blm document on future gas production in tn 2008

8/7/2019 BLM Document on Future Gas Production in TN 2008

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Tennessee

REASONABLY FORESEEABLEDEVELOPMENT S CENARIO

FOR FLUID MINERALS

Prepared for:

U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT

EASTERN STATESJACKSON FIELD OFFICE

411 Briarwood Drive, Suite 404Jackson, MS 39206

April 2008


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The Bureau of Land Management is responsible for thestewardship of our public lands. It is committed to manage, protect,and improve these lands in a manner to serve the needs of theAmerican people for all times. Management is based on theprinciples of multiple use and sustained yield of our nationsresources within a framework of environmental responsibility andscientific technology. These resources include air, fish and wildlife,minerals, paleontological relics, recreation, rangelands, scenicscientific and cultural values, timber; water, and wilderness.

BLM/ES/PL-08/XXX


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Tennessee Reasonable and Foreseeable Development Scenario

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TABLE OF CONTENTS

1.0 INTRODUCTION ............................................................................................................................ 2 1.1 Discussion of Determining Oil and Gas Resource Potential ...................................... 2 1.2 Methodology for Predicting Future Oil and Gas Exploration and Development Activity

................................................................................................................................. 2 1.3 Relating the Potential for Resource Occurrence to Potential for Activity ................... 2

2.0 DESCRIPTION OF THE GEOLOGY OF TENNESSEE ................ .................. .................. ........ 3 2.1 Subsurface Stratigraphy and Structure ..................................................................... 3

2.1.1 ......... North Central Tennessee Region ................................................................. 3 2.1.2 ......... Other Regions in Tennessee ........................................................................ 5

3.0 SUMMARY OF USGS PLAY DESCRIPTIONS FOR THE STATE OF TENNESSEE......... 10 3.1 Illinois Basin in Tennessee ......................................................................................10

3.1.1 ......... Precambrian to Cambrian TPS ................................................................... 10 3.1.2 ......... Ordovician Ancell/Maquoketa TPS ............................................................. 10 3.1.3 ......... Devonian to Mississippian TPS .................................................................. 10

3.2 Cincinnati Arch Province in Tennessee ....................................................................10 3.2.1 ......... Cambrian and Lower Ordovician Carbonate Play ....................................... 11 3.2.2 ......... Middle and Upper Ordovician Carbonate Play ............................................ 11 3.2.3 ......... Silurian and Devonian Carbonate Play ....................................................... 11 3.2.4 ......... Mississippian Carbonate Play .................................................................... 11 3.2.5 ......... Devonian Black Shale Gas Play (Chattanooga Shale) ............................... 11

3.3 Appalachian Basin Province in Tennessee ..............................................................11 3.3.1 ......... Upper Cambrian, Ordovician and Lower/Middle Silurian Thrust Belt Play ... 12 3.3.2 ......... Beekmantown/Knox Carbonate Oil/Gas Play ............................................. 12 3.3.3 ......... Trenton/Black River Carbonate Oil/Gas Play .............................................. 12 3.3.4 ......... Mississippian and Pennsylvanian Sandstone/Carbonate Play .................... 12 3.3.5 ......... Devonian Black Shale Gas Play (Chattanooga Shale) ............................... 12

4.0 PAST AND PRESENT OIL AND GAS EXPLORATION ACTIVITY ........................ ............ 13 4.1 Geophysical and Geochemical Surveys ...................................................................13 4.2 Exploratory Drilling and Success Rates ...................................................................13 4.3 New Field and Reservoirs ........................................................................................13

4.3.1 ......... Chattanooga Shale Play (Devonian): ......................................................... 13

5.0 OIL AND GAS ACTIVITY IN TENNESSEE .................. ................. .................. ................. ....... 16 5.1 Leasing Activity ........................................................................................................16 5.2 Well Spacing Requirements .....................................................................................16 5.3 Drilling and Completion Statistics .............................................................................17

5.3.1 ......... Drilling Practices ........................................................................................ 17 5.3.2 ......... Drilling and Completion Costs .................................................................... 17

5.4 Production Statistics ................................................................................................17 5.4.1 ......... Crude Oil .................................................................................................... 17 5.4.2 ......... Natural Gas ................................................................................................ 17

5.5 Oil and Natural Gas Characteristics .........................................................................17 5.5.1 ......... Natural Gas ................................................................................................ 17 5.5.2 ......... Crude Oil .................................................................................................... 17

5.6 Oil and Gas Prices ...................................................................................................19 5.7 Conflicts with Other Mineral Development ...............................................................19 5.8 Gas Storage Fields ..................................................................................................20


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Bureau of Land Management Jackson Field Office

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6.0 OIL AND GAS OCCURRENCE POTENTIAL .................. ................. .................. ................. .... 21 6.1 Existing oil and gas production ................................................................................21

7.0 OIL AND GAS DEVELOPMENT POTENTIAL......................... ................. .................. ............ 22 7.1 Relative Oil and Gas Development Potential ...........................................................22 7.2 Drilling Development ................................................................................................22

8.0 REASONABLE FORESEEABLE DEVELOPMENT BASELINE SCENARIOASSUMPTIONS AND DISCUSSION ................ ................. ................. .................. .................. ............... 26

9.0 SURFACE DISTURBANCE DUE TO OIL AND GAS ACTIVITY ON ALL LANDS ........... 27 9.1 Surface Disturbances ..............................................................................................27 9.2 Site Construction .....................................................................................................27 9.3 Mitigation Measures .................................................................................................32 9.4 Conditions of Approval .............................................................................................32 9.5 Lease Stipulations ...................................................................................................32 9.6 Total Disturbances ...................................................................................................32

10.0 REFERENCES ................................................................................................................................ 34

APPENDIX A ............................................................................................................................................ 35

APPENDIX B ............................................................................................................................................ 36

LIST OF TABLESTable 1: Stratigraphic Column - North Central TennesseeTable 2: Active and Inactive Oil and Gas Fields North Central TennesseeTable 3: Summary of Well Spacing Requirements Tennessee Oil and Gas Board Rule 1040-2-4Table 4: Crude Oil Data for Reservoirs in TennesseeTable 5: Crude Oil and Natural Gas Production by County in Tennessee for 2005Table 6: Ten-Year Forecast of Gas Wells in TennesseeTable 7: Ten-Year Forecast of Oil Wells in Tennessee

Table 8: Level of Disturbance for Conventional Shallow Oil and Gas WellsTable 9: Level of Disturbance for Conventional Deep Oil and Gas WellsTable 10: Level of Disturbance for Horizontal Gas WellsTable 11: Predicted Development and Surface Disturbance (Exploration and Construction) for

Gas and Oil WellsTable 12: Predicted Development and Residual Surface Disturbance (Production) for Gas and

Oil Wells

LIST OF FIGURESFigure 1: Geologic Map of TennesseeFigure 2: Physiographic Map of TennesseeFigure 3: Federal Surface in TennesseeFigure 4: Tennessee Well Completion Records by Well TypeFigure 5: Permits Issued from 2001 - 2005Figure 6: Counties with Active or Historic ProductionFigure 7: Tennessee Crude Oil Production 1996-2006Figure 8: Tennessee Natural Gas Production 1996-2006Figure 9: Forecasted Rank for Gas ExplorationFigure 10: Forecasted Rank for Oil Exploration


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ACRONYMSACEC Area of Critical Environmental ConcernAPD Application for Permit to Drill

AU Assessment UnitsBCF billion cubic feetBLM Bureau of Land ManagementBOPD barrels of oil per dayCBNG Coal Bed Natural GasEIS Environmental Impact StatementEOR Enhanced Oil RecoveryESA Endangered Species ActEIS Environmental Impact StatementJFO Jackson Field Office

MMBO million barrels of oilROD Record of DecisionRMP Resource Management PlanSMA Surface Management AgencyTCF trillion cubic feetTPS Total Petroleum SystemsUSFS United States Forest ServiceUSFWS United States Fish and Wildlife ServiceUSGS U.S. Geological Survey


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Summary


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1.0 INTRODUCTIONThe Bureau of Land Managements JacksonField Office is located in Jackson,Mississippi, and is responsible for 11southern states: Alabama, Arkansas,Florida, Georgia, Kentucky, Louisiana,Mississippi, North Carolina, South Carolina,Tennessee, and Virginia. The Jackson FieldOffice manages approximately 34.25 millionacres of federal mineral estate in theeastern portion of the United State. Of thisapproximately 1.9 million mineral estateacres are located in Tennessee.

