DCN: SGE00 625 

# Sanitized Site Visit Report
Southwestern Energy Fayetteville Shale Operations

March 30 , 2015DCN: SGE00 6 25 i TABLE OF CONTENTS

Page

1.0 I NTRODUCTION

................................ ................................ ................................ ........ 1

2.0 B ACKGROUND AND O BJECTIVES

................................ ................................ .............. 1

3.0 C OMPANY B ACKGROUND

................................ ................................ ......................... 2

4.0 O VERVIEW OF SWN F AYETTEVILLE O PERATIONS

................................ ................... 3

4.1 Well Development

................................ ................................ ...................... 4

4.1.1 Permitting

................................ ................................ ........................ 5

4.1.2 Water Sources

................................ ................................ ................. 5

4.1.3 Drilling

................................ ................................ ............................ 6

4.1.4 Hydraulic Fracturing

................................ ................................ ....... 6

4.1.5 Flowback

................................ ................................ ......................... 7

4.1.6 Production

................................ ................................ ....................... 7

4.2 Waste Management and Disposal Practices

................................ ................ 8

4.2.1 Transportation

................................ ................................ ................. 8

4.2.2 Direct Reuse

................................ ................................ .................... 9

4.2.3 Wastewater Treatment for Discharge

................................ ............. 9

4.2.4 Underground Injec tion

................................ ................................ .. 11

4.2.5 Other Potential Management Options

................................ ........... 11

5.0 S OUTHWESTERN S ITES V ISITED

................................ ................................ ............. 12

5.1 SWN Training Facility

– Damascus SOTC

................................ .............. 13

5.2 Fracturing Site

- Green Bay Well pad

................................ ....................... 15

5.3 Flowback Site

- Charles Hall Well Pad

................................ .................... 18

5.4 Judsonia Centralized Wastewater Treatment Facility

............................... 22

A PPENDIX A L IST O F P ARTICIPANTS ON THE C ITRUS S ITE V ISIT

................................ .............. 27

A PPENDIX B P

OWER P

OINT P RES ENTATION OF A LL S ITE V ISIT P ICTURES

.............................. 29

A PPENDIX C D OCUMENTS R ECEIVED FROM SWN

................................ ................................ ..... 30DCN: SGE00 6 25 ii LIST OF FIGURES
Page

Figure 4

- 1. Map of SWN’s Fayetteville Producing Wells, Wastewater Treatment Facilities, and

Disposal Wells

................................ ................................ ................................ ......... 4

Figure 5

- 1. Map of Sites Visited by EPA

................................ ................................ ...................... 13

Figure 5

- 2. Cross Section of a Typical SWN Fayetteville Well Casing

................................ ........ 14

Figure 5

- 3. Horizontal Separator at Damascus Training Facility

................................ .................. 14

Figure 5

- 4. Vertical Separator at Damascus Traini ng Facility

................................ ...................... 15

Figure 5

- 5. Reuse Fracturing tanks (left) and Reserve Pit (right) at Green Bay Hydraulic

Fracturing Site

................................ ................................ ................................ ........ 16

Figure 5

- 6. Fracturing Base Fluid Holding Tanks (left), Ecosphere Ozone T reatment Unit (right) 17

Figure 5

- 7. Pump Truck at Green Bay Hydraulic Fracturing Site

................................ ................. 17

Figure 5

- 8. Wellhead (left) and Sand Separator (right) at Charles Hall Well pad

......................... 18

Figure 5

- 9. Four Corrosion Inhibitor Tanks at Charles Hall Well pad

................................ .......... 19

Figure 5

- 10. Water/gas Separators (right) and Gas Collection Lines (bottom left corner)

........... 20

Figure 5

- 11. Fracturing Tan ks at Charles Hall Well Pad

................................ ............................... 21

Figure 5

- 12. Produced Water Tanks at Charles Hall Well Pad

................................ ..................... 21

Figure 5

- 13. Lined Reserve Pit at Charles Hall Well pad

................................ .............................. 22

Figure 5

- 14. U nloading Bays at Judsonia Centralized Waste Treatment Facility

......................... 23

Figure 5

- 15. Sedimentation Ponds (front) and Impoundment (rear) at Judsonia Centralized Waste

Treatment Facility

................................ ................................ ................................ .. 24

Figure 5

- 16. P urestream ’s IGF Treatment Unit at SWN’s Judsonia Treatment Facility

............... 24

Figure 5

- 17. Purestream ’s AVARAs MVR Unit at SWN’s Judsonia Treatment Facility

............. 25DCN: SGE00 6 25 iii LIST OF TABLES

Page

Table 3

- 1. SWN 2010 Active Well Counts by Basin and Formation

................................ .............. 3

Table 4

- 1. SWN Fayetteville Wells Drilled Overtime and Costs

................................ .................... 4

Table 4

- 2. Summary of Existing Purestream Installments

................................ ............................ 11

Table A

- 1. List of Attendees

................................ ................................ ................................ .......... 28DCN: SGE00 6 25 1

1.0 I NTRODUCTION

On September 12 and 13

, 2013

, t he U.S. Environmental Protection Agency (EPA) met with Southwestern Energy (SWN ) and visited sites in the Fayetteville Shale Play in Arkansas

. These sites included:

 Damascus Safety Operations & Training Center ;

 Charles Hall Well P ad ;

 Green Bay Hydraulic Fracturing Well Site ; and

 Judsonia Centralized Waste Treatment Facility

. Meeting participants are listed below. Contact inform ation is included in Appendix A. Appendix B provides a photo log from the site visit and Appendix C provides documents received from SWN before and after the site visit.

U.S. EPA Office of Water, Office of Science and Technology

, Engineering and Anal ysis
Division

Lis a Biddle
Karen Milam Jesse Pritts

U.S. EPA Region 6
Maria Okpala

E astern R esearch G roup, Inc

. (ERG) (EPA Contractor)

Sarah Hays Brent Ruminski

Southwestern Energy

Thomas Alexander, Vice President

– Health, Safety & Environmental Jim Bol ander, Senior Vice President

– Resource Development Peter Fyfe, Senior Facilities Engineer Roy Hartstein, Vice President

– Strategic Solutions Mark Mazock, Manger

– Water Team Sean McKaren

– Health, Safety & Environmental Doug Melton, Sp ecial Project Manag er

2.0 B ACKGROUND AND O BJECTIVES

The SWN site visit was the sixth in a series of site visits that the EPA plans for this industry. Prior to site visit s , the EPA planned to view a range of unconventional oil and gas extraction operations and wastewater treatme nt operations that demonstrate a variety of treatment options.
The purpose of the SWN site visit was to collect background information on the
unconventional oil and gas extraction wastewater treatment industry and observe wastewater treatment operations. To initiate site visits, the EPA reviewed information about unconventional oil and gas operators and their wastewater management practices. During this review, the EPADCN: SGE00 6 25 2

identified SWN as a major operator of shale gas extraction wastewater for treatment, act ive in the Fayetteville Shale Play.
During the SWN Fayetteville Shale site visit, the EPA viewed a range of shale gas operations that demonstrate a variety of production and wastewater management options, including reuse, centralized waste treatment (CWT), hydraulic fracturing, and gas production at a well pad

. Tom Alexander , Vice President

– Health, Safety & Environmental, a nd Jim Bolander,
Senior Vice President

– Resource Development, primarily led the discussion of the company’s Fayetteville operations and the site tour

. Duke Sochalski of Purestream 1 , contractor to SWN

, led the tour through the Judsonia treatment facility , one of three locations (active and pending) that SWN uses for wastewater treatment . Mr. Sochalski provided information specific to th e treatment unit. The remainder of this report summarizes the site visit :

 Section 3.0 provides company background information on SWN;

 Section 4.0 provides an overview of SWN’s Fayetteville operations; and

 Section 5.0 provides sit e

- specific information on the s i t es EPA visited.

3.0 C OMPANY B ACKGROUND

SWN , based in Houston, Texas, is the fifth largest oil and gas operator in the United States. The company includes approximately 1,200 empl oyees, 360 of whom have offices in SWN’s Conway, Arkansas office building. SWN owns and operates unconventional oil and gas wells in the states below ( shale formations /basins are noted parenthetically ) :

 Arkansas ( Fayetteville Shale Formation ) ;

 Pennsylvani

a ( Marcellus Shale Formation ) ;

 East Texas ( Overton F ield ) ; and

 Oklahoma (Arkoma Basin)

.

SWN continues to explore unconventional formations in the following states (shale formations/basins are noted parenthetically where they are known):

 Utah (Paradox Bas in) ;

 Colorado (Denver

- Julesburg Basin 2 ) ;

 Southern Arkansas and Louisiana (Brown Dense Formation 3 ) ; and

 New Brunswick, Canada

.

Table 3

- 1 provides additional information for each basin and formation in which SWN is active as of 2013

, including net acreage and active number of wells . SWN is most active in the Faye tteville Shale Play of Arkansas.

1 Purestream is a wastewater treatment vendor that offer s services to the unconventional oil and gas industry.

2 SWN owns less than 100,000 acres and is in the early exploration stages in the Denver

- Julesburg (DJ) Basin.

3 The Brown Dense Formation is a liquids rich formation. SWN is drilling approximately 8 we lls per year that are producing oil at 150

- 200 bbl per day. SWN noted that to be economical, these wells need to produce approximately 400 barrels of oil per day.DCN: SGE00 6 25 3 Table 3

- 1 . SWN 2010 Active Well Counts by Basin and Formation

States Basin Formation Net Acreage (acres) Number of

Active Wells
AR Arkoma Fayetteville 913,500 3,500 a

PA Appalachian Marcellus 337,300 129 OK, AR Arkoma White Oak 114,287 Unknown
CO Denver Julesburg Niobrara 302,000 1

TX, LA Unknown Lower Smakcover
Brown Dense 507,000 0

New Brunswick (Canada) Unknown Unknown 2,500,000 0

TX East Texa s Overton 49,300 Unknown

a

— SWN noted that BHP and XTO are two other active shale play operators in the Fayetteville Shale formation and that BHP bought land from Chesapeake Energy

.

4.0 O VERVIEW OF SWN F AYETTEVILLE O PERATIONS

The site visit focused on SWN’s operations in the Fayetteville Shale Play where SWN is furthest along in the formation development process . This level of development has allowed them to implement a proactive appro ach to wastewater management in this play

. SWN noted that
the ir wastewater management infrastructure in other plays, such as the Marcellus, is not as developed as their Fayetteville infrastructure. However, SWN plans to move Fayetteville personnel to the M arcellus Shale to start evaluating wastewater management options in more detail. Source: AOGC, 2013 (well locations); SWN ( CWTs and disposal well ); Map generated u sing ArcG IS Figure 4

- 1 shows a map of SWN’s active producing wells, wastewater treatment facilities, and saltwater disposal facility in the Faye tteville Shale Play. SWN noted that they strategically located their three CWTs to minimize trucking for disposal. Assuming that gas prices stabilize at approximately $5 per MCF as anticipated by the United States Energy Information Administration (EIA), S WN projects that they will continue to drill in the Fayetteville for another 10 to 15 years at a rate of 400 to 500 wells per year until the formation is fully developed.DCN: SGE00 6 25 4

Source: AOGC, 2013 (well locations); SWN ( CWTs and disposal well ); Map generated u sing ArcG IS Figure 4

- 1 . Map of SWN ’s Fayetteville Producing Wells, Wastewater Treatment Facilities, and Disposal Wells

SWN’s Fayetteville operations are described in more detail in the following subsections :

 W ell development ( e.g., drilling, fracturing) ; and

 Wastewater management and disposal.

4.1 Well Development

Table 4

- 1 shows the number of Fayetteville wells that SWN drilled per year from 2007 to 2012

, including the well cost per year and operating costs in dollars per thousand cubic feet of natural gas. SWN noted that although the average well capital cost decreased over the years, the number of drilling days per well has in creased dramatically and the average lateral length has
incre ased. In general, S WN has a [REDACTED] percent hurdle rate (i.e., rate of return) on all investments.

Table 4

- 1 . SWN Fayetteville Wells Drilled Overtime and Costs

Year Wells Drilled Per

Year Well Capital Cost

(millions dollars) Long Term Costs (dollars per MCF)
2007 255 2.9 2.38
2008 329 3.0 1.44
2009 446 2.9 0.80
2010 553 2.8 1.04
2011 560 2.8 1.11
2012 493 2.5 2.53

MCF

- Thousand cubic feet of natural gas.

The well development steps discussed include p ermitting, water acquisition, drilling, hydraulic fracturing, flowback, and production. These steps are described in the following subsections.DCN: SGE00 6 25 5

4.1.1 Permitting

The Arkansas Oil and Gas Commission (AOGC) and Arkansas Department of Environmental Quality (ADEQ) ar e r esponsible for permitting and oversight of shale gas operations in Arkansas. Specifically, AOGC is responsible for permitting oil and gas wells in
Arkansas while ADEQ is responsible for waste management

.
SWN noted that land application of oil and gas w astewater has limited use in Arkansas and that it is difficult to get permitting from ADEQ. SWN stated that farmers have inquired about using water from SWN’s operations. SWN explained that t he farmers haven’t required any specific water quality , but noted that shallow groundwater produced from well drilling is likely the most applicable water for land application in Arkansas. To

- date, SWN has not land applied any of their oil and gas wastewater.

SWN builds storage reserve pits to store wastewater for reus e according to Arkansas Oil and Gas Commission (AOGC) Rule B17. 4

4.1.2 Water Sources

SWN has constructed its own freshwater pond s, in accordance with Army Corp of Engineers requirements

, to provide collected surface water as freshwater for hydraulic fracturing operations. The average size of SWN’s freshwater ponds ranges from 400,000 to 500,000 barrels

. In 2009, SWN added a pipeline transport to deliver freshwater to well pads for fracturing.

SWN also entered into an agreement with a local municipal water auth ority to obtain water during droughts. However, SWN has found this to be an uneconomical water source and does not plan to continue the agreement once the contract is up . SWN typically stores freshwater in unlined ponds. However, to stor e the treated mu nic ipal wastewater, SWN must adhere to additional ADEQ requirements, including obtain ing a NPDES permit and treat ing the water (e.g., remove chlorine).

Another water source option that SWN has considered is to convert a producing well into a brackish water well . When a producing well is no longer economical and is located directly above or below a water bearing formation, SWN can recomplete the well into the water bearing formation to produce brackish water. SWN noted that this recompletion requires a permit ting change.

SWN also commented on water source options in other shale formations. In northern Louisiana, operators are using pulp discharges as a water source. In the Marcellus Shale, SWN is researching using acid mine drainage (AMD) to recharge watershe ds from which they are removing water for fracture jobs. For example, SWN proposed treating AMD at the source and discharging it into the local river and then withdrawing the same volume downstream from the

4 Arkansas Oil and Gas Commission’s General Rules and Regulations, Rule B

- 17: Well Drilling P its and Completion Pits Requirements (as of February 8, 2013). Available online at: http://www.aogc.state.ar.us/onlinedata/forms/rules%20and%20regulations.pdfDCN: SGE00 6 25 6

same river at a location closer to where they are fracturing wells. This process would create a watershed balance and would reduce require transportation costs.

4.1.3 Drilling

SWN typically drills six to eight wells per pad. SWN owns and operates 14 drilling rigs in the Fayetteville and 4 drilling rigs in the Marcellus. However, they also use third party drilling service providers. In addition, they always use third party service providers to cement their wells during drilling. SWN is currently monitoring 8 sputter rigs (6 in the Fayetteville Shale and 2 in th e Marcellus Shale) and 10 re

- entries (8 in the Fayetteville Shale and 2 in the Marcellus Shale). Sputter rigs are smaller rigs that are used to air drill wells the first several hundred feet. Re

- entry rigs are larger and are used to drill the remaining ver tical section and eventually the horizontal leg of the well using water

- or oil

- based drilling fluid.

SWN has an Operation Support Center (OSC) located in their Conway, AR office that monitors all drilling operations for the company. The key responsibilit ies of the OSC are to optimize drilling and mitigate problems, monitor real

- time collision avoidance data, manage gas lag, and populate and maintain SWN’s well trajectory database. The OSC has been monitoring Fayetteville Sh ale operations since March 2010, and the Marcellus Shale operations were brought online in 2012. SWN has seen improved drilling efficiency since implementing the
OSC

.
On the well drilling site, the well site supervisor also has access to similar data in the
field office as what is house d at th e OSC. The OSC provides continuous monitoring of the data during times when the supervisor needs to leave the field office to monitor on

- site operations, which typically occur s at least twice a day.

4.1.4 Hydraulic Fracturing

SWN owns and operates two h ydraulic fracturing “teams” to fracture wells. SWN also contracts out fracturing jobs to third party vendors such as Halliburton and Cal Frac. SWN indicated that they complete half of their fracture jobs themselves using these two teams and third

- parties c omplete the other half of the jobs.

SWN described an efficient method of fracturing called a zipper

- frac. This method allows SWN to fracturing two wells in the same length of time it would typically take to fracture a single well at a time. A zipper

- frac is a method of subsequently hydraulically fracturing two wells using the following repeated process for each fracture stage:

 Stage 1 of well 1 is perforated using the wire line.

 Stage 1 of well 1 is hydraulically fractured.

 While stage 1 well 1 is being fractured, stage 1 of well 2 is perforated using the wire line.

 After stage 1 well 1 fracture is complete it is plugged using the wire line to maintain pressure and fracturing of stage 1 well 2 commences.

 Process repeats until all stages are complete for b oth wells

.DCN: SGE00 6 25 7

The number of stages in a hydraulic fracture depends on the length of the horizontal leg. The average lateral drilled by SWN is 5,000 ft long (with a maximum of approximately 10,000 ft long) and SWN averages between 10 and 12 stages per well. T he average length of time to complete one stage of a fracture is between 2 and 3 hours. Each stage requires up to 15,000 barrels of fracturing fluid resulting in a total fracturing volume of approximately 12 0 ,000 to 130,000 barrels per well. SWN currently uses 35 percent reuse wastewater and 65 percent freshwater on average for fracturing fluid makeup, which allows SWN to reuse nearly 100 percent of the wastewater generated by previously fractured wells.

A typical well requires 3 million pounds of sand to fracture. SWN owns a sand plant in Little Rock, AR that provides sand for all of its hydraulic fracturing operations. SWN typically only adds two chemicals to the hydraulic fracturing fluid in the Fayetteville Shale: biocides and
friction reducers. On occ asion, SWN also adds a corrosion reduction chemical. SWN noted that as the fraction of reuse wastewater in the fracturing fluid increases, they must use larger volumes of chemicals to account for the higher TDS concentrations. To eliminate the need for bio cide, SWN uses Ecosphere , which is a company that offers chemical

- free wastewater treatment using

ozone t o eliminate bacteria and inhibit scaling. Ecosphere’s ozone treatment unit is run “on

- the

fly” with the fracturing process. The entire fracturing fluid volume is pumped through Ecosphere’s unit at 80 to 100 barrels per minute prior to the blending unit and pump trucks.

4.1.5 Flowback

After fracturing is complete the flowback process begins. The Fayetteville Shale is an
under

- pressure reservoir, meaning that gas will not flow on its own when the wellhead pressure is released to commence flowback. As a result, SWN must run small truck

- mounted compressors at the beginning of the flowback process to initiate flow of natural gas and water using artificial lift.

T ypically, 10 to 20 percent of the fracturing fluid volume returns to the surface during the flowback process. Most wells generate flowback at rates up to 1,000 to 1,100 barrels per day immediately after flowback commences. SWN stores flowback into lined re serve pits or 500 barrel fracturing tanks. SWN noted the following fracturing tank prices:

 Fracturing tanks with secondary containment built

- in (Bradley tank): $55 per day

 Fracturing tanks with separate secondary containment: $95 per day

These fracturing tanks are typically only used for the first two weeks until water is produced at a low enough rate that it can be handled in the above ground produced water tanks.

4.1.6 Production

During the production phase, SWN’s Fayetteville wells generate on average anyw here between 3.6 and 54.8 barrels of produced water per day. However, the cumulative average produced water rate is 10.3 barrels per day

. SWN approximated these volumes using water generation data for 2,305 wells that have been producing for 60 days or lon ger

. SWN estimated that between 25 and 30 percent of the totaled fracturing fluid volume injected will flowback to
the surface over the entire life of the well (includes flowback and produced water)

. SWN storesDCN: SGE00 6 25 8

produced water in above ground produced water tanks at all producing well sites. New sites have one or more 400 barrel tanks, while older sites have one or more 150 barrel tanks depending on how many wells are producing on the well pad. A typical SWN well pad includes six to eight wells.

SWN transpo rts produced gas to the Tennessee Gas P ipeline , a set of natural gas pipelines running through Arkansas among other locations. Ideally, SWN wants to keep an 80 psi line pressure at each producing well, which is monitored by SWN personnel in SWN’s Houston, Texas office. The Fayetteville Shale pr oduces dry gas consisting of approximately 97 percent methane, with the remaining 3 percent composed of primarily of inert gases, CO 2 , and
H 2 S.

4.2 Waste Management and Disposal Practices

As explained in Section 4.1.4 , SWN currently uses 35 percent reuse wastewater and 65 percent freshwater on average for fracturing fluid , which allow s SWN to reuse nearly 100 percent of the wastewater generated by previously fractured wells. The following sub sections provide more detailed information on SWN’s wastewater management practices in the Fayetteville Shale Play.

4.2.1 Transportation

SWN has a L

ogistics Operation Center (LOC) located in their Conway, AR office that monitors all transportation operations fo r the company. The LOC monitors the movement of sand, frac turing tanks, mud, casing/tubing, and water for all operations in the Fayetteville Shale and Marcellus Shale. The LOC database also houses information about available water sources
and maximum roadw ay loads. In order to minimize transportation, SWN tries to only handle the water once before it arrives at its final destination. Last year, SWN was able to increase efficiency, which they measure using the following parameters:

 Fewer miles driven by tru cks (SWN reduce d the total amount of transportation by 2,500 miles last year)

.

 Trucks filled to maximum capacity.

 Fewer trucks on the road.

The key responsibilities of the LOC are to provide the following types of data for all
SWN locations:

 Carrier Man

agement

– incident review, performance metrics

 Load Planning

– sand sourcing, weekly frac turing planning

 Dispatch

– production tanks, water transfers, field transfers

 Reporting

– load volume, truck capacity, mileage

 24 Hour Hotline

– staff 24 hour emergenc y hotline

The LOC tracks approximately 700 loads per day, with the following average quantities of loads based on 2012 data :DCN: SGE00 6 25 9

 Average flowback or freshwater load: 111 barrels per load

 Average produced water load: 90 barrels per load

 Average sand load: 48, 000 lbs/load

SWN contracts all trucking to third

- party entities and has seven dedicated carriers

. Dedicated carriers go through a bid process where they negotiate a rate. Tier 1 carriers have a set rate and they are guaranteed a set number of loads. Tier 2 carriers have a (higher) set rate and are not guaranteed as many loads . This allows for flexibility in the quantity of trucks needed at a given time. The water haulers that SWN uses have contract rates at approximately $80 to $90 per hour.
A third

- party entity, IS NetWorld, gathers health and safety information about each carrier for use in the bid process. Each third

- party truck has a QualCom satellite communication system installed that the LOC uses to locate each truck at any given moment.

SWN also u ses pipelines to transport freshwater water only . Typically, they use high pressure flex

- lines to move water above

- ground. SWN does a portion of the pipeline work in

house, but also contracts to third

- party entities. Depending on the particular need on

- sit e, pipelines may move freshwater or reuse water.

4.2.2 Direct Reuse

SWN ’s currently development rate in the Fayetteville Shale Play is 400 to 500 new wells

per year , which provides enough demand for fracturing water to enable SWN to reuse nearly 100 percent of their wastewater. Reuse involves transporting wastewater from the generating well to another location for temporary storage and then transporting it a second time to the next well that is to be fractured. Where possible, SWN tries to truck wastewater direc tly to the next hydraulic fracturing site for use in the fracture job, rather than transporting it to a treatment facility or other storage area.
SWN reported that they typically pay between [REDACTED] per barrel to reuse
wastewater direc tly without any t reatment. SWN provided a breakdown of this cost:

 Transportation : [REDACTED] per bbl (first move)

 Reserve pits, fracturing tanks, and auxiliaries: [REDACTED] per bbl

 Transportation [REDACTED] per bbl (second move)

 Freshwater cost offset: [REDACTED] per bbl

4.2.3 Wastewater Treatment for Discharge

Although SWN currently reuses all of their wastewater, they indicated that eventually

waste water volumes will exceed the water demand for new fracturing jobs

. As a result, SWN proactively obtained permits to treat and di scharge wastewater to prepare for a future need for wastewater disposal

. SWN has three permitted centralized waste treatment facilities described in more detail below. SWN is permitted to accept wastewater from other oil and gas operators at all three of t hese facilities. However, at the time of the site visit, SWN was not accepting wastewater from other operators . SWN continues to construct their facilities, ref ine their treatment systems, research additional t reatment options and negotiate contracts with other operators.DCN: SGE00 6 25 10

 Judsonia treatment facility : Thi s facility is currently operating a wastewater treatment system consisting of induced gas flotation (IGF) followed by mechanical vapor recompression (MVR) . The distilled wastewater is currently permitted fo r dischar ge under NPDES permit AR052051 but SWN is still making adjustments to the treatment system to meet their discharged limits. As a result, all distilled wastewater is currently being reused for fracturing. The EPA visited the Judsonia treatment faci lity during their site visit on September 1 2 , 2013. The
Judsonia treatment facility is discussed in more detail in Section 5.4 of this report.

 C leveland treatment facility : This facility is currently operating as a zero discharge facility. The facility does not currently have any treatment on

- site; it only has lined impoundments for storage of flowback and produced water from SWN wells. SWN is waiting to complete the Judsonia treatment facility to determine what type of treatment train to ins tall at the Cleveland facility. T he Cleveland treatment facility is currently permitted to discharge 4,000 barrels per day to surface water under NPDES permit AR0052175.

 Bee Branch (also referred to as Hartwick) treatment fa cility : This facility is not yet constructed, but is also permitted to discharge to surface water under NPDES permit AR0052086. The facility’s current purpose is to facilitate reuse similar to the Cleveland treatment facility

.

SWN reported that they expec t treatment costs to be between [REDACTED] per barrel. SWN provided a breakdown of this cost:

 Transportation: [REDACTED] per bbl

 Treatment via evaporation/condensation: [REDACTED]

 Brine disposal: [REDACTED ] 5

For the two facilities that do not yet have tr eatment systems installed, SWN continues to research additional treatment technologies including: re verse osmosi s, capacitative deionization, crystallization, biological treatment, and other treatment technologies

. SWN is also considering
small scale treat ment options that would allow operations to scale up or down according to variations in wastewater volumes.

SWN contracted with Purestream , a wastewater treatment vendor that offers services to the oil and gas industry and has already installed a treatment system, to construct the Judsonia
site

. 6 Purestream offers a mechanical vapor recompression (MVR) treatment system called the AVRA. Table 4

- 2 shows all of Purestream ’s current unconventional oil and gas deployment
locations with the A VRA unit s including formation, state, operator name, and influent TDS according to Purestream ’s website.

5 [REDAC TED]

6 More information on Purestream is available online at: http:// p urestream technology.com/

.DCN: SGE00 6 25 11 Table 4

- 2 . Summary of Existing Purestream Installments

Formation /Basin State Operator a Influent TDS (mg/L)
Marcellus PA, W V PDC Mountaineer, SM Energy Unknown
Colorado River Basin (CBM) UT Unknown 17,700

Bakken ND Whiting Oil and Gas 198,000 Eagle Ford TX Unknown 15,000

- 40,000
Permian Basin TX Unknown 40,000

- 120,000
Woodford Shale OK Unkn own 15,000

- 40,000
Granite Wash OK Unknown 15,000

- 40,000 Fayetteville AR SWN 20,000

- 35,000

a

— Purestream may have commercial operations in some formations/basins. Mg/L

— Milligrams per liter.
Source: Purestream Website 7

4.2.4 Underground Injection

SWN owns several C lass II underground injection for disposal well s in the Fayetteville Shale Play. At the time of the site visit, SWN wa s only actively operating two of these wells at their Griffin Disposal Facility, which were formerly used for hydrocarbon dispos al. SWN’s remaining underground injection for disposal wells are shut in or abandoned.

Source: AOGC, 2013 (well locations); SWN ( CWTs and disposal well ); Map generated u sing
ArcG IS Figure 4

- 1 shows the location of the Griffin Disposal Facility. Griffin Mountain #1 is permitted by AOGC for 20,000 barrels per day at 975 ps ig and Griffin Mountain #2 is permitted by AOGC for 20,000 barrels per day at 1,041 psig. However, on a daily basis, SWN noted that they only inject a very limited volume of wastewater due to their 100 percent reuse operation

.

SWN reported that they spen d approximately [REDACTED] per barrel to reuse wastewater directly without any treatment. SWN also provided a breakdown of this cost:

 Transportation: [REDACTED] per bbl

 Injection for disposal market rate: [REDACTED]

SWN noted that they had previously hau led Fayetteville waste water to Oklahoma for underground injection disposal . However, for the last few years, SWN has managed all of its flowback and produced water in Arkansas. SWN stated that the cost of disposing of wastewater

at Oklahoma Class II underg round injection wells was between $5 per barrel and $6 per barrel

.

4.2.5 Other Potential Management Options

SWN discussed with EPA several other wastewater management options that they are considering

, including decentralized treatment at the well pad level an d discharging to POTWs.

 Decentralized Treatment : SWN stated that centralized waste treatment (CWT) is currently the best treatment option for their oil and gas wastewater . However, in

7 Available online at: http:// Purestream technology.com/

.DCN: SGE00 6 25 12 the future they would like to implement treatment at the well pad with flexibility to increase/decrease capacity based on wastewater volumes. For example new wells will need higher treatment capacity than older wells. Well pad t reatment would reduce trucking

, and in turn increase SWN’s water management efficiency.

SWN is c onsidering a treatment system offered by Epiphany Solar Water Systems , located in Pittsburgh, PA . Epiphany ’ s technology consist s of a solar concentrator that heats a working fluid , which is then used in a thin film evaporator to crystallize the influent wa stewater . The wastewater is converted to a distilled water stream and a solid waste stream

. The treatment system is relatively small and would only be designed to treat sufficient number of barrels per day to

treat produced water generated by a single well pad. 8 SWN plans to conduct a pilot scale test of a solar concentrator at a Fayetteville well pad sometime by the end of 2013. Potential issues that may arise with the well pad treatment option include p ermitting for the treatment units and compliance with the effluent limitations guidelines and standards (ELGs) for the onshore subcategory of the oil and gas extraction point source category.

 D ischarge to POTWs : SWN stated that they are not sending untreated wastewater
to POTWs . T hey assumed that Region 6 would not approve POTW discharges due to the historic problems with POTWs accepting shale gas wastewater in the
Marcellus Shale. However, SWN also noted that if permissible under current or future regulations, SWN would consider transporting the evaporated water at the Judsonia treatment facility to a POTW. This would eliminate the need for SWN to refine their treatment system to meet direct discharge standards, which includes reducing ammonia and increasing mineral content. SWN suggested that a POTW
would be able to handle both of these issues.

SWN indicated that setting a pre

- treatment standard would help to determine what treatment technologies they should be pursuing. SWN suggested that EPA should consider setting POTW capacity thresholds (e.g., majors/minors, minimum capacity) for POTWs accepting SGE wastewater to ensure tha t they are large enough to effectively treat the unconventional oil and gas wastewater. In additional, SWN noted that because water quality changes significantly in different geographic areas, using surrogate test parameters such as WETT could provide nati onally comparable data without requiring testing of specific pollutants of concern, which would vary with location. SWN also suggested requiring recurring water quality test results at certain stages during permitting (e.g., PA DEP’s 26R form ).

5.0 S OUTHWESTE RN S ITES V ISI TED

This section describes the four sites that the EPA visited during the September 12 tour , which
include:

8 More information on Epiphany’s wastewater treatment system for unconventional wastewater is available online

at: http: //transtechenergy.org/wp

- content/uploads/2012/11/Ron_Pettengill_TransTech

- Epiphany

- SWS

- 8

- minute

presentation

- for

- publish.pdf

.DCN: SGE00 6 25 13

 SWN Training Facility

– Damascus Safety Operations & Training Center

 Fracturing Site

– Green Bay Well pad

 Production Site

– Charles Hal l Well pad

 Judsonia Centralized Waste Treatment Facility
Figure 5

- 1 shows these sites along with the SWN’s regional office in Conway, Arkansas and producing wells.

Source: AOGC, 2013 (well locations); SWN (sites visited) ; Map genera ted using ArcG IS

Figure 5

- 1 . Map of Sites Visited by EPA

5.1 SWN Training Facility

– Damascus SOTC

SWN’s Damascus Safety Operations and Training Center (SOTC) includes the following facilities:

 Training facilit y;

 Laboratory; and

 Equipment storage.

SWN’s training facility houses an “off

- line” full scale setup of an active producing well site. The setup includes both old equipment (used prior to 2010) and new equipment to allow new personnel to be up

- to

- speed on old producing well sites as well as recently drilled wells.

Figure 5

- 2 shows a cross section of a typical SWN well casing for their Fayetteville Wells. It consists of an outer diameter casing which would be filled with cement up to the inner diameter. The inner diameter casing would be filled with cement up to the well casing. The perforated tubing is housed inside the well casing and is not cemented to allow water and gas to flow between the perforated tubing and the well casing.DCN: SGE00 6 25 14 Figure 5

- 2 . Cross S ection of a Typical SWN Fayetteville Well Casing

The training facility also included a cross section view of the different types of gas/water separators

. Figure 5

- 3 shows a photo of the old, horizontal gas/water separator , which involved gas venting and was not as reliable for high flow rates during flowback . The average cost of the old, horizontal separator was approximately $10,000 per unit. The new method, al so called a “green completion”, uses a vertical separator

. Figure 5

- 4 shows a cross section of a vertical gas/water separat or which does not vent gas and is more reliable for high flow rates in the early part of flowback . The aver age cost of the new, vertical separator is approximately $37,000 per
unit.

Figure 5

- 3

. Horizontal Separator at Damascus Training FacilityDCN: SGE00 6 25 15 Figure 5

- 4 . Vert ical Separator at Damascus Training Facility

The water that collects in the bottom of the separator is not released from the unit in a continuous flow. Instead it is collected in the bottom of the tank allowing the water level to rise.
Once the water level reaches a certain level in the tank it is released from the tank in batches. There are three methods for measuring the water level and releasing it out of the separator and into a nearby fracturing tank:

1. Guided wave

– measures water height and dumps wate r once it reaches a certain height. 2. Float

– measures water level and dumps water once it reaches a certain level. 3. Vibrating fork

– vibrations of forks mounted at different heights on the tank indicate when to dump water. The vibrating fork is used on all n ew vertical separator installations.

5.2 Fracturing Site

- Green Bay Well pad

The Gr een Bay wellhead contained three wells that were already fractured and two wells that were being completed at the time of the visit . The wells that were previously fractured are covered with orange metal housing to protect them during the hy draulic fracturing of the other wells. EPA observed the service provider performing hydraulic fractu ring , plugging, andDCN: SGE00 6 25 16

perforating. Third

- party entity, CalFrac, was conducting the fracture . Once completed, this well will have a total of 16 stages.

The fracturing job on the day of the site visit wa s using 65% freshwater and 35% reuse water for fracture fluid. The reuse water was transported overland from the fracturing tanks (i.e., 8

– 500 bbl fracturing tanks) via black poly

- pipelines to the mixing tank. Shallow groundwater produced during the well drilling was contained in a single

- lined reserve pit on

- site and was also reused as a portion of the fracture fluid. Freshwater was transported overland from one of SWN’s freshwater ponds located approximately two miles away via black poly

- pipelines to the mixing
tank. Figure 5

- 5 shows the fracturing tanks, reserve pit, and overland black poly

- pipelines

tr ansporting reuse fluid to the well pad.

Figure 5

- 5 . Reuse Fracturing tanks (left) and Reserve Pit (right) at Green Bay Hydraulic Fracturing Site

From the pumps shown in Figure 5

- 5 , the mixture of reuse and freshwater is pumped to the Ecosphere ozone treatment unit. The Ecosphere ozone treatment unit destroys all bacteria in the fracturing base fluid to eliminate the need for biocide use in fracturing. From here, the fracturing bas e fluid is pumped to the blue fracturing base fluid holding tanks.DCN: SGE00 6 25 17

Figure 5

- 6 . Fracturing Base Fluid Holding Tanks (left), Ecosphere Ozone Treatment Unit (right)

From the blue fracturing base fluid holdin g tanks, the fluid is pumped to a blender where sand and chemicals are added to create the final fracture fluid. The fracturing fluid is pumped out of the blender through pump trucks that pressurize the fluid prior to being pumped downhole. Figure 5

- 7 shows one of the large pump trucks onsite. SWN noted that an average fracture requires 15 (2,000 to 2,500 horsepower each) pumps pumping 8 to 10 barrels per minute. The ideal fracture rate is 100 barrels per minute.

Figure 5

- 7 . Pump Truck at Green Bay Hydraulic Fracturing SiteDCN: SGE00 6 25 18

After one stage is fractured it is plugged using a wire line

. Next, the service provider perforate s the next stage using explosives . The perforations protrude th rough the casing and into the formation about one foot in order to guide the fractures outward when the fracturing fluid is injected during fracturing . The plugging and perforation takes approximately 2 hours to complete. During the perforations, SWN opera tes under radio silence (i.e., no cell phones or other signals) due to the potential for radio waves to interfere with the perforations.

A fuel truck is located on

- site at all times during the fracturing job. The truck has secondary containment around it to catch potential leaks and spills. A tractor trailer is brought into the site to refill the fuel truck daily.

In 2011, SWN began installing dust control units . All SWN personnel working on or around the sand tanks are required to wear respirators. SWN a lso noted that they are participating in a study with NIOSH regarding sand tank dust and safety procedures.

5.3 Flowback Site

- Charles Hall Well Pad

The EPA visited the Charles Hall well pad on September 1 2 , 2013 and observed six producing wells that had bee n fractured approximately 2 months prior to our visit and have been flowing for approximately one and a half months (see Figure 5

- 8 ). SWN noted that these wells should produce gas for the next 30 to 40 years.
Flowback water and ga s travel to the well head and first into a sand separator shown on the right side of Figure 5

- 8 . The separated sand is collected in a rectangular waste bin on the well pad and periodically emptied via truck. The remaining water/ga s is piped to the water/gas separators on the other side of the well pad.

Figure 5

- 8 . Wellhead (left) and Sand Separator (right) at Charles Hall Well pad

Figure 5

- 9 shows the w hite , plastic tanks containing corrosion inhibitor chemicals were located next to each of the six wellheads on

- site. Corrosion inhibitor chemicals were being fedDCN: SGE00 6 25 19

down each well bore to minimize corrosion. The pipes at the bottom of Figure 5

- 9 are carrying the flowback water and natural gas mixture from the sand separators to the water/gas separators on the other side of the well pad.

Figure 5

- 9 . Four Corrosion Inhibitor Tanks at Charles Hall Well pad

From the sand separators, the water/gas mixture flows to the water/gas separators shown in Figure 5

- 10 . After the water/gas mixture enters each separator, the gas flows to the top , into
the collection pipeline show n in the bottom left corner of Figure 5

- 10 . Using these closed separators total eliminates the need to flare gases generated by the wells during the completion and flowback phases

. Separated flowback water exits near the bottom of the separator.DCN: SGE00 6 25 20

Figure 5

- 10 . Water/gas Separators (right) and Gas Collection Line s (bottom left corner)

At the time of the site visit, the flowback was being routed to the blue fracturing tanks shown in th

e background of Figure 5

- 10

. Figure 5

- 11 provides a close up of the fracturing tanks. The average wastewater flow rate at the time of the site visit was 250 barrels per day (10 barrels per hour). SWN note d that eventually as the well enters the production phase and the wastewater flow rates decrease and level out, they will remove the blue fracturing tanks from the well pad and route the produced water to the three permanent produced water tanks shown in Figure 5

- 12

. Each produced water tank has a capacity of 400 barrels.DCN: SGE00 6 25 21 Figure 5

- 11 . Fracturing Tanks at Charles Hall Well Pad

Figure 5

- 12 . Produced Water Tanks at Charles Hall Well Pad

SWB takes chlorides and pH samples from the flowback and produced water. SWN indicated that the chloride and TDS content was fairly constant in the produced water over time. SWN checked the most recent p H and TDS measurements of the produced water while EPA was on site and reported the following:

 pH: 7.0 SU

 TDS: 35,000 mg/L SWN noted that the TDS reading during EPA’s visit erred on the high side and that the average TDS values for Fayetteville Shale prod uced water are between 20,000 mg/L and 25,000 mg/L

.

The Charles Hall well pad also contained a double

- lined reserve pit that received fluids during the drilling process. Figure 5

- 13 shows this reserve pit. The fluid stored in thi s pit included drill cuttings, shallow groundwater produced during well drilling, and stormwater. SWN produces approximately 2,000 bbl of groundwater per well drilled. SWN also noted that the reserve pit has a leak detection system installed. These reserve pits are temporary and are typically removed within one year of fracturing. When the reserve pit is no longer in use, SWN will pump it dry, stabilize the solids with fly ash and dispose of them in a landfill, fill in the pit,
and re

- grade the entire site.
A compressor was also located on site, but was not operating. The compressor had previously been used to artificially lift the well to initiate flowback water and natural gas flow; however, the formation was now capable of flowing gas freely so the compre ssor w as no longer needed.DCN: SGE00 6 25 22 Figure 5

- 13 . Lined Reserve Pit at Charles Hall Well pad

5.4 Judsonia Centralized Wastewater Treatment Facility

SWN’s Judsonia treatment facility is located at 4301 Highway 157N in Judsonia, Arkansas and has been operating since February 2013. The facility uses Purestream ’s induced gas flotation (IGF) and mechanical vapor recompression (MVR) treatment technologies to treat oil and gas wastewater from nearby SWN wells. 9 The Judsonia t reatment facility is permitted to discharge up to 4,000 barrels per day (0.168 MGD) under NPDES permit AR0052051. However, at the time of the site visit, the facility had not yet discharged. The facility’s influent capacity is 2,500 bbl per day with an ave rage influent TDS of 20,000 mg/L. With the relatively low TDS compared to other shale formations, the evaporator is able to recover approximately 80 percent of the influent wastewater as distilled wastewater. Typical brine production is between 400
barrel s per day and 600 barrels per day. SWN’s contract with Purestream requires SWN to provide Purestream with a certain quantity (barrels per day) of wastewater as long as Purestream continues to meet SWN’s discharge permit limits. Wastewater from the impoundm ent is treated through the following step

wise processes:

1. Wastewater is hauled to the facility in trucks and delivered using six unloading bays constructed with inlets that drain to treatment unit (see Fig ure 5

- 14 ).

2. Wastewater is gravity fed through an overland pipe from the unloading bays into two sedimentation basins prior to going into the impoundment. The sedimentation ponds remove solids from the water as well as skimming oil and grease off the surface of the water. The impoundment’s maximum capacity is 250,000 bbl and it is aerated for odor control (see Figure 5

- 15 ).

9 More information on Purestream is available online at: http://purestreamtechno logy.com/

.DCN: SGE00 6 25 23

3. The wastewater is treated using induced gas flotation (IGF) to remove suspended solids (SS) and oils, w hich are collected and pumped to the brine tank. Figure
5

- 16 shows one of the IGF treatment units.
4. The wastewater is filtered through a 50 micron bag filter to remove any remaining
SS.
5. The pretreated wastewater is evaporated and then condensed using MVR to create a distillate and concentrated brine

. Figure 5

- 17 shows one of the MVR units.

6. The distillate stream is stored in the verification tanks (holding tanks) and a

concen trated brine stream that goes to the brine tank prior to disposal.

7. Treated effluent from the facility is similarly hauled away from the facility using three loading bays with identical drain systems that recycle effluent water to the treatment unit.

Fig ure 5

- 14 . Unloading Bays at Judsonia Centralized Waste Treatment FacilityDCN: SGE00 6 25 24

Figure 5

- 15 . Sedimentation Ponds (front) and Impoundment (rear) at Judsonia Centrali zed Waste Treatment Facility

Figure 5

- 16

. Purestream ’s IGF Treatment Unit at SWN’s Judsonia Treatment FacilityDCN: SGE00 6 25 25

Figure 5

- 17

. Purestream ’s AVARAs MVR Unit at SWN’s Judsonia Treatment Facility

The two MVR treatment units are powered by electricity that is available for purchase for between $0.06 per kilowatt hour (kWh) and $0.08 per kWh. The MVR treatment units are capable of running off of natural gas, but SWN chooses to use electricity because it is available to them at a low cost. SWN reported that in July 2013, the Judsonia treatment facility used 8.3 kWh per barrel of influent wastewater treated. The current wastewater treatment cost at the Judsonia facility is $5.50 per barrel and the capital costs to build the facility were approximately $1.5M.

While the EPA was visiting the Judsonia facility, the effluent TDS concentration in the distillate stream was 34.81 mg/L and the pH was 8.34 SU. The average TDS con centration in the brine stream is 200,000 mg/L. SWN currently disposes of brine by using it as kill fluid, using it as an additive for drilling fluid, or hauling it to a landfill. SWN is looking into other options for disposing of brine (e.g., blending int o fracturing fluids for reuse; substituting for potassium chloride ( KCl ) , agricultural uses).

SWN is capable of sampling from each of the verification tanks that contain the treated distillate stream. The Judsonia NPDES permit sets limits for the following parameters:

 Carbo naceous Biochemical Oxygen Demand (CBOD 5 )

 Total Suspended Solids (TSS)

 Ammonia Nitrogen (NH 3

- N)

 Dissolved Oxygen (DO)DCN: SGE00 6 25 26

 Chlorides

 Sulfates

 Total Dissolved Solids (TDS)

 Oil & Grease (O&G)

 Arsenic, Total Recoverable (Ar)

 Cadmium, Total Recoverable (Cd)

 Chromi um III, Total Recoverable (Cr 3 )

 Chromium (VI) (Cr 6 )

 Chromium, Total Recoverable (Cr)

 Cobalt, Total Recoverable (Co)

 Copper, Total Recoverable (Cu)

 Lead, Total Recoverable (Pb)

 Mercury, Total Recoverable (Hg)

 Nickel, Total Recoverable (Ni)

 Silver, Total Re coverable (Ag)

 Tin, Total Recoverable (Sn)

 Zinc, Total Recoverable (Zn)

 Cyanide, Total Recoverable (CN)

 Bis (2

- ethylhexyl) phthalate

 Butylbenzyl phthalate

 Carbazole

 n

- Decane

 Fluoranthene

 n

- Octadecane

 Radium

- 226 (dissolved)

 Strontium

- 90 (dissolved)

 Beta radiation (gross)

 pH

 Chronic WET Testing

The facility is having difficulties complying with the NPDES permit limits for ammonia and methanol. SWN suggested the following potential options to try to obtain compliance with these permit limits:

 Run the dist illate stream through crushed limestone prior to discharge to lower the pH and slightly raise the TDS concentrations.

 Send treated water to POTW to treat ammonia and methanol before discharge.DCN: SGE00 6 25 27 A PPENDIX A
L IST O F P ARTICIPANTS ON THE SWN S ITE V ISITDCN: SGE00 6 25 28 Table A

- 1. List of Attendees

First Name Organization Phone Number Email

Lisa Biddle U.S. EPA, Engineer (202) 566

- 0350 Biddle.Lisa@epa.gov

Karen Milam U.S. EPA, Economist (202) 56 4

- 9752 Milam.Karen@epa.gov

Jesse Pritts U.S. EPA, Engineer (202) 566

- 1038 Pritts .Jesse@epa.gov

Maria Okpala U.S. EPA

, Region 6 (214) 665

- 3152 Okpala.Maria@epa.gov

Thomas Alexander SWN, Vice President

– Health, Safety & Environmental (HS&E) (281) 618

- 7366

Cell: (497) 409

- 6495 Tom_Alexander@swn.com

James Bolander Senior Vice Presiden t

– Resource Development (281) 618

- 4789 Jim_Bolander@swn.com

Peter Fyfe Senior Facilities Engineer (281) 618

- 6147

Cell: (281) 382

- 1082 Peter_Fyfe@swn.com

Roy Hartstein Vice President

– Strategic
Solutions (281) 618

- 4875

Cell: (281) 433

- 3252 Roy_Hartstein @swn.com

Mark Mazock Manger

– Water Team NA NA

Sean McKaren Team Member, HS&E NA NA

Doug Melton Special Project Manager (Geologist) (501) 548

- 6620 Doug_Melton@swn.com

Sarah Hays ERG, Environmental Engineer (703) 633

- 1661 Sarah.Hays@erg.com

Brent Rumin ski ERG

, Energy Engineer (703) 633

- 1701 Brent.Ruminski @erg.comDCN: SGE00 6 25 29 A PPENDIX B P OWER P

OINT P RES ENTATION OF A LL S ITE V ISIT P ICTURES

[REDACTED]DCN: SGE00 6 25 30 A PPENDIX C
D OCUMENTS R ECEIVED FROM SWN

[REDACTED]