Report & Recommendations

FEBRUARY 27, 2014 WASHINGTON, DC ASME HYDRAULIC FRACTURING: WATER ISSUES AND OPPORTUNITIES OPEN RESEARCH FORUM Report & Recommendations

2 DISCLAIMER 2014, ASME, 2 Park Avenue, New York, NY 10016, USA (www.asme.org) All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. INFORMATION CONTAINED IN THIS WORK HAS BEEN OBTAINED BY THE AMERICAN SOCIETY OF MECHANICAL ENGINEERS FROM SOURCES BELIEVED TO BE RELIABLE. HOWEVER, NEITHER ASME NOR ITS AUTHORS OR EDI- TORS GUARANTEE THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PUBLISHED IN THIS WORK. NEI- THER ASME NOR ITS AUTHORS AND EDITORS SHALL BE RESPONSIBLE FOR ANY ERRORS, OMISSIONS, OR DAMAG- ES ARISING OUT OF THE USE OF THIS INFORMATION. THE WORK IS PUBLISHED WITH THE UNDERSTANDING THAT ASME AND ITS AUTHORS AND EDITORS ARE SUPPLYING INFORMATION BUT ARE NOT ATTEMPTING TO RENDER ENGINEERING OR OTHER PROFESSIONAL SERVICES. IF SUCH ENGINEERING OR PROFESSIONAL SERVICES ARE REQUIRED, THE ASSISTANCE OF AN APPROPRIATE PRO- FESSIONAL SHOULD BE SOUGHT. ACKNOWLEDGEMENTS This ASME Hydraulic Fracturing: Water Issues and Opportunities Open Research Forum Workshop Report was prepared by Norma Johnston under the guidance of Dr. Michael Tinkleman, Director, Research and Mr. Petr Spurney, Director, Development at the American Society of Mechanical Engineers (ASME). Additional guidance was provided by the Research Committee on Water Management Technology leadership including J. Iwan Alexander, Jane Kucera and Shahid Chaudhry as well as input from John Veil. On behalf of ASME, we would like to express our appreciation to the participants in the ASME Hydraulic Fracturing: Water Issues and Opportunities Open Research Forum (see Appendix A) for their input and recommendations. ASME shall not be responsible for statements or opinions advanced in papers or... printed in its publications (B7.1.3). Statement from the Bylaws. For authorization to photocopy material for internal or personal use under those circumstances not falling within the fair use provisions of the Copyright Act, contact the Copyright Clearance Center (CCC), 222 Rosewood Drive, Danvers, MA 01923, Tel: 978-750-8400, www.copyright.com. Requests for special permission or bulk reproduction should be addressed to the ASME Publishing Department, or submitted online at: http://tinyurl.com/p72hgfu

3 TABLE OF CONTENTS Introduction...4 Summary of Presentations...5 Hydraulic Fracturing...5 Hydraulic Fracturing Water Issues Overview...7 Potential Areas for ASME Action...10 Appendix A. List of Participants...14 Appendix B. Workshop Agenda...15 Appendix C. Copies of Presentations...16

4 INTRODUCTION The American Society of Mechanical Engineers (ASME) Open Research Forum, a joint effort of the Center for Research and Technology Development (CRTD) and Emerging Technologies (ET), is designed to bring together industry, government, and research leaders to identify and evaluate the challenges and opportunities in a select set of key focus areas: energy-water-nexus, integrated/sustainable building equipment and systems, thermal energy storage, sustainable manufacturing, risk management, hydraulic fracturing, advanced manufacturing, and nano-engineering for medicine and biology. This Hydraulic Fracturing: Water Issues and Opportunities Open Research Forum Workshop Report & Recommendations provides a summary of the Forum discussions, including highlights from the Forum presentations, the key challenges and opportunities for the hydraulic fracturing community, and key initiatives ASME can undertake to facilitate these opportunities. Outlining these challenges and opportunities will enable mechanical engineers and the larger hydraulic fracturing community to apply their collective interdisciplinary knowledge and expertise toward addressing identified challenges. On February 27, 2014, American Society of Mechanical Engineers (ASME) conducted an Open Research Forum on Hydraulic Fracturing: Water Issues and Opportunities. The forum was held both live in the Washington, DC office and virtually for those participants outside of the local area. This is the first of a series of open research forums to be held by ASME on water issues and opportunities in hydraulic fracturing. A broad cross section of experts from industry, government, national laboratories, academia, and the association community were invited to identify and evaluate the challenges, opportunities, and best practices in hydraulic fracturing water issues. The forum focused on the most pressing issues such as water availability in areas with water scarcity, challenges with flow back and produced water, and appropriate treatment of flow back and produced water for reuse. At the forum experts discussed the technology needs of the industry for hydraulic fracturing, existing commercially available technologies, and ongoing and planned research and development (R&D) activities from government, industry, and academic researchers. The goal of the Forum was for ASME to produce a concept paper and action plan highlighting 3-4 relevant challenges and to identify solutions in the hydraulic fracturing industry that can be effectively addressed by the interdisciplinary knowledge and expertise of engineers and scientists. The Forum also explored how ASME can contribute to advancing these technologies to the global engineering community via research, education, knowledge dissemination, conferences, and new codes and standards and guidelines.

