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### 6th Annual Low Cost Produced Water Management Marcellus and Utica 2016

March 30

- 31, 2016

- Pittsburgh, Pennsylvania

DAY 1 Comparing Case Studies and Case Water Treatment Technologies for Re

- Use & Disposal, with

an Integrated Focus On Water Sharing to Generate New Revenue Streams in A Cost

Constrained Environment

1. CHAIR’S OPENING REMARKS
Ian Cameron, Consulting Engineer, Regen Innovative Technologies

 A key question to answer during the conference is how to reuse Marcellus wastewater in Utica wells.

2. KEYNOTE 1: MARCELLUS WATER MANAGEMENT PROGRAM Hear How Marcellus Operators Are Reconfiguring Their Treatment

- For

- Reuse and
Treatment

- For

- Disposal Strategy to Manage the Changing Pace of the Industry

Marshall Roberts , Director of CONVEY Water Systems, CONS OL Energy

 C ONSOL E nergy: vehicle for water related technologies and champion of the reuse of mine water

 Market Cap= $2.7 billion and 2015 Total Revenue = $3.1billion

 The key question is what to do with all of the water and how to reduce capital

 Asset managers do not believe that water costs are that high

 Water management should always be less than 10% of the total cost of the well. Our goal is also to reuse 90% of water

.

 In 2015

- 2016: Gas production increased by 10% and water also increased by 72%.
E veryone started reuse initiative s, and then everyone put the wells on a hold. With limited reuse, water just fills up storage.

 Water has been CONSOL’s biggest liability: found new initiatives with CSSD standards: maximized water recycling and developed a ground water protection plan. Started focusing on closed loop drilling and well casing designs. Closely m onitor groundwater and disposal.

 Water Chemist ry is the determining factor in ability to reuse water

 General consensus is that Sulfates must be < 100 ppm for reuse

 100% reuse achieved by using Marcellus water in Marcellus well

 CONSOL considers Flowback to be 0 to 60 days, believe this is the general

c onsensus

 Suggests that operators should put pressure on treatment vendors to achieve reuse chemistry

- Produced water contains barium

- Sulfates must be <100 ppm . This number is debatable. Other operators have done it differently.2 - Barium sulfates inhibit well production

 Marcellus Shale

- 100% Reuse achieved

- Marcellus to Marcellus only

- Switch from anionic to cationic FR.

 Utica Shale

- 80% reuse achieved . Haven’t been able to put 100% Marcellus into Utica yet.

- Utica to Utica only

- Cationic FR only

 Flow back process

o 0

- 60 days in the well is flowback water. After that the water follows the same delineation curve as the well.

o Associated with process not water type

o Process allows well to flow back fluids, sand, and solids

o Prior to the well flowing hydrocarbons

o All flowback water is produced water

 Produced water

- All water that is returned to the surface through a well borehole

- Composed of frac water as well as natural formation water

- Follows similar production curves as gas

- Water quality and quantity vary by play

 Reu se

- Reuse in low activity period

- Marcellus water is able to be used for reuse: Low TSS after initial flow back (~ 160 ppm) Centralized impoundment storage AST storage Piped or trucked to pads

 Benefits:

- Reduction in volume of wastewater and reduced truck traffic

- Less freshwater needed for fracturing

- Reduced costs to operators

 Treatment

- Safety, environmental ly compliant , and economic feasibility

- S ock filtration, s ettling ponds, thermal distillation, reve rse osmosis, chemical/ electro precipitation

- Haven’t had the need to treat pre pad because it is cheaper to dispose via disposal wells than to treat.

 Disadvantages:

- Expensive pilot studies

- Early majority benefit most

- Little incentive

- Marketplace partnerships3

 Operator Partnering

- Sharing produced water: Sharing agreements in place Provide produced water to reduce disposal Accept produced water to reduced fresh water needs Assist other operators to help manage their tank and CI levels

- Asset Collabora tion: Reduce truck traffic Reduces capital Increases storage capacity Grow industry network.

3. KEYNOTE 2: UTICA WATER MANAGEMENT STRATEGY
Hear How a Utica Operator Is Reconfiguring Its Water Management Strategy in The
Context of the Low Price Environment
Eddy Biehl , President & CEO, Stone Bridge Operating

 Biggest concern: how do we manage water use, reuse, recycling and disposal when we don’t have any money?

 Safety is very important; it is a dangerous industry

 The industry experiences cycles of booms and b ust, but can’t let that impact safety

 As a small operator, Stone Bridge has had to be creative with water management and

reuse

- Water storage is extremely important, but there are challenges in winter weather

areas

. Winterizing the facilities such as heating the plumbing, moving the product and adding chemicals to lower freezing point, costs money.

- Tanks are getting cheaper but still can run up quite a tab in a cashless environment.

- In

- ground impoundments

- a tricky issue and on the way out for all but fresh

water.