The Reasonable Foreseeable DevelopmentScenario (RFDS) forecasts fluid mineralexploration, development, and productionfor the planning area for the next 10 years.The RFDS assumes a baseline scenario inwhich no new policies are introduced and allareas not currently closed to leasing anddevelopment are opened for oil and gasactivity.

Interagency Reference Guide - ReasonablyForeseeable Development Scenarios andCumulative Effects Analysis for Oil and GasActivities on Federal Lands in the GreaterRocky Mountain Region (USDI 2002),Policy for Reasonably Foreseeable

Development Scenario (RFD) for Oil andGas (BLM WO IM No. 2004-089) andPlanning for Fluid Minerals SupplementalProgram Guidance (BLM Handbook H-1624-1) guided the criteria and analysesmethods used in this RFD.

1.1 Discussion of Determining Oiland Gas Resource Potential

Potential accumulations of oil and gas aredescribed in Section 2. Non-BLM land withinthe state may be included in this sectionwhen it provides a better understanding ofresource potential on BLM property. Thesedeterminations were made using thegeologic criteria provided by reference inSection 2. Also contained in Section 2 aredescriptions of stratigraphy, structure,historic oil and gas activities, as well asrelevant studies done in the area. Potential

reservoir rocks, source rocks, and existingstratigraphic and structural traps arediscussed in detail.

1.2 Methodology for PredictingFuture Oil and Gas Explorationand Development Activity

Section 7 predicts the type and intensity offuture oil and gas exploration anddevelopment activities. These forecasts aredetermined by an areas geology, andhistorical and present activity, as well asfactors such as economics, technologicaladvances, access to oil and gas areas,transportation, and access to processingfacilities. Economics, technology, and otherfactors may be hard to predict because of

their complex nature and rapid rate ofchange. Projections of oil and gas activitiesare based upon present knowledge. Futurechanges in global oil and gas markets,infrastructure and transportation, ortechnological advancements, may affectfuture oil and gas exploration anddevelopment activities within the state.

1.3 Relating the Potential forResource Occurrence toPotential for Activity

Predicted oil and gas activity does notnecessarily correlate with geologic potentialfor the presence of hydrocarbons. Althoughthe geology of an area may suggest thepossibility of oil and gas resources, actualexploration and development may berestricted by high exploration costs, low oiland gas prices, or difficulty accessing thearea due to lease stipulations. Thus a smallarea may have a high resource potential,yet have a low exploration and developmentpotential due to severe restrictions onaccess. Conversely, technologicaladvancements or an increase in oil and gasprices could result in oil and gas activities inareas regarded as having low potential foroccurrence.


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2.0 D ESCRIPTION OF THEG EOLOGY OF T ENNESSEE

The surface geology of the State ofTennessee is dominated by exposures ofPaleozoic rocks that range in age fromOrdovician to Pennsylvanian. Exposures ofyounger Mesozoic and Tertiary aged unitsare confined to the western part of the state.Quaternary aged sediments in the state aregenerally confined to areas associated withrivers and tributaries in the western parts ofthe state (See Figure 1 Geologic map ofTennessee).

The distribution of these exposures and thegeneral topography and physiography of theregion are largely controlled by the parts of

three major structural features that arepresent within the state. These include partof the Appalachian basin including theassociated Appalachian fold-and-thrustprovince, the southern most extent of theCincinnati Arch, and a part of theMississippi Embayment which is located inthe western part of the state. Theseregionally scaled structural features includesmaller localized features that includefolded geologic structures and individualfaults or fault trends. Figure 2 shows the

location of these regional structural featuresand indicates individual counties in which oiland gas resources have been identified.

2.1 Subsurface Stratigraphy andStructure

The subsurface stratigraphy and structurerelated to the occurrence of oil and gasresources in Tennessee is largelydominated by the Nashville Dome andassociated Cumberland Saddle which islocated on the southern most extension ofthe north south trending Cincinnati arch.The furthermost eastern flank of this featureforms parts of the adjacent AppalachianBasin area. Oil and gas production inTennessee is generally consistent with anextension of similar production identified in

central and south central Kentucky. TheAppalachian fold-and-thrust province,located to the east of the Appalachian Basinforms the valley and ridge physiographicregion of eastern Tennessee. Theseregional structural features which effect thedistribution of the geologic surfaceexposures and the general physiography ofthe state also largely control the distributionof subsurface rock units and in turn effectthe distribution of oil and gas occurrences.

2.1.1 North Central Tennessee Region

The North Central Tennessee productiveregion is located in north-central Tennesseeand is coincident with the crestal and flankareas of the Cincinnati arch and parts of theAppalachian Basin which extends fromsouthern Kentucky into north-centralTennessee.

The Cincinnati arch is a positive geologicstructural feature that represents anextension of the Kankakee and Findleyarches which extend southward fromnorthern Illinois and western Ohio intoKentucky and then further on intoTennessee where it terminates in centraland south central part of the state. Thestructural features of this arch in Tennessee

are the Nashville Dome, and theCumberland Saddle. The CumberlandSaddle consists of the structural sag locatednorth of the Nashville Dome of Tennesseeand south of Jessamine Dome of Kentucky.The eastern flank of the Cincinnati Archforms the western flank of the AppalachianBasin and is included in this portion ofTennessee that is productive of oil and gas.While some production has beenestablished in direct association with thesoutheastern flank of the Nashville Dome

the majority of the production in Tennesseeis from those counties in the area of theCumberland Saddle or portions of theAppalachian Basin and adjacentAppalachian Thrust.


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Figure 1: Geologic Map of Tennessee


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Figure 2: Physiographic Map of Tennessee

This region contains reservoirs that areproductive of both oil and natural gas andthat range in age from the Cambrian-Ordovician System through MississippianSystem. The individual reservoir unitsinclude both carbonate and clastic lithologicunits. Table 1 shows a generalizedstratigraphic column for reservoir units inthe North Central Tennessee region.

Table 2 provides data relative to active andinactive oil and gas fields located in

northern central Tennessee and includesfields located in the area of the CumberlandSaddle of the Cincinnati Arch and theAppalachian Basin as well some productionestablished in association with the areaincluded in the Appalachian Thrust. Thefields in this part of Tennessee areclassified a mix of fields with non-associatedgas with oil and oil and associated-dissolved gas present.

2.1.2 Other Regions in Tennessee

The eastern part of the state is located inthe valley and ridge province of theAppalachian area. The sedimentarysequence in this area is highly faulted andin some areas affected by regionalmetamorphism. Northeast southwesttrending faults predominate with overthrusting and sharp folding common to thearea.

The western part of the state lies within thenorthern reaches of the MississippiEmbayment which is marked by exposuresof Mesozoic (Cretaceous) and Tertiary rockunits. These units are generally composedof clastic strata including gravels, sands andsandstone, silts, and mud. To date therehas been no oil and gas productionestablished in this part of the state.

Figure 3 indicates the general federalsurface in the state of Tennessee.


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Table 1: Stratigraphic Column - North Central Tennessee

SYSTEM GROUP FORMATION / RESERVOIR

Pennsylvanian Pottsville GroupMississippian Chester Pennington Formation

* Bangor Limestone (Big Lime)

* Monteagle LimestoneMeramec * Monteagle Limestone

St Louis limestoneWarsaw Limestone

Osage * Fort PayneKinderhook

Devonian Onongdaga Grp. * Chattanooga ShaleSilurian Albion - Lockport Lego Limestone

Laurel LimestoneOsgood FormationBrassfield Limestone

Ordovician Richmond Grp.Maysville Grp. Leipers FormationNashville Grp (Trenton) Catheys Formation

*Bigby-Cannon Limestone*Hermitage Formation

Stones River Grp Carters Limestone* Lebanon LimestoneRidley LimestonePierce Limestone* Murfreesboro LimestoneWells Creek Dolomite

Cambrian -Ordovician

Knox * Knox Dolomite

* Indicates horizon or stratigraphic equivalent is a productive or prospective reservoir(s).