5 SUMMARY OF PRESENTATIONS Jared Oehring of Stewart and Stevenson and John Veil, Veil Environmental, LLC (retired from Argonne National Laboratory) gave the presentations during the meeting. The two presentations were aimed at informing participants about current efforts to advance hydraulic fracturing research, development, and commercial applications and to brainstorm ideas and thoughts about what actions ASME can potentially take to facilitate further advancement of this field. At the end of the both presentations, participants discussed the challenges, barriers, success stories, and identified potential roles for ASME. Hydraulic Fracturing JARED OEHRING, STEWART AND STEVENSON Hydraulic fracturing (fracturing) involves the injection of large quantities of water, chemicals, and sand at high pressures down the well. The depths and lengths of the well vary depending on the characteristics of the hydrocarbon-bearing formation. The pressurized fluid mixture causes the formation to crack allowing natural gas or oil to flow up the well. Major water issues in Hydraulic Fracturing include: Water Acquisition Large volumes of water need to be sourced and are transported to be stored for fracturing processes Frack Fluid Mixing Equipment needs to mix water, chemicals, and sand at the well sites Well Injection Energy requirements to pump hydraulic fracturing fluid into the well at high injection pressure Flowback and Produced Water 1 On site storage and management of the recovered water water that returns to the surface following a fracturing job (called flow back and produced water). 1 Produced water is a term used in the oil industry to describe water that is produced as a byproduct along with the oil and gas. Oil and gas reservoirs often have water as well as hydrocarbons, sometimes in a zone that lies under the hydrocarbons, and sometimes in the same zone with the oil and gas. Oil wells sometimes produce large volumes of water with the oil, while gas wells tend to produce water in smaller proportion (from Wikipedia). Flowback water is water that returns to the surface after the hydraulic fracturing process. Wastewater Treatment and Waste Disposal The wastewater may either be treated on-site or transported offsite for treatment and disposal. Recycling of Treated Flowback and Produced Water Required treatment before reuse. A 2009 report 2 on modern shale gas by the Groundwater Protection Council and ALL Consulting, stated that [t]he amount of water needed to drill and fracture a horizontal shale gas well generally ranges from about 2 million to 4 million gallons, depending on the basin and formation characteristics. Similarly, a 2010 Harvard study 3 found that, on average, water consumption for natural gas produced through frac ranges from 0.6 to 1.8 gallons of water per MMBtu. Fracturing fluid is pumped at high pressure into the formation to create small fissures and fractures to free the gas and oil trapped within the formation. In addition to creating the fractures, fracturing fluid carries proppants, usually sand, to prop open a hydraulic fracture and increase the permeability in the formation. About 99.5% of the fracturing fluid is water (~90%) and sand (~9%). The remainder (~0.5%) is different chemical mixtures--the precise formulation is based on characteristics of the formation. Water is the primary delivery method of the sand and some of these chemicals help to suspend the sand in the fluid. Water used in hydraulic fracturing comes from both surface and ground water sources depending on the location of the formation. For example, The Marcellus, Fayetteville, and Bakken use mostly surface water. The Barnett uses a mix of surface and ground. The Eagle Ford and west Texas fields use primarily ground water. In some states, the water used for fracturing is controlled by a river basin commission or water resources board such as the Susquehanna 2 Modern Shale Gas Development in the United States: A Primer, 2009, Groundwater Protection Council and ALL Consulting, (http://www.gwpc. org/sites/default/files/shale%20gas%20primer%202009.pdf) 3 Erik Mielke, Laura Diaz Anadon and Venkatesh Narayanamurti, Water Consumption of Energy Resource Extraction Processing and Conversion (Harvard Kennedy School, Belfer School for Science and International Affairs October 2010)

