Guide to Regulating Oil and Gas Exploration and Development Activities Under the Resource Management Act
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Guide to regulating oil and gas exploration and development activities under the Resource Management Act ISSN: 0114-8184 (Print) Taranaki Regional Council ISSN: 1178-1467 (Online) Private Bag 713 Document: 1261309 (Word) STRATFORD TRC website: www.trc.govt.nz First released 5 March 2013 Updated 9 October 2013 DISCLAIMER This report has been prepared by the Taranaki Regional Council (TRC) for the purpose of providing a guide to regulating oil and gas activities, under the Resource Management Act 1991, for other councils and regulators. Unless otherwise agreed in writing, TRC accepts no responsibility for any use of, or reliance on any contents of this Report by any person and shall not be liable to any person, on any ground, for any loss, damage or expense arising from such use or reliance. Table of contents 1. Introduction 1 1.1 Purpose of document 1 1.2 Scope 1 1.3 Structure 2 1.4 How to use this document 4 2. Background 5 2.1 The oil and gas industry in New Zealand 5 2.2 Environmental effects and regulation– the Taranaki experience 7 2.3 Regional council collaboration 9 3. Subsurface assessment, well construction and exploration and development drilling 11 3.1 Exploration process 11 3.2 Pre-existing geologic and geophysical data evaluation 12 3.3 Seismic survey assessment 12 3.3.1 Seismic survey techniques 12 3.3.2 Survey results and interpretation 14 3.3.3 Summary 14 3.4 Drilling and casing a well 15 3.4.1 Exploratory and development drilling 15 3.4.2 Drilling muds 16 3.4.3 Well casing 17 3.4.4 Well completion 18 3.4.5 Shallow gas hazards 18 3.5 Well logging techniques 19 3.5.1 Depth measurements 20 3.5.2 Mud and geologic logging 21 3.6 Wireline logs 21 3.6.1 Electric logs 22 3.6.2 Potential fields 22 3.6.3 Resistivity logs 22 3.6.4 Interpretation of electric logs 23 3.7 Other types of logs 24 3.7.1 Gamma ray logs 24 3.7.2 Density logs 25 3.7.3 Neutron logs 25 3.7.4 Electromagnetic logs 25 i 3.7.5 Acoustic (sonic) logs 26 3.7.6 Measurement while drilling and Logging while drilling 26 3.8 Formation evaluation 27 3.9 Well development 28 3.10 Well perforation 28 4. Hydraulic fracturing 31 4.1 What is hydraulic fracturing 31 4.2 Target reservoirs 31 4.2.1 Tight gas and oil sandstones 32 4.2.2 Coal seams 32 4.2.3 Shale oil and gas reservoirs 33 4.3 Hydraulic fracturing operations 33 4.3.1 Types of hydraulic fracturing operations 33 4.3.2 Use of hydraulic fracturing in Taranaki and elsewhere 33 4.4 The hydraulic fracturing process 36 4.4.1 Hydraulic fracturing - a specialist process 36 4.4.2 Hydraulic fracturing phases 37 4.4.3 Multiple fracturing jobs in a single wellbore 41 4.4.4 Importance of well design and construction 42 4.4.5 Fracturing fluid composition and selection 43 4.4.6 Summary of hydraulic fracturing operations 43 4.4.7 Hydraulic fracturing equipment 44 4.5 Hydraulic fracture monitoring 44 4.5.1 Common diagnostic tools 45 4.5.2 Selection of diagnostic tools 47 4.6 Hydraulic fracture fluids management and composition 49 4.6.1 Containment, storage, transport 49 4.6.2 Composition of fracturing fluids 49 4.6.3 Chemicals used 50 4.6.4 Toxicity of chemicals as used 54 4.6.5 What happens to the chemicals used 54 4.6.6 Example: Mangahewa well Taranaki 55 4.7 Environmental effects to be managed 56 4.8 Relevant investigations and studies 57 4.8.1 Hydrogeologic risk assessment 57 4.8.2 Seismic impact and risk assessment 59 4.8.3 Assessment of flare emissions 62 ii 4.8.4 Review of overseas environment concerns and regulatory approaches 67 4.8.5 Radioactivity in hydrocarbon exploration 69 4.8.6 Land farming 71 4.8.7 Conclusions 72 4.9 Required regulatory technical expertise 72 5. Regulatory requirements 75 5.1 Resource Management Act 75 5.2 Crown Minerals Act 77 5.3 Hazardous Substances and New Organisms Act 78 5.3.1 Substance approvals and disclosure 78 5.3.2 Substance approvals and the setting of environmental and human health protection exposure limits 79 5.3.3 Monitoring and enforcement of HSNO in respect of hazardous substances 79 5.4 Health, Safety and Employment Act and Petroleum Exploration and Extraction Regulations 80 5.4.1 Petroleum regulations 82 6. Resource consent considerations 87 6.1 Regional councils 87 6.1.1 Hydraulic fracturing fluid subsurface discharge 87 6.1.2 Flow back or return fluid discharge by deep well injection 101 6.1.3 Drilling waste and return fluid discharge via land farming 112 6.1.4 Wellsite emissions 128 6.1.5 Water abstraction 139 6.1.6 Well site construction earthworks and stormwater discharges 140 6.2 District councils 148 6.2.1 Well sites 