Energy Water Conservation & 

Recycling

33rd Annual Governor’s Water Conference

November 13, 2012

Richard Luedecke

Vice president, Environmental, Health and Safety
NYSE: DVN www.devonenergy.com page 2

The First Commercial Fracture 

Stimulation

Velma Alma, OK

March 17, 1949

• Fracture stimulation is a wellestablished technology with a 

strong environmental and safety 

record

• The technology has been used 

to complete more than 1 million 

wells over the past 60 years

page 2
Devon Overview

•Well Life Cycle Phases

- Drilling

- Completion

- Production

• Regulation 

• Hydraulic Fracturing: The Process

− Technology Role

− Water

Presentation Outline

page 3
NYSE: DVN www.devonenergy.com page 4

• Founded as a private company in 1971 

• Became a public company in 1988

• Currently listed on the New York Stock 

Exchange under the ticker symbol DVN

• Has grown from 185 employees in 1981 

to more than 5,000 employees today

• Established a portfolio to provide 

stable production and a solid platform 

for future growth

Devon History
NYSE: DVN www.devonenergy.com page 5

Devon Today

Proved reserves: 3.0 billion BOE

 (42% liquids)

Q2 2012 production: 679 MBOED

 

Production mix: 22% oil

 15% NGLs

 63% natural gas

 

Significant midstream business

2012e operating profit: ≈$385 million

Enterprise value: $25 billion

Jackfish

Pike

Granite Wash

Barnett Shale

Permian Basin

Ferrier Corridor

Cana Woodford

Mississippian

Tuscaloosa Shale

Rockies

Oil Utica Ohio

Michigan

Horn River

Deep Basin

Powder River

Washakie

Haynesville/Bossier

Carthage

Groesbeck

Oil

Liquids-Rich

Dry Gas
NYSE: DVN www.devonenergy.com page 6

$0 $5 $10 $15 $20 $25 $30

Allstate

General Motors

Sherwin-Williams

Marriott

Best Buy

Southwest Airlines

Larger than you might think... 

Enterprise value

In billions of U.S. dollars

Source: Enterprise value as stated on Yahoo! Finance on Oct. 1, 2012.
Well Life Cycle Phases
NYSE: DVN www.devonenergy.com page 8

Well Life Cycle Phases

• Drilling: creating the bore hole

– Location construction

– Well construction planning

– Drilling — implementation of the construction plan

• Installation of casing strings

• Completion: make ready for production

– Perforate the casing 

– Fracture stimulate the reservoir

– Install production tubing 

– Install surface production equipment

• Production: efficiently extract the hydrocarbons

– Separate water, gas, liquid hydrocarbons

– Manage operating costs

– P&A
NYSE: DVN www.devonenergy.com page 9

Drilling
NYSE: DVN www.devonenergy.com page 10

Regulation of Well Construction

State’s Role

• States manage the oversight and enforce federal law and

state rules

• Have the on-the-ground personnel and expertise

• State-led enforcement allows fit-to-purpose solutions for

localized issues

• Regulated activities:

• Well design

• Well location

• Well spacing

• Well operation

• Water management and disposal

• Waste management and disposal

• Air emissions

• Wildlife impacts

• Surface disturbance

• Worker health and safety
NYSE: DVN www.devonenergy.com page 11

Groundwater protection

Through proper well construction

Cement

Cement

Surface casing

Drilling fluid

Intermediate casing

Conductor casing

Aquifer

2,000 ft.

4,000 ft.

6,000 ft.

8,000 ft.

10,000 ft.

13,500 ft.

Impervious rock layers

In the Cana Field (Woodford Shale)

Production casing 

Production tubing

page 11
NYSE: DVN www.devonenergy.com page 12

Hydraulic Fracturing
NYSE: DVN www.devonenergy.com

Technology’s Role

• In the late 1970s, George Mitchell, then president and CEO of Mitchell Energy, 

became concerned about the longevity of his gas reserves.

• He challenged his engineers to think outside the box and identify additional 

reserves on their existing leases.

• Mitchell knew when drilling through the Barnett Shale that well logs would register 

“a kick in gas,” but common knowledge was that the shale wasn’t porous enough to 

give up whatever it held.

• Despite the cautioning of his engineers and investing nearly two decades of time 

and millions of dollars into fracture experiments on 30 wells, many of which were 

at a loss, Mitchell’s persistence paid off.