6 River Basin Commission in Pennsylvania. In other places, water is owned by private individuals who can allocate it at their discretion. The amount of water used in hydraulic fracturing, particularly in shale gas formations, may appear substantial, but it is small when compared individually and collectively to other water uses such as agriculture, manufacturing and municipal water supply. For example, electric generation withdraws nearly 150 million gallons a day in the Susquehanna River Basin, while the projected total demand for peak Marcellus Shale activity in the same area is 8.4 million gallons per day. Oil and gas operations are only part of the Mining category which in total comprised about 1% of the total water used in the United States. In 2005, thermoelectric cooling represented 41% of water withdrawn nationally, and 6% of water consumed nationally. 4 Although first researched in the 1920 s, horizontal drilling technology didn t achieve commercial viability until the late 1980 s. Its successful deployment, particularly in the Bakken Shale of North Dakota and the Austin Chalk of Texas, encouraged its use in many other domestic geographic regions and geologic formations. Since 2006, the majority of shale oil and gas wells are drilled by horizontal drilling technology. U.S. government's Energy Information Administration (EIA) 5 reported that in 2000 shale gas provided only 1% of U.S. natural gas production; in 2010 it was over 20% and by 2035, 46% of the United States' natural gas supply may come from shale gas which requires hydraulic fracturing. EIA estimates that there are 345 billion barrels of technically recoverable sources of shale oil worldwide with 58 billion barrels in the United States. EIA also estimates that there are 7299 trillion cubic feet of technically recoverable shale gas worldwide with 665 trillion cube feet in the United States. Hydraulic Fracturing Water Issues Overview JOHN VEIL, VEIL ENVIRONMENTAL, LLC Natural gas is an important energy source for the United States. Shale formations represent a growing source of natural gas for the nation and are among the busiest oil and gas plays in the country. The U.S. Department of Energy s Energy Information Administration (EIA) released a report in June 2013 that assessed 137 shale formations in 41 countries 6. By 2040 shale gas will represent 50% of U.S. production. The EIA study concludes that North America has the largest shale oil reserves while Europe has the largest shale gas reserves in the world. The main shale oil & gas formations in the U.S are Marcellus Shale in Pennsylvania and West Virginia, Barnett and Eagle Ford in Texas, the Woodford in Oklahoma, the Piceance in Colorado, the Monterey in California, and the Bakken in North Dakota. MARCELLUS SHALE In order to estimate the maximum volume of water needed to meet Marcellus shale fracturing needs we first estimate the total number of wells that could be drilled. In Pennsylvania, 113 wells were drilled in 2007. By 2011, the number of drilled wells reached to 1,987. The hypothetical estimate of wells that can be drilled is 3974. In West Virginia, the number of wells drilled in 2007 was 408 but decreased to only 52 in 2011; the hypothetical number that can be drilled is 922. In New York, there is a moratorium on Marcellus Shale wells, however, for estimate purposes, 922 is used as the hypothetical number that could be drilled. Based on the hypothetical number of 5,818 wells from the three states that could be drilled at Marcellus Shale, and assuming that the total annual demand for water is five million gallons per well is approximately 29 billion gallons. This translates to 80 million gallons per day. Actual water withdrawals in the Marcellus Shale formation were only 24.5 million gallons per day. 4 Energy-Water-Nexus: The Energy Sector s Water Use: Nicole Carter, Congressional Research Service, August 30, 2013. 5 Energy Information Administration, Annual Energy Outlook 2014 with projections to 2040, May 2014. 6 Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States, Energy Information Administration, June 2013. http://www.eia.gov/analysis/studies/worldshalegas/.