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Table 2: Active and Inactive Oil and Gas Fields North Central Tennessee

FIELD NAMECOUNTY

NAME TYPES FIELD NAME COUNTY NAME TYPES

ALGOOD PUTNAM O DEER LODGE NORTH MORGAN NALLRED OVERTON O DIFFICULT SMITH N

ALTAMONT GRUNDY N DODSON CHAPEL OVERTON NARCOTT SCHOOL CLAY O DOUGLAS BRANCH MORGAN ONASHBURN CREEK CLAY O DOUGLAS BRANCH EAST MORGAN OASHBURN CREEKSOUTH OVERTON ON DREW BRANCH CAMPBELL OBARREN PLAINS ROBERTSON ON DRY CREEK CLAY OBEATY FENTRESS O EAGLE CREEK OVERTON OBENDIX SPUR SCOTT ON FAULKNER SPRINGS WARREN NBIG BRANCH FENTRESS N FAYETTEVILLE LINCOLN NBIG EAGLE CREEK OVERTON ON FINDLEY NE WHITE NBLACK HOLLOW OVERTON O FLAT CREEK NE OVERTON OBOATLAND FENTRESS O FLATT CREEK OVERTON ON

BOATLAND NE FENTRESS N FORBUSFENTRESS &PICKET O

BOONE CAMP MORGAN ON FOX SPRINGS CLAY OBRICEVILLE ANDERSON O FRANKFORT NE MORGAN ONBROKEN LEG OVERTON O FROG POND MACON NBROWN POND SCOTT ON GATEWOOD SW MORGAN ONBUCKLICK MORGAN O GATEWOOD-STOWERS MORGAN ONBUFFALO COVE FENTRESS O GEORGE WEST BRANCH SCOTT N

BURCHETT HOLLOWCLAY &OVERTON O GLADES EAST MORGAN ON

BURRVILLE MORGAN ONA GLENMARY SCOTT ONBURRVILLE EAST MORGAN O GLENMARY SE SCOTT OCAPITOL HILL SCOTT ON GLENOBEY FENTRESS ONCARVER BRANCH SMITH O GOOD HOPE OVERTON ONCARYVILLE CAMPBELL OA GOOD PASTURE BEND CLAY OCECIL HOLLOW SCOTT ON GRAVE HILL SCOTT OCELINA CLAY O GRAVE HILL NORTH SCOTT OCELINA NORTH MORGAN O GREEN POND OVERTON NCHANEY GAP MORGAN O GREENWOOD SOUTH JACKSON OCLARKRANGE FENTRESS O GRIMSLEY NORTH FENTRESS OCLIFTY DOME MACON N GROCE PICKETT OCOAL HILL SCOTT ON GRUETLI GRUNDY N

COALMONT GRUNDY N GUM BRANCH

MORGAN &

SCOTT ONACOLLINS RIVER WARREN ON HANGING LIMB OVERTON NCOOKEVILLE PUTNAM N HARPETH VALLEY DICKSON NCOON HOLLOW MORGAN ON HELENWOOD WEST SCOTT ONCOON HOLLOW NE MORGAN N HENEGER WARREN NCROOKED BRANCH FENTRESS N HICKORY CREEK COFFEE NDAYS CHAPEL CLAIBORNE OA HIGGENBOTTOM BEND WARREN NDEER LODGE MORGAN O HIGH POINT SCOTT O


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FIELD NAMECOUNTY


HONEY CREEKSOUTH

FENTRESS &SCOTT ONA MILL CREEK CLAY O

HUNTSVILLE SCOTT ON MILLER MOUNTAIN OVERTON ONHURRICANE CREEK FENTRESS ON MITCHELL SUMNER OHIGH POINT SOUTH SCOTT O MITCHELL CREEK CLAY OHILHAM OVERTON N MITCHELL CREEK SE OVERTON OHIWASSEE FENTRESS N MOODYVILLE EAST PICKETT OINDEPENDENCESCHOOL OVERTON ON NEELEY CREEK CLAY OINDIAN CREEK MORGAN OA NEW HAVEN SCOTT NINDIAN CREEK SE MORGAN O NEWCOMB CAMPBELL NIRONS CREEK CLAY O NIGGS CREEK SCOTT NJACK BRANCH OVERTON O NOAH FORK COFFEE OJAMESTOWN NE FENTRESS N NORTH CREEK CUMBERLAND ONJAMESTOWN SE FENTRESS O OAK GROVE OVERTON OA

JOHN HALL FLATS SCOTT ON PALL MALL NORTH FENTRESS OJONES CREEK DICKSON O PARKER-ETTER PICKETT ONJOUETTE CREEK PICKETT O PERKINS HOLLOW CAMPBELL OJOUETTE CREEKEAST PICKETT O PETERMAN BEND CLAY OKETTLE CREEK CLAY O PETERS BRIDGE FENTRESS OKHOTAN ANDERSON OA PILOT MOUNTAIN MORGAN ONLEWALLEN C SCOTT N PINE BRANCH SW CLAY OLIBERTY MACON N PINE GROVE MORGAN NLIBERTY CHURCH OVERTON N PLEASANT RIDGE MORGAN ONLICK BRANCH SCOTT ON PLEASANT SHADE SMITH N

LILLYDALE

CLAY &

PICKETT O POPLAR COVE FENTRESS OLITTLE CLEARCREEK MORGAN ON PREVIT BRANCH SCOTT OLITTLE CRAB FENTRESS O PUNCHEONCAMP SCOTT OLITTLE PROCTOR CLAY O RED HILL FENTRESS OLIVINGSTON EAST OVERTON O RIVER JUNCTION SCOTT NLOCK BRANCH JACKSON O RIVERTON FENTRESS OLONG FORK SCOTT N ROBBINS SCOTT ON

LONG RIDGE JACKSON O ROSLIN SOUTHFENTRESS &MORGAN N

LOVE LADY NW PICKETT O RUGBY

FENTRESS,MORGAN, &SCOTT ON

LOW GAP SOUTH SCOTT ON RUSSELL FORK CAMPBELL OLOW GAP-REUBENHOLLOW SCOTT OA RUSSELL RIDGE PICKETT O

MANSON SCHOOL FENTRESS ON SHIRLEYFENTRESS &MORGAN N

MARTIN BRANCH CANNON O SHEPHERD BRANCH FENTRESS ONMCKINNEY CAMPBELL O SHILOH OVERTON ONMILE ONE SCOTT O SHUG MOUNTAIN SCOTT O


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FIELD NAMECOUNTY


SILVER PINE FENTRESS ON TACKETT CREEK CLAIBORNE OSMITHLAND LINCOLN N TALLMAN FORD MACON

SPARTA WHITE N TINSLEYS BOTTOMCLAY &JACKSON O

SPRING CREEK OVERTON O TOWN CREEK WARREN OSPURRIER PICKETT O TRAVISVILLE PICKETT OST JOHN CLAY O TURKEY CREEK CLAY OSTANLEY JUNCTION SCOTT ON UNION HILL MORGAN ONSTAR POINT PICKETT N UNION HILL SW MORGAN ONSTATIC PICKETT O VANS BRANCH PICKETT OSTILLHOUSE CREEK CLAY O VERDUN SCOTT NSTOCKTON FENTRESS O WALNUT GROVE WHITE NSTOCKTON SW FENTRESS ON WILLIAMS CREEK SCOTT OSUGAR GROVE SUMNER O WILLOW GROVE CLAY OSUNBRIGHT MORGAN ON WINONA SCOTT ON

SUNBRIGHTCENTRAL MORGAN ON WIRMINGHAM OVERTON OSWAN CREEK HANCOCK ON WOLF RIVER EAST FENTRESS OSYCAMORE VALLEY MACON N YELLOWCLIFF SCOTT N

ONA = Oil, non-associated gas, and associated dissolved gas are present. ON = Oil and non-associated gas present; associated-dissolved gas absent. N = Non-associated gas present; oil and associated-dissolved gas absent. O = Oil present; non-associated gas and associated-dissolved gas absent. OA = Oil and associated-dissolved gas present; non-associated gas absent.Source: Tennessee State Oil and Gas Board 2007

Figure 3: Federal Surface in Tennessee


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3.2.1 Cambrian and Lower Ordovician Carbonate Play

The Cambrian and Lower OrdovicianCarbonate Play is an oil play withassociated gas trapped in a karstic dolomite

by Knox unconformities and small anticlines(Ryder, 1996a). The Cincinnati Arch area ispredicted to have the potential for smallfields with production around 1 MMBO and6 BCF of gas. A more detailed description ofthe play developed by the USGS for the1995 US Oil and Gas Assessment can befound in Appendix B.

3.2.2 Middle and Upper Ordovician Carbonate Play

The Middle and Upper Ordovician

Carbonate Play is an oil play withassociated gas trapped in dolomite andbioclastic limestones by stratigraphic traps,fracture zones and small anticlines (Ryder,1996a). The Cincinnati Arch area ispredicted to have the potential for smallfields with production around 1 MMBO and6 BCF of gas. A more detailed description ofthe play developed by the USGS for the1995 US Oil and Gas Assessment can befound in Appendix B.

