PRE-DRILL WATER SOURCE SAMPLING

1. PRE-DRILL WATER SOURCE SAMPLING Moody and Associates, Inc.

2. Image taken Ohio Department of Natural Resources Geologic Survey

3. Image taken Ohio Department of Natural Resources Geologic Survey

4. Vertical Vs Horizontal Drilling • Vertical well exposed to about 50 ft of formation • Horizontal well can extend laterally through 2,000-6,000 ft of formation • Numerous vertical wells needed in an area to equal production of one horizontal well Source: Penn State University

5. Advantages of Horizontal Drilling Greater wellbore exposure Smaller surface “footprint” Access to resources under existing infrastructure, buildings or environmentally sensitive areas (wetlands). Source: Geology.com

7. Purposes of Frac Fluid Additives Friction Reducers – Allows the hydraulic fracturing fluid to flow into and out of the production casing and tubing easily. Scale Inhibitors – Formation brine creates scales on tubular steel products. Scale inhibitors prevent mineral scale on the interior surfaces of frac pipe, production tubing and well casing. Surfactants – Keeps solid particles suspended in liquids. Surfactants can be thought of as soap. They reduce surface tension in liquids and bind polar molecules in water. Surfactants are used to increase recovery of flow back fluids. Biocides – Inhibits or prevents the growth of bacterial, algae, fungi and other microscopic organisms. Bacteria can consume hydrocarbons or can form a slime or black residue in a gas well that can plug or damage the formation. Proppants – Typically inert material such as sand or ceramic beads used to hold fractures open against formation pressure.

8. Typical additives for hydraulic fracturing fluid. Note that there is no such thing as a “bottle” of frac fluid. The ingredients are mixed on the well pad and injected into the stream.

9. To do well in the oil and gas industry, you must understand the regulations of the state that you are working in. Today I will briefly touch on the regulations of:PennsylvaniaNew York

10. PennsylvaniaLegislative Authority • Oil & Gas Act of December 19, 1984 (updated February 2012 with the passage of HB 1950, and subsequent signing into law by the PA Governor as Act 13) Act 13 presumes that an unconventional well operator is responsible for the pollution of a water supply that is located within 2500 feet of the oil or gas well, where the pollution occurred within 12 months after the completion or alteration of the unconventional well.Unless -

11. The pollution existed prior to the drilling or alteration activity as determined by apredrilling survey. The landowner or water purveyor refused to allow the operator access to conduct a predrilling or prealteration survey. The water supply is not within 2,500 feet of the well. The pollution occurred more than 12 months after completion of the drilling or alteration activities. The pollution occurred as the result of some cause other than the drilling or alteration activity. Any operator electing to preserve its defense under items (1) or (2) above shall retain the services of an independent certified laboratory to conduct the predrilling or prealteration survey of water supplies. A copy of the results of any such survey shall be submitted to the PADEP and the landowner in a manner prescribed by the PADEP.

12. PADEP REGULATIONS • Current regulations adopted by the PADEP were promulgated from the Oil & Gas Act of 1984 and have yet to be updated to reflect the provisions of Act 13. • Pennsylvania Code Title 25 – Environmental Protection • Chapter 78 – Oil and Gas Wells Commonly referred to as “Chapter 78”.

13. CHAPTER 78 cont’d • § 78.52 Predrilling or prealteration survey • A well operator who wishes to preserve its defense under section 208(d)(1) that the pollution of a water supply existed prior to the drilling or alteration of the well shall conduct a predrilling or prealteration survey in accordance with this section. • The survey shall be conducted by an independent certified laboratory. A person independent of the well owner or well operator, other than an employee of the certified laboratory, may collect the sample and document the condition of the water supply, if the certified laboratory affirms that the sampling and documentation is performed in accordance with the laboratory’s approved sample collection, preservation and handling procedure and chain of custody. • An operator electing to preserve its defenses under section 208(d)(1) of the act shall provide a copy of the results to the PADEP and the landowner within 10 business days of receipt of the results.