7 With regard to water availability in both the Marcellus and Fayetteville Shales plays, the water needed to support a hypothetical maximum well fracturing yearly represents a fraction of one percent of the total water already being used in the regions. However, adequate water supply requires good advanced planning to withdraw water from rivers when flows are high and store it until needed for fracturing. It also will require local or regional fresh water storage impoundments. In other more arid parts of the country, as much water may not be available as it is in these two Shale plays. As noted in the previous presentation, the hydraulic fracturing fluid composition is appropriately 90% water, 9.5% sand and less than 0.5% chemical additives. The Ground Water Protection Council 7 and Interstate Oil and Gas Compact Commission have created an on-line database, Fracfocus, to host information on chemical additives in fracturing fluids and their ingredients. By the end of January 2014, the database had information on more than 65,000 wells representing about 600 oil and gas companies. FLOWBACK WATER MANAGEMENT PROCESSES Mr. Veil stated that there is a disproportionate emphasis by the media on shale gas wastewater. Using conservative estimates, assumptions are that if 20,000 shale gas wells are fractured in a year and each fracturing job requires 5 million gallons, only 50% of the fracturing fluid volume returns as flowback and produced water. The total shale gas flowback and produced water for the U.S. = 50 billion gallons per year. flowback water returns to the surface during the first few hours to few days; this is typically collected in pits/ponds. Produced water, on the other hand, flows to the surface in smaller amounts for many months. It is stored on-site in tanks for subsequent removal by trucks. Management of on-site treatment or off-site collection and treatment of flow back and produced water wastewater is dependent on what a company plans to use the water for. Five management options are generally considered: Injection into disposal well (offsite commercial well or company-owned well) Recent concerns over induced seismicity Treatment to create clean brine (e.g., ph adjustment, flocculation, clarification; electrocoagulation; advanced oxidation) Use of advanced treatment technologies, such as thermal distillation and membrane distillation processes, to produce clean fresh water. If reverse osmosis is used, pretreatment is required to reduce TDS to levels the RO membrane can tolerate. Evaporation or crystallization (allows zero discharge of fluids) Filtration of flowback to remove suspended solids (i.e., sand grains and scale particles), then blend with new fresh water for future stimulation fluid. In 2009, only 21% of Pennsylvania s flowback water was reused in contrast to 97% from January to June 2013. For produced water, 15% was reused in 2009 versus 88% in the first six months of 2013. In 2007, the volume of U.S. produced water generated by all oil and gas wells for the entire year was 21 billion bbl (Source: Clark and Veil, 2009) which equals 882 billion gal/ year. Comparing shale gas water to all produced water was only 50 billion/882 billion or about 5.7%. Putting this in perspective, shale gas receives the majority of attention yet it consists of less than 6% of all the volume of produced water. FLOWBACK WATER VS. PRODUCED WATER After the fracking process is complete, a large volume of 7 http://www.fracfocus.org

8 POTENTIAL AREAS FOR ASME ACTION During the facilitated discussions, participants expressed their appreciation to the speakers for their sharing of information and field experience. Further, the biggest issue identified in water management was the amount of needed water, consumptive water vs. non-consumptive water uses, water quality, and flowback and produced water treatment and disposal. It was identified during discussion that injection of hydraulic fracturing fluid could impact the ground water quality if there are leaky, cracked, and broken pipe casings. In response, the speakers pointed out that such incidents are very rare and potential risks are minimal due to great advances in the well casing technology and practices. The Forum participants pointed out a series of initiatives that ASME can undertake such as identifying current challenges, barriers, and best practices in hydraulic fracturing by setting up a clearinghouse of new treatment processes, products, services, and technology solutions providers. It was noted that a number of technologies currently exist and many others are evolving to address wastewater and flowback and produced water challenges. Similarly, many companies such as Baker Hughes and Schlumberger provide guidance to the well operators on water issues. ASME should collect unbiased facts and figures on these available and emerging treatment technologies and their successful applications to treat flowback and produced water and disseminate this information Yet another challenge with on-site treatment and recycling of produced water (such as at Marcellus Shale-centric and Marcellus Shale) is from regulatory perspective. As the fracturing field matures, the water need for fracturing of new wells is reduced. This surplus water may not be able to be discharged back into surface water bodies due to the regulatory restrictions. A Gas Technology Institute (GTI) study 8 on best water management practices and emerging 8 Techno-economic Assessment of Shale Gas Water Management Solutions, GTI-12/0004, Gas Technology Institute, June 2012. solutions finds that after 10-20 years of fracturing in one specific area with produced water continuing to come up, there will be no place to reuse this water and may become a regional issue in the future. The discussion concluded that fracturing is relatively a new area and lots of scientific and technical information are needed in different areas to use fracturing technology in an environmentally friendly manner. For example, geologists still need more information on rock formation of faults and how fracturing will propagate these faults during the fracturing process. Another area of potential interest to ASME could be to conduct a study to better understand physical phenomena of fracturing and its propagation in existing seismic faults such as by using 3-D technology. Experts discussed induced seismicity resulting from hydraulic fracturing. A 2012 National Academy of Sciences/ National Research Council report, Induced Seismicity Potential in Energy Technologies, states that hydraulic fracturing has a low risk for inducing earthquakes that can be felt by people, but underground injection of wastewater produced by hydraulic fracturing and other energy technologies has a higher risk of causing such earthquakes. John Veil has authored two white papers on the subject that can be found at http://veilenvironmental.com/. Experts thought that ASME could do more in terms of education for public policy officials since we are an unbiased, neutral party convener. There are not that many Congressional hearings that explain the appropriate technology or include presentations from industry on new techniques being used or on the water issues involved. Also, since there is often a turnover among congressional staffers it may be necessary to do these presentations annually. ASME could conduct noon time briefings on the mechanical engineering aspects of hydraulic fracturing. Experts discussed the EPA Study of Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources which will be released on December 15, 2014. An attendee from EPA reported that there will be ample opportunity to provide comments. EPA would welcome formal comments from ASME or other organizations and will post the procedures on the planned EPA peer review process for submission of comments both written and oral.

