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Marcellus Shale
The L.R. Kimball and CDI team offers oil and gas
clients total project management solutions
Economic Opportunities of
Marcellus Shale
Protecting our Water Resources
Environmental Impacts of
Oil and Gas Exploration
Marcellus Shale and Infrastructure
Q&A with our Experts
2 Benchmark Spring 2011
Spring 2011
From Our Founder
CONTENTS
Experience Matters
Opportunities
4
L.R. Kimball/CDI Success Stories
C
8 New Development: New Opportunity
Marcellus Shale exploration offers great ommunities throughout the Marcellus Shale corridor will benefit from
economic opportunities.
the opportunities and challenges that natural gas exploration brings to
Environmental Impacts of
their states. From New York to West Virginia and Michigan to Ohio, it is
10 Oil and Gas Exploration expected that 500 trillion cubic feet of natural gas is trapped beneath the Earth’s
surface. By some estimates, this represents up to 20 years of the nation’s present
12 Marcellus Shale and Infrastructure gas consumption.
14 Q&A With Our Newest Expert
Natural gas is popular because it is clean burning. Through sound and
prudent practices, its environmental impact can be mitigated and minimized to
protect other natural resources. In addition, it provides jobs, as well as an influx of
Founder revenue through land leases and permits to our neighbors and communities.
L. ROBERT KIMBALL, PE
But what does natural gas exploration mean to our business, to our community
President
R. JEFFREY KIMBALL, PE or to you? Are there opportunities for us to capitalize on this growing market or
should our concern be on the impact exploration could have on our environment,
Published by
L.R. Kimball
roads, stream ways and wastewater systems?
615 West Highland Avenue
P.O. Box 1000 This special issue of our Benchmark magazine is designed to help you better
Ebensburg, PA 15931
Phone: 814.472.7700 understand the natural gas industry and what you should be thinking about now
Fax: 814.472.7712 with regard to natural gas exploration.
www.lrkimball.com
S
ince becoming part of CDI in June of last year, we have spent time looking for opportunities
where our individual services can be combined to better serve our clients. One of the biggest
opportunities we’ve uncovered is the synergies in the services we offer to clients involved in
oil and gas exploration. From helping local municipalities with road assessments before exploration
begins to offering professional staffing solutions to some of the largest oil and gas companies in the
nation, we now have the unique ability to provide clients with nearly everything they
need for the oil and gas extraction process.
L.R. Kimball team members have been putting their heads together with CDI
team members to determine the best solutions for our clients. This type of
collaboration and service to our clients is exactly what I had hoped for when
our firms joined forces.
R. Jeffrey Kimball, PE
President
L. Robert Kimball, PE
Founder
Experience Matters
L.R. Kimball and CDI – Providing Total Project Management
Solutions for the Natural Gas Industry
What role does CDI Engineering Solutions The Marcellus Shale industry is in its early
play in Marcellus Shale exploration and stages. How has CDI helped clients firmly
extraction? position themselves for growth in other
emerging industries?
An estimated 500 trillion cubic feet of natural gas lies in
reserve across the Marcellus Shale play. To extract it, new wells We’ve been very successful in this arena. Recently,
must be drilled in an environmentally-friendly way. In addition, several companies were interested in entering the solar panel
new underground pipelines must be installed to move the gas market but lacked the expertise to produce polysilicon, a key
from the well to the main underground transmission lines so raw material for solar panel production. We provided key
it can be piped to residential and commercial users. CDI has process design technology and support, as well as detailed
specific technical expertise in the design and installation of engineering design services. Equipped with the resources they
these underground transmission lines and pipelines, as well needed, these companies entered the market at its onset and
as the design and installation of compressor stations. These solidified their leadership in an industry that is now positioned
stations increase the pressure of the gas so more of it can pass for international growth.
through the pipeline.
What makes CDI different from similar firms? What can energy clients expect from CDI and
L.R. Kimball?