3.2.3 Silurian and Devonian Carbonate Play

The Silurian and Devonian Carbonate Playis an oil and gas play trapped in Silurian andDevonian carbonates by truncations, facies-change, and combination traps (Ryder,1996a). The Cincinnati Arch area ispredicted to have the potential for smallfields with production around 1 MMBO and6 BCF of gas, as previous development hasexhausted larger fields in the play area. Amore detailed description of the playdeveloped by the USGS for the 1995 US Oiland Gas Assessment can be found inAppendix B.

3.2.4 Mississippian Carbonate Play

The Mississippian Carbonate Play is an oiland gas play trapped in Mississippianbioherms by facies-change, and

combination traps (Ryder, 1996a). TheCincinnati Arch area is predicted to have nopotential for production around 1 MMBOand 6 BCF of gas, as previous developmenthas exhausted larger fields in the play area.A more detailed description of the playdeveloped by the USGS for the 1995 US Oiland Gas Assessment can be found inAppendix B.

3.2.5 Devonian Black Shale Gas Play (Chattanooga Shale)

The Devonian Black Shale Gas Play is anunconventional continuous-Type Play inwhich gas has been generated and trappedin fractured shales of the Upper DevonianChattanooga and New Albany Shales(Ryder and Hatch, 1996). The CincinnatiArch area is predicted in the 1995assessment to have the potential for smallamounts of undiscovered gas, this data maybe out of date as test wells have beendeveloped in the shale and technology hasadvanced to facilitate production of this gas.A more detailed description of the playdeveloped by the USGS for the 1995 US Oiland Gas Assessment can be found inAppendix B.

3.3 Appalachian Basin Province inTennessee

The assessment of the Appalachian Basinprovince by the USGS recognized fourconventional plays and one unconventionalplay that included parts of eastern and east

central Tennessee located in theAppalachian Basin. The conventional playsincluded: a Upper Cambrian, Ordovicianand Lower / Middle Silurian Thrust BeltPlay, Beekmantown/Knox CarbonateOil/Gas Play, a Trenton/Black River

Carbonate Oil/Gas, and a Mississippian andPennsylvanian Sandstone/Carbonate Play.The unconventional play listed as beingincluded in a very small part of theTennessee portion of the Appalachian BasinProvince is a Devonian Black Shale GasPlay.


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3.3.1 Upper Cambrian, Ordovician and Lower/Middle Silurian Thrust Belt Play

The Upper Cambrian, Ordovician andLower/Middle Silurian Thrust Belt Play is a

conventional gas trap play reservoired inDolomites, limestones, and sandstones bylarge anticlines (Ryder, 1996b). TheAppalachian Basin area has the potential forseveral undiscovered gas fields of greaterthan 6 BCFG. A more detailed description ofthe play developed by the USGS for the1995 US Oil and Gas Assessment can befound in Appendix B.

3.3.2 Beekmantown/Knox Carbonate Oil/Gas Play

The Beekmantown/Knox Carbonate Oil andGas Play is a conventional play with oil andgas in dolomite reservoirs trapped bytruncations, paleotopographic highs, andlow amplitude anticlines (Ryder, 1996b).The Appalachian Basin area has thepotential for a modest number lundiscovered oil and gas fields of greaterthan 1 MMBO or 6 BCFG. A more detaileddescription of the play developed by theUSGS for the 1995 US Oil and GasAssessment can be found in Appendix B.

3.3.3 Trenton/Black River Carbonate Oil/Gas Play

The Trenton/Black River Carbonate Oil andGas Play is a conventional play with the oiland gas in platform limestone reservoirstrapped by low amplitude anticlines,dolomitized fracture zones, and naturalfractures (Ryder, 1996b). The AppalachianBasin area has the potential for a modestnumber l undiscovered oil and gas fields ofgreater than 1 MMBO or 6 BCFG. A moredetailed description of the play developedby the USGS for the 1995 US Oil and GasAssessment can be found in Appendix B.

3.3.4 Mississippian and Pennsylvanian Sandstone/Carbonate Play

The Mississippian and PennsylvanianSandstone/Carbonate Play is an ol and gasplay reservoired in shallow-marine

sandstone and shelf limestone trapped byfacies-change stratigraphic, combination,unconformity and local anticlinal traps(Ryder, 1996b). The Appalachian Basinarea has the potential for a small number oiland gas fields of greater than 1 MMBO or 6BCFG. A more detailed description of theplay developed by the USGS for the 1995US Oil and Gas Assessment can be foundin Appendix B.

3.3.5 Devonian Black Shale Gas Play (Chattanooga Shale)

The Devonian Black Shale Gas Play is anunconventional continuous-Type Play inwhich gas has been generated and trappedin fractured shales of the Upper DevonianChattanooga and New Albany Shales. TheCincinnati Arch area is predicted in the 1995assessment to have the potential for smallamounts of undiscovered gas, this data maybe out of date as test wells have beendeveloped in the shale and technology hasadvanced to facilitate production of this gas.

A more detailed description of the playdeveloped by the USGS for the 1995 US Oiland Gas Assessment can be found inAppendix B.


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4.0 P AST AND P RESENT O IL ANDG AS E XPLORATION A CTIVITY

4.1 Geophysical and GeochemicalSurveys

No extensive geophysical or geochemicalsurveys have been undertaken inTennessee in recent years other thanindividual seismic operations targeted atspecific exploration targets generated off ofsurface or subsurface geologic studies(Hoyal, M.L., 2008).

4.2 Exploratory Drilling andSuccess Rates

The success rates are reported fromTennessee Oil and Gas Association annualreport. The average success rate over thelast ten years for new field wildcat andoutpost wells is approximately 33%. Annualsuccess rates have varied from a 100%success rate in 2004 when two wells weredrilled to 9% in 2005 when 140 wells were

drilled. Figure 4 presents the total number ofwells drilled per year by type, including drywells (D&A), Oil, Oil & Gas, and Gas wellsas reported by the Tennessee Departmentof Environment and Conservations Divisionof Geology. Figure 5 shows where recentpermits have been issued by county andfigure 6 show past production by county.

4.3 New Field and Reservoirs

4.3.1 Chattanooga Shale Play (Devonian):

The Chattanooga Shale is a Devonian agedshale of the Onondgaga Group. Drilling hasbeen focused in the following five countiesin north central Tennessee; Anderson,Campbell, Claiborne, Morgan and ScottCounties. Drilling of wells in this play haveincreased in recent years as the economicsof this gas play have become moreprofitable.

Figure 4: Tennessee Well Completion Records by Well Type

Source: TDEC, 2006


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Figure 5: Permits Issued from 2001 - 2005


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Figure 6: Counties with Active or Historic Production


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5.0 O IL AND G AS A CTIVITY INT ENNESSEE

This section deals with the current status ofoil and gas activity in Tennessee based on

information provided by both public andprivate sources. Information includes;leasing activity, well spacing requirements,drilling permits by county, Drilling practices,production statistics, oil and gascharacteristics, oil and gas prices,operational costs (drilling and completion),conflicts with other mineral development,and gas storage fields.

5.1 Leasing ActivityLeasing activity in Tennessee is on-going inthe primary area of oil and gas operationswhich is located generally in north-centralTennessee.

While leasing costs vary across this areathey tend to range from $10.00 to $20.00per acre, although lease prices in the orderof $1,000 per acre have been reported for

acreage offsetting established productionwith good production rates (Goodwin, W.,2008).

5.2 Well Spacing Requirements

Well spacing requirements for oil and gaswells drilled in Tennessee are subject to therules and regulations of the Tennessee Oiland Gas Board (TOGB). Spacingrequirements fall under those set by specificfield rules issued by the Board upon noticeand hearing and those covered under thegeneral rules and regulations of TOGB.

The specific TOGB regulation which dealswith spacing requirements not coveredunder established field rules is Rule 1040-2-4. The complete text of this rule is attachedin Appendix B. While there are certainexceptions available under specificconditions Table 3 shown belowsummarizes the standard requirements forunit size, spacing and setbacks as outlinedin Rule 1040-2-4.

Table 3: Summary of Well Spacing Requirements Tennessee Oil and Gas Board Rule1040-2-4

Well Type Well Depth(Formation) Unit SizeMinimumDistance

to Nearest Wellin Same Pool

Setback to NearestProperty or Unit Line

Oil & Gas < 1,000 Ft. 10 Acres No closer than660 Ft 330 Ft.