9 Two follow on forums will be held to further discuss the water issues in more depth. The dates are Thursday, May 1, 2014 and Thursday, June 19, 2014 both at 1:00 PM EDT. Water issues in shale formations (other than Marcellus Shale) will be one of the topics discussed. Another might be on regulations in the states high level comparisons. A short bulleted list of key discussion points can be found below. BULLETED LIST FROM WHITE BOARD 1. Challenges/Barriers/Best Practices Water Quality is a big issue. Degrees of reuse. Concern with groundwater contamination (leaking out of the casing). Reservoir TDS levels. What can you do with it after treatment, other than more hydraulic fracturing? Water Quantity - injecting water to manage it Costs of treating the water can be high and the regulatory structure may not provide incentives to reuse and manage the water in different ways. Understanding rock properties. Turnover in Congress prevents historical memory on topic. Takes a lot of repetitive outreach/education. Stakeholder perceptions: use of fresh water, volume of water required, ground water contamination, storage of flowback (Hydrogen Sulfide, Volatile Organic Compounds, Normally Occurring Radioactive Materials, chemicals) Opportunity: focus more on reusing produced water or saline water sources instead of fresh water Industry Perceptions: depending on the degree of treatment required, cost of treatment is not necessarily prohibitive. There are a number of technology options available to treat water for less than the cost to truck & dispose of flowback and produced water. Tight oil wells - uses much less water than in shale gas wells Opportunity: Landowners want to see baseline ground monitoring of their wells and would like to know what to test for to make sure their well water isn't being compromised Significant positive changes in US energy outlook is occurring because of hydraulic fracturing. Land stability (seismic activity) impact on drilling, tracking crack propagation is the focus of significant research. Water withdrawals vs. water consumption in energy production. (for example, for the electric utilities) 2. How can ASME Help? Standardize baseline groundwater analyses prior to hydraulic fracturing Provide best practices around casing standards, technologies used during fracturing process. Provide more educational opportunities on Capitol Hill. Conduct a hydraulic fracturing Noon Time briefing Could use more information from industry especially. Present unbiased cases of issues relating to hydraulic fracturing industry. ASME is viewed as a Neutral party convener More so than the American Petroleum Institute (API). Make information widely available to the public. Collect unbiased facts and figures from different perspectives on the subject, summarize and disseminate them. Applications of US solutions in other countries as hydraulic fracturing increases throughout the world. Provide hydraulic fracturing basic workshops to educate individuals at the local level, to help increase their understanding and to allay their concerns. 3. New Products, services, technology solutions that would benefit the Hydraulic Fracturing Community. Establish an ASME hydraulic fracturing working group (could be on asme.org). Provide educational materials from a mechanical engineering perspective to law makers and the lay person Provide case studies around critical issues surrounding hydraulic fracturing

10 APPENDIX A. LIST OF PARTICIPANTS *Speaker J. Iwan Alexander Dean of Engineering University of Alabama at Birmingham Jeanne Briskin Hydraulic Fracturing Research Coordinator US EPA Shahid Chaudhry Program Manager, Water-Energy Nexus California Energy Commission Corrie Clark Principal Environmental Systems Engineer Argonne National Laboratory Elizabeth Eide Director, Board on Earth Sciences & Resources National Research Council/National Academy of Sciences Robert Goldstein Senior Technical Executive, Water & Ecosystems EPRI Richard Jacobsen Executive Director, Strategic Management Idaho State University Meridian Health Science Center G. Todd Langford Unconventional Gas Domain Leader-Americas GE Water & Process Technologies John R. Lloyd Research Professor Naval Postgraduate School Stephanie Meadows Senior Policy Advisor American Petroleum Institute Wayne Micheletti President Wayne C. Micheletti, Inc. *Jared Oehring Engineering Manager Stewart & Stevenson Ken Pandya President Advanced Water Technologies Services, Inc. Shauyra Prakash Assistant Professor Dept. of Mechanical Engineering The Ohio State University Brian Polizzotti Chief Engineer, Water Issues GE Oil and Gas Iraj A. Salehi Senior Institute Scientist Gas Technology Institute Ethan Timothy Smith Retired USGS Sriram Somasundaram Chief Engineer Building Energy Systems Group Pacific Northwest National Lab. *John Veil President Veil Environmental, LLC Roberta Wasylishen President Fluid Intelligence Inc.

