RISK & INSURANCE

Broome County Law, August '08

DISCLAIMER

• Presentation is not legal advice.• Presentation is designed to advise the

public on steps taken by Broome County– Our research– Our plans

• I suggest that individuals and coalitionsretain their own attorneys for advice.


Natural Gas

• Industry stages.• Each stage has different issues

– Geological testing, seismic testing– Drilling/Exploration/Frac’ing– Production– Transmission, storage, distribution


Marcellus ShaleNatural Gas Play

• “There are obviously many environmental, legal and political issues attached to gas drilling. Gas deposits have the potential to increase property values, sales tax revenues and personal income. We want County residents and taxpayers to benefit from these economic opportunities. Residents and local leaders are also properly concerned with potential water and soil contamination, damage to roads, noise pollution, air pollution and similar issues. Our job is to balance these various and sometimes competing interests.”

– Barbara Fiala, July 8, 2008.


Marcellus ShaleNatural Gas Play

• Actions by County Administration.– Due Diligence/Patience– Balance opportunity with protection– Learn from other communities– Rely on expert opinions– Draft documents/LLs– Draft RFPs/leases– Municipal Agency Cooperation


Natural Gas Plays

Chemung CountyTrenton Black River ShaleRural settingFocus on testing & drilling/exploration.

Ft WorthBarnett Shale; mature natural gas play/industry.Rural, suburban & urban setting; increased public debate.Focus on geological testing, drilling/exploration, production & transmission.

Broome CountyMarcellus Shale; natural gas industry/play has not yet developedSetting??????Focus on drilling/exploration


Geologic/Seismic Testing• “Thumper trucks.”

Sound waves are sent underground.

• Pending seismic test permit applications– NYS Highway Law– Title to road way

• County own land• Simple easement

– Abutting landowners


Natural GasProduction

• Compressors--lift the gas from the well and pump the gas along the sales lines.

• Separators-- isolate the extracted gas from waste water and other contaminants.

• Waste water tanks-- store the waste water and contaminants before they are trucked away.

• Each well site looks different:• Producer• Number of wells on pad and well pressure• Pressure in transmission lines• Number of wells in the play• Compressors get larger as number of wells in play

increase.


Producing Wells—Chemung County

• Well head, compressor,separators and waste tank.

• Compressor noise is low; ICU


Producing Wells-Chemung County

• Rural settings.• Vertical well, no

fracturing.• Trenton Black River

formation.


Non Producing Well-Chemung County


Natural Gas Play

• “ . . . the size requirements for drilling sites, usually 40 acres or more, pretty much guarantees that well sites will be in very rural settings . . . ” Southern Tier East Regional Planning Board.

• DEC website photo.


FT WORTH• Barnett Shale, similar to Marcellus shale?• Industry is fully engaged in testing, drilling/exploration, production &

transmission.• Rural, suburban & urban settings.• Drill Rigs

• Horizontal drilling• Drill pits-closed loop system• Decibel testing

• Frac’ing• Frac ponds• Storage tanks

• Producing wells• Well heads• Compressors• Separators• Waste tanks

Broome County Law, August '08 Ft Worth photo

Rural vs Urban Well site

• Downtown Ft Worth• Well has been drilled.• Frac process not

completed.• Driller is considering

frac tanks or frac pond.

Broome County Law, August '08 Photo courtesy Don Behrens

Rural vs Urban Well Site

• Downtown Ft Worth.• Asbestos wrap on

site.• Sound measuring

equipment.


DRILL RIG HIGH IMPACT

• Chesapeake drill rig.• High Impact: Located

within 600 feet of house, school, church or non industrial building.

• City of FT Worth; near a church and nestled between interstates.


DRILL RIG HIGH IMPACT– More rigorous permit

process by locality.– Truck routes and

emergency response measured.

– Ambient noise level parameters

• Benchmarksestablished

• Local traffic, industry.• Measured daily during

drilling

Broome County Law, August '08. Dale Roe photo

DRILL PIT• Drilling generates

borings and other waste.

• Borings are put into open pit or steel tanks –closed loop system.

• Disposed according to state waste managementregulations.


DRILL PIT-Closed Loop


DRILL PIT- Closed Loop


HORIZONTAL DRILLINGFracturing (Frac’ing)

• Requires between 800 thousand to 5 million gallons of fresh water per well bore.

• Chemical is added to lubricate the water; chemical is silicone based.

• Sand is added to the water to keep fractures open.

