Oklahoma Water Survey Presentation

Managing Water in Unconventional Resource Plays

Presented at: Oklahoma Water Survey Workshop on

Oil & Gas Operations and Protecting Water Resources October 25, 2012

Prepared by: ALL Consulting

Tulsa, Oklahoma

Introduction

Water Planning

Case Studies

Considerations

1

2

3

4

Agenda

October 25, 2012 2 Copyright (c) 2012 ALL Consulting

WATER MANAGEMENT EVOLUTION • Surface Discharge

– Salt Creek & Elk Basin (1920s) – Black Warrior Basin (1989) – Powder River Basin CBM (1990s)

• Reuse/Recycling of PW – Barnett Shale (2001) – Marcellus (2009)

• Treatment – Powder River Basin CBM (2001) – Barnett Shale (2002/2008) – San Juan Basin (2003) – Woodford Shale (2008) – San Ardo (2008) – Piceance Basin (2009) – Fayetteville Shale (2009) – Eagle Ford (2011)


Oklahoma Fracturing Water Use

WATER PLANNING


Good Ideas Don't Just Happen • Good innovative solutions require

experience, planning, monitoring, analysis, and continuous improvement.

• Some solutions evolve because of roadblocks to more common solutions:

– First Nation's Concerns (Horn River) – Surface water shortages (Bakken &

Fayetteville) – Environmental Conditions (Shublik &

Barnett) – Groundwater Limitations (Haynesville &

Permian)

• Water Management Planning is CRITICAL!


Water: An Array of Considerations • Logistics: Methods for transporting water and resultant wastes

can carry wide variations in costs, liabilities, resource production, manpower, community relations, and environmental implications.

• Sourcing: Choosing options for sourcing that is best suited to a particular play or region is critical.

• Storage: A key aspect to the feasibility of many options, especially for groundwater, reuse/recycling, blending, etc.

• Treatment: Treatment adds costs and creates waste. To use treatment, economic thresholds must be achieved.

• Disposal/Reuse: Options are generally driven by the character of a play or region.

• Compliance/Monitoring: Critical aspect of managing water!


Fresh Water Facts • Relative Use: Most discussion of water includes little in the

way of relative use or actual cumulative impacts relative to availability.

• Comparative Use: Most unconventional plays will amount to a fraction of one (1) percent of overall uses in a region.

• Availability: Access to fresh water (surface or groundwater) is generally preferred as it is most desired by landowners (in general), offers adequate capacity, is the least expensive option, and offers the best results for drilling & fracturing.

• Alternatives: Other options often do not provide the same results and are more expensive - thus decreasing economic viability.


Recycling in Shale Plays • Recycling: In several areas, water recycling "may" be critical to

acquiring ample water for drilling and fracturing (although justification can vary).

• Challenges: Water produced after fracturing often contains high levels of bacteria, metals, and salt compounds that present challenges for reuse.

• Treatment: Treating high levels of bacteria as well as corrosion and scale inducing constituents has been employed to facilitate reuse of produced water starting from about 2008 in the Woodford and Fayetteville Shale areas.

• Blending: Prior efforts were generally limited to settling, fresh water blending, and filtration (as early as ~2001). However, this approach requires greater quantities off chemical additives.


0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Eagle Ford

0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Woodford

0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Bakken

0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Marcellus

0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Missippi-Lm

0

50

100 Water Req

Fresh Water Avail.

Alt. Water Avail.

SWD Avail.

Flowback WQ

Produced WQ

Utica

Variability in Water Definitions


Leveraging Experience

Bakken

• Traffic and Routing • Disposal Well

Availability • HF Chemical

Screening

Barnett

• Multi-Well Pads • Air Emissions Control • Urban Development • HF Chemical

Disclosure

Woodford

• Water Sourcing • Water Management • Well Completions • Impoundment Siting

and Design


CASE STUDIES


Barnett Shale Recycling • Devon Energy is currently using a

Distillation/Evaporation System in the Ft. Worth Barnett Shale Area.

– 2,500 BBL/day throughput with 2,000 BBL/day of Fresh Water produced.

• Chesapeake installed four Water Evaporation Units at the Brentwood SWD Facility in Fort Worth.