11 ASME STAFF: Michael Tinkleman Director, Research ASME Tel: 202-785-7394 Email: tinklemanm@asme.org Norma Johnston Manager, Center for Research & Technology Development ASME Tel: 202-785-7395 Email: johnstonn@asme.org Brandes Smith Program Manager, Emerging Technologies ASME Tel: 212-591-8705 Email: smithb@asme.org Paul Fakes Government Relations Representative ASME Tel: 202-785-7480 Email: fakesp@asme.org Randy Reagan Director, Engineering Knowledge ASME Tel: 212-591-7122 Email: reaganr@asme.org Christine Reilley Program Manager, Emerging Technologies ASME Tel: 212-591- 8486 Email: reilleyc@asme.org

12 APPENDIX B. WORKSHOP AGENDA ASME Hydraulic Fracturing: Water Issues and Opportunities Open Research Forum (ORF-4) February 27, 2014 1:00 1:05 PM Welcome and Introductions 1:05 1:20 PM 1:20 1:40 PM Hydraulic Fracking Overview Jared Oehring, Stewart & Stevenson Hydraulic Fracking Water Issues Overview John Veil, Veil Environmental Consultants 1:40 2:20 PM Facilitated Discussions - Initially Once Around the Room Once Around the Conference Call Goal Discussion & Identification of Challenges / Barriers / Best Practices. How can ASME help? What new ASME products, services, further Open Research Forums, technology solutions, etc. would benefit the Water Hydraulic Fracking community? 2:20 2:30 PM Review Outcomes of Facilitated Discussions Identify Next Steps

13 APPENDIX C. COPIES OF PRESENTATIONS Hydraulic Fracturing Jared Oehring, Engineering Manager ASME Officer, VP of Financial Operations, Knowledge & Community Sector February 27, 2013

14 What is Hydraulic Fracturing? 9/15/14 2 What is Hydraulic Fracturing? ~2 million to 4 million gallons per horizontal shale well 9/15/14 3

15 What is Hydraulic Fracturing? 9/15/14 4 What is Hydraulic Fracturing Proppant Helps keep the fracture propped open Sand Ceramic 9/15/14 5

16 What is Hydraulic Fracturing? 9/15/14 6 History of Hydraulic Fracturing (Fracking) Hydraulic Fracturing- Vertical Wells 1947 Stanolind Oil experimented using utilized napalm and sand, Hydrafrac 1949, with an exclusive license granted to the Halliburton Oil Well Cementing Company (Howco)to pump the new Hydrafrac process 9/15/14 7

17 History of Hydraulic Fracturing (Fracking) Hydraulic Fracturing- Vertical Wells In 1949, 332 wells were treated, with an average production increase of 75% In 1953, water as a fracturing fluid was added. During1950s, approximately 3,000 wells per month were stimulated 9/15/14 8 History of Hydraulic Fracturing (Fracking) Directional Drilling First researched in the 1920s Late 1980s, horizontal drilling became commercially viable 9/15/14 9

18 History of Hydraulic Fracturing (Fracking) Hydraulic Fracturing in Shale 1990s, Mitchel Energy used hydraulic fracturing in Barnett Shale of Texas Tiny pores in the formation rock snapped close when the pumps were turned off Added proppant (sand) to prop open the fractures 9/15/14 1 0 History of Hydraulic Fracturing (Fracking) 9/15/14 11

19 History of Hydraulic Fracturing (Fracking) Hydraulic Fracturing in Shale-Unconventional 9/15/14 1 2 Shale Plays in Lower 48 States 9/15/14 1 3

20 World Shale Plays as of May 2013 9/15/14 1 4 Hydraulic Fracturing is Revolutionizing the World 9/15/14 1 5

21 Water Saving for Natural Gas vs Coal for Energy Production 9/15/14 1 6 Hydraulic Fracturing is Changing the World. We can do even more! 9/15/14 1 7

22 Hydraulic Fracturing Equipment Fracturing Pumps 9/15/14 1 8 Hydraulic Fracturing Equipment Fracturing Blenders 9/15/14 1 9

23 Hydraulic Fracturing Equipment Hydration Systems 9/15/14 2 0 Hydraulic Fracturing Equipment Chemical Additive Units 9/15/14 2 1

