July 16, 2012 / 7:24 PM / 5 years ago

Natgas drillers' water use cut due to Pennsylvania drought

* Natgas operations unaffected, companies say

* Talisman says low prices affected fracking operations

* Carrizo planned around dry season

By Jeanine Prezioso

NEW YORK, July 16 (Reuters) - Drought conditions in Pennsylvania have led to the highest number of suspensions of water withdrawals since permitting began in June 2008 in areas where natural gas producers need water to extract the fuel, a water regulator said.

Gas drilling in those areas has grown rapidly in the last three years.

However, at least two gas producers said the suspensions did not affect them as they had already reduced operations either because of seasonal planning or due to low gas prices.

The Susquehanna River Basin Commission, which manages the river as a water source, said on Monday that around 30 companies, not all of which are gas companies, that rely on some 64 water withdrawal areas in 13 Pennsylvania counties and one New York county were affected.

Water is an integral part of the natural gas drilling process known as hydraulic fracturing or "fracking".

In fracking, water is mixed with chemicals and flushed into a horizontal well at high pressure to hold open cracks created in rocks, allowing gas particles to rise to the surface.

This is the highest number of water withdrawal suspensions since June 2008 when the commission began permitting natural gas producers to draw river water for operations. Many gas producers either keep water in reservoirs, recycle water or plan operations around the dry season because the process of hydraulic fracturing is so water intensive.

A spokesman for Carrizo Oil & Gas said the company schedules well completions around periods of expected dry weather.

"Carrizo currently has no well completion operations in Susquehanna County due to scheduling around the seasonal dry period," he said. "We will be completing wells in Wyoming County and return to Susquehanna later in the year after the end of the dry period."

The practice of "fracking" has caused huge amounts of previously untapped gas reserves to be drawn out, causing a glut of the fuel in the United States, sending prices to a decade low this year.

Talisman Energy, which had suspended some operations due to thin water supplies in April, said this time low natural gas prices hit its drilling activities well before any water issues could.

"With the low natural gas prices our frac activity is slower and therefore our consumption of water is also low as a result," Pam Tragesser, a spokeswoman for Talisman Energy in The Woodlands, Texas, said in an email.

Talisman also uses a "large percentage" of recycled water for its operations when needed, Tragesser said.

New York Mercantile Exchange natural gas prices sank to a 10-year low this spring, at times reaching below $2 per million British thermal units.

By comparison, 2011 prices averaged around $4 per mmBtu.

Pennsylvania has been a focal point for natural gas drilling in the United States. The state sits atop the Marcellus Shale, a large natural gas basin, and heavy production from that basin has aided in pushing prices lower.

XTO Energy, owned by ExxonMobil, the largest U.S. natural gas driller, and Chesapeake Energy, the second largest U.S. natural gas driller, operate in the affected areas.

Cabot Oil & Gas, Southwestern Energy and EXCO Resources were also listed as having operations in the suspended water withdrawal areas.

Representatives for those companies did not immediately reply to requests for comment.

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