Simply put, experience. We have long-term relationships
with many of the leading producers, transmission companies We pride ourselves on our customer-oriented approach.
and distribution companies. CDI and L.R. Kimball also have Providing excellent customer service is part of our work ethic
key offices located throughout the Marcellus Shale play, - it’s who we are as individuals. Our “high touch” approach is
giving our clients quick and easy access to our teams of based on daily client communication, and work that is delivered
engineers, geologists, waste water specialists, regulatory on-time and error-free. With extremely competitive rates and
experts, environmental analysts, transportation professionals a strategic network of CDI and L.R. Kimball offices located
and others. across the Marcellus Shale play, we’re focused on providing
high quality service to drive high quality deliverables.
www.lrkimball.com 5
• Aerial
Photogrammetry
• Site Surveying
• Process Design • Corridor Analysis
• Pipeline Design • Feasibility Studies
• Preliminary Eng’g • Site Selection and
• Managed CAD/ • Detailed Eng’g & Studies
Drafting Design • Civil Site Design
• CDI is Responsible for • On-Site Managed Eng’g
Managing All Human • Project Management • USACE/DEP
Resource Functions • Procurement • Materials Mgmt. Permitting
• Inspection at Site for the Total • Plant Eng’g Support • Construction Mgmt. • Technology
• Eng’g & Tech Customer Temporary • Information Services • Process Safety Packages
• IS/IT Work Force • Document Control • Project Planning
Mgmt.
• On-Site Professional • Planning/Scheduling • Constructability
Professionals Management • Start-up Assistance
• Cost Control • Conceptual
• Environmental • Recruitment Process Estimating
Outsourcing (RPO)
E
ffective water management is an important part of Marcellus Shale
development. Hydraulic fracturing, the process of using high pressure
water with sand and chemical additives to crack the shale and drive
the gas to the surface, uses three to five million gallons of water per well.
Most of the injected water stays in the Marcellus formation, with less than 15%
on average returning to the Earth’s surface. The design and construction of
the well isolates the fluids in the well while proper handling of the materials
on the well pad prevents spills and groundwater contamination. However,
the continued debate over the impact that this water and the additives that
are used to break up the shale have on our water resources continues to be
important.
Marcellus Shale developers are analyzing different disposal and treatment options to determine the pros and cons of each
and find the most cost-effective and efficient scenario of handling frac flowback. A study conducted in 2010 by L.R. Kimball
wastewater experts revealed the following options:
• Hauling the flowback outside of Pennsylvania for treatment • Off-site treatment for zero liquid discharge is an option, but
in a nearby state is one of the first options. However, there are a number of factors that will impact the viability of
high expenses may make this less attractive for large this option.
operations.
• Another alternative is pumping to a nearby centralized
• Underground injection is an option but cost and treatment facility which will result in long pipelines and
availability of wells in Pennsylvania are just some of the centralized pumping facilities.
disadvantages.
• Dilution and reuse at the well was found to be the most
• On-site treatment may work for some but it will likely require cost-effective option but still requires some treatment to
hauling to a crystallization facility to reduce the remaining reduce friction. New issues and other regulatory limitations
brine volume. Many of today’s treatment technologies could arise if reuse is used as a final method.
are not able to handle the salinity concentrations and will
therefore force additional hauling to sites.
Download our white paper, Marcellus Shale Frac Flowback You may also contact
Disposal Options, at www.lrkimball.com/MarcellusShale to Tanya McCoy-Caretti, SCRP
learn more about these options. Vice President - Business Development
814.472.7700
tanya.mccoy-caretti@lrkimball.com
New Development:
New Opportunity
Airports and developers work together to capitalize on Marcellus Shale
T
here is little doubt that Marcellus Shale exploration employees into the region on a regular basis, making the airport
offers great economic opportunities for businesses and a prime focal point for other developmental activities. These
developers throughout the Marcellus Shale play. Oil and companies may need land for the development of hangars and
gas producers and support companies are investing a great corporate office space, and airports can offer that land and
deal into leases, drilling, development and other infrastructure the capabilities to aid the Marcellus Shale companies in their
improvement. Airports must be prepared to take advantage of development plans. These opportunities could lead to hangar
these opportunities as well. construction and other related development such as small
business parks on or near an airport property, with the airport
Airports: Focal Point for Economic as the central focus area.