Oil & Gas>1,000 2,000 Ft. 40 Acres No closer than660 Ft 330 Ft.

Gas 2,000 5,000 Ft. 40 Acres No closer than660 Ft 330 Ft.

Gas > 5,000 Ft. 160AcresNo closer than660 Ft 330 Ft.


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5.3 Drilling and CompletionStatistics

5.3.1 Drilling Practices

The vast majority of drilling operations inTennessee are standard vertical tests drilledwith air rotary equipment that vary in depthfrom 2000 feet to 6,000 feet. This range ofis based on the drill sites elevation andgeneral position on regional structuralfeatures (Cumberland Saddle, AppalachianBasin or Appalachian Thrust) with theaverage well depth in the order of 2,000 feet(Burton , M., 2008, Goodwin, W., 2008 andHoyal, M.L., 2008). The deepest vertical testdrilled to date reached a depth ofapproximately 9,500 feet and as of late2007 only one horizontal drilling operationfor oil and gas has been conducted inTennessee (Burton, M., 2008).

5.3.2 Drilling and Completion Costs

Drilling costs and well completion costs varyby depth, reservoir, and completion practicefor the specific reservoir to be produced.Very generalized costs associated with gasproduction areas in the state suggest thatwell costs are in the order of approximately$70,000 for drilling costs and $30,000 to$100,000 for completion costs (Goodwin,W. 2008).

5.4 Production Statistics

5.4.1 Crude Oil

Annual crude oil production data forTennessee for the period 1996 through2006 is graphically displayed with pricinginformation in Figure 7. As can be seenfrom a review of this graph the annual crude

oil production rate at the beginning of thisperiod stood at 380,750 barrels of oil peryear. That rate has subsequently declinedto 261,575 barrels / year in 2006. Thisproduction decline trend is not expected tobe significantly altered as most of the oilproduction located in the north-central partof the state is categorized as very matureproduction that is dependent on infill and

trend development drilling as well assecondary recovery operations for generallysustaining this rate (Burton , M., 2008 andHoyal, M.L., 2008).

5.4.2 Natural Gas

Annual natural gas production in Tennesseefor the years 1996 through 2006 isgraphically displayed with pricinginformation in Figure 8. Unlike oilproduction, natural gas production hasgenerally been on the rise since 2000 whenannual production stood at 1,154,197 Mcf ofgas for the year. Since that year annualproduction has generally risen each yearthrough which there is data available with2006 annual production reaching 2,662,584Mcf or a 130.6% increase in production overthat which was reported in 2000. Thisincrease in production is undoubtedlybecause of the increase in wellhead gasprices over that period coupled with theincrease in drilling operations anddiscoveries in Monteagle Limestone, FortPayne, Stones River, and Knox reservoirsas well as the Chattanooga Shale gasinterval.

5.5 Oil and Natural Gas

Characteristics5.5.1 Natural Gas

Natural gas produced from oil and gas fieldsin north-central Tennessee although limitedin volume can be either a wet or dry gasdepending on the individual reservoir.

The natural gas from the fields has as ageneral average a heating value of 1600Btu per cubic foot with little or no problemswith CO2 or nitrogen content being reported(Goodwin, W. 2008).

5.5.2 Crude Oil

Crude oil produced in Tennessee varies incolor and in odor by area and by individualreservoir; however the overall quality of theoil does not appreciably vary acrossgeographic regions or reservoirs and isconsidered to be consistent with


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Figure 7: Tennessee Crude Oil Production 1996-2006

Crude Oil Production -Tennessee 1996-2006

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Years

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d e

O i l ( B B L s

)

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

P r i c e

/ B B l

Oil Production Oil Price

Figure 8: Tennessee Natural Gas Production 1996-2006

Natural Gas Production -Tennessee 1996-2006

0

500,000

1,000,000

1,500,000

2,000,000

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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Years

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( M C F )

$0.00

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$7.00

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/ M C F

Gas Production Gas Price


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2008). Crude oils consistent withPennsylvania grade crude oil are thermallystable and generally have a high viscosityindex. Only very limited specific informationas to the gravity of crude oil by reservoirand area is available. That data is includedin Table 4 shown below.

5.6 Oil and Gas PricesAverage annual crude oil prices forTennessee based on data provided by theTennessee Division of Geology (TDOG)during the period from 1996 through 2006,as seen in Figure 7 referenced above in thesection concerning production trends, showthat crude oil prices have risen from 19.28$/ bbl to 57.06 $/bbl during that timeframe

(Zurawski, Ronald P., 2007). TheSeptember 2007 posting of the averagecrude oil purchase price reported to EIAshows wellhead crude prices at 73.62 $/bblfor the PADD II area (PetroleumAdministration Defense District) of whichTennessee is a part (EIA, website). Pricingfor crude oil in Tennessee in early 2008 wasapproximately $14.00 below that beingposted on the NYMEX exchange.

As can be seen from a review of the graphin Figure 8 the annual average wellhead

price for Tennessee natural gas reported bythe TDOG has steadily risen from 4.08$/Mcf in 2000 to 6.78 $/Mcf in 2006(Zurawski, Ronald P., 2007). Whileannualized data for 2007 is not as of yetavailable, current wellhead prices for localutility use including transportation andcompression costs are estimated to be inthe order of 6.54 $/Mcf based on the current(2/2008) NYMEX posting of 7.25 $/mmBtu(Goodwin, W., 2008).

Both crude oil and natural gas prices aregenerally expected to remain strong for theforeseeable future.

5.7 Conflicts with Other MineralDevelopment

Mineral development in Tennessee isextensive and involves in addition to oil andgas a number of different mineral resources.

Mineral resources produced in Tennesseefall into six broad categories and include:Mineral fuels, Clay, Stone, Sand andGravel, Shale, and Metals. Informationcontain in this mineral summary is from theUSGS 2004 Mineral Yearbook and from theTennessee Division of Geology.Mineral Fuels

The Mineral fuels produced in Tennesseeinclude oil and natural gas and coal,

Tennessees coal production is small bycomparison to other producing states butgenerally of high quality. Coal production isa bituminous grade coal from theCumberland Plateau and CumberlandMountains areas.

ClayClay mineral production includes Ball clay,kaolin, and fullers earth (montmorillo nite).

Crushed Stone and Dimension Stone

The most recent data for the State (2004)indicates that the crushed stone industryoperated 157 quarries in Tennessee.Production of crushed stone is widespreadthrough out the state with productionlocated in 66 counties. Dimension stoneproduction includes both dimension marbleand sandstone.Sand and Gravel

Sand and gravel for construction andindustrial purposes was produced at 94sites in 30 counties across the State.

Shale

A total of 9 shale mining operations wereactive in Tennessee in 2004 with thematerial from these operations going to theproduction of construction bricks.

Metals

Zinc production has in the past been animportant metal mining sector inTennessee. The most recent mineralindustry data however indicates that zincmining and processing operations havebeen suspended in all of Tennessees zincmines.


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Table 4: Crude Oil Data for Reservoirs in Tennessee

Reservoir CountyCrude Oil

Gravity(API)

Pennsylvanian unknown 32.0Mounteagle Morgan 34.4

Mounteagle Scott 35.2

Mounteagle Cumberland 36.7

Fort Payne Morgan 30.9

Fort Payne Scott 31.8 36.0

Trenton Fentress 35.6

Trenton Overton 39.1

Stones River Overton 39.4Source: (Hoyal, M.L., 2008)

Based on interviews with personnel from theTDOG there appears to be little or noconflicts between oil and gas operationsand on-going mineral development (Burton ,M., 2008, Goodwin, W., 2008) and Hoyal,M.L., 2008).

5.8 Gas Storage Fields

EIA gas storage data for 2006 indicates thatthere is one active gas storage fieldoperating in the State of Tennessee (EIAwebsite, Natural Gas Storage, Form EIA-191 Data, 2007). That field, the Lick Branch

Unit (LBU) is a depleted gas field located inMorgan and Scott counties that has beenconverted to gas storage operations. TheEIA data indicates that the operator of thefield is Cambridge Resources Inc. Thereservoir is in the Fort Payne section. Thereported total field capacity and authorizedmaximum daily delivery is 1,200,000 Mcfand 20,000 Mcf respectively. The LBUincludes 14 wells used for injection andwithdrawal, 3 wells for observation and 10wells for oil production (Forexco Inc.,website, LBU Operations, 2008).


