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Industry Must Cut Flaring, Conserve Water, Marathon Oil CEO Says

After extolling the benefits of the U.S. shale oil and gas renaissance, Lee Tillman, CEO of leading Eagle Ford Shale producer Marathon Oil Corp., told an industry audience in Texas that operators need to be mindful of air quality, water management and roads.

"We must address such topics in the right way, and with a sense of urgency. We must put them into context, engage openly and honestly with those who are voicing concerns, demonstrate our ongoing commitment to safe and responsible operations and be solution driven," Tillman said at Hart Energy’s 2014 DUG Eagle Ford Conference in San Antonio.

Tillman said that across its assets, Marathon Oil is continuously evaluating air emission-reduction technologies as its operations become more efficient.

"Flaring [of associated gas production] is a very visible activity," he said. "This year, Marathon Oil continues to identify and prioritize significant flaring sources, and we are constantly evaluating emissions reduction projects. We're also participating with other companies to share best practices for reducing flaring in an effort to spread these practices throughout the Eagle Ford."

The company's efforts have reduced the amount of time that gas is flared from most wells to just hours before infrastructure is available to transport the associated gas to sales, Tillman said.

"Also in the Eagle Ford, Marathon Oil has applied a strategy of building central facilities that aggregate production for processing and separation before sending the product to sales. Using central facilities -- instead of installing equipment at each well location -- minimizes the overall surface footprint, and reduces air emissions," he said. "And to further reduce emissions, we've begun using dual-fuel power systems that can take advantage of natural gas from the wellhead. We used dual-fuel to power two rigs last year, and we're expanding the effort in drilling as well as to completion operations."

With regard to water conservation and protection, Tillman said the company is learning from its activities in the Eagle Ford. "For example, in our Eagle Ford operations, we've reduced water use per well by 45% during hydraulic fracturing operations by switching to a polymer gel mix to produce a thicker, more viscous [frack] fluid that can also carry more sand in the process."

He said Marathon Oil currently uses brackish water to cover 75% of its water needs for fracking in the Eagle Ford. "This is part of our commitment to conserve and protect freshwater resources."

Because oil and gas development requires the movement of lots of heavy equipment as well as large volumes of water and proppant, roads to and from the shale patch have suffered, Tillman said. "...[W]e're working with elected officials, regulators and other community leaders to cooperatively address these issues and lessen the impacts," he said. "During the last [Texas] legislative session, Marathon Oil, joined by our oil and gas state trade associations, was a strong supporter of a proposed constitutional amendment that will provide billions more in much-needed transportation funding for Texas [see Shale DailyMay 30, 2013].

"Known as Proposition 1, it was approved by the legislature and will appear on the upcoming Nov. 4 ballot. If approved by a majority of voters, Prop. 1 will authorize annual disbursements from the state's oil and gas production tax collections -- commonly known as the Rainy Day Fund -- to the State Highway Fund."

The funds won't completely resolve the infrastructure funding challenges in Texas, he said, but they will "...provide a significant step toward funding transportation projects that are critical to developing the state's oil and natural gas resources."

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