## Infrastructure: Bringing

the Next Wave to Water Management

Michael Dunkel Vice President - CH2M September 24, 20152 

### • Water infrastructure examples • Economics of infrastructure building • How the buildout will unfold • Benefits for oil & gas companies • Benefits for water treatment companies



## Outline3 

## Alternatives to Water Infrastructure

• Close-in groundwater source wells • Nearby Saltwater Disposal Wells (SWDs) • Trucking source and produced water SWD next to tank battery4 

## Limitations of No Water Infrastructure
• Limited flexibility • Risk running out of water • Risk of disposal limitations • Cost increases with higher rig activity5

• Construction through 2019 • 20 subsystem networks • 125+ water storage ponds connected • Non-fresh source water from Odessa and potentially Midland’s effluent water • $100 million in 2015 on water infrastructure 

## Pioneer Natural Resources -

Source Water Infrastructure100+$Miles$

60+$Miles$6 

### • Haynesville Water Midstream Network

– 60-mile delivery & gathering system - LA to TX

– 90,000/bbl per day capacity - 8 SWDs. 

### • McKenzie County (ND) Water Midstream Network

– 150 mile water delivery and gathering system - construction 2015

– $125 - $150 million capital project 

### • 30-50% lower Op costs 

## Nuverra Environmental Water Gathering Systems7 • Network to gather flowback and produced water • Allows Water Recycling • Saved 80,000 truck trips in 2014 

## Anadarko Water Infrastructure in Marcellus8 

### • System links 13 SWDs in McKenzie and Mountrail Counties • Injection averages 80,000 BPD • Will have 120 miles of network by this fall • 1804 is the largest disposal company in ND



## 1804 Operating in N. Dakota9 

## WV Water Treatment plant and infrastructure • August announcement plans for a 60,000 BPD water treatment plant • Desalination process by crystallization • $275 MM Capex cost; two years to build • Plant will be owned by Antero • 5-mile pipeline will connect to existing pipeline system10 

### Eureka Resources in Pennsylvania • 20k BWPD capacity Wastewater treatment in Williamsport, PA • Second facility commissioned in Bradford County, Pa in 2014 - includes a crystallizer • Water is trucked in and out of facility11 

## Payout on Water Infrastructure • Trucking versus Pipeline Installation • 10-mile 12” diameter HDP buried pipe with a capacity of 35,000 BWPD could cost ~$3 million • Assume only 1⁄2 of the capacity is used, or 17,000 BWPD • Assume that local trucking costs for 10 miles is $1.50/ BW • Operating cost for pipeline is 3 cents/BW • Payback is in four (4) months • Pipeline could last 20+ years12 

### Process of Building Shared Infrastructure

• 3 fields & 3 sets of partners combined to pay for the pipeline • Once built, more fields can be added over time13 • Major water source in southern area designs project to move water to NM. • First movers in pipeline and buyers take risk but control future delivers 

## Infrastructure Onshore Hypothetical14 • Initial buyers build network to deliver to wells (mauve) • Second phase network to move water where needed in white (lower risk to new buyer, but profitable initial companies) 

### Onshore Growth of Infrastructure15 • Changing rig schedules and strategic plans • Costs are front loaded • Fractionated ownership of mineral interests • Right-of-way access • Medium to longer term time horizon required • Not the traditional “core business” for oil companies 

## Challenges of Water Infrastructure16 • Lower water costs • More flexibility • Easier to have multiple water supply options • Lower community impacts

– Fewer trucks on the road

– Easier to substitute brackish for fresh water • Easier to recycle 

## Benefits to Oil & Gas Companies17 • More recycling with infrastructure • Larger volumes of water in one place to allow lower treatment costs / bbl • Longer term commitments by oil companies • Better business opportunities 

## Benefits to Water Treatment Companies18 

## Let’s build more water infrastructure!!

### Thank You