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6.0 O IL AND G AS O CCURRENCEP OTENTIAL

6.1 Existing oil and gas production

Oil and gas has been produced inTennessee for many years. Twenty-fivecounties have active or historic productionof oil or natural gas. There are nine countieswith active natural gas production in 2006.There are twelve counties with active oilproduction in 2006. Natural gas isdistributed very differently from oil and theoccurrence of two will be discussedseparately. Between 2001 and 2005 therewere 15 counties in which drilling permits foroil or natural gas wells were issued.

Drilling activity records are maintained bythe state of Tennessee Division of Geology.Drilling activity as presented in Figure 4 iscomposed of active producing wells and dryand abandoned wells; undrilled permits andshut-in wells are not considered since theiractual disposition is as yet unknown. Therehas only been one horizontal well attemptedin Tennessee.

Oil and Natural gas production statistics forthe year 2005 by county are presented inTable 5. Eight counties have combined oiland gas production.

Table 5: Crude Oil and Natural GasProduction by County in Tennessee for

2005

County Oil(bbls) CountyGas(mcf)

Overton 154,507 Anderson 813,297

Morgan 51,814 Morgan 401,522

Scott 35,191 Hancock 291,477

Fentress 25,669 Claiborne 231,678

Pickett 21,786 Scott 219,858

Claiborne 13,917 Campbell 201,895

Campbell 9,044 Fentress 42,899

Anderson 8,427 Overton 9,865

Hancock 4,946 Roane 1,027

Clay 785

Cumberland 224

Franklin 168


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7.0 O IL AND G AS D EVELOPMENTP OTENTIAL

7.1 Relative Oil and GasDevelopment Potential

Counties are ranked in the previous sectionaccording to current production and drillingactivity. Most of these counties have seendecreased oil and gas activity sinceapproximately 2001, for the last two yearsthere has been a resurgence which mayresult from increases in crude oil andnatural gas prices. It is expected that thecurrent historical high price for oil (between$90 and $100 per bbl) will continue into thefuture or increase to some extent. If, on the

other hand, crude oil and natural gas priceswere to slip downward, drilling rates wouldlikely be reduced.

The increase in drilling is also the result ofincreased interest in the shallow gas playsof the Devonian Chattanooga Shale.Successful development of this play inneighboring states has resulted in anincreased interest in Tennessee.

7.2 Drilling DevelopmentDrilling rate fluctuations have been seenover the last ten years with the number ofwells drilled over the last 5 years decliningin comparison to the previous five years.

The average number of oil wells completedhas declined from 12 per year to 2 per year,the average number of natural gas wellshas declined from 13 per year to 6 per year.The percentage of dry holes has remainedrelatively constant with the 10 year averageat 67% and the 5 year average at 65%.

Drilling activity forecast is shown in Table 6and Table 7; the forecast value for annualwells during the next ten years is taken fromdrilling activity in 2006 or the average from1996 to 2006. The number of wells shown inTable 6 and Table 7 is split between generalfederal ownership, US Forest Service, andstate plus fee land on the basis of thepercentage of ownership in the county.Since we do not know where in each countyfuture drilling will happen, we can assume arandom distribution. Figures 9 and 10 depictthe gas and oil rankings per countyrespectively.


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Table 6: Ten-Year Forecast of Gas Wells in Tennessee

COUNTY GasRankFederal

acresTotalAcres

2006Wells

2001-2006wells

10-yearForecast

GasWells 1

Forecast FederalGas Wells % Fed

Acreage

BLM USFS

ANDERSON High 14,137 342,719 ND ND 15 1 0 6.46%MORGAN High 6,183 331,371 ND ND 15 0 0 1.87%HANCOCK Medium 0 139,170 ND ND 10 0 0 0.00%CLAIBORNE Medium 8,149 291,252 ND ND 10 0 0 2.80%SCOTT Medium 58,901 218,724 ND ND 10 2 0 17.20%CAMPBELL Medium 18,238 317,330 ND ND 10 1 0 5.75%FENTRESS Low 28,031 316,357 ND ND 5 1 0 8.86%OVERTON Low 156 278,524 ND ND 5 0 0 0.06%ROANE Low 53,364 250,649 ND ND 5 1 0 21.30%

Total 2 49 856 0

1 - Forecasted gas wells represent all mineral owners, state, fee, and federal.ND Indicates no data was available for the individual counties only annual total data for the state was presented.

Table 7: Ten-Year Forecast of Oil Wells in Tennessee

COUNTY Oil Rank FederalacresTotalAcres

2006Wells

2001-2006wells

10-yearForecast

OilWells 1

Forecast FederalOil Wells

% FedAcreage

BLM USFS

Overton High 156 278,524 ND ND 10 0 0 0.06%Morgan High 6,183 331,371 ND ND 10 2 0 1.87%Scott Medium 58,901 218,724 ND ND 5 1 0 17.20%Fentress Medium 28,031 316,357 ND ND 5 0 0 8.86%Pickett Medium 15,076 114,796 ND ND 5 1 0 13.1 %

Claiborne Medium 8,149 291,252 ND ND 5 0 0 2.80%Campbell Low 18,238 317,330 ND ND 3 0 0 5.75%Anderson Low 14,137 342,719 ND ND 2 0 0 6.46%Hancock Low 0 139,170 ND ND 3 0 0 0.00%Clay Low 19.477 164,971 ND ND 2 0 0 11.8%Cumberland Low 0 437,521 ND ND 3 0 0 0.00%

Franklin Low 0 363,724 ND ND 2 0 0 0.00%Roane Low 53,364 250,649 ND ND 3 1 0 21.30%Total 3 43 58 5 0

1 - Forecasted gas wells represent all mineral owners, state, fee, and federal.ND Indicates no data was available for the individual counties only annual total data for the state was presented.


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Figure 9: Forecasted Rank for Gas Exploration


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Figure 10: Forecasted Rank for Oil Exploration


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8.0 R EASONABLE F ORESEEABLE D EVELOPMENT B ASELINE S CENARIOA SSUMPTIONS AND D ISCUSSION

This RFD scenario assumes that allpotentially productive areas are open underthe standard lease terms and conditionsexcept those areas designated as closed toleasing by law, regulation, or executiveorder. The areas closed to leasing typicallyinclude Areas of Critical EnvironmentalConcern (ACECs), Wilderness Study Areas(WSAs) and USFWS Wildlife Refuges. TheRFD scenario contains projections for thenumber or wells and acres disturbed forthese counties. This in no way is intended toimply that the BLM are making decisionsabout the Forest Service lands or theUSFWS lands. The predictions are intendedto provide the information necessary so thatall potential cumulative impacts can beanalyzed. The disturbance for each well isbased on the typical depth of wells for anarea; generally, shallow gas wells disturbfewer acres than deeper oil wells. Theassumptions for conventional oil and gasare as follows:

The number of wells was calculated basedon historical statistics and data trends asfollows:

Wells drilled to date were taken from theTennessee Division of Geology annualreports.

The number of wells drilled to date wasstatistically analyzed to calculate amedian per year wells drilled per county.

The data trends associated with the last6 years (2001-2006) represents a moreaccurate estimate of future developmenttrends than historical data, thus, it isweighted more heavily.

The data trends from 1996 to presentdata set are a more accurate estimate offuture trends than the completehistorical record and were weightedmore heavily than the historical record.

The data trends for the completehistorical record represent the leastaccurate estimate of future developmenttrends and, thus, it was weighted thelightest.

For each geographic/geologic boundaryregion and sub region, the calculatedestimates for future development weresummed to obtain a per year well count.

Wellhead oil and gas prices are adriving force for well drilling andcompletion; current prices arehistorically high and have resulted inincreased activity throughout the state.An estimate of activity for the future welldevelopment to into consideration thisinfluence. The forecast assumeswellhead oil and gas prices will remainhigh and development over the next 10years will continue at an elevated rate.

Estimates of well counts for the differentmineral ownership entities are based onspatial analysis of the percent of mineralownership within each county times thetotal number of producing wells

anticipated to be developed in thatboundary area.

The average acreage figure (acres perwell) for the resource area was used toestimate federal disturbed acres.

The RFD projections have a 10-year life.

The number of dry holes wasdetermined based on historic analysis ofdry holes in the geologic boundaryareas.

The assumptions were used to calculate thenumber of wells to be drilled, the number ofin-field compressors, and the number ofsales compressors required.


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9.0 S URFACE D ISTURBANCE D UE TO O IL AND G AS A CTIVITY ON A LL L ANDS

9.1 Surface DisturbancesEstimates of the surface disturbancesassociated with the development of oil andgas on federal minerals within the State ofTennessee were determined from a varietyof resources, including previous oil and gasenvironmental assessments, discussionswith BLM and state oil and gas personnel,discussions with various operators, anddocument review.