– Employs natural process of evaporation to turn water into water vapor.

• Less technical methods were employed starting in the early 2000s, but required considerable settling time, fresh water blending, and filtration.


Fayetteville Shale Water Recycling • Water quality in the Fayetteville is

exceptional, ranging in the 20,000 to 35,000 mg/L TDS range (very high quality water compared to many shale basins).

• Companies like SWN have pilot tested more than 100 different treatment alternatives, with bacteria being a major priority.

• Companies like Ecosphere have had success, but continue to deal with challenges (which is common).


Horn River Basin GW Cycling • First Nation's concerns over use of

surface water resources in the area has lead Apache/Encana to pursue brackish water from the DeBolt Aquifer.

• Water from the DeBolt (500-1,000 meters) is brackish (15,000-40,000 mg/L TDS) and sour (65 mg/L H2S).

• A $60 million treatment plant was built to sweeten water for use in HF.

• Produced water after HF is re-injected back to the brackish DeBolt aquifer.

• Capacity of the DeBolt to fully meet drilling and completion demands for water is questionable.

2011 CAPP Environmental Awward

Challenges: isolated location; lack of disposal option; limited access roads; lack of power; and harsh

winter temperatures.


Misissippi-LM Water Sourcing • Water sourcing can be challenging

in the MLP. Drought has impacted surface water sources and restrictions have arisen in some areas.

• Fresh water costs of $0.25/BBL are common (far less than treatment).

• Common water sourcing options have been fresh water from creeks, farm ponds, impoundments, and the blending of water captured during the flowback process.

• Groundwater combined with cycling is an option for the MLP as the play moves north.


CLOSING CONSIDERATIONS

Water composition overall is less than ALL has previously reported for shale gas plays because development efforts like the Niobrara and Eagle Ford use higher ratios of gel, which increases the gel composition compared to water composition. Overall, water composition as a percentage has increased since 2008 and the number of additives used has decreased within individual plays (ALL Consulting, 2012).


The Future of Shale… • To fully develop US shales, something on the order of 1-2 million additional

wellbores will be needed. This will NOT be easy! We can expect: − Increased use of brackish/saline water − Increased use of treatment technologies − Multi-well fluid management pits/impoundments − Centralized facilities and overland piping of produced water − and much more...

• Several sources suggest that US oil production could rise 50-75% over the next 10 years, causing imports to drop to 5%.

• Another study suggests the shale gas boom will account for ~1.5 million new jobs by 2015 (June 2012) – including recognition of the current downturn in gas prices.

• Some economists expect cumulative investments of ~$3.2 trillion from 2012 through 2035.


Considerations.. • Fresh water is often the most economically

feasible option. • Drought doesn't necessarily mean water

shortage. GW in the EF is plentiful and landowners are getting long-term access to this resource becauuse of industry activity.

• Water is complex and varies dramatically by play, production period, within plays, etc.

• Seemingly small issues can create large issues (e.g., bicarbonates can create problems with HF).

• Use of brackish/saline water or treatment must compete economically with the use of fresh water resources AND align with landowner requirements.


The Deadly Facts About Water!

Over consumption can cause excessive sweating, urination,

and even death!

100% of all serial kills, rapists and drug dealers have admitted

to drinking water!

Water is one of the primary ingredients to herbicides and

pesticides!

Water is the leading cause of drowning!

100% of all people exposed to

water will die!

Citation Information: Arthur, J.D. , Layne, M., Wilson, P. (ALL Consulting). “Evolution and Economics of Managing Water in Unconventional Resource Plays”. Presented at the Oklahoma Water Survey Workshop on Oil & Gas Operations and Protecting Water Resources October 25, 2012.