24 Hydraulic Fracturing Equipment Data Acquisition & Control Centers 9/15/14 2 2

25 Hydraulic Fracturing Water Issues Overview John Veil 410-212- 0950 john@veilenvironmental.com www.veilenvironmental.com ASME Webinar Washington, DC February 27, 2014 Importance of Shale Gas to the USA Natural gas is an important energy source for the United States. Shale forma9ons represent a growing source of natural gas for the na9on and are among the busiest oil and gas plays in the country. Source: DOE/EIA Annual Energy Outlook 2013 2

26 Shale Plays in Other Parts of the World 3 2013 Report on Global Shale Oil and Gas Reserves U.S. Department of Energy released a new report in June 2013 that assessed 137 shale forma9ons in 41 countries. Prepared by Advanced Resources Interna9onal hjp://www.eia.gov/analysis/studies/worldshalegas/

27 Risked Shale Gas and Oil In-Place and Technically Recoverable by Continent QConRnent Shale Gas (Tcf) Shale Oil (billion bbl) North America (Ex. U.S.) 1,118 21.9 Australia 437 17.5 South America 1,431 59.7 Europe 883 88.6 Africa 1,361 38.1 Asia 1,403 61.1 Sub- Total 6,634 286.9 U.S. 1,161 47.7 Total 7,795 334.6 Source: Advanced Resources 2013 The Shale Gas Development Process 6

28 Well Completion Process Most shale gas wells are drilled as horizontal wells with up to 1 mile of lateral extent through the shale forma9on In order to get gas from the forma9on into the wellbore, companies must follow two steps: Perfora9on HF Source: T. Murphy Penn State Marcellus Center for Outreach and Research Visit hjp://videos.loga.la/horizontal- drilling- animaron to see a good video of these steps Well Completion Process (2) On a long horizontal leg, comple9on is done in a series of stages, each of which is a few hundred feet long Perfora9ons are made using small explosive charges that are lowered to the desired depth on a cable HF is done for several hours for each stage Pressure is held on the well and a plug is set to isolate that fractured interval and allow s9mula9on of the next stage The next stage is perfed and fracced When all stages are completed, the plugs are drilled out, and some of the water returns to the surface Source: J. Veil Source: Frac Focus website

29 Hydraulic Fracturing (HF) 9 A New Frac Technology Discovered in Bolivia

30 Frac Job Pumps Large Volume of Water, Sand, and Additives into the Well in Stages Water Needs for Hydraulic Fracturing 12

31 Estimate of Water Requirements for Marcellus Shale Make es9mate of maximum volume of water needed to meet Marcellus Shale fraccing needs Es9mate volume of water per well Es9mate maximum number of wells in a year Pennsylvania Wells Drilled Year Marcellus Shale Wells Drilled 2007 113 2008 336 2009 814 2010 1,591 2011 1,987 2012 (Jan- July) 883 (note: lower rate than in 2011) Source: PA DEP website To get a hypothe9cal maximum, double the 2010 total = 3,974 wells

32 West Virginia Wells Drilled Year Marcellus Shale Wells Drilled 2007 408 2008 461 2009 170 2010 114 2011 52 Source: WV GES website To get a hypothe9cal maximum double the 2008 total = 922 wells New York Wells Drilled Year Total Wells Drilled 2008?? 2009?? 2010?? 2011?? New York has moratorium on Marcellus Shale wells No good way to predict maximum number of wells Chose to es9mate maximum New York wells to be the same as maximum West Virginia wells = 922 wells

33 Hypothetical Maximum Water Demand for Marcellus State Hypothe9cal Maximum Number of Wells Drilled in a Year Annual Volume assuming 5 million gals of water needed per well Pennsylvania 3,974 19.8 billion gals/yr West Virginia 922 4.6 billion gals/yr New York 922 4.6 billion gals/yr Total 5,818 29 billion gals/yr = 80 MGD Actual Water Withdrawals for 2005 (in MGD) Category New York Pennsylvania West Virginia Total Public Supply 2,530 1,420 189 4,139 Domes9c 140 152 34 326 Irriga9on 51 24 <1 75 Livestock 30 62 5 97 Aquaculture 63 524 53 640 Industrial 301 770 966 2,037 Mining 33 96 14 143 Thermoelectric 7,140 6,430 3,550 17,120 Total 10,288 9,478 4,811 24,577 Source: USGS report (Kenny et al. 2009)

34 Comparison of Marcellus Shale Water Needs with Actual Withdrawal Water needed for shale gas Volume Total water withdrawal 24,577 MGD Percentage Water Required for Shale Gas ProducRon Compared to Total Withdrawal 80 MGD - 0.32% Water Availability in Marcellus and Fayetteville Shales In both of these shale plays, the water needed to support a hypothe9cal maximum well fracturing year represents a frac9on of 1 percent of the total water already used in the regions. This suggests that sufficient water should be available Not in every loca7on or on every stream tributary Not during every week of the year Requires good advanced planning to withdraw water from rivers when flows are high and store the water un9l needed for fracturing. Will require local or regional fresh water storage impoundments. In other more arid parts of the country, water may not be as available as it is in these two plays.

