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Water Management for Shale Plays West 2014 

### Treating Produced Water to Generate Beneficial Reuse Byproducts Stephen Hughes, P.E. May 29, 2014 Denver, Colorado 1

### Presentation Agenda

 Natural Gas and Flowback & Produced Water Generation in the Marcellus & Utica Plays  Non-Recycled Flowback/Produced Water Treatment and Disposal Options and $/bbl Fees  Summary and Conclusions  Future Considerations

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### ~85% Natural Gas Production in Marcellus & Utica Plays in Pennsylvania

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0 1 2 3 4 5 6 7

2010 2011 2012 2013 2014 2015 2016 2017 2018TCFperYear Actual & Forecasted Unconventional Natural Gas Production in Pennsylvania

Sources: PADEP; Miscellaneous Research Reports; Estimated 1,600 Natural Gas Wells Drilled Annually 2014 - 2018

### Flowback & Produced Water Generation in Pennsylvania

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0 5 10 15 20 25 30 35 40 45 50

2010 2011 2012 2013 2014 2015 2016 2017 2018MillionsofBarrelsperYear Actual & Forecasted Produced and Flowback Water Generated in Pennsylvania

Produced Flowback

Sources: PADEP; Miscellaneous Research Reports; Estimated 1,600 Natural Gas Wells Drilled Annually 2014 - 2018

### Non-Recycled Flowback & Produced Water in Pennsylvania

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0 1 2 3 4 5 6 7 8

2010 2011 2012 2013 2014 2015 2016 2017 2018MillionsofBarrelsperYear Produced and Flowback Water Not Recycled in Pennsylvania

Produced Flowback

Sources: PADEP; Miscellaneous Research Reports; Estimated 1,600 Natural Gas Wells Drilled Annually 2014 - 2018

### Total and Non-Recycled Flowback/Produced Water in Pennsylvania - 2010 to 2018

6 2010 2018 Total million bbls Non-Recycled million bbls Total

million bbls Non-Recycled

million bbls Flowback Water 5.0 0.7 8.1 0.5 Produced Water 4.4 1.2 44.2 6.9 Total 9 .4 1.9 52.3 7.4

### Brine Disposal Wells in PA, WV and OH

7 Estimated No. of Wells Typical

Injection Rate (bbl/day) Regulatory

Primacy (UIC Program) Pennsylvania 7 500 - 1,000 USEPA West Virginia 70 500 - 1,500 WVDEP Ohio 200 500 - 1,500 ODNR

### Unconventional Gas Well and Injection Well Map

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### Non-recycled Flowback/Produced Water - Disposal and/or Treatment Options

9 1 - Brine Disposal Wells  Utilize UIC Class IID injection wells in OH, WV and PA 2 - Thermal Treatment  Generates a high quality distillate that can be used as frac water or other industrial applications  Also generates a brine concentrate that can be: - disposed of in injection wells - solidified and disposed of in landfills - used to manufacture beneficial reuse byproducts

### 1 - Injection Well Disposal Option

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Considerations  Cost effective and safe option for brine disposal $3 to 5/bbl (commercial well fee)  PA only has 7 injection wells – long permit application review (USEPA) and challenging geologic conditions  Major interest in PA to convert depleted conventional gas wells into injection wells  Trucking costs from NE PA to OH injection wells $12 to 14/bbl  Seismic events in OH are a concern

### 2 - Thermal Treatment Processes

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Thermal treatment systems can include following processes:  Pretreatment processes to remove suspended solids, heavy metals, NORM and organics  Mechanical evaporator that generates a brine concentrate and high quality distillate  Crystallizer that converts the brine concentrate to dry salt cake for landfilling or beneficial product development  Beneficial product manufacturing processes that manufacture reusable products such as road salt and industrial chemicals

### 2a - Thermal Treatment and Brine Injection or Landfill

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### 2a - Thermal Treatment and Brine Injection or Landfill

13  Injection well disposal of brine concentrate  Landfill Disposal of solidified brine concentrate

- Dried salt grout generated from blending with Portland cement, etc. - Solidified brine must meet TCLP and paint filter test landfill regulations - Concerns about filling landfills with large quantities of salt grout containing NORM could limit this option in future

### 2b - Thermal Treatment and Salt Production

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### 2b - Thermal Treatment and Salt Production

15  Extensive pretreatment required to remove NORM to meet road salt or industrial product standards  Major storage requirements may be needed since road salt only needed ~4 months/year  Flooding the market with large quantities of salt could depress the product’s regional market value and make it difficult to set a consistent $/bbl fee charged to E&Ps  Even though the salt could meet required standards, public opinion may be against using it on roads or in water softeners

### 2c - Thermal Treatment and

Industrial Chemicals Production

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### 2c - Thermal Treatment and

Industrial Chemicals Production

17  Chemical manufacturing processes added to thermal treatment to generate industrial chemicals such as hydrochloric acid, caustic soda and bleach  Extensive brine pretreatment processes required to satisfy chemical product specifications  Rail access is required to delivery chemicals to market  Since markets for chemicals are large and stable, predicable $/bbl fee can be established  Sale of high value chemicals allows cost-competitive $/bbl fee

### Non-recycled Flowback/Produced Water - Thermal Treatment Options - Estimated $/bbl Fees

18 Thermal Treatment Options Est. Fee charged to E&Ps 1 Brine Concentrate Disposal via Injection Well $8 - 12/bbl 1 Brine Concentrate Solidification & Landfill $12 - 16/bbl Beneficial Product – Salt $7 - 14/bbl 2 Beneficial Product – Industrial Chemicals $6 - 12/bbl Notes: 1 - Fees above don’t include transportation costs to deliver flowback/produced water to treatment facilities or brine concentrate to injection wells. 2 - Fee for road salt option does not include storage costs during non-winter months. It is estimated that there are currently 10 thermal treatment facilities operating or being planned in PA with design capacities ranging from 1,000 to 10,000 bbl/day

### High Sierra Energy Resource Recovery Project

19  Produced Water Treatment Plant and Chemical Manufacturing Facility planned for NE PA (Bradford Co.)  Extensive pilot Testing, market studies, site selection, preliminary design and business plan completed  Equipment providers selected  Negotiating chemical marketing arrangements (E&Ps interested in direct purchase of HCL)  PADEP supports project (Environmentally Sustainable)  Patents pending on system arrangement and processes to achieve required brine quality

### Summary and Conclusions

20  Estimated volumes of non-recycled flowback/produced water in PA could increase from 1.9 mmbbl (2010) to 7.4 mmbbl (2018)  Minimizing transportation costs is a key component in: - developing cost-competitive disposal and/or treatment options - reducing public concerns regarding heavy truck traffic  The thermal treatment option that manufactures industrial chemicals is potentially the most environmentally sustainable and cost- competitive option

### Future Considerations

21  Approximately 8,000 natural gas wells have been drilled in the Marcellus and Utica Plays in Pennsylvania to date  With the Marcellus and Utica Plays over 90,000 sq. miles , potentially 80,000 wells could be developed in the footprint  As more wells go into production, non-recycled produced water will become by far the predominant water management challenge in the plays  It is anticipated that brine disposal wells and/or thermal treatment facilities located in or near producing well fields will be needed to effectively respond to this challenge