the state in October that the public and the DEP would benefit from a more detailed definition of a conventional well, one that would “make clear that, unlike an unconventional well, a conventional well is not defined with respect to drilling technology or design or formation.”
Mr. Moody said it’s appropriate to preserve the Elk as the dividing line in order to be consistent. “From day one, that’s been the Legislature’s way of capturing the Marcellus and anything below it,” he said.
Sounds simple enough. But the industry has evolved since day one, argues John Walliser, vice president of legal and government affairs with the Pennsylvania Environmental Council.
Drilling horizontally at shallower depth increases the risk of encountering abandoned and unplugged wells, he said, which could allow gas and fluids to migrate into drinking water aquifers or to the surface. There are also fewer barriers between the activity in the well and the surface with a shallower well, he argued. Defining everything above the Elk as conventional could mean all such wells would face lower thresholds for environmental protection and accountability.
“Any operator, regardless of the size of the company, could conduct high-volume fracturing at shallow depths and still be deemed ‘conventional’ — and thus subject to reduced protection standards,” he wrote opposing the Senate bill in May.
Mr. Walliser believes that an unconventional designation should be a reflection of the technology used to produce the gas, not the well’s location underground. For his part, he would support legislation that gives DEP discretion over how wells should be categorized and, by extension, regulated.
John Harper, former chief of the Pennsylvania Geological Survey’s Oil, Gas, and Subsurface Geological Service, has opposed the use of the Elk formation as a divide between conventional and unconventional since the DEP first considered it.
“Most of Pennsylvania’s [gas] reservoirs are considered by U.S. Geological Survey what we would call unconventional,” he said. “Essentially, if a reservoir has to be fracked in order to produce, it’s considered an unconventional reservoir” and nearly all wells drilled in Pennsylvania since the 1960s have been fracked.
The “fracking” that’s he’s referring to is not the same as high-volume hydraulic fracturing required for a Marcellus or Utica shale well. The point is just that the vast majority of wells within the past half a decade in Pennsylvania have required some kind of stimulation.
Mr. Harper’s concept of unconventional came about in the 1970s when the federal Department of Energy was trying to promote unconventional gas research and development. It regarded certain tight sandstones, shales and coal seams as unconventional sources. The federal government allowed producers working those formations to realize higher gas prices and tax incentives as the country’s gas supply was transitioning to a free market.
That served Pennsylvania’s legacy producers well. More than 90 percent of the state’s gas development was happening in formations that qualified under the federal definition. These operators enjoyed tax incentives and higher prices to continue developing them.
“Pennsylvania’s bread and butter reservoirs are tight sands,” Mr. Harper said. “Industry applied for tight sand status and got higher pricing.”
Meanwhile, the newer state DEP definition of unconventional was developed during a time when Marcellus was the only modern fracking play in the game. Mr. Harper said the state Geological Survey tried to dissuade the state from using the Elk as a border, but the environmental agency was focused on setting a boundary relative to the Marcellus Shale.
“It’s also easier for bureaucrats and politicians to understand as long as there’s a line in the sand, even if the sand becomes a limestone,” he said.
Anya Litvak: email@example.com or 412-263-1455.