Forecasting Significant Incidents in Gas Fields

1. Forecasting Significant Incidents in Gas Fields Test Case: Barnett Shale, Fort Worth, Texas by Jerry Lobdill, physicist and Ch. E. (ret.)

2. One Picture is Worth...

3. Significant Incidents (SI) • A US DOT term meaning an incident involving any of: • $50,000 in damage or more • Fire • Explosion • Injury • Death • The RRC collects mandatory reports of SI’s for the US DOT

4. Purpose of Study • Use Significant Incident historical data to quantify the risk associated with urban gas drilling and production. • Apply findings to the City of Fort Worth (Barnett Shale)

5. Barnett Shale Gas Well Density 2007

6. Proposed Statistic • Average Significant Incident Rate per 1000 gas wells per unit time. • This is scalable to a field of any size.

7. History of Barnett Shale Play • Play covers about 15 counties • First wells drilled in the northern rural region in the 1990s • By June 2008 there were 7766 wells • First wells in Fort Worth area drilled in 2001 • As of last week 2008 a total of 1376 well permits had been issued in FW

8. Factors Affecting SI Rate • No. producing wells • Miles of gathering pipeline • Population density • Regulation • Maintenance/Inspection • Age of Field

9. Population Density vs SI Rate • Certain kinds of human activity increase the SI Rate above that experienced in rural settings. • The historical SI data available are mostly for non-urban areas. • Fort Worth has 2333 people/sq. mi. • Our forecasts will be conservative.

10. The Effect of Regulation on SI Rate • Regulations do not imply safety. • They are the result of a tug of war between profit and safety. • Profit interests are strongest. • Regulations are only as good as the enforcement budget. • Use modern TX RRC Regulation/enforcement in this study.

11. Effect of Maintenance/Inspection, Age • Regular inspection should minimize SIs. • Inspection without corrective maintenance will not prevent SIs. • As gas field ages maintenance and inspection receive short shrift. • Our forecasts will be conservative.

12. Wells and Pipelines in and Near Tarrant County, 2007

13. Analysis Summary • There were 9 SI’s from 2004-2007 in the Barnett Shale. • Statistical analysis shows Fort Worth will have (conservatively) a “significant incident” about every 6 months on average when full production is achieved (3000 wells).

14. The Barnett Shale Data

15. Number of Incidents vs Number of Wells

16. Mathematically • Assuming only that the SIs are independent events... • The probability that there are exactly k SIs in a period of t months when the average rate is l SIs per month is given by the Poisson distribution. • The equation is

17. Simulated Timeline, 3000 Wells—One Replication Maximum time between Significant Incidents for this replication is about 17.6 months.

18. SI Rate Implications for Fort Worth • Property insurance against gas damage will be mandatory. • Home values will go down (for sales, but not for taxes) • PITI will escalate. • Population will decrease. • Taxes will go up. • Bond ratings will decline.

19. In Fort Worth Today... • High Impact drilling is routinely permitted. • For-profit gas companies are given eminent domain power to seize private property for pipeline ROW. • City, State claim impotence.

20. Conclusions • Drillers and their allies in local government ignore the public safety aspects of shale bed gas drilling today. • The public cannot afford to accept this rosy view of life in an urban gas field. • As new shale bed field projects begin, citizens should use this analytical tool to forecast the SI rate and demand restriction of pipeline and drilling site locations to industrial zones.