development
Because airports are typically located on large tracts of For airports to succeed in capitalizing on the Marcellus
land and are near major highways, they are ideal properties Shale industry, they must successfully balance plans for
on which to locate Marcellus Shale drilling or related support airport operational needs with the designation of land that
facilities. Marcellus Shale companies also typically fly their could be used for Marcellus Shale development or drilling.
www.lrkimball.com 9
While most airports have an approved Airport Layout Plan, it The L.R. Kimball team can provide:
is very doubtful that the Plan took into account non-aviation • Airport business planning
related development such as those that will be required as a • Funding agency coordination and approvals
part of the Marcellus Shale boom. An Airport Business Plan
• Marketing plan initiatives
is essential to help the airport manage its existing assets while
taking advantage of any development opportunities. An Airport • Aviation development plans
Business Plan can provide development guidelines, sample • Regulatory compliance to expedite permit approvals and
leases, minimum standards and other required information to minimize project delays
ensure a level playing field for all types of development.
Download our white paper, How Airports Can Capitalize
Additional help exists for airports. Working with a on Marcellus Shale, at www.lrkimball.com/MarcellusShale
professional aviation consultant can help airports navigate to learn more about the opportunities that exist for
the many obstacles that can come with Marcellus Shale airports, the considerations they must make and how
development. Aviation consultants can work with the Federal L.R. Kimball can help.
Aviation Administration and the State Department of Aviation
to ensure that all Sponsor Grant Assurances are being met You may also contact
while helping the airport meet the needs of the developer. It is Richard Holes, PE
extremely important to involve the consultant and the funding Vice President - Operations Manager
agencies early on in the process to ensure a smooth, stress- Aviation Services
free process to improving the airport’s revenue stream through 814.472.7700
Marcellus Shale drilling and/or development. rick.holes@lrkimball.com
Environmental Impacts
of Oil & Gas Exploration
P
erhaps one of the most debated issues in relation to Marcellus Shale exploration is the
potential impact on our environment and wildlife. Pennsylvania is known for having
exceptional natural resources and the Pennsylvania Department of Conservation and
Natural Resources, the Pennsylvania Department of Environmental Protection and other
regulatory agencies have been working with gas drilling companies to set regulations and
identify ways to minimize the direct and indirect impacts of natural gas development.
www.lrkimball.com 11
When determining the best option for the physical technology used by the firm has the potential to save money
path of the corridor, one should examine potential impacts, and allow the best possible decision in selecting corridors.
such as cost, environmental concerns, transmission efficiency
and community interests and weigh them against those that
Download our white paper, Applying Advanced
may not meet the needs of the project.
Technology to Analyzing Corridor Impacts, at
www.lrkimball.com/MarcellusShale to learn more about
L.R. Kimball corridor analysis service includes aerial
corridor analysis.
photography that is scanned to create a 3D GIS map, offering
a realistic perspective of each proposed corridor’s landscape.
You may also contact
This technology allows the firm to determine exactly how a
Gene Pietrowski
corridor will impact the surrounding environment. Additionally,
Business Development Associate
when combined with secondary source information, staff 814.472.7700
members can identify opportunities to shift the corridor slightly gene.pietrowski@lrkimball.com
and decrease the environmental impact a great deal. The
Considering environmental effects early in the development cycle will help to avoid the destruction of natural resources, project
delays, financial loss or regulatory violations. Consider these strategies when assessing potential natural resource risks:
• Proactive coordination with regulatory agen- • If you assess alternatives, document it.
cies will reveal potential constraints. Take a It will provide a sound justification for site
project-specific approach, set a realistic sched- selection and permit issuance. And it will form
ule and most importantly, form a collaborative the foundation needed for NEPA determination/
“working group.” documentation, which may be required for
• Practice avoidance and mitigation through- federal actions or funding.
out the entire project lifecycle to reduce permit • After all of this, resource mitigation and/
application burdens, costly mitigation require- or developing species or habitat conservation
ments and unnecessary process delays. and enhancement plans may still be required.
