Central New York Landowner’s Coalition Rally: Petroleum Geologist Don Zaengle

The third and final speaker at the April 10 Central New York Landowner’s Coalition (CNYLC) meeting held at the Unadilla Valley Central School was Don Zaengle, a consulting petroleum geologist from Worcester, NY. Zaengle opened his talk with a map showing an outline of those regions in New York State that fall within the Marcellus Shale zone. He said New York State has 12 million acres of potential Marcellus Shale, but not all of it is commercially viable. To put it in context, the entire Appalachian Plateau, which is the area in the Eastern United States that contains Marcellus Shale reaching from New York as far south as Georgia and Alabama, has some 34 million acres in it. So New York State represents about 35% of the entire Marcellus Shale region by acreage.

Zaengle showed a cross section of different shale and sandstone deposits and briefly discussed a few of the different types of shale found in the Central New York region. The exciting news is that Marcellus wells far out produce other types of natural gas wells. An example: It takes six Herkimer Sandstone/Oneida gas wells to equal the production of just one Marcellus Shale gas well. Or put the other way around, one Marcellus gas well equals (revenue-wise) six Herkimer Sandstone/Oneida wells.

Another example Zaengle offered to give attendees an idea of the importance of the Marcellus Shale: In Dimock Township, Pennsylvania, Cabot Oil & Gas has drilled a number of wells in a seven-mile area. The well production from that small area over the course of a single year is on track to generate $180 million in gross revenue. The Marcellus gas play is huge.

Cabot Oil & Gas fracked a well in the Dimock, PA area called Teel #6. It is a vertical well and the fracking “interval” is 370 feet, spanning several different rock layers. The interesting thing is that Cabot has been able to extract gas from many of the non-Marcellus layers, indicating energy companies may be interested in leasing land for non-Marcellus plays as well.

With respect to whether or not a landowner’s property is attractive to an energy company, and the terms a landowner might receive for leasing their mineral rights, Zaengle offered eight geological factors that influence a successful shale play.

Geologic Factors Influencing a Successful Shale Play

1. Total Organic Carbon. This is the amount of organic matter in the shale. The Marcellus Shale in New York is typically in the 2-6 percent range. Energy companies want to see this number over 2 percent in order to drill.

2. Thermal Maturity. This measures how much the rock has been “cooked” in geologic ages gone by. If the rock was cooked too much, or not enough, the likelihood of finding natural gas decreases. Thermal maturity is measured with units called vitrinite reflectance, abbreviated as Ro. The Ro values found in the Central New York region range from 2.7 to 3.3. Energy companies like to see the Ro value below 3.0.

3. Brittleness and Natural Fractures. A lot of natural gas is found in naturally occurring fractures. Energy companies use seismic testing to determine brittleness and fractures and the data is considered proprietary and closely guarded. The more naturally occurring fractures, the better.

4. Gas in Place. This is the total volume of natural gas in the shale rock. Estimates for the Marcellus Shale in Central New York range from 35-75 Bcf per square mile. (Bcf=billion cubic feet; one square mile equals 640 acres)

5. Porosity and Permeability. Porosity is a measure of how much of a rock is open space. Permeability measures the ease with which a substance (natural gas) can move through a porous rock.

6. Mineralogy. The makeup and composition of the rocks. Is there a lot of clay? The wrong kind of clay can plug up the fracking holes and cause the well to not produce. Also, the higher the silica content in the rock, the better the rock will fracture. Silica is the main chemical compound found in sand. Zaengle said mineralogy is an extremely important factor.

7. Pore Pressure. This is the amount of pressure the gas is under. The more pressure the better. Energy companies want shale layers to be at least 3,000 feet down so the pressure is sufficient.

8. Thickness. The depth of the shale layer. The Marcellus Shale gross thickness, from the very top to the very bottom ranges from 600 to 800 feet. But the useable, drillable part of that layer in the Central New York area is 10 to 160 feet. The thicker the better.

Zaengle followed geologic factors with a list of non-geological factors that influence success in a shale play.

Non-Geologic Factors Influencing a Successful Shale Play

1. Proximity to Pipelines. Having a way to get the gas to market is critical. According to Zaengle, everything around the Millennium Pipeline and south of it will get leased first because of pipeline proximity.

2. Available Water Resources. It takes a lot of water for hydraulic fracturing, so abundant water supplies help. In five to ten years water will not be as important. Drillers are working on alternatives to water, using carbon dioxide and even natural gas itself in the fracturing process. But for now, water is still critical.

3. Access to Roads and Railways. Good transportation is needed to get get equipment and materials, including sand and water, to the drilling site.

4. Geo-Political Regulations. Drilling companies will avoid areas where the regulations are simply too restrictive. Zaengle said that drillers have told him they prefer to not drill anywhere in the Delaware River Basin because the Delaware River Basin Commission makes it so difficult to get a permit to drill. However, they don’t mind drilling in areas where the Susquehanna River Basin Commission is involved as they tend to be more reasonable. He also said that Sullivan County, NY and other counties in the New York City Watershed area of the Catskill region will likely never see drilling. Not only because of the opposition from New York City, but also because the geology in that area is not good for Marcellus drilling.

5. Topography. The natural characteristics of the land—is it flat, mountainous, rolling hills, flood plain, etc.

6. Proximity to Schools and Residential Areas.

7. Environmental Considerations. Are there wetlands or sensitive wildlife habitats close by?

8. Natural Gas Prices. The higher the price, the more money can be spent to extract natural gas because it is profitable. The lower the price, the less likely new drilling will take place.

In summary, Zaengle said that Central New York has “a lot of different shale plays.” The offer a landowner will receive will depend on his or her geology and other factors. Zaengle encouraged those attending to join multiple coalitions. He said it’s important to be in a coalition and that, “Your lease will be affected by your neighbor’s lease.”