 All of these issues add to the cost of operation

 Coordinated use is the key:

- Continuous but reduced pace operations in

- house

- Alternative uses inside the company

- Shared use between companies

 In duced seismicity could be a concern from a regulatory perspective (over

- regulation)

 The industry is cyclical

– Play Driven, Technology, Price, Political, and Macro

Economic (Booms and Busts) 1. Play

- driven booms: examples are spindle top on the Texas gulf coa st and the original Drake well at Titusville among many others. 2. Technology

- driven booms: engineering advances and geological advances 3. Price

- Driven booms: local factors and global economy4 4. Politically driven booms: regional actions, government actions. 5. Mac ro

- Economic (Booms and Busts): recessions and booms, monetary policy and the like.

 These five types of booms have happened and will likely happen again

– it’s all a cycle : Horizontal shale boom was a result of all five factors

 We should learn from the pas t to help predict the future

 Talked about how the company accounted for water types and proximity to injection wells to create its water reuse plan.

 Store it until we need it

 Slowed tempo of operations and more careful about when completions /re

completio ns are being planned and costs of operations in general

 In ground impoundments : limited availability

 Tanks are expensive , especially when idle for long periods between jobs.

 How we coordinate their use is the key

 Alternative uses in the company: displacing fluids into other wells to help control environmental and safety exposure

 Reduced pace operations can be a solution

 Try to figure out alternate use between companies

 A dded problem of moving product in the winter: producing wells don’t recognize the change in weather and continue to give up water even when we don’t need it

 Induced seismicity: a lot of appointees are coming through with emphasis on O klahoma events and northeast Texas events.

 Earthquake map: Youngstown area: to date only few wells are monitored

 Epicenters are located away from injection well sites

 Bust right now: very unpredictable at times

 Play driven, technology, price, political and macro

- economic types of oil booms determine if we will be in a boom or bust

 Play driven booms can impact locally

 Technology booms: rotary drilling in 20 th century

 Geological advances: seismic in all its evolution and revolutions. 2D or 3D seismic

 Price driven booms: local vs. global factor. Interstate prices in the mid

- 70s led to drilling booms for Tex as and Ohio for “self

- help gas ” . Supply shortages can drive global economy

 We had elements of all five factors

 Prices hit all

- time highs

 Be careful of what we are injecting into and what we’re doing for disposal operations. Diffuse disposal operations ra ther than concentrat e them

.

 Think of material balance concept: looks for ways to reduce transportation costs

 Using fluids other than water: no water is good ; we just need to improve the ways we are using it

 Straight gas and nitrogen fracs to reduce colum n of water but it’s expensive. Vertical wells cost money.5

4. WATER TREATMENT: POST

- BREAK BREFING Treatment of Produced Water for Reuse or Discharge: North American Case Study

Lnsp "Naggs" Nagghappan, Senior Business Developer, Oil & Gas, Veolia Water Technologies

 Veolia : The only company in the world able to cover the entire range of environmental solutions. $30.3 billion and 174,000 employees.

 Minimize truck traffic and carbon emissions

 Can we make freshwater out of this wastewater?

 We aren’t drilling or frac experts, we are just trying to get the impurities out of the water and make it more cost

- effective.

 600 trucks of produced water we receive in a day ; handl ing the variability is a challenge as well

 Oxidation for post treatment: predominantly to remove benzene, 90% by MBBR. To get to less than 10 ppm. Use ultra violet radiation and hydrogen peroxide

 At 60,000 barrels a day. We are doing an on

- site landfill for radioactive salt.

 Client needs:

- Minimize dependency on deep wells

- Cost

- effective solution for treatment of produced water to discharge quality

- R obust technology to treat produced water highly variable in quality (30,000 ppm to 300,000 ppm)

- A reliable solution with high availability and long

- term certainty

- Reduce truck tr affic and carbon emissions

- Ability to recover valuable resources from produced water

- A commercial solution that will minimize long

- term risk

- Wanted a 97

- 98% uptime availability

 Treatment technologies

- Necessity for Gathering & Equalization: 600 trucks/day unloading the feed water for treatment. High variability in feed water with field

- wide truck deliveries.

- Necessity for Pretreatment: To control scaling issues due to specific ions in feed water, to control fouling issues due to oil and solids, to control corrosion issues due to specific ions in feed water.

- Necessity for Thermal Technology: High feed water TDS

- need for crystallization solution, necessity to achieve Zero Liquid Waste to minimize disposal costs

- Necessity for Post Treatment: High concentrati on of dissolved gases in feed water (ammonia, benzene, VOC’s)

- Residuals Management: Large quantities of sludge and salt

- offsite vs. onsite landfill.

 Bench

- scale Validation6 - Confirmed Treatment Efficiency: High quality treated water meeting target specifi cation

- Validated Operating Costs: Chemicals and power demand, sludge and salt generation

- Validated the Ability to Produce By

- Product Salts: Sodium chloride and calcium chloride characterization

- Validated Scaling and Corrosion Characteristics: Identified pr etreatment contaminant removal requirements

- Determined Solids Settling Characteristics: Optimum sizing of clarification and dewatering equipment

 Treatment Approach:

 Pretreatment:

- Goals are truck unloading and ion removal

- 600 trucks/day are monitored at the unloading facility.