The level of disturbance associated withconventional oil and gas developmentvaries depending on the depth of the welland type of well drilled (horizontal vs.

vertical). A shallow oil and gas well (


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TABLE 8LEVEL OF DISTURBANCE FOR CONVENTIONAL SHALLOW OIL AND GAS WELLS AND

ASSOCIATED PRODUCTION FACILITIES

FACILITIES

ExploratoryWell

Disturbance(acres/well)

ConstructionDisturbance(acres/well)

Operation/Production


Well Pad (300-foot by 300-foot pad during drillingand construction, 175-foot by 175-foot pad duringoperation) 2.07 2.07 0.70

Access Roadsto Well Sites

Two-track (12-foot wide by0.25 miles long) 0.36 N/A N/A

Graveled (20-foot wide by 0.10miles long for construction andoperation) N/A N/A 0.24

Bladed (20-foot wide by 0.10miles for construction andoperation) N/A 0.24 0.0

Utility Lines

Water lines (15-foot by 0.20miles) N/A 0.18 0.0Overhead Elec. (10-foot by0.15 miles) N/A 0.12 0.03Underground Elec. (15-foot by0.20 miles) N/A 0.36 0.0

TransportationLines

Intermediate Press. Gas line toand from field compressor (15-foot by 0.1 miles) N/A 0.18 0.045

High Press. Gas or Crude OilGathering Line (20-foot by0.25 miles) NA 0.61 0.15

ProcessingAreas

Tank Battery (one 0.50-ac tankbattery per 20 wells) N/A 0.025 0.025Access Roads (25-foot by 0.05miles) N/A 0.15 0.15

Field Compressor (0.5-acrepad per 20 wells) N/A 0.025 0.025

Sales Compressor (2-ac padfor 150 wells) N/A 0.01 0.01Sales Line (20-foot by 5 milesper 200 wells) N/A 0.061 0.015

Produced WaterManagement

Produced Water pipeline (15-foot by 0.25 miles) N/A 0.45 0.11

Water plant/ Inj well (6 ac siteper 20 wells) N/A 0.3 0.3

Total Disturbance per Conventional Oil or GasWell (acres) 2.43 4.79 1.81

1. The operation disturbance for utilities assumes all utilities will be completed underground, and the land surface will bereclaimed so that no disturbance should remain except where noted.

2. It is assumed that each conventional oil and gas well will need product pipeline and produced water line from the well. Inaddition, some wells will need intermediate pipeline run from the field compressor to sales line.


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TABLE 9LEVEL OF DISTURBANCE FOR CONVENTIONAL DEEP OIL AND GAS WELLS AND

ASSOCIATED PRODUCTION FACILITIES

FACILITIES

ExploratoryWell







Two-track (12-foot wide by 0.5miles long) 0.73 N/A N/AGraveled (20-foot wide by0.075 miles long forconstruction and operation) N/A N/A 0.18Bladed (20-foot wide by 0.075miles for construction and

operation) N/A 0.18 N/A

Utility Lines

Water lines (12-foot by 0.20miles) N/A 0.29 0.0Overhead Elec. (10-foot by0.075 miles) N/A 0.09 0.023Underground Elec. (15-foot by0.20 miles) N/A 0.36 0.0

TransportationLines

Intermediate Press. Gas line toand from field compressor (15-foot by 0.075 miles) N/A 0.14 0.034High Press. Gas or Crude OilGathering Line (25-foot by 0.5miles) NA 1.21 0.30

ProcessingAreas

Tank Battery (one 0.50-ac tankbattery per 15 wells) N/A 0.03 0.03Access Roads (25-foot by 0.05miles) N/A 0.15 0.15Field Compressor (0.5-acrepad per 15 wells) N/A 0.03 0.03Sales Compressor (2-ac padfor 150 wells) N/A 0.01 0.01Sales Line (25-foot by 6 milesper 150 wells) N/A 0.12 0.12


Produced Water pipeline (15-foot by 0.25 miles) N/A 0.45 0.11Water plant/ Inj well (6 ac siteper 15 wells) N/A 0.40 0.40





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TABLE 10LEVEL OF DISTURBANCE FOR HORIZONTAL GAS WELLS AND ASSOCIATED

PRODUCTION FACILITIES

FACILITIES

ExploratoryWell







Two-track (15-foot wide by0.25 miles long) 0.45 N/A N/AGraveled (15-foot wide by 0.15miles long for construction andoperation) N/A 0.0 0.27Bladed (15-foot wide by 0.15miles for construction andoperation) N/A 0.27 0.0

Utility Lines

Water lines (15-foot by 0.5miles) N/A 0.90 0.0

Overhead Elec. (10-foot by0.15 miles) N/A 0.18 0.045Underground Elec. (15-foot by0.15 miles) N/A 0.27 0.0

TransportationLines

Intermediate Press. Gas line toand from field compressor (15-foot by 0.25 miles) N/A 0.45 0.11

High Press. Gas or Crude OilGathering Line (20-foot by 0.5miles) NA 1.21 0.30

ProcessingAreas

Tank Battery (one 0.50-ac tankbattery per 16 wells) N/A 0.031 0.031Access Roads (25-foot by 0.05miles) N/A 0.15 0.15

Field Compressor (0.5-acrepad per 16 wells) N/A 0.031 0.031Sales Compressor (2-ac padfor 128 wells) N/A 0.016 0.016Sales Line (20-foot by 4 milesper 128 wells) N/A 0.075 0.019


Discharge Point N/A N/A N/AStorage Impoundment (20acres each serving 64 wells) N/A 0.31 0.31





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Roads can be permanent or temporary,depending on the success of the well. Theinitial construction can be for a temporaryroad; however, it is designed so that it canbecome permanent if the well produces. Notall temporary roads constructed arerehabilitated when the drilling stops. Atemporary road is often used as access toother drill sites. The main roads andtemporary roads, require graveling to bemaintained as all-weather roads. This isespecially important in the spring. Accessroads may be required to cross public landsto a well site located on private or statelands. The portion of the access road onpublic land would require a BLM right-of-way.

Most conventional wells are drilled from afixed platform while the majority of CBNGwells are drilled using a truck-mounted rig.Site preparation generally takes about aweek before the drill rig is assembled. Formoderate depth oil wells drilling generallytakes 2 to 4 weeks, although deeper wellsmay require longer drilling time because ofthe geologic formations encountered. Wellsdrilled from a platform require more surfacepreparation and cause disturbance to alarger area for the ancillary facilities. CBNGwells are usually drilled in under a week andsite preparation is typically less than forconventional wells.

Approximately 1 to 4 acres are impacted bywell site construction. The area is cleared oflarge vegetation, boulders, or debris. Thenthe topsoil is removed and saved forreclamation. A level area from 1 to 4 acresis then constructed for the well site, whichincludes the reserve pit.

The well pad is constructed by bulldozersand motor scrapers. The well pad is flat (toaccommodate the drill rig and supportequipment) and large enough to store all theequipment and supplies without restrictingsafe work areas. The drill rig must be placedon cut material rather than on fill materialto provide a stable foundation for the rig.The degree of cutting and filling depends onterrain; that is, the flatter the site, the less

dirt work is required.

Hillside locations are common, and theamount of dirt work varies with thesteepness. A typical well pad will require acut 10 feet deep against the hill and a fill 8

feet high on the outside. It is normal to havemore cut than fill to allow for compaction,and any excess material is then stockpiled.Eventually, when the well is plugged andabandoned, excavated material is put backin its original place.

Reserve pits are normally constructed onthe well pad. Usually the reserve pit isexcavated in cut material on the well pad.The reserve pit is designed to hold drillcuttings and used drilling fluids. The sizeand number of pits depends on the depth ofthe well, circulating system and anticipateddown hole problems, such as excess waterflows.

Reserve pits are generally square oroblong, but may be irregular in shape toconform to terrain. The size of reserve pitsfor deeper wells can be reduced by the useof steel mud tanks. For truck-mounted drillrigs used in shallow gas fields, a small pit(called the blooie pit) is used. Most or all ofthe reserve pit is located in the cut locationof the drillsite for stability. When the drillsiteis completed, the rig and ancillaryequipment are moved on location anddrilling begins.

The reserve pit can be lined with a syntheticliner to contain pit contents and reduce pitseepage. Not all reserve pits are lined;however, BLM often requires a syntheticliner depending upon factors such as soils,pit locations, ground water and drilling mudconstituents. The operator can elect to linethe reserve pit without that requirement.

