Alternative water supplies for sustainable oilfield operations Cotulla, Texas November 15, 2013

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1 Alternative water supplies for sustainable oilfield operations Cotulla, Texas November 15, 2013 Kim Jones, Ph.D., P.E. Director, ISEE Department of Environmental Engineering

2 Topics Assessment of current oilfield produced water disposal in the USA Recent topics and concerns from shale gas and oil development that suggest business as usual for flow back and produced water is not sustainable Concepts for innovation needed in oilfield water treatment and disposal Some information here from Flowback and Produced Water Management Short Course conducted at Texas A&M University Kingsville, Nov

3 Millions Status Quo Current Costs $35 $30 $ 33,989,742 Fresh Water Sourcing Fresh Water Logistics $25 $20 $15 Owners Disposal Fee Public Disposal Fee Trucking to Public SWD $10 $5 Trucking to Owners SWD $- (c)2013 Baker Hughes Inc. All Rights Reserved Total Cost

4 SW Disposal Wells Saltwater disposal wells are regulated by the Texas RRC Underground Injection Control (UIC) program (delegated to the State by USEPA) and the permits are examined to insure that the operator must provide isolation from freshwater aquifers with aquitards or formations that are not porous or permeable above and below the zone of injection, and impermeable cementing behind the casing to prohibit vertical communication in and around the wellbore 4

5 Permitting a SW Disposal Well For commercial SWD facility there are other criteria as well 24 hour security and surveillance Spill and leak protection policies and practices implemented Other specifics 5

6 Three assumed levels of GW protection for a SW Disposal Well Surface casing cemented to >1,000 feet Production casing cemented to below zone of injection Production/injection tubing set with a packer above the zone of injection 6

7 Monitoring and Reporting for a SW Disposal Well Monthly reports to RRC injection volumes, surface pressures Annual inspections by RRC personnel Initial Mechanical Integrity Testing (MIT) at commencement of operations and every five years thereafter 7

8 Topics for UIC operations Salt water disposal well operations increasing costs Corrosion management tubing and surface injection facilities Coatings Fiberglass tubing Special metallurgy nickel or chrome 8

9 Topics for UIC operations Spill liabilities for disposal company and produced water operator 9

10 Topics for UIC operations Spill liabilities for disposal company and produced water operator 10

11 USEPA report on Induced seismicity Preliminary Report by USEPA Minimizing and Managing Potential Impacts of Induced-Seismicity of Class II Disposal Wells: practical approaches, Draft Report November 27, 2012 Reports on four recent case studies of induced seismicity events in Arkansas, Ohio, Texas and West Virginia 11

12 USEPA report on Induced seismicity Important factors/findings With new shale gas and oil development, new areas of oil and gas exploration and development have led to new SW disposal activities in areas largely unexplored in the past Shallow disposal wells can lead to potential for geo-pressured formations in new areas 12

13 USEPA report on Induced seismicity Rodessa sandstone example in East Texas has led to geo-pressures higher than 5,000 psi in some areas Induced seismicity in and around DFW potentially linked to SWD; Operator shut in SWD well and events subsided Another example discovered in Arkansas USEPA recommends improved understanding needed of local geology, local seismicity and reservoir responses will be needed in the future 13

14 Public resistance to more SWD Recent meeting in Frio County Public forum with TCEQ and RRC on July 11, 2013 concerning increases in volumes of SW injected and applications for new permits for SWD wells 14

15 New RRC rules on oilfield water conservation In March 2013, the RRC adopted new rules to encourage Texas operators to continue their efforts at conserving water used in the hydraulic fracturing process for oil and gas wells It is expected that other States will implement similar activities to promote oilfield water reuse ranging from California (all water for oilfield stimulation activities must be reclaimed) to Texas (where reuse is promoted whenever possible) 15

16 We need innovation 16

17 Alternative water supplies for oilfield operations Brackish groundwater Municipal wastewater treatment effluent Industrial wastewater treatment effluent Recycled oilfield flowback water Recycled oilfield produced water 17

18 Average STP (psi) Produced Water Performance Treated Water Frac Job #1 Job #2 Job #3 Job #4 Job # Canyon Lwr Wolfcamp Mdl Wolfcamp Upr Wolfcamp Upr Wolfcamp Zone Dean Lwr Spraberry Mdl Spraberry Upr Spraberry (c)2013 Baker Hughes Inc. All Rights Reserved

19 Production Fresh vs. Recycled Month 1 (c)2013 Baker Hughes Inc. All Rights Reserved SPE MS Production Gains Through Reuse of Frac Fluids S. Monroe

20 Production Fresh vs. Recycled Month 3 (c)2013 Baker Hughes Inc. All Rights Reserved SPE MS Production Gains Through Reuse of Frac Fluids S. Monroe

21 Some Conclusions The conventional methods of deep well injection and disposal of oilfield wastewaters are becoming less attractive in both the eyes of the public and the regulatory community costs are going to go up The RRC and other agencies are going to continue to promote water reuse Alternative water supplies and new methods of flow back and oilfield produced water treatment and reuse are needed now and the need will increase 21