- Equalization: manage influent variability and flow variations

- Clarification: particulates removal using solids

- contact reactor clarification technology.

- System is fully covered and gas blanketed to prevent emissions

 Crystallization:

- Process goal is the removal of dissolved solids

- Removal of dissolved solids and zero Liquid Waste treatment objective

- CoLD® Crystallization Technology: Operates at low temperature, deep vacuum and mixed salts generation suitable for onsite landfill, Ability to recover by

products (NaCl, CaCl2), Effective desalination of produced water

- Key Benefit: Lower OPEX costs than conventional approach, no calcium removal ahead of the crystallizer, Requires less pretreatment than co nventional approach, Less sludge generation than conventional approach.

 Post

- Treatment:

- Process Goal: Ammonia, benzene, VOC’s and solids removal, Neutral, buffered effluent.

- AnoxKaldnes® MBBR Technology: Hybas® biofilm technology, VOC, Nitrification, De

- n itrification, Ammonia removal.7 - Actiflo® Technology: High

- rate clarification, Ballast flocculation technology, Suspended solids removal

- Advanced Oxidation: UV H2O2 Chemistry, OH radical based oxidation and Benzene removal

- Key Benefit: No liquid waste, low OPEX costs, Make treated water suitable for discharge.

 Benefits: Treatment for discharge quality

- Reliable and Economical Solution with “High Certainty”

- Minimizes Dependency on Deep Well Injection and Associated Costs

- Reduces Truck Traffic for Disposal and Carbon Emissions

- Enhances Trucking Logistics with Location Central to Acreage

- Minimizes Fresh Water Withdrawal from State Waterways

- Ability to Recover Resources from Produced Water (fresh water, salt)

- An Environmentally Sound and Sustainable Solution.

5. NETWORKING BREAK SPONSOR’S COMMENTS Designated Inter and Intra Jurisdiction Discussion Areas for Making Water Sharing a Reality Across Eastern Pennsylvania, West Virginia, Ohio

James Milleson, CEO, OhioAcres4u

 Lo oks at the golden triangle as repurpose, reu se, recycle water

 Represent land and mineral industry

- represent and educate the farmers and land

owners

 Presentation not provided

6. MAKING A CASE FOR WATER SHARING Water Sharing: Assessing How E&Ps Can Coordinate Frac Jobs and Put Infrastructure
in Place to Make Water Sharing a Reality and Deliver Cost Savings

Josh Adler, CEO, Source Water

 Sourcing, recycling, transporting, and disposing of water for energy production

 Help companies by reducing operating costs : hauling and disposal

 Help service companies t o help s ell what they are selling: win

- win solution through efficiency

 Reduce cost with zero capital and negative overhead

 Operators choose to dispose of their produced water when the ir tanks are either full or overflowing, in hopes of preventing inevitabl e costs. Doesn’t matter when you do it

, because it is probably going to cost the same. It’s all about planning to optimize for the lowest price

, then go when it’s needed

 Today price is always the same

, but then think about (for example) why airports are participating in expedia and kayak? Why should trucks do it? It’s good for them

- short term fixed capacity “perishable inventory”

- best solution is to maximize8 utilization

, not selling it for highest price. That’s what sourcewater does for

m arketplace.

 Water should be disposed when it’s the cheapest to do so. Marketplaces such as sourcewater provide an inventory and low marginal costs

, and are a way for customers to react to prices all at one time.

 Sourcewater is helpful in cutting water man agement costs such as trucking and disposal

, and also eliminating the fear of contract losses.

 You don’t call all the airlines in making an optimal decision, you go on the internet and explore your options and optimize a decision given your criteria

- in a few minutes.

 Parallel comparison through internet is the best option these days . W hen all the buyer s are in one place, it’s easier to market your products and give people an opportunity to explore their options. Use price to change demand through a n online marketplace.

 Give companies and treatment facilities an opportunity to sell their water, or market their technologies, or water disposal to sell. Companies who want water

, or disposal wells that need to find water.

 I nsure your supply chain agains t disruption and have a potential to get paid to sell reuse water. Hauling waters and disposal service companies should want to be on our website if their business goals are to maximize sales and find fair value for it. We provide the real supply and demand through marketplace.

 Inter

- operator recycling: especially in northeast PA, this is a big deal. If you can’t use your reuse water because you don’t have any more completio ns, where is the water going to go? Most efficient way is to go to marketplace and haul it to another

company that needs completion: perks of better logistics and participating in the marketplace.

 Bringing down cost structure means more wells for everybod y.

 Truck bidding marketplace: we let you send out bids for competitive prices every day. Potential to save money and provide business for truckers who might have had last minute cancellations that day.