148 6.2.2 Waste disposal sites 150 6.2.3 Discussion and conclusions 151 7. Cost recovery 153 7.1 Taranaki Regional Council context 153 7.2 General principles 153 7.2.1 Charges must be lawful 153 7.2.2 Charges must be reasonable 153 7.2.3 Charges must be equitable 153 7.2.4 Charges must be justified 153 7.3 Other principles 154 iii 7.3.1 Charges must be simple to understand 154 7.3.2 Charges must be transparent 154 7.3.3 Charges must be predictable and certain 154 7.4 Charges for resource consent applications 154 7.4.1 Charges for consent compliance monitoring 155 7.5 Specific investigations 157 8. Public reporting 159 8.1 Taranaki Regional Council context 159 8.2 Consents 159 8.3 Monitoring 160 8.4 Enforcement 160 8.5 Management of commercially sensitive information 160 8.5.1 Local Government Official Information and Meetings Act 161 8.5.2 Resource Management Act 162 8.5.3 Crown Minerals Act 1991, the Crown Minerals (Petroleum) Regulations 2007 and the Minerals Programme for Petroleum (2013) 162 8.6 Annual activity report 165 9. Benchmarking 167 9.1 UK Royal Society and Royal Academy of Engineering report 167 9.2 Benchmarking 167 9.3 Conclusion 171 10. Review, research needs and challenges 173 10.1 Review 173 10.2 Research needs 173 10.3 Challenges 174 11. Conclusions 177 Glossary 179 References 187 iv List of tables Table 1 Summary of wireline logging tools 27 Table 2 Comparison of typical fracturing operations in NZ and USA 33 Table 3 Available diagnostic techniques to evaluate hydraulic fracture length, height and containment 48 Table 4 Chemicals used in hydraulic fracturing, by product function 51 Table 5 Modified Mercalli Intensity Scale 60 Table 6 Well site drilling emissions inventory 131 Table 7 Review of the Council’s approach to regulating hydraulic fracturing against the ten recommendations for hydraulic fracturing from the UK Royal Society and the Royal Academy of Engineering report 168 List of figures Figure 1 Location of oil and gas fields and production facilities in Taranaki 5 Figure 2 Schematic of seismic survey process 13 Figure 3 2D versus 3D seismic arrays 14 Figure 4 2D versus 3D seismic survey output model 14 Figure 5 Examples of horizontal and vertical wells (Source: API, 2009) 16 Figure 6 Todd Energy Mangahewa 11 well schematic showing casing strings, production tubing, and cement (shaded) 19 Figure 7 Electrical log example (Source: http://spec2000.net/07-eslog.htm) 24 Figure 8 Well Perforation Process (Source: API, 2009) 29 Figure 9 Permeability range of conventional, tight gas and unconventional reservoirs (Source: King, 2012) 32 Figure 10 Hydraulic fracturing events in Taranaki up to 31 July 2012 36 Figure 11 Fractured and non-fractured well completions (Source: API, 2009). 37 Figure 12 An example of a fracture at the Mangahewa 6 well (10/3/2012) undertaken by Todd Energy 38 Figure 13 Typical Taranaki hydraulic fracturing equipment schematic (Source: Todd, 2012) 44 Figure 14 Composition of hydraulic fracturing fluids (Source: Ground Water Protection Council, 2009) 50 Figure 15 Location of freshwater aquifer zones and fractured reservoir zones in selected Taranaki wells 58 Figure 16 DWI schematic showing the well (casing and cement ) and associated equipment and injection interval (source http://web.deu.edu.tr/atiksu/ana58/deepwell.html) 103 List of appendices Appendix I Example of consent conditions and a conditions analysis table for a subsurface hydraulic fracture discharge Appendix II Example of consent conditions and a conditions analysis table for a subsurface deepwell injection discharge Appendix III Example of consent conditions and a conditions analysis table for a land farming discharge Appendix IV Example of consent conditions and a conditions analysis table for the discharge of well site emissions to air v Appendix V Example of consent conditions and a conditions analysis table for a well site stormwater discharge Appendix VI Example of consent conditions template for a well site in New Plymouth District Council area vi 1. Introduction This section outlines the purpose, scope and structure of the guide. It also contains a brief description on how to use the guide. 1.1 Purpose of document The purpose of this document is to provide a guide to regulating petroleum exploration activities under the Resource Management Act 1991. The guide is primarily intended for the information of consenting, monitoring and enforcement staff in regional councils, district councils and other regulators to promote good practice in this area, built up over more than 30 years of regulation, and a consistent and integrated approach to regulating petroleum exploration in New Zealand among the various agencies involved.