• Eventually, he found that “slick water,” a combination of a surfactant, water and 

sand, opened the shale.

• In 2002, following Devon’s acquisition of Mitchell Energy, we coupled the technique 

of horizontal drilling with hydraulic fracturing to revolutionize the industry.

page 13
NYSE: DVN www.devonenergy.com page 14

Technology’s role

Why the revolution

Traps vs. shales

Migrating

hydrocarbons Shale

Frack

Porous and permeable

reservoir layer

Hydrocarbon Trap

Impermeable

sealing layer

organic rich

source layer

Fracture stimulation 5,000’ – 15,000’ below the surface
NYSE: DVN www.devonenergy.com page 15

Hydraulic fracturing

Key to the revolution
NYSE: DVN www.devonenergy.com

Mapped Fracture Treatments

Barnett Shale

Kevin Fisher, “Data Confirm Safety of Well Fracturing” The 

American Oil & Gas Reporter – July 2010 

page 16
GWPC/IOGCC Chemical Registry

FracFocus

NYSE: DVN www.devonenergy.com page 17
NYSE: DVN www.devonenergy.com

Groundwater Protection

Where’s the Problem?

• Lisa Jackson, EPA Administrator:

– Unaware “of any proven case where the fracking process itself affected water.” (U.S. 

Senate testimony, 05/11)

• Taury Smith, NY State’s Top Geologist: 

– “He said he has been examining the science of hydraulic fracturing the shale for three 

years and has found no cases in which the process has led to groundwater contamination.”

(Albany Times Union, 3/14/11)

• John Hanger, former PA DEP Secretary and Former PennFuture CEO: 

– “It’s our experience in Pennsylvania that we have not had one case in which the fluids 

used to break off the gas from 5,000 to 8,000 feet underground have returned to 

contaminate ground water.” (Reuters, 10/4/10)

• Colorado Oil and Gas Conservation Commission: 

– “There has been no verified instance of harm to groundwater caused by hydraulic 

fracturing.” (Regulatory Statements on Hydraulic Fracturing, 6/09)

• Louisiana Department of Natural Resources: 

– We are “unaware of any instance of harm to groundwater in the State of Louisiana caused 

by the practice of hydraulic fracturing.” (Regulatory Statements on Hydraulic Fracturing, 

6/09)

• Texas Railroad Commission: 

– “Though hydraulic fracturing has been used for over 60 years in Texas, our Railroad 

Commission records do not reflect a single documented surface or groundwater 

contamination case associated with hydraulic fracturing.” (Regulatory Statements on 

Hydraulic Fracturing, 6/09)

page 18
Water Use in Fracture Stimulation
Water demand 

State of Oklahoma — 2010

Irrigation

40.0%

Oil & Gas Activities

2.3%

Livestock

5.1%

Thermoelectric 

Power

14%

Self-Supplied 

Industrial 

4.8%

Self-Supplied Rural 

Residential

1.6%

Municipal & 

Industrial 

32% SOURCE: Oklahoma Water Resources Board

page 20
Water reuse process 

• Traditional and non-traditional water sources

– Surface water, ground water, non-potable water, produced 

water, treated sewage effluent

• Plenty of treatment options (basic to advanced)

– Blending, coagulation, electrocoagulation (EC), reverse osmosis 

(RO), distillation

• Reuse reduces freshwater footprint and gains competitive edge

page 21
Complexity continuum of 

treatment options

• Complexity of treatment a function of frac design and regulatory 

requirements

– Frac designs can be widely variable including tolerance of salts

– Regulatory requirements influence storage and conveyance options

– Some amount of “make-up” water will be needed

– Flowback water has highly variable characteristics

page 22
Water Recycling Barnett Shale
NYSE: DVN www.devonenergy.com page

Water Recycling

• Approved by the Railroad 

Commission of Texas in 2005

• Implemented in 2005 

• Vaporizes frac flow-back 

water and condenses it into 

clean, distilled water

• Remaining concentrated 

water removed for disposal 

or utilized for controlling 

pressures in another well 

completion as a “kill fluid” Ellenberger

Barnett Shale

page 24
Barnett Shale recycling facility

Freshwater storage and completion activity

page 25
NYSE: DVN www.devonenergy.com page 26

Water Recycling

Fountain Quail

• 22,500 bbls/day at peak 

• 14+ million barrels processed 

(588+ million gallons) 