7. WATER SHARING: MULTI

- STAKEHOLDER PANEL Assessing Po tential Opportunities, Hurdles, Legal Challenges and Presenting Solutions

to Expedite Agreements Between Operators and Utilize the Market Place for Water Sharing

Moderator : Josh Adler, CEO, Source Water Panelist: Peter Dorrins, President, Junex Panelist: Chad Bruinooge, Integrated Operations Center Tech, Anadarko Petroleum Panelist: Rick Hall, Senior HSE Representative, Anadarko Petroleum Panelist: Olivia Desser, Production Engineer, Anadarko Petroleum9

 Intended Outcome at The End of the Panel: Practical St eps for Streamlining Efforts to Make Water Sharing a Reality in 2016

1. C had Bruinooge : eliminate wasted management time making phone calls to find out who has what

, where

, and how much.

o Reduce disposal and completion costs by recycling produced water between nearby operators. Anadarko doesn’t have its own water management team to handle water logistics , and it ’ s time consuming to contact vendors. We see value in having one place to access markets.

o Automate competitive bidding . T rucking rates are down over 30%

, so we are paying a lot more than last year. Costs add up quickly if you have 20

- 40 trucks at one time on the road. Marketplace provides us with an opportunity to reduce such costs.

o We like to eliminate wasted take

- or pay

- contract costs

o We have 110

- mile s of fresh water pipeline, 7 pump station s with about 12,000 Horsepower between all of them

, and significant numbers of impoundments and tanks . Currently, we haven’t run th e pump station s in over 2 years , and

s ome of our infrastructure is somewhat stranded in our acreage . B ut it’d be good for the producers who don’t want to spend a lot of capital to put those kind of systems in to take advantage of our infrastructure. For our infr astructure to be active again , we need co nsumers who are willing to pay.

o M anagement doesn’t want the water business to make profits

, but we are open to charging what it costs and a small utilization fee that it costs to access those facilities.

o Our trucking approved list shrunk by a lot last year. Anadarko is down to only 4 vendors that are okay to use on daily basis. There is no competition because we need them all. We don’t try to punish them because we need them to keep the wells flowing and k eep the tanks empty

, so having access to more vendors is essential. From our position it is a lot easier to force the trucking companies to join marketplace

, because if they want to make money, they have to do it.
2. Olivia Desser

o We are down to using crysta llization plant and our broker for water. We are not the only ones operating in northeast

, and there are other operators using such third part y broker systems. To avoid getting into contracts and securing our options

, and get a good price with vendors whil e offset ting any additional costs: marketplace helps us lessen the burden and we are able to come up with a better argument. It’s like put your extra tickets on stub hub and they are not going to waste

.

 2015 PA Quick facts:

- 31MM bbl. Produced Water

- 90.6% recycled in new completions

- 8.12% SWD

- 1.26% to NPDES facility10

 500 wells needed in 2016 to sustain this produced water model

- 60,000 bbl. produced water per well

- Operator transfer agreements.

- The table represents average dataset from 2,025 Anadarko samples taken between Q1 2014 and Q4 2015:

o 2014 produced water handling:

- Frac: 1,530,321 bbl. (99%)

- 3 rd party recycling: 9,000 bbl. (1%)

o 2015 produced water handling:

- Frac: 455,340 bbl. (49%)

- 3 rd party recycling: 467,625 bbl. (51%)

o 2016 produced water handlin g:

- Frac: 90,250 bbl. (11%)

- 3 rd party recycling: 721,950 bbl. (89%)

o We have seen resistance by waste treatment facilities to accepting their contracts with such phrases in writing.

o Make resource trading not about relationships but about what is best for the business. Instead of calling my “friends” to look for an outlet, I will only look at what’s best for Anadarko in terms of who is willing to help me pay the most. Sourcewater is a great resource

, but to make it more successful we need more cooperation.

o We have to have a legal agreement to protect us from all arrows that could hit us. Many operators have various views that their legal departments feel strongly about

, and every risk is a high risk and should be talked about. Working through that and getti ng everyone on the same page to establish such agreements is not an easy task. There isn’t a master blanket that works for

everyone , so it’s challenging. It’s easier to see through source water and stay eye to eye on establishing such agreements.

o Transpo rtation efficiencies:

- Scheduling interface w/predictive analysis that is not a spreadsheet (Gray Matter)11 - Dispatch & form an “ engine application ” which is a smart enabled device, which means that trucking companies have tablets and smart phones and they

ar e able to see and accept loads in real time without having to make phone calls. (Gray Matter)

- Reporting optimization w/handoff to vendors

- Emergency rail option (Ohio SWD)

o Long

- term evaluation:

- Thermal technology: Onsite vs centralized

- UIC potential

- Waste generation: Solids vs Slurry

- Transportation: Rail vs Trucking

- Capital expense vs Operating expense

o Treatment levels

- Level 1

– Minimal Treatment

– Reuse: Total Suspended Solids Removal, TSS

– Physical Chemical Treatment and / or Filtration

- Level 2

– Specific Ion Removal + TSS Removal

- Reuse Target removal of ions like Iron, Calcium, Barium, Strontium, Metals

Physical Chemical Treatment

- Level 3

– Meet Discharge limits: Must remove Total Dissolved Solids and ammonia ( all ions), Discharge typically less than 5 00 ppm TDS, Typically Accomplished through (depends on influent TDS)

- Pretreatment + Membrane

- Pretreatment + Membrane + Evaporation

- Pretreatment + Membrane + Evaporation/Crystallization

- Pretreatment + Crystallization

o Treatment levels

- Capital and Operating cost increase as influent brine concentration increases

- Larger the size the lower the cost/ bbl. to treat 5000 bpd, 12,000 bpd, 30,000 bpd, Due to economies of scale (Capital and O&M)

- Technology dependent upon effluent disposal requirements and options, reu se

- and influent brine concentration

- Pretreatment requirements may vary with each option : Minimize TENORM effect

- ‘Clean’ effluent from each can meet discharge or reuse requirements

o Methods for Life Cycle ‘Cost’ Minimization

- Single Owner to Merchant to Conso rtium to blends of each

- Size does matter, the larger the facility the lower the lifecycle cost (estimated cost over 10 yrs. including capital recovery, disposal and all O&M cost) 5000 bpd

– $11/

bbl. 12,000 bpd

- $9/

bbl. 30,000 bpd

- $6/

bbl.

- Merchant facili ties

- sell excess capacity to offset investment12 - Location

- Minimize trucking cost near a large user of high purity water (power producer)

– value of high purity water can be greater than $1/ bbl.

- Reuse/Resale

- By

- products, salts, other liqu id products

– equ ate to several $/ bbl.

- On

- site landfill

- Solids disposal is the single largest operating cost Est $2.50/ bbl. or more

- On

- site landfill can reduce solids disposal cost by 50 to 70%

3. Peter Dorrins

o Q: We all like to work with companies that have comparable standards. Is the minimum standard thing already built in?

o Josh answered: source water lets you set standards. You can search by setting criteria or you can expand you research but our system is able to help you with that. Options are open. Everyone has sa me issues every time no matter which source you are on: when does your liability end and other guy’s liability starts. It’s risky but if you can’t take risks you shoul dn’t be in the business at all.

o Q: are their ratings or performance reviews like amazon?

o We haven’t extensively developed that area yet but it is a good source that we pl an on working at in the future.

o Q: truck bidding marketplace is a great idea but how has th e buying been from the haulers?

o We just launched it. We are getting a lot of haulers calling in but we are hoping to have an improved interest. Wen haulers don’t know who the vendors are, they can’t be biased in terms of who is calling. They only enlist competitive prices. Pricing wi ll be hourly and by per barrel.

o Q: any hurdles in terms of accurate reporting and any legal issues?

o Generally, PA DEP wants to encourage water sharing between operators. Yeah sometimes things don’t get reported the right way e.g. the source of water, but as far as sharing goes, paper work is pretty straight fo rward and standard paper work

o Q: is there a mechanism to illustrate water quality?

o When you create a water source listing, you do a scan of water quality test report but its voluntary but you know people are going to bring it up at one point so you might a s well be up

- front about it.

o Q: what thoughts have been given to future and if the business goes down, what guarantee do we have that it won’t go back to the old days?

o Hopefully the demand will stay. Before it was out there and you just couldn’t find it b ut no we are hoping it will always stay. In 2012, when everything was ripping, we were told that Anadarko wasn’t to help anyone but that has changed now. We reach out to other operators and we care about what other13 operators are doing. With younger folks i n the industry, we have realized that

working together is the way to go.

o Q: who will house the data of chemistry of water when it is moved from partner to partner? If water is taken and tested and if it is not what the data says, who is responsible?

o Whoeve r the lister of the source provides is responsible to hold data. We function like a matchmaker, contracts are set between the buyer and the seller though.

8. MOBILE TREATMENT VS. CENTRALIZED PERMANENT STRUCTURE Evaluating The Extent to Which Mobile Treatment Is the Most Cost

- Effective Way of Treatment Vs. Centralized Facilities for Different Water Chemistries and Production
Rates
Mark Patton, VP Sales & Marketing, Hydrozonix

 Mobile vs. Central is not necessarily an either

- or question; the two can work together

 A combination of these options can work for each individual operation; everyone has different needs

 Don’t necessarily need a lot of treatment depending on the use of the produced water

 Have to consider advantages and disadvantages of traditional centralized treatment and low cost mobile treatment

 Hydrozonix described their details of treatment

 Hydrozonix uses real time testing and monitoring to check their system

 Bacterial growth usually occurs after the extraction wastewater rea ches the surface

 Different ways to look at it: depends on equipment capacity

 Relocatable asset, costs are higher.

 Where are you concentrating your drilling? And are you moving a lot? Help decide what kinds of structure you want.

 An evolution in terms of w hat people want in terms of water quality, at one

- point people only used filtration but now we have coagulation, oxidation etc. question is what do we really need?

 Aeration:

o Iron is significantly reduced

o Used in working tanks and ground surface tanks

o Use oxygen in the air to oxidize iron

o Phase 1: submersible or floating. Submersible is better for oxidation and solid control

o Phase 2: supplemental oxygen. If water quality is really poor , and aeration will take a long time, supplemental oxygen helps in ge tting better results quicker.

o Phase 3: filtration: targets TSS, bacteria etc. pay attention to bag fits and filter quality. Look at TSS goals and micron size of the bag you are using. Take14 pieces of filter cloth with a syringe and collect solids and do a simple field particle size filtration. It will tell you what micron size to use. Looking at turbidity goals once you know what micron to use.

o Phase 4: oxidation. Sulfides and bacteria are targeted. Primarily run on ozone. Eliminates the need for scale inh ibitors. If oxidizing the water, reducers get eliminated (if you are using a breaker)

o Typically, monitor tanks throughout the process. Use air as an oxidant and chloride from water.

o We recirculate tanks and we don’t charge for that because we are not addi ng any additional chemicals.

o We do a lot of real time testing to ensure the system is working. We wanted to remove the interference we see in produce water. Idea is we want to create certainty

. W e need to understand how water quality is changing over time. Have special sample pre procedures , such as field methods developed in conjunction with manufacturers of the equipment we use

.
o Stage by stage testing for some clients to see how water quality is changing at every step

o We look at effluent and influent of the system and look at flow back for bacteria testing. It’s important to do a third part lab testing but also real time monitoring.

o Centralized facilities have their advantages but with mobile fa cilities we don’t have to commit and can place tanks wherever you want to.

o Regardless of what option you choose, make sure to incorporate real time testing.

o Typically flow back we look at a target of less than 100. At a certain point in time, everything gets flushed out called flow back period: for bacteria, we don’t use PCR. With ATP it’s all living organisms, we haven’t seen good oil field PCR method yet.

9. EVAPORATION CONSIDERATIONS Reviewing A Common Problem of Evaporation Removing Precious Water in F rac Water Storage Applications

Ian Cameron, Consulting Engineer, Regen Innovative Technologies

 Problem: evaporation is a loss of fluid and we always see a loss of precious water too.

 Mechanical lids are costly, inefficient and could create an unsafe situa tion

 Wind speed is only a mild 3 mph (5 km/hr.)

 Storage tank outside diameter is 160 feet (48.8m) and Capacity = 41,000 barrels (6,500

m 3 ) of fluid

 Loss of water due to evaporation is 209 barrels/day (33.3 m3 /day)

 10,558,212 btu/ hr. is the energy lost in this environment in

keeping the water at a desired frac temperature of 68 o F (20 o C)15

The rate of evaporated water can be expressed as: g = (25+19 v) A (x s - x)

g is amount of evaporated water in kg/ hr. v is velocity of air above the water surface in m/s A is water surface area in m 2

x s is humidity ratio in saturated air at the same temp as the water surface x is humidity ratio in air

 Cost and logistics required to maintain heat and fluid volumes are high : especially cold weather

 The solution

- Heated water temp sustained at 114 o F (45.5 o C)

- Outside air temp of

- 4 o F (

- 20.0 o C)

- Liquid covering stops evaporation within seconds

- Liquid product: easily applied in minutes with or without fluid preset in the container. It floats uniformly on top of the fluids and fluid levels are easily measured from outside the container w/ layer of covering as little as 0.01” (0.25mm). HydroShield is resilient in windy conditions.

 Advantages

- Frac fluid friendly: Does not impact any the performance of the frac f luid chemistry.

- Significantly reduces Aerobic Bacteria: Reduces biocide requirements to maintain frac fluid compatibility and lessens concerns about injected fluids altering the reservoir fluid properties.

- Does not create a “confined space” environment bet ween tank fluid top and below mechanical cover for improved safety

- No need to enter the tank thereby eliminating concerns of foot traffic causing the liner to be punctured or damaged

- Conforms to any shape of container or pit

- No waste product to be “trimmed off” for disposal that would be associated with
that of a mechanical cover.

- No need to clean

- after

- use like a mechanical cover

- No residual moisture / mold with a mechanical cover resulting from evaporated H2O

- No on

- site mixing costs

- If other fluids are added after this liquid cover is in place, they are simply pumped into the container and the cover “re

- heals” itself within seconds after the agitation has stopped

.

- No freeze/thaw concerns

 Results

- After only 2 hours of applying the new liquid covering16 Evap oration was reduced by up to 95%

- Evaporation is influenced by: relative humidity ratio (air to water), wind speed, cross sectional area exposed

 Cost savings

- Savings due to just reduction of frac water loss: Evaporation of water is now only 10 barrels/day (1.7 m 3 /day) 5% vs. 209 barrels/day (33.3 m 3 /day)

10. PANEL DISCUSSION & WOR KSHOP LED BY ANADARKO PETROLEUM How Are Operators Going to Sus tain Production as Base Assets?

Olivia Desser, Production Engineer, Anadarko Petroleum

 Allocation of capital: base

- sometimes gets a bad rep. we are able to deliver with efficiency and have been able to have a sound impact within last 5 years.

 Water management strategies have drastically changed form year after year.

 2014: 99% produced wat er was recycle d in our own fracs.

 2015: 49% was recycled at ours and 51% through 3 rd party recycling and other brokers

 2016 projections: they want 89% of water to be recycled at 3 rd part operators. 11% is one frac that they have on their plate

 Produced wa ter is difficult because it has extremely high TDS and chlorides. For discharge, we are still left with concentrated brine and solids after treatment.

 Risks: in 2015, PA waste data reports showed that 31MM barrels were handled and 90% foun d home in comple tion and 8% SWD facilities and 1.26% NPDES facilities.

 For 2016 we need 500 well completions to sustain this produced water model.

Chad Bruinooge, Integrated Operations Center Tech, Anadarko Petroleum

 Graph with frac focus data: count of wells with 2010

- 2015 number of fracs per year. Red= average total of water used per frac in barrel. 39% decline between 2014

- 2015.

 DEP Waste report map: cumulative water production for 2015. “sinks”

- true outlet to get rid of the water such as SWD and NPDES discharge facilities (circles). Number of fracs per county with 2010 on the bottom and 2015 at the top. PA is split in two regions (northeast and southwest).

 Northeast: 55% decline in amount of fracs in 2014

- 201 5. Creates a problem because we produce 10 million barrels of production water per year. Only one sink is available for the entire northeast: a crystallization facility that has a capacity of 1.6 million barrels only. So the rest of it goes into a differen t operator’s frac.

 Southwest: activity has remained pretty flat and increased over time. Easy access to sharing markets. Access is a luxury because NE looks at $20/ barrel.

 We can control transport efficiencies. Used excel spreadsheets to accomplish disp atch. Partnered with grey matter solutions: digital manifest program: provides a scheduling program that’s not just a spreadsheet and made it easy to navigate. Able to send the schedule out to trucks and have them assign a truck to those loads without send ing emails or phone calls. No paper handwriting, no wrong data.17

 After trucking vendors handle the load, final piece is the reporting optimization. After load is completed, it ’ s stored on the cloud and is pulled back on real time for analysis and streamlin es billing process.

 Emergency access to salt water disposal option in Ohio via railways . Now we can access those markets for much less than $20/ barrel using the rail program.

 We have thermal technologies. Solids vs. slurry issue, what fits better with transportation avenues to accomplish goals? We want to incorporate rail vs. trucking debate. We want to include railroads they can move more tonnage for less

 Capital vs. operational expenses. We are being asked to s pend less capital and spend more on the operating LOE side.

Adam Locke, Director of Technology, Tetra Tech

 Need to minimize transportation: one of the solutions

 UIC wells: class 2 D wells. Around since 1974. We are about 180,000 wells deep now and 30,000 are class 2d

 We have about 300, most of them are in Ohio.

 UIC wells are part of the development process.

 Our UIC wells are not regional currently. We are looking at what can be done to permit them closer to where the water is being generated.

 Ohio DNR h as primacy for permitting so does WV and PA.

 PA: we have most of them in western but we are generating most water in eastern side. Only 2 wells are commercial and only 1 is active. We have formations in PA that are injection and we don’t have easy to targ et blanket formations.

 Oriskany trend in PA: map shows green areas where it is fractured. Reservoir map so there are areas that are depleted.

 Case study: bear lake properties: brine disposal wells. They were converted and they are depleted medina gas wel l field. They have up to 20 more wells that can be converted as well.

 How to find a well? Look at the geological data. Drilling depth, don’t water out existing formations, injectivity testing is generally recommended to establish injection pressures,
1k

- 2k barrels per day are possible.

 PA requires a more surgical approach for siting injection wells than other states : 300,000 improperly abandoned wells

 Regionalized thermal treatment: Anadarko ( Feb. 2016). The y wanted to see if thermal treatment would work in a mobile fashion

. They brought a company from OK to run a submerged combustion thermal evaporator for testing. 120 barrels a day unit was used for demos. It comes down to thermal efficiency. 1000 barrels a day regionalized system makes more sense. They run right below saturation. Solids end up in a roll of, you don’t want steam coming off: that’s a potential loss.

 Submerged combustion: the blower kicks on, you need air, ignition. Combustion gasses are injected in the vapor column and adjust the feed pu mps and gravity flow is pretty typical.18

 We’re generating a lot of waste: pretty dry waste. 87% solids no water. Barium is very high

.

 Permitting: DEP is very supportive. It was given the oil and gas division and it’s permitted by rule. We need gas, so per mit by rule on pad.

 40

- 45$ per barrel. Take it by rail to Ohio and get the average cost down.

Chip Cagle, Manager, Business Development, Commercial, Veolia North America

 Treatment levels

 Level 1: minimal treatment/ reuse: remove suspended solids with fi lters. If you are going to reuse in the pad or frac

 Level 2: remove iron, or metals, physical chemical treatment, TSS removal; more expensive

 Level 3: meet discharge limits: ex ternal site. Progresses from pretreatments needed at each head of the membrane, membrane evaporation, evap + crystallization etc.

 Costs increase with influent brine concentration

 Larger the size the lower the cost/ bbl. to treat

 Technology depends on type of effluent requirements.