Contact Information J. Daniel Arthur, P.E., SPEC President/Project Manager [email protected] Preston Wilson Water Resource Consultant [email protected] ALL Consulting 1718 S. Cheyenne Ave. Tulsa, OK 74119 www.all-llc.com


Did You Know? Well Construction (in British Columbia - Horn River Basin Shale): Example Well: Total depth of 14,100 ft with a 5,750 ft horizontal section. Includes: 682,675 lbs of steel or 341.34 tons of cement, which weights 860,461 lbs. The combined total weight of the steel and cement is: 1,543,136 lbs./771.6 tons Production Casing has a min. tensile strength of 125,000 psi and a burst pressure of 12,635 psi. Groundwater protection: Nine barriers comprised of alternating cement and steel, separate the well from groundwater with a combined thickness of 10.5 inches, 5 layers of steel equal to 1.89 inches and 4 layers of cement equal to 8.61 inches Typical well casing has yield strength of over 80,000 psi and tensile strength of over 95,000 psi. Projected Annual Average: HRB on average (last 2 years) has construction that increased over 200% per year, thus assuming 300 new shale gas wells per year: Every year, 46,448.4 tons steel and 129,000 tons of cement are used to construct the average 300 HRB wells

For Consideration: • On average, one car contains 1,800 lbs of steel • Eiffel Tower 7,300 tons of iron • CN Tower, 117,910 metric tonnes or 130,000 tons • One mile of four lane interstate highway contains

155.65 tons of steel and 1,245 tons cement • Blast resistant structures used in bank vaults and

military operations often have walls about 6 inches thick with compression strength exceeding 14,500 psi.

• To reduce Gamma ray intensity in half (halving thickness) one needs 2.4 inches of concrete or 0.99 inches of steel.

COMPARISONS • The steel in one well equals 379.3 cars • The steel in 21.4 wells equals one Eiffel Tower • The combined steel and cement (by weight) in

168.5 wells equals one CN tower • It would take the cement (m3) in 194.6 wells to

equal the cement in the CN tower • One well has enough steel for 2.19 miles of

interstate, and enough cement for 0.34 miles. • Annually the steel in 300 HRB wells is equal to

298.4 miles of interstate highway and the cement equals 103 miles of interstate.

• The tensile strength of the well casing is capable of suspending one fully loaded semi-truck and trailer or three city buses.


EXTRA SLIDES

Technology Prevails • Deep horizontal

drilling • High volume hydraulic

fracturing • 3-D Seismic Analysis • Multi-well drilling pads • Water sourcing and

transport • Impact mitigation

Source: www.guardian.co.uk


24 October 25, 2012 24 Copyright (c) 2012 ALL Consulting

Bakken Brackish Water Test • EERC partnered with Hess to pilot test

the use of reverse osmosis (RO) treatment on brackish water from the Dakota Aquifer (~10,000 mg/L TDS).

• Site located near Tioga at an existing water production well used for EOR.

• GE Water Process and Technologies was contracted to provide the RO treatment.

• Currently at ~70% efficiency with permeate production at 80-160 gpm.

• The Dakota Aquifer is also the main disposal zone in the region, making water cycling feasible.

Source UNDEERC (2012)


Eagle Ford and Water Recycling • The Eagle Ford Shale is the most active shale play in the world with

approximately 250 rigs running. It is unique due to the that it is a formation rich in oil and natural gas fields. The oil reserves are estimated at 3 billion barrels with potential output of 420,000 barrels a day.

• Although recycling pilots are ongoing (Purestream, ecosphere, Fountain Quail, and others), the economics don't currently make sense considering abundant fresh water - even considering drought conditions.

• Many new SWDs and waste management facilities have been built and are continuing to be built to address waste/wastewater disposal demands.

• Many new water supply wells have been drilled and continue to be in order to meet water sourcing demands.


The Ongoing Learning Process • Water use can vary considerably by play. • Water use for fracturing is disclosed. • The data submitted to FracFocus provides

access to data that was not previously available throughout most of the country.

• Water sourcing options vary by play and although average comparisons can be made, the range of water quantities used can very by:

– Operator – Area of the play – Service Company – Completions Engineer – Etc.

• Generalization should be used with caution.

Average Volume of Water Used Per Well

(In Million Gallons) Source: ALL Consulting

Hyanesville-Bossier

5.79

Fayetteville 5.17

Marcellus-Utica 4.38

Eagle Ford 4.29

Barnett 4.23

Bakken 1.96

Niobrara 0.55


Oklahoma Water Survey Presentation

Technology

water req fresh water

water recycling

water definitions

water resources

discussion of water

ample water

water vapor

fresh water blending