• Permitting should not be a “stand-alone” effort but rather However, the scope and scale of this effort could be exacerbated
an all encompassing, due-diligence effort that is thoroughly as a result of a poorly documented, unsubstantiated or
documented. ineffectual alternative analysis.
TIPS
Some other
Q&A
Scott Roberts Answers Your Natural Gas Questions
Former PA DEP Leader Joins L.R. Kimball as Advisor
What should state legislators be thinking about What Marcellus Shale issues will be of top
in 2011 as it relates to Marcellus Shale? concern over the next 6 months?
Natural gas drilling is expected to have a significant We may continue to see a small amount of site specific
economic impact on communities, municipalities and states issues as shale gas drilling activity increases. These will likely
across the Marcellus Shale play. With that in mind, several involve workplace safety, endangered species, erosion and
state legislatures will likely debate the merits of imposing a sediment control, spills and materials handling. However, of the
severance tax, modifying existing tax structures or bypassing more than 2,500 Marcellus wells drilled across Pennsylvania,
a drilling tax altogether. Currently, 38 states impose some form approximately 25 of them have encountered a problem as it
of tax on drillers; Pennsylvania does not charge any taxes on relates to well construction and gas migration to water wells.
the gas that comes from the ground. Other states, including Additionally, the broad debates about environmental policy and
West Virginia, are considering an increase in their severance hydraulic fracturing will continue.
tax plans.
What should residents of Pennsylvania, West
In addition, states should be thinking about the level
of control that municipalities have and their rights to impose Virginia, New York, Ohio and Michigan do or
zoning or stop oil and gas exploration. Finally, pooling and learn about Marcellus Shale?
spacing laws need to be addressed. Mineral estates are so
divided among various land owners it can cause confusion and Education is key. Learn about Marcellus Shale and natural
roadblocks to accessing all of the Marcellus Shale minerals gas exploration. Learn how it works, what it is and what it isn’t.
and can sometimes prevent drilling. Currently there are laws in Understand the risks, but also think about the benefits to your
Pennsylvania that address this issue, but they only apply to the community, your state and the nation.
rock below Marcellus Shale. The same attention needs to be
paid to the Marcellus Shale formation. Visit www.lrkimball.com/MarcellusShale for further information.
Scott is a perfect complement to the L.R. Kimball/CDI Marcellus Shale team of experts. Formerly
employed by the PA DEP for more than 25 years, his expertise spans many facets of Pennsylvania’s mineral
industries, including mine safety, oil and gas, abandoned mine reclamation, mining and reclamation and
district mining opportunities. His career also includes other notable accomplishments including:
• Providing logistical coordination for the 2002 Quecreek Mine • Spearheading efforts to remove or reduce procedural
Rescue roadblocks to the development of Pennsylvania’s
unconventional shale natural gas resources without sacrificing
• Working with Pennsylvania’s Federal Congressional delega-
protection of other land, water or environmental resources
tion to secure the re-authorization of $1.4 billion in funding for
restoration of Pennsylvania’s abandoned mines Mr. Roberts has been on the forefront of the development of
the industries associated with the Marcellus Shale and resurgence
• Negotiating the first major rewrite of Pennsylvania’s bituminous
of the natural gas and coal industries in Pennsylvania. His
mine safety laws in over 100 years
regulatory knowledge and background will be a great asset for
those who are trying to properly leverage the opportunities in the
Marcellus Shale play and other energy sectors.
e
814.472.7700
Fast,Smart Comprehensive
Engineering Solutions
L.R. Kimball and parent company CDI offer
unique project management solutions.
With nearly six decades of experience and a unique service delivery model, L.R. Kimball and
parent company CDI offer unique one-stop design and project management solutions to quickly,
cleanly and safely meet the broad ranging requirements of the oil and gas exploration supply chain
clients. Our services include: