# WATER ISSUES RELATIVE TO THE BAKKEN IN NORTH DAKOTA

James Landenberger, P.E. October 29, 2012

# PRESENTATION AGENDA

 Bakken overview

 Projected levels of activity

 Current water practices

 Reasons for growing concern

 Conclusion

– what are the implications/opportunities?

### MAY 2012 IN MILLIONS OF BARRELS OF OIL (194 MBPM US TOTAL)
1. Texas = 56.9 (1.90 mbpd ) 29% 2. North Dakota = 19.8 (0.66 mbpd ) 10% 3. Alaska = 16.9 (0.56 mbpd ) 9% 4. California = 16.2 (0.54 mbpd ) 8% 5. Oklahoma = 7.2 ( 0.24 mbpd ) 4% 

# US TOP 5 OIL PRODUCING STATES

0 20 40 60

Texas ND Alaska California OK Aug = 0.70 mbpd

# ROCKIN THE BAKKEN IN NORTH DAKOTA

Mature area or sweet spot T

otal area = 10,000 + sq miles 2010 population = 40,000 people 160 out of the 190 rigs (~85%)

# MAJOR PLAYERS

Source: Wood Mackenzie Upstream Service, Company reports Operator Bakken acreage ('000) Continental Resources ~1,000 Hess ~800 Whiting 702 EOG Resources 600 ConocoPhillips 460 Marathon Oil 416 ExxonMobil/XTO 410 Statoil 375 Oasis 307 Occidental 277 Denbury 202 SM Energy 202 Northern O&G 177 Kodiak O&G 157 Chesapeake 150 Magnum Hunter 125 MDU Resources (Fidelity) 124 Red Arrow Energy 100 Newfield 100 QEP Resources 90

# RAMPING UP PRODUCTION

# INCREASING WATER DEMAND

Source: Wood Mackenzie Upstream Service Difficult water sourcing  Arid region  Ongoing issues between State of ND and US Army COE  Time factor in attaining permits

 High cost of trucking

 Water disposal issues  Regulation  High salinity  Need additional disposal wells

 Mounting public concern  Environmental concerns  Road traffic, accidents, and truck emissions  Increased regulation Escalating water demand and costs 

# WHAT’S ALL THE FUSS ABOUT?

Source: Wood Mackenzie Upstream Service Sources

 Surface water

 Groundwater ( b ecoming increasingly limited)

 Municipal supplies (sporadic)

 Modes of transport

 Generally trucking

 Pipelines (strong movement)

 Current practices at well site

 Average 2

- 4 million gallons per well

 Increasing frac stages fueling water demand

 Disposal practices

 Underground injection wells

 Saltwater disposal wells

 Minimal recycling (more regulation) 

# CURRENT WATER PRACTICES 

### Local (County, Township)

 

### No Local Permits for access and use of water, except coordination of State permits with local water boards

 

### State

 

### ND State Engineer / ND State Water Commission ( issues of access, availability, quantity, and environmental)

 

### ND State Health Department (issues of quality)

 

### ND State Public Service Commission (new player to the game )

 

### Federal

 

### US Corps of Engineers (US F&WS) 

# PERMITTING / APPROPRIATION

## The Basic Premise of Water Law and Management in North Dakota :

 

### All waters of the State are owned by the State

 

### All waters managed and appropriated by a beneficial use doctrine

 

### Water management is by the ND State Engineer and NDSWC

 

### The ‘State Environmental Agency’ is the ND State Health Dept

 

### Follows the typical Conditional to Perfected water right path 

# PERMITTING / APPROPRIATION

## Priority of Beneficial Use:

 

## Domestic

 

## Municipal

 

## Livestock

 

## Irrigation

 

## Industrial

 

## Fish, Wildlife, Outdoor Recreation ...Only applies when competing permits are filed within 90 days of each other and water availability is in question ... 

# PERMITTING / APPROPRIATION

## Temporary Water Permit: (modified Dec. 2011)

 

## Made to the State Engineer

 

## Issued for a 12 month period

 

## Conversion of Ag/Irrigation (non

- flood) to Industrial

 

## Based on average annual use of water

 

## Must be metered

 

## Must be reported

 

## Issued year to year

 

## Does not create a water right

 

## A public comment period be made part of the process starting in 2013 

# PERMITTING / APPROPRIATION

## From the Federal Perspective : Surface Water Applicability

 

## Any alteration of the channel (dredging, excavation , intake works)

---- requires a regulatory permit (Section 10 and/or 404)

 

## Within the Reservoir

--- (or along the free flowing river with Federal land ownership)

--- requires real estate access easements/permits 

# PERMITTING / APPROPRIATION

### ‘ 

# There is really only one truly “plentiful” and reasonably stable source of unappropriated water in the state, and that is the Missouri River. All smaller rivers are nearly fully appropriated. Most of the state’s good quality ground water is found ... in the eastern, central and northern portions of the state .’ Water Resource Report 49, NDSWC

# ABUNDANT SUPPLY OF WATER

 

# 2500 new wells drilled per year

 

# 4 million gallons of frac water needed per well

 

# = 10 billion gallons or 1.3 billion cu - ft

 

# Lake Sakakawea at elevation1807 (lowest level in 50 years of operation in 2007) = 210,600 acres in size, or 9.2 billion square feet

 

# 1.3 billion cu

- ft / 9.2 billion sq - ft = 0.14 ft or 1.7 inch

 

# 12 years to fully develop the Bakken = 

# 20 inches

 

# Current elevation of Lake Sakakawea is 1836 (which is also the long term avg) = 300,000 acres Move towards pipelines

 Push for increased reuse and recycling

 Drawbacks are cost and very limited reuse percentages (20

- 40%)

 Movement towards independent closed and semi

- closed

- loop systems

 Increased environmental scrutiny regarding hydraulic fracturing

 Safe Drinking Water Act (SDWA)

 Underground Injection Control Program (UIC)

 New ND regulations went into effect in 2012

 Allow fresh water ponds for frac water 

# GROWING TRENDS Continued shift to shale development

– will only fuel greater water demand

 No slowdown expected in the Bakken in the near - term (15

- 20 years possibly)

 Bakken drilling will remain extremely water
- intensive

 Current water practices must shift due to:

 Regulatory environment

 Cost/impacts of trucking

 Technology/Treatment 

# KEY CONCLUSIONS