Sustainable Solutions for Oil & Gas Produced water

1. SUSTAINABLE WATER AND ENERGY SOLUTIONS
BLACK & VEATCH CORP.STEVE TARALLO
SUSTAINABLE SOLUTIONS FOR
OIL & GAS PRODUCED WATER
24June2013

2. AGENDA
• Dealing with Oil & Gas Produced Water:
Now vs. Then
• Fresh Look at Collaborative vs. Singular
Wastewater Solutions
• Earlier Barriers to Collaborative
Wastewater Solutions are Starting to Ease
• Recent Developments Offer a New
Forward Look for Wastewater Handling
2

3. 1. Oil & gas development
no longer is “remote”
• Fields are being
developed in more
heavily populated areas
• Need to mitigate
tensions between
economic growth and
residential life
DEALING WITH OIL & GAS PRODUCED WATER:
NOW VS. THEN
3
24 June 2013
Produced water is not invisible to modern stakeholders
- as it might have been 60 years ago
Upper photo: Preparing well site on Daniel Mast's Newcomb Road farm in
Parkman Township, Ohio, 2011.
http://www.geaugamapleleaf.com/freestory/lack-of-gas-ol-well-driling-control-
concerns-commissioners-12-8
Lower photo: Postcard of Amarillo, Texas, ca. 1930s.
http://www.allacrosstexas.com/uncovered-texas-postcard-
detail?image=OilWell.jpg&city=Amarillo
Then …
Now …

4. 2. Water no longer can be
considered “cheap”
• The natural supply of
drinkable water is
limited and is in demand
by a growing population
• Droughts are impacting
sensitive regions,
including shale oil & gas
developments
DEALING WITH OIL & GAS PRODUCED WATER:
NOW VS. THEN
4
24 June 2013
Produced water must be considered in the context of
overall water supply and economics for multiple users
Upper image: Water auction prices before and after Eagle Ford shale oil & gas
development, south Texas.
http://fuelfix.com/blog/2013/06/16/fracking-fuels-water-fights-in-nations-dry-
spots/
Lower image: Three shale oil & gas plays encountering drought conditions.
http://www.droughtmonitor.unl.edu/

5. 3. Disposal of wastewater
through underground
injection no longer is a
“given”
• Geology is not supportive
everywhere
• Public concerns about
environmental
consequences
• Questions about
possibilities for re-use –
why throw it away forever?
DEALING WITH OIL & GAS PRODUCED WATER:
NOW VS. THEN
5
24 June 2013
Underground injection of wastewater cannot be done
everywhere and the issue now is … should it be done
Upper image: Unusual earthquake activity surrounding oil & gas wastewater disposal wells in Ohio.
http://thinkprogress.org/wp-content/uploads/2012/01/cnnaerialearthquake.jpg/
Lower image: Pictorial simulation of progressive treatment of oil & gas produced “graywater”.
http://www.spe.org/industry/docs/reusingwater.pdf
Produced
Treated for
Re-Use

6. • Traditional approach to
handling produced water
emphasized singular
solutions
• Each producer
implemented an
individual solution
• Injection well
(conventional oil & gas)
• Water treatment
modules delivered to
the well pad (shale gas)
• Water recycling within a
single producer
portfolio
FRESH LOOK AT COLLABORATIVE VS. SINGULAR
WASTEWATER SOLUTIONS
6
24 June 2013
Emphasis on fastest solution available to an
individual portfolio – almost always a singular fix
Producer
A
Injection
Well 1
Producer
B
Injection
Well 2
Producer C
Modular
Water
Treatment
at Wellpad 3

7. • Sustainable approach
must consider
collaborative solutions
• Several producers in the
same play cooperate in
centralized solutions
• Shared wastewater
treatment facility
connecting multiple
wellpads
• Efforts toward beneficial
re-use of treated
wastewater
FRESH LOOK AT COLLABORATIVE VS. SINGULAR
WASTEWATER SOLUTIONS
7
24 June 2013
Efficiencies of scale can offer advantages both in cost
control and regulatory compliance
Producer
A
Producer
B
Producer
C
Disposal | Re-Use

8. • Mergers & acquisitions provide operational
streamlining
• Some independent producers now are part of
majors (XTO/ExxonMobil, Petrohawk/BHP Billiton)
• Larger water infrastructure investments now are
more feasible
• State regulatory changes are encouraging
recycling & re-use which favor collaboration
• Lightening of liabilities formerly associated with
“pooled” wastewater reduces risks of shared
solutions
• Ad hoc water markets in resource plays provide
transparency needed for collaboration
• Water auction bid/ask activity create benchmarks
for “market value” of water operations
EARLIER BARRIERS TO COLLABORATIVE
WASTEWATER SOLUTIONS ARE STARTING TO EASE
8
24 June 2013
Collaborative solutions are more compelling in 2013
than they were in 2007-2008

9. • Pennsylvania
• Beginning 2007, in absence of disposal wells, wastewater
from Marcellus development was trucked to Ohio for
underground injection
• Since 2011, wastewater must be reused and recycled, or
collected and treated at an authorized wastewater
treatment facility
• State approval is required before the receiving treatment
facility can accept the wastewater for processing and/or
disposal
• Modular treatment at wellpads became popular as a way
around insufficient capacity at fixed treatment facilities
• State now an excellent candidate for more centralized
treatment facilities designed to accommodate high-TDS
wastewater from multiple oil & gas developers
RECENT DEVELOPMENTS OFFER A NEW
FORWARD LOOK FOR WASTEWATER HANDLING
9
24 June 2013
Regulatory requirement for recycling provides a
motivation for collaborative solutions – economy of scale

10. • Texas
• Since the 1900s, abundant disposal wells have been the
default solution for wastewater – now including the Barnett,
Eagle Ford and Permian Basin developments
• Disposal wells operated by individual developers
• Commercial disposal wells used by multiple developers
• In March 2013, State rules for wastewater recycling were
amended to make collaborative recycling solutions easier
• Recycle defined as “To process and/or use or re-use oil and gas
wastes as a product for which there is a legitimate commercial
use and the actual use of the recyclable product.”
• Waives recycling permit if operators are recycling fluid on their
own leases or transferring their fluids to another operator’s
lease for recycling
• Centralized Commercial Solid Oil and Gas Waste Recycling is
defined as a specific option
RECENT DEVELOPMENTS OFFER A NEW
FORWARD LOOK FOR WASTEWATER HANDLING
10
24 June 2013
Lowering of regulatory hurdles encourages developers
to cooperate and move toward centralized solutions

11. • Summary
• Sustainable solutions for oil & gas produced water are more
important than ever
• Disposal wells no longer can be considered the universal
solution
• Situationally useful but geologically not feasible everywhere
• Permanently removes water from the hydrologic cycle
• Some bothersome side effects (i.e., earthquakes)
• Modular treatment at individual wellpads is not a long-term
solution
• Situationally useful but challenged with high volumes in large
developments
• Regulatory progress at the State level is recognizing the
importance of recycling and the value of having centralized
solutions
RECENT DEVELOPMENTS OFFER A NEW
FORWARD LOOK FOR WASTEWATER HANDLING
11
24 June 2013
The time is right to explore ways to facilitate collaborative
wastewater solutions among multiple developers