• Water pumped at 4,000+ lbs pressure• Completed in stages; 4 or 5 days• By product is production/salt water and

contaminants ejected from wells. Typically very caustic.

Broome County Law, August '08 Eastern Energy photo

FRAC JOB

• Several days.• 800,000 to 5,000,000

gallons of water.• Cable truck,

compressor/pumpingtruck.

• Noisy


FRAC POND• Typically 3 million to 5

million gallons.• Fresh water.• Usually lined with

plastic; security issues.

• Ponds in Ft Worth are supplied thru City water meter or private supply.


FRAC POND


Frac Tank

• Each frac tank; 21,000 gallons, about 175,000 lbs when full.

• Tanker trucks used to transport fresh water to store in frac tanks and to transport salt water from frac tanks at well site.


Frac Tanks

• Increased traffic, noise, dust & work zone size.


PRODUCING WELL-FT WORTH

• Next to Frac pond.• Each well pad site is

unique.• There may be more than

one well bore on a site.• Size of equipment on

each well site is different.Separators, compressors, etc are engineered for the physics of each well.



• Separators.• Gas is separated from

water and contaminants.

• Gas is sent into lines.• By product goes into

waste tanks.



• By product is held in waste tanks, then trucked away.

• Security issues.• Thief hatches to

check contents.• Lightning rods.• Explosions from

lightning and vandalism.


PRODUCING WELLS-FT WORTH-One site; Two wells

Waste tanks on one end.

• Compressor and separators on other end.

• Secondary concrete barrier for separators and waste tanks.

• NOISE


COMPRESSOR

• Compressor.• Building is for noise

abatement.• Number one

complaint in Ft Worth is noise from compressors.

• ICU, not.


PR CAMPAIGN--FT WORTH• Well sites in suburban &

urban areas. • New issues surrounding

production and transmission.

• More vocal opposition.• Billboards; Mr. Jones• “Shale TV”

– Online broadcasting– Local TV anchor

personalities• “Citizens of the Shale”


ACTUAL ISSUES in FT WORTHPOSSIBLE ISSUES in BROOME COUNTY?• More high impact permit applications; suburban & urban locations.• Disposal of production/salt water:

• Regulated by state.• Trucked or piped away to disposal wells.• Preferred option is recycle the water.

• Damage to roads; traffic in residential neighborhoods.• Emergency response, infrequent incidents.

• Blowouts are rare; one known blowout during frac.• Fires by vandalism or lightning strikes.• Available workforce; worker error.

• Noise from drill rigs and compressors.• Location of new pipelines.

• Eminent domain.• Very controversial.

• Financial accounting of royalty payments.


NYS DEC

• NYS Pre-emption of gas drilling regulation.• NYS Regulations (DEC permit) address:

• Spacing units.• Setback requirements.• Financial requirements for well abandonment.• Drill casing; related operational requirements.• Waste disposal, prevention of pollution.• New GEIS by DEC

• Issues can be addressed in leases.


COUNTY ACTIONS

• Consult with experts• Leases/RFPs• Local Laws/Regulations• Public Agency Cooperation.


BROOME COUNTY--LEASES• RFP; Leases; Balance opportunity with protection.• Contract clauses.

• Marcellus Shale only ????• Request lessee commitments County wide????• Closed loop drill system for drilling and frac• Frac during daytime only.• Noise management at producing wells.• Water supply/disposal of production water.• Set backs, security.• Roads specs for access roads, location, route.• Incidental substances produced.• Reclamation parameters.• Record keeping.• Standard lease clauses re indemnity, assignments, etc.


Local Laws/Regulations• Road preservation LL

– Route designation– Benchmark condition of roads– Maintenance agreement, indemnity and bond for damage– Road maintenance fee for enhanced wear and tear

• Noise abatement.– Permit classification; closest buildings.– Benchmark ambient noise levels of site– Permitted ambient noise levels with drilling/production

• Security– Pre-emption issue– Fencing at site/set backs.– Closed loop system– Access road for emergency response


Municipal Cooperation• “I have told our County Department Heads that our

information and research will be shared with the local municipalities.”Barbara Fiala July 8, 2008

• County Exec. invite to localities and BOCES– Share information– Municipal attorneys meeting

• Discussing RFPs• Uniform local laws

– Coalitions with municipalities– Information for residents

• Meeting with private coalitions• County Natural Gas web page• http://gobroomecounty.com/gasresources/

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