35 Chemicals in Frac Fluids 21 Frac Fluid Composition Water makes up ~90% of volume Sand makes up ~10% of volume All other chemical addi9ves make up ~0.5% of volume Source: Shale Gas Primer, GWPC and ALL

36 Chemical Disclosure Registry MSDSs provide some but not necessarily all of the informa9on that regulators and the public want or need In April 2011, the Ground Water Protec9on Council and the Interstate Oil and Gas Compact Commission opened a new online system to host informa9on about the chemical addi9ves used in frac fluids and their ingredients Any interested person can visit the website and search for data on a specific well As of end of January 2014, data had been entered on more than 65,000 wells represen9ng about 600 oil and gas companies www.fracfocus.org 23 Frac Focus Homepage 24

37 Example of Registry Record for Well in Texas Chesapeake Resources Well BSOA 14-14- 15 H- 1, De Soto County, LA, frac date 3/21/11 25 Flowback Water Management Processes 26

38 Disproportionate Media Emphasis on Shale Gas Wastewater Assump9ons (tried to choose conserva9ve es9mates) 20,000 shale gas wells are fractured in a year Each frac job requires 5 million gallons Only 50% of the frac fluid volume returns as flowback and produced water Total shale gas flowback and produced water for the U.S. = 50 billion gallons per year Disproportionate Emphasis on Shale Gas Wastewater (2) U.S. produced water volume in 2007 for all oil and gas = 21 billion bbl (Source: Clark and Veil, 2009) = 882 billion gal/year Compare shale gas water to all produced water 50 billion/882 billion or about 5.7%. Punng this in perspec9ve, shale gas receives more than 90% of the aden7on yet it consists of less than 6% of all the volume of produced water.

39 What Happens to the Injected Water after the Frac Job Is Finished? Some of the water returns to the surface over the first few hours to weeks. This frac flowback water has a high ini9al flow, but it rapidly decreases Over the same period of 9me, the concentra9on of TDS and other cons9tuents rises TDS values (mg/l) in flowback from several Marcellus Shale wells * Day 0 represents the star9ng frac fluid condi9ons Source: Tom Hayes, 2009. Flowback Water (1) Large volume of flowback returns to the surface in first few hours to few days Typically collect in pits/ponds

40 Produced Water Over 9me, smaller volume of produced water flows to surface Collected in onsite tanks Picked up by trucks and removed for offsite management Management of Shale Gas Wastewater Onsite treatment vs. offsite centralized treatment Key considera9on is what will be done next with the treated water Five management op9ons Injec9on into disposal well (offsite commercial well or company- owned well) Recent concerns over induced seismicity Treatment to create clean brine (e.g., ph adjustment, floccula9on, clarifica9on; electrocoagula9on; advanced oxida9on) Treatment to create clean fresh water (thermal dis9lla9on processes), reverse osmosis, forward osmosis (?) Requires pretreatment Evapora9on or crystalliza9on (allows zero discharge of fluids) Huge energy demand Filtra9on of flowback to remove suspended solids (i.e., sand grains and scale par9cles), then blend with new fresh water for future s9mula9on fluid.

41 Pennsylvania Flowback Management 2009 vs 2013 2009 2013 (January- June) Disposal Method Total Volume (bbl) % Using Method Centralized Treatment Plant for Recycle 940,692 26.8 Injec9on Disposal Well 94888 2.7 Landfill 2186 0.1 Reuse Other Than Roadspreading 2,457,025 70.1 Storage Pending Disposal or Reuse 9,227 0.3 Centralized Treatment then Discharge 46 0.0 Total 3,504,064 100 Pennsylvania Produced Water Management 2009 vs 2013 2009 2013 (January June) Disposal Method Total Volume % Using Method Centralized Treatment Plant for Recycle 1,367,173 12.8 Injec9on Disposal Well 1287516 12.0 Landfill 197 0.0 Reuse Other Than Roadspreading 8,050,177 75.1 Storage Pending Disposal or Reuse 15,485 0.1 Roadspreading 105 0.0 Total 10,720,653 100.0