• 11+ million barrels of distilled 

water generated (462+ million 

gallons)

• 110 wells fracked with recycled 

water
Water Reuse Cana Woodford
NYSE: DVN www.devonenergy.com page 28

Opportunities for water reuse

Cana Woodford Shale

• Exceptional produced water quality in the Cana Woodford Shale

– Very low total dissolved solids (TDS)

– Early stages of produced water quality about 12,000 TDS 

– Later stages of produced water quality about 20,000 TDS

– Potential exists to reuse these fluids, thus reducing the demand 

for fresh water

• Current quantities available for re-use:

– 26,000 barrels (1.1 million gallons) per day of produced fluid 

from 196 wells
NYSE: DVN www.devonenergy.com page 29

Developing a new pit rule

for produced water

• With the development of the 

Cana-Woodford Shale, Oklahoma 

regulators and Devon recognized 

the use of larger pits to store 

produced waters from the 

flowback process 

• Earlier regulations allowed only 

for temporary storage

• New revised regulations include 

enhanced construction and 

design requirements and 

permitting options
NYSE: DVN www.devonenergy.com page 30

Water reuse facility

Settling pond, Cana-Woodford

• SWD well/injection pumps 

disposal capacity of 30,000 bpd 

@ 1500 psi

• Truck unloading station with 

above-ground settling tank 

capacity of 6,000 barrels (bbls)

• Fully automated with level 

alarms, meters for allocation, 

and chloride level

• Currently taking 20,000 bpd from 

infill well produced water

• Plan to recycle 4MM bbls in 2012
NYSE: DVN www.devonenergy.com page 31

Cana-Woodford Water Re-Use 

Facility – Storage Pond

• 575’ x 575’ 7.5 Acres Depth 12’

• 502,000 BBL Capacity plus 2’ 

Freeboard

• 60 Mil High Density Polyethylene 

Liner

• Leak Detection System

• Automated:

– Level Indication

– Chloride Level
NYSE: DVN www.devonenergy.com page 32

Water reuse pipeline

Cana-Woodford

• 12”, 10”, and 8” Star fiberglass 

pipe, rating 450 psi @ 200 degrees 

(infill Flowback temp 175 deg F)

• Will handle 30,000 bpd flowback 

rate for all 30 sections

• Can deliver 70+BPM to 10 infill 

sections for stimulation

• Capable of delivering 30-70 BPM 

to remaining 20 infill sections for 

Stimulation

• Flowed 150,000 BBLS in last 2 

weeks from Brooks wells
NYSE: DVN www.devonenergy.com page 33

Cana-Woodford reuse facility 

Summary

• A disposal well is located next to the re-use facility to handle excess 

water

• Pipelines to handle 30,000 bpd will soon connect to 33 sections.

• Result: reuse water will contribute to completion of 270 wells
NYSE: DVN www.devonenergy.com page 34

Pipeline for recycling operations
Thank You.
Seismicity
NYSE: DVN www.devonenergy.com page 37

Demystifying seismic events

Purported connection to E&P activity

• Experts’ consensus: Low risk managed through good practices

• “We don't see any connection between fracking and earthquakes of any 

concern to society.” — Bill Ellsworth, senior U.S. Geological Survey 

geophysicist, to E&E News, April 23, 2012. 

• Fewer than 30 out of 150,000 U.S. disposal wells have had any alleged 

connection to seismic activity

• Generally no damage from those events 

• Devon uses advanced seismic imaging technology and interpretation 

methods to identify and avoid faults.

• Industry expanding water recycling/reuse programs to reduce need for 

disposal wells 
NYSE: DVN www.devonenergy.com page 38

Seismic risk in context

Seismic array monitoring example

Total Array Areal coverage is 3 square miles. 

Source: Spectraseis Array location map 

Horizontal 

Well Paths Seismic Stations

That form the 

Seismic Array

Frank 11 100 – Station layout 

.

East - West dimension is 

12,000 feet (2.3 miles)

North - South dimension is 

7000 feet (1.3 miles)
NYSE: DVN www.devonenergy.com page 39

Seismic risk in context

Comparison of frack and trains

0.8

80

0

10

20

30

40

50

60

70

80

90

1

Relative Seismic Amplitudes 

Hydraulic 

Fracture Event

Freight Train 

Vibrations