An adequate supply of water is required fordrilling operations and other uses. Thesources of water can be a well at the drillsite or remote sources such as streams,ponds, or wells. The water is transported tothe site by truck or pipeline. Pipelines arenormally small diameter surface lines. Theoperator must file for and obtain all


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necessary permits for water from the state.On public lands an operator must have theBLMs permission before surface water canbe used.

9.3 Mitigation MeasuresMitigation measures are restrictions onlease operations, which are intended tominimize or avoid adverse impacts toresources or land uses from oil and gasactivities. The mitigation measures would beapplied to permits, leases or approvalsgranted by the land management agency.Mitigation measures would be included asappropriate to address site-specificconcerns during all phases of oil, gas andCBNG development.

9.4 Conditions of ApprovalAn approved application for permit to drill(APD) includes conditions of approval(COA), and Informational Notices which citethe regulatory requirements from the Codeof Federal Regulations, Onshore OperatingOrders and other guidance. Conditions ofapproval are mitigation measures whichimplement lease restrictions to site specificconditions. General guidance for COA arefound in the BLM and U.S. Forest Servicebrochure entitled Surface OperatingStandards for Oil and Gas Exploration andDevelopment (USDI, BLM 1989) and BLMManual 9113 entitled Roads.

9.5 Lease StipulationsCertain Resources in the planning arearequire protection from impacts associatedwith oil and gas development. The specificresources and methods of protection arecontained in lease stipulations. Leasestipulations usually consist of no surfaceoccupancy, controlled surface use, or timinglimitations. A notice may be included with aleased to provide guidance regardingresources or land use. While actual wordingof stipulations may be adjusted at the timeof leasing, the protection standarddescribed will be maintained.

9.6 Total DisturbancesThe disturbances for the RFD scenario overthe next 10 years have been calculated andare displayed in Tables 11 and 12. Table 11address the disturbances from exploration

and construction activities for types of gasand oil wells anticipated to be developed.Estimates for horizontal gas and deep gas,and multiple horizontal wells from singlepads as well as deep oil wells have beenextrapolated. The total disturbances for allpredicted wells are estimated at 760 acres.Disturbance from federal mineraldevelopment would be 53 acres of whichzero acres would be on USFS lands. Theremaining federal disturbance (53 acres)would be on military sites, national park

lands, and TVA lands. The disturbance tostate and fee lands would be 707 acres.

Table 12 depicts the residual disturbance bywell type remaining after appropriatemitigation measures and site restoration orrehabilitation activities have taken place.The total residual disturbance fromanticipated development activities is 154acres of which 13 would be from federalmineral development. The federaldisturbances would affect zero USFS acresand 13 acres of various surface agencies.State and fee residual disturbance would be141 acres.

The mitigation of initial exploration andconstruction disturbances would equalnearly 606 acres. Mitigation measureswould account for remediation of 28 federalacres, and 287 state and fee acres.


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March 2008Page 33

TABLE 11PREDICTED DEVELOPMENT AND SURFACE DISTURBANCE (EXPLORATION AND CONSTRUCTION) FOR GAS AND OIL WELLS

Well Type

TotalWellsDrilled

DryHoles

Disturbanceper Dry

Hole

Total DryHole

Disturbance

FederalProducing

Wells

Disturbanceper Federal

Well

TotalFederal

Disturbance

State/FeeProducing

Wells

Disturbanceper

State/FeeWell

TotalState/Fee

Disturbance

USFSProducing

Wells

Disturbanceper USFS

WellTotal USFSDisturbance

TotalProducing

wellsTotal

Disturbance

Gas horizontal 30 0 3.43 0 4 6.90 27.60 26 6.90 179.40 0 6.90 0 30 217.00

Gas horizontal (2 from single pad)

0 0 4.25 0 0 7.72 0 0 7.72 0 0 7.72 0 0 0

Gas deep 55 36 3.96 141.57 0 6.71 0 19 6.71 127.49 0 6.71 0 19 269.06

Gas shallow 0 0 2.43 0 0 4.79 0 0 4.79 0 0 4.79 0 0 0

Oil - Deep 58 38 3.96 149.29 2 6.71 13.42 18 6.71 120.78 0 6.71 0 20 283.49

CBNG horizontal 0 0 3.43 0 0 6.9 0 0 6.9 0 0 6.9 0 0 0

Total 143 74 290.86 6 41.02 63 427.67 0 0 69 759.55

Assumptions:Disturbance per well includes the well pad plus incremental roads, utility lines, transportation lines, processing equipment areas, and produced water management as outlined in Tables 8, 9, 10,& 11 for exploration.

TABLE 12PREDICTED DEVELOPMENT AND RESIDUAL SURFACE DISTURBANCE (PRODUCTION) FOR GAS AND OIL WELLS

Well Type

TotalWellsDrilled

FederalProducing

Wells

Disturbanceper Federal

Well

TotalFederal

Disturbance

State/FeeProducing

Wells

Disturbanceper

State/FeeWell

TotalState/Fee

Disturbance

USFSProducing

Wells

Disturbanceper USFS

WellTotal USFSDisturbance

TotalProducing

wellsTotal

Disturbance

Gas horizontal 30 4 2.21 8.84 26 2.21 57.46 0 2.21 0 30 66.30

Gas horizontal (2 from single pad)

0 0 2.5 0 0 2.5 0 0 2.5 0 0 0.00

Gas deep 55 0 2.24 0 19 2.24 42.56 0 2.24 0 19 42.56

Gas shallow 0 0 1.81 0 0 1.81 0 0 1.81 0 0 0.00

CBNG 58 2 2.24 4.48 18 2.24 40.32 0 2.24 0 20 44.80

CBNG horizontal 0 0 2.21 0 0 2.21 0 0 2.21 0 0 0.00

Total 143 6 13.32 63 140.34 0 0 69 153.66

Assumptions:Disturbance per well is the residual disturbance remaining after the mitigation measures have been implemented.


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March 2008Page 34

10.0 R EFERENCES Energy Information Agency, 2007 NaturalGas Storage, Form EIA-191 Data.http://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asp

Forexco Inc. , 2008 LBU Operations.http://www.forexcoinc.com/operations.html#LBU,LLC

Luther, Edward T., 1993 , Map- Oil andFields of North-Central Tennessee.

Mache, David L., 1996 , Illinois BasinProvince (067), in the 1995 NationalAssessment of United States Oil and GasResources, in USGS Digital Data SeriesDDS-30.

Ryder, Robert T., 1996a , Cincinnati ArchProvince (066), in the 1995 NationalAssessment of United States Oil and GasResources, in USGS Digital Data SeriesDDS-30.

Ryder, Robert T., 1996b , AppalachianBasin Province (067), in the 1995 NationalAssessment of United States Oil and GasResources, in USGS Digital Data SeriesDDS-30.

Ryder, Robert T. and J.R. Hatch, 1996 ,

Devonian Black Shale Gas Play (6604), inthe 1995 National Assessment of UnitedStates Oil and Gas Resources, in USGSDigital Data Series DDS-30.

Tennessee Division of Geology, 2008, Mineral Industry,http://www.state.tn.us/environment/tdg/mineralind.shtml

Zurawski, Ronald P., 2002, Oil and Gas

Activity in Tennessee During 2001,Tennessee Division of Geology .

Zurawski, Ronald P., 2003, Oil and Gas Activity in Tennessee During 2002,Tennessee Division of Geology.

Zurawski, Ronald P., 2004, Oil and Gas Activity in Tennessee During 2003,Tennessee Division of Geology .



http://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asphttp://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asphttp://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asphttp://www.forexcoinc.com/operations.html#LBU,LLChttp://www.forexcoinc.com/operations.html#LBU,LLChttp://www.forexcoinc.com/operations.html#LBU,LLChttp://www.state.tn.us/environment/tdg/mineralind.shtmlhttp://www.state.tn.us/environment/tdg/mineralind.shtmlhttp://www.state.tn.us/environment/tdg/mineralind.shtmlhttp://www.state.tn.us/environment/tdg/mineralind.shtmlhttp://www.state.tn.us/environment/tdg/mineralind.shtmlhttp://www.forexcoinc.com/operations.html#LBU,LLChttp://www.forexcoinc.com/operations.html#LBU,LLChttp://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asphttp://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asp


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Appendix ATennessee GENERAL RULES


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Appendix B

USGS Play Descriptions

blm document on future gas production in tn 2008

Documents