Meeting the Environmental Challenges of Water Recycling in Shale Gas Plays

1. Meeting the Environmental Challenges of Water Recycling in Shale Gas Plays John Candler, Rahul Dixit, Daniel Gallo, Andrea Shramko, Kayli Clements, M-I SWACO

2. Water challenges in shale plays • Water supply - Groundwater - Water Discharge

3. Treatment and reuse is a solution to water challenges Water Returned For Reuse • Processing Technologies: • Chemical • Mechanical • Thermal • Filtration • Membranes • Electro coagulation Closed loop system 100% recycle Clean Water Returned To Hydrologic Cycle

4. Challenges for recycling and reuse • Business • Technical • Regulatory

5. Business Issues

6. Two Recycle Approach Options Flowback Water Treated water Offsite/Local Treatment Facility Onsite treatment

7. Mobile and Central Treatment Facilities • Mobile Treatment for single wells • 5,000 to 10,000 bbl per day • Quick rig up and rig down • Trailer mounted for transportation • Small footprint • Filtration Unit: 35 ft x 10 ft • Reclamation Unit: 120 ft x 120 ft • Central Treatment Facilities • 60,000 to 100,000 bbl per day • Central Facilities for Multiple wells in the area • Strategically located • In-line with drilling program requirements • Treatment and re-use of 100% of produced waters • Minimum operating volumes required to justify the investment

8. Service based approach offers comprehensive services from characterization to treatability.

9. Shale Gas Reservoirs: The Need for FracFlowback Treatment • Each well is initially fractured in 8 to 12 stages • Average 10,000 bbl of water are used per stage • 130 bbl/truck – 77 trucks per stage • 18-30% of the water flows back H2O2 Fe 2+ 9

10. Water Recycling Treatment Technologies – Summary • Provide environmental control and limiting future environmental liability • Use best available technology and practices • Quality control of water and waste • Minimize use of valuable natural water sources • Consistent HSE management and controls

11. State Summary

12. Sourcing • Regulated by seasonal availability

13. Water needs varies from region to region based on factors from regulations to transport cost SOURCE: M-I SWACO; EIA; Deutsche Bank; shalegas.com; USGS; NPC; McKinsey analysis

14. Disposal/Recycle Technology

15. Flowback Water Management Flowback Storage in Tanks or Lined Pits Almost always trucked Typically injected in Class II Brine Injection well some distance away ~ 10 minutes to 6 hours Less frequently (but increasing) operators may recycle … Treat and recycle, or…just dilute with makeup water and reuse for next job Regions without disposal wells may use commercial treatment works, which then dispose to waterways

16. Issues with recycle and beneficial reuse: • Is the secondary material similar to an analogous raw material or product? • What degree of processing is required to produce a finished product? • What is the value of the secondary material? • Is there a guaranteed market for the end product? • Is the secondary material handled in a manner consistent with the raw material/product it replaces?

17. Specifications for Frac water • No regulatory specifications set for frac water quality • Currently no regulations for fracking process (except casing) • EPA currently evaluating whether hydraulic fracturing should be regulated as underground injection wells and under the same jurisdiction

18. Fracturing Fluid Makeup

19. Why do we need to treat the flowback for reuse?

20. Water Treatment Specifications Haynesville Shale Area: Marcellus Shale Area:

21. TREATMENT TECHNOLOGIES

22. Water Management Solutions Blending

23. Blending Treatment Operation

24. Water Management Solutions Filtration

25. Filtration System Targets removal of TSS, using filter cartridges/socks.

26. Filtration System Example • Operational Highlights (Filtration System Central Site) • Processed over 1M bbls of flowback water • Treats and processes average of 5,000 bbl/12 hours • 99.9% water recovery • 1,000 bbls of waste sent to disposal • Contaminates removed from flowback water (ppm):

27. Water Management Solutions Reclamation

28. Reclamation System • Results: • Calcium Removal: • 9,400 ppmto 34 ppm • Magnesium Removal: • 570 ppm to 6 ppm • TDS reduction • 61,100 ppm to 39,100 Flowback Water Reclamation System Trial

29. Reclamation System Example • Operational Highlights (Reclamation System Mobile Unit) • Typical Flowback Water Processed per Well 10,500 bbls • Treats and processes 3,000 bbl /12 hours • 97% water recovery • 125 bbls of waste sent to disposal Contaminates removed from flowback water (ppm):

30. Water Management Solutions RO

31. Pretreatment - Membrane Technology pH adjustment Flow Back Water Clarification Ion Exchange Ultra Filtration Oil Removal Antiscalant & pH Adjustment Sludge • Hardness • Iron Oil Reverse Osmosis

32. Reverse Osmosis - RO • Features: • Remove TDS and can handle up to 40K TDS. • Pre-treatment includes: • TSS, oil, and some hardness removal • 35 - 40% recovery drinking water quality • Inexpensive with less than 40K TDS flow back & produced waters • Low energy input required

33. Water Management Solutions Thermal

34. Pretreatment - Thermal Technology • Antiscalant • Defoamer • Corrosion Inhibitor pH adjustment Clarification/ Filtration Thermal Technology Flow Back Water Suspended Solids

35. Mechanical Vapor Recompression

36. Regulatory challenges • Disposal/Recycle • RCRA rules apply for all waste • States have jurisdiction for treatment and disposal • Produced/Flowback waters cannot be directly discharged

37. General Commonalities • Well Activities • No specifications set for frac water quality • Currently no regulations for fracking process (except casing) • EPA currently evaluating whether hydraulic fracturing should be regulated as underground injection wells and under the same jurisdiction • Initial Design of EPA Research. Study on Potential Relationships Between Hydraulic Fracturing and Drinking Water Resources. U.S. Environmental Protection Agency Office of Research and Development. March 2010. http://yosemite.epa.gov/sab/sabproduct.nsf/0/3B745430D624ED3B852576D400514B76/$File/Hydraulic%20Frac%20Scoping%20Doc%20for%20SAB-3-22-10%20Final.pdf

38. Laboratory Requirements • Waste Characterization • Water Analysis • Treatment Evaluations • Regulatory Compliance

39. WaterCharacterizationRequirements • Analytical laboratory offers state-of-the art instrumentation for data validation and methods development purposes • Field Kits available to all operations AA: Atomic Absorption ICP-MS: Inductively Coupled Plasma Mass Spectroscopy IC: Ion Chromatography NTU: Nephelometric Turbidity Units

40. Water Analysis and Bench Treatment Evaluation • Personnel & Equipment • Water analysis before and after • Bench scale Treatment Before Treatment After Treatment

41. Regulatory Compliance Testing • Identification of test parameters • Development of test protocols for field testing and offsite lab testing • Sampling procedures and frequency • Documentation and reporting procedures

42. The Path forward

43. Life Cycle Analysis • Air Discharges • Water Discharges • Solid Waste • Biodiversity protection • Resource consumption • Use of Good Science • Transparent Operations • Dedication to waste minimization approach

44. The Big Picture • Operators • Service Companies • Regulators • Other Stakeholders • Public Participation • Research Organizations • NGOs • Industry trade groups • Technology providers

45. Positive Change • Remain engaged with local authorities • Conserve resources • Practice Responsible Withdrawal • Implement Recycling • Identify other industrial water sources • Be proactive in the community • Protect groundwater/ surface water resources