14. CHAIN of CUSTODY WATER TESTING • Water tests done to document pre or post drilling water quality should be collected by professionals and delivered to a PA accredited laboratory. This type of sampling is referred to as “chain of custody” or “third party” water testing. • This assures that individuals who handle the sample are documented on the COC and that only unbiased professionals, using proper sampling protocols, have access to the samples. • A complete list of water testing laboratories that are accredited by the PADEP can be found on the PADEP website.

15. WHAT IS NOT INCLUDED IN EITHERTHE OIL & GAS ACT OR CHAPTER 78 • Post-drill Sampling • Post-drill sampling is neither specified nor required in the Act or Chapter 78. • Post-drill sampling is generally performed by the gas operator following a complaint by the landowner. • Analyte Lists • Prior to Marcellus drilling, operators generally created an analyte list that were either indicators of gas well drilling or the “recipe” of the operator. • PADEP recommended predrill list • Marcellus Shale Coalition recommended predrill list

16. Alkalinity Chloride Conductivity Hardness Oil & grease pH Sulfate TDS TSS Total coliform & E.coli Barium Calcium Iron Magnesium Manganese Potassium Sodium Strontium Methane Ethane PADEP RECOMMENDED OIL & GAS PRE-DRILL PARAMETERS

17. If a homeowner elects to sample for less than the recommended list, PADEP says that pH, TDS, iron, manganese, sodium, methane and ethane should be sampled for. • PADEP recommends that the sampling be conducted within one year prior to the start of gas well drilling. • PADEP recommends that a third party (laboratory or consultant) collect and transport the sample for testing.

18. Alkalinity Oil & grease pH Specific conductance TDS TSS Sulfate Hardness MBAS Nitrate as N Turbidity Propane Ethylene Glycol Methane Ethane BTEX Arsenic Barium Cadmium Calcium Chromium Lead Iron Magnesium Manganese Mercury Potassium Selenium Silver Sodium Total coliform/E.coli/fecal coliform MARCELLUS SHALE COALITION PRE-DRILL CONSTITUENTS

19. ISSUES • No standardized analytical method for methane. The different methods with widely varying detection limits used by laboratories accounts for the wide range of the number of wells with reported methane during pre-drill sampling. • No specific analyte list as a regulatory standard. • Chapter 78 does not stipulate the time of sample collection. • Chapter 78 does not define “predrill”.

20. NEW YORKLEGISLATIVE AUTHORITY • There is a moratorium on development of the Marcellus Shale in NYS. • Currently, there is no legislative or regulatory framework in NYS that guides pre-drill or pre-alteration water sampling for conventional gas well drilling. • The only guidance for pre-drill sampling issued to date is the draft Supplemental Generic Environmental Impact Statement (“dSGEIS”). • The dSGEIS only applies to the Marcellus Shale and other unconventional gas well drilling that uses high volume hydraulic fracturing.

21. dSGEIS The final Generic Environmental Impact Statement was released by the NYSDEC in 1992. There were no provisions for pre-drill water source sampling. In response to the high volume hydraulic fracturing proposed for the Marcellus Shale that was distinct from the other types of well completions allowed in NYS under the 1992 GEIS, the dSGEIS was issued in 2009 for public comment. The NYSDEC incorporated public comments into the dSGEIS and released the final draft SGEIS on July 1, 2011. 

22. dSGEIS cont’d • Another formal public comment period was completed in the Fall/Winter of 2011/2012. • Following the finalization of the SGEIS, the NYSDEC will begin processing high volume hydraulic fracturing drilling permits, and where appropriate, issue well permits in accordance to the GEIS and SGEIS. • In 2010, Governor Patterson issued an executive order stating that no permits would be issued for high volume hydraulic fracturing until the SGEIS is finalized.

