By Karl Henkel
THE MISCONCEPTIONS SURROUNDING the natural gas and oil industry aren’t limited to fracking.
There is confusion regarding injection wells, the caboose of the fracking process.
Not all injection wells are created equal.
As the earthquake speculation has swollen around Youngstown-based D&L Energy Inc., the company and state officials have maintained that Ohio has 176 other wells managed by many other companies that have buried brine for decades with few issues.
One such company is Warren-based Kleese Development Associates, owners of two new wells in Vienna Township.
They have more traditional wells, which reach depths of about 4,700 feet.
But newer wells, spawned by the recent oil and gas drilling frenzy, reach depths twice the distance.
To put it simply, the D&L wells aren’t your father’s wells.
To extract gas and oil, a mixture of water, chemicals and sand are blasted into rock thousands of feet below the ground, unlocking the gas and oil. That’s fracking. And drilling companies use about 4 million gallons of water to frack an average well, or about the same amount a golf course uses during a midsummer week.
Of those gallons, about 20 percent of that brine resurfaces and has to be disposed of underground, never to be used again. That water ends up at injection wells — the business of D&L.
The D&L wells inject brine deeper than most in Ohio, and in quantities greater than ever imagined.
And the driving force behind these new-age wells?
The demand for injection sites because of the increased drilling activities in the Marcellus and Utica shales.
“It’s not new. It may be new to this area, simply because of the volumes of water that needs to be disposed of,” said Paul Kleese of Kleese Development. “There hasn’t been a need to inject these kinds of volumes.”
Companies such as D&L have spent millions of dollars to capitalize on the brine-disposal opportunity.
D&L, in business since 1986, spends more money on one well than similar companies spend on three.
Ben Lupo, owner and CEO of D&L, told The Vindicator that each injection well costs about $4 million to build.
D&L, aside from its original Youngstown well, which began operations in December 2010, plans to have operations in Youngstown, Girard, Campbell, Coitsville, Hubbard, Springfield Township, Beaver Township and in Columbiana County in East Liverpool, Fairfield and Elk Run townships.
The Ohio Department of Natural Resources already has permitted D&L wells in Girard, Campbell, Coitsville and Beaver Township as of Dec. 1, according to ODNR records.
Other well owners, such as Kleese, aren’t spending nearly as much.
In fact, Kleese spent about one-third as much on two wells in Vienna Township.
Those wells are former gas-producing wells. Many nonproducing gas wells can be reformatted as injection wells.
D&L injected, on average, about 2,000 barrels of brine a day before the state shut down its Youngstown site Dec. 30.
Kleese injects between 500 and 1,000 barrels per day. There are 42 gallons in one barrel.
D&L’s wells travel as much as 9,300 feet deep.
Kleese’s wells are about 4,700 feet deep, according to ODNR records.
D&L injects brine at pressures of up to 2,500 pounds per square inch.
Kleese injects brine at one-third that pressure.
The demand for injection capacity is the reason D&L has applied for permits that allow wells to inject brine into the Mount Simon sandstone geological formation, which in eastern Ohio is more than 9,000 feet deep.
“If you’re going to spend the kind of money D&L spent, you’ve got to dispose of that high volume of water,” Kleese told The Vindicator.
“[The Mount Simon is] where you drill if you want a well specifically designed for disposal.”
It’s true. Geologists say the Mount Simon is a great formation for brine disposal.
Unless it’s in eastern Ohio.
The average porosity — open pore space in a rock — of the Mount Simon in western and central Ohio is about 13 percent, which are “very high compared to most of Ohio’s oil and gas reservoir rocks,” according to ODNR.
But even ODNR admits that in eastern Ohio, the formation isn’t as viable an injection formation as in other parts of the state, calling eastern Ohio’s Mount Simon “less suited for use as an injection unit.”
The porosity in eastern Ohio is 8 percent, according to ODNR.
The Mount Simon, which in Ohio ranges from 44 to more than 300 feet in thickness, according to ODNR, has a much larger capacity volume than say, the Clinton, the formation into which Kleese injects brine.
As a result, Kleese, though spending a third of the money on a well, accepts only about one-third of the brine.
“We’ve invested money for future, not for existing production,” he said. “We probably won’t be able to inject as long. The Clinton formations have the ability to fill up.”
But in D&L’s case, it is — or was — a race to the bottom.
And the company has cashed in.
Lupo told The Vindicator that the company generated about $16,000 a day off its Youngstown well, which means it took only 250 days of full-force production to match the $4 million originally spent on the well, minus expenses and taxes.
Taxes are a big part of the brine equation.
The state now imposes a 5-cent per-barrel tax on in-state brine and a 20-cent per-barrel tax on out-of-state brine.
Wells such as those owned by D&L can earn the state up to $100,000 in annual tax revenues. Wells such as those owned by Kleese Associates bring the state about a third of that total.
The state, through the first nine months of 2011, raked in $1 million as a result of the brine tax. That money, state officials have told The Vindicator, will be used to grow ODNR’s well-inspector roster, which at the end of 2011 had about 30 members.