23. PROPOSED SGEIS WATER WELL SAMPLING Private water wells within 1000 feet of the well pad, subject to the property owner’s permission, are to be pre-drill sampled. If no water wells are available within 1000 feet of the well pad (due to lack of sources or lack of landowner permission), the sampling radius moves to within 2000 feet of the well pad.

24. PROPOSED SGEIS WATER WELL SAMPLING The results of each test must be provided to the property owner within 30 days of receipt of the analytical results by the operator. The data shall be available to the NYSDEC and local health department upon request for complaint investigation purposes.

25. PROPOSED SGEIS WATER WELL SAMPLING Initial sampling is to occur prior to site disturbance at the first well on the pad, and prior to drilling commencement at additional wells on multi-well pads. Sampling is to occur three months after reaching total measured depth (“TMD”) at any well on the pad if there is a hiatus of longer than three months between reaching TMD and any other milestone on the well pad that would require sampling. Sampling is to occur three, six and 12 months after hydraulic fracturing operations of each well on the pad.

26. dSGEIS PROPOSED WATER SOURCE SAMPLING SCHEDULING cont’d • For multi-well pads where drilling and hydraulic fracturing activity is continuous, to the extent that water source sampling according to the schedule laid out in the previous slide would result in sampling to occur more often than three every months, the NYSDEC proposes that: • Sampling would occur at three month intervals until six months after the last well on the pad is hydraulically fractured. • Final round of sampling 12 months after the last well on the pad is hydraulically fractured. • More frequent sampling, or sampling beyond 12 months after the conclusion of hydraulic fracture activities may be warranted in response to landowner complaints or for other reasonable cause.

27. Dissolved methane/ethane pH Sodium TDS SWL VOCs (specifically BTEX) PROPOSED SGEIS WATER WELL SAMPLING PARAMETERS NYSDOH recommends that the following parameters be tested for to aid with determining whether gas drilling may have had an impact on the quality or quantity of a well: • Barium (or other drilling mud component) • Chloride • Conductivity • Gross alpha/beta • Iron • Manganese

28. In the event that a potential impact is determined, additional investigation, such as isotopic analysis of methane or site-specific chemical analysis, may be necessary. Water samples shall be collected by a “qualified professional”.

29. ISSUES No standardized analytical method for methane. The different methods with widely varying detection limits used by laboratories accounts for the wide range of the number of wells with reported methane during pre-drill sampling in Pennsylvania. The SGEIS refers to testing of private water wells, and does not discuss springs, ponds or other surface water bodies that could be sources of drinking water or other legitimate beneficial use. In fact, the NYSDOH discourages the use of springs as drinking water sources and suggests that they should only be used as a last resort with proper protective measures.

30. QUALITY ASSURANCE

31. Oil & gas operators are looking for analytical data that is scientifically and legally defensible.

32. Quality Assurance begins with the standard operating procedure for field sampling. Where are you going to collect the sample from? How will you determine an appropriate purge volume and purge rate (is the water representative of the aquifer)? What field parameters should you measure? Do you have a calibration and calibration documentation program? What information should you collect from the property owner during the field interview? Are sample custody, preservation and method hold time requirements being met? Document field activities – document, document, document! Especially when a deviation of the SOP is used (why?) or when an issue is identified at the time of sampling that could be an existing source of contamination of the well.

36. Possible components of a Quality Control Program • Trips blanks for every sample cooler that contains VOC samples. • Blind duplicate sampling – 1 in every “x” samples collected. • Duplicate sample sent to another lab – 1 in every “x” samples collected. • MS/MSD sampling – 1 in every “x” samples collected. • Field blanks • Equipment blanks

37. Quality Assurance continues in the laboratory. • Laboratory reports should include both MDLs and MRLs • Are the conditions of the QAPP being followed? • Can your laboratory provide full data validation?

38. Timothy M. Eriksen, P.G. Moody and Associates, Inc. 685 Broad Street Extension Suite 1 Waverly, NY 14892 (607) 565-8800 teriksen@moody-s.com QUESTIONS?