 How to minimize costs: produce water, truck loading, pretreatment, selective ion removal etc.

o Single owner to merchant facility partners

o Location: minimize trucki ng cost, find allocation near power plants so you can sell it to them

o Reuse / resale: by products etc.

o On site landfill: can reduce solid handling costs.

David Cercone, Project Manager, U.S Department of Energy

 Water research websites

 To find papers on treatment technologies and formations etc., NETL.DOE.GOV, RPSEA.ORG.

 Looking for step changes on how Amer ica uses and generates energy.

11. THE SOLUTION TO DEEP WELL INJECTION AND ITS INDUCED SEISMICITY Assessing A Patented Multi

- Effect Evaporation & Crystallization Process

Brian Kalt, President, Fairmont Brine Processing

 Fairmont Brine has a patented multi

- ef fect evaporation crystallization process that is able to process 5,000 barrels per day.

 It doesn’t cost $6 per barrel and it doesn’t cost 50 million dollars to construct one.

 Charging between $5.50

- 8 / bbl. and think they can reduce that

 Played video from their website :19

- currently frac water producer in Ohio, PA, and WV have only two choices: 1. Deliver their brine to Ohio, PA or WV for deep well injection or 2. Deliver their brine to a concentrator that evaporates much of the brine into distilled water leaving behind heavily salted brine which is then deep injected into an underground well.

- brine is treated through a series of processes. Consists of three main operations: pretreatment, evaporation, and crystallization.

- pretreatment: after arrival and before unloading, the contents of tracks are sampled and tested for chemical composition and physical properties. The truck is then unloaded into a large basin. The brine water is processed to chemically remove barium, calcium, strontium, metals, organ ics, suspended and gravitationally removed solids. Residual oils and solids are removed next and the water then moves to a large retention pond for temporary storage.

- Evaporation: the brine water is pumped through heat exchangers to preheat the water

an d then to the deaerator to release the non

- condensable gases (oxygen and nitrogen) before the evaporators. In the vapor liquid separators (VLS), brine water is concentrated as distilled water is evaporated out the top of a vessel. The condensed water vapo rs are free of salt and suitable for reuse or discharge to a river under permit.

- Crystallization: occurs in the evaporation vessels as the water is evaporated and the concentration of the remaining brine exceeds the saturation point of the brine water solution. The salt crystals are then pumped to a hydro cyclone to sort the smaller from the larger crystals. While the smaller crystals are returned to the VLS to continue growing and larger salt crystals are sent to a centrifuge for dewatering and then f ed to a rotating weir before being conveyed to a storage pile to await customer distribution.

- Potentially marketable product of the crystallization process are distilled water, crystallized salt and a liquid mixed salt solution consisting of calcium chl oride and residual sodium chloride. Distilled water is used by driller as fresh frac water or it can be discharged as clean water. Crystallized sodium chloride is used as a supplement or substitute to rock salt. Liquid mixed salts is used on coal piles to keep them from freezing.

 None of their products are landfill ed or deep well ed.

 15 year sales and marketing contract with tetra technologies

 TENORM is removed during pretreatment process, solidified, and sent to a landfill

.

 Send calcium chloride to IL for use at U.S. Steel in coal piles and in their process to keep rail carts from freezing up. Bulk of it also gets sent to Ohio on daily basis used for winterization efforts and to drill plugs out.

 Sodium sulfate is used to precipi tate radium and barium in their pretreatment. How much TENORM is precipitated into the sludge depends on the amount of barium in the incoming water . Water is received from Antero and TransEnergy and other local operators. If the barium levels are low radiu m passes to your plant, but barium levels can also be under the TENORM Value. In a 1:1 mole ratio for barium to radium sludge generation is under 140 micr o rems an hour. If you’re 2 part of radium to 1

- part barium coming in, you will have semi warm sludge.20

 Also adding a lime softening process to the plant that will remove magnesium. A grade

B calcium product is produced at their facility which is about 24% calcium chloride (ASTM grade is 28

- 40 %). The grade B product ranges from $3

- $7 per barrel dependin g on the calcium chloride concentration. It is not ASTM yet because some magnesium and iron is also found in it. Moving to a lime softening process to remove that. Currently generating about 2.5 tons of sludge a day on 5,000 b arrels. About 8 tons with the lime softening process, so a total of 50 micro rems per hour.

 Sodium sulfate is picked over barium sulfate as the precipitant because barium sulfate is extremely insoluble. So when you take it to landfill, it’s not migrating and it’s not going to end up in a leachate.

 The reason we can charge $5.50

- 8/bbl. is because we sell salt. The larger the plant the better the economics.

 If we had a 60,000 barrels per day plant for a 170 million capital dollar cost, we would still have 21 full

- time employees (currently the biggest expense).

 Second biggest expense is natural gas. Consume 15,000 MCF/month of natural gas . The only product not sold is the barium radium sulfate sludge because it’s a landfill.

 Discharge treated water; occasionally give it back to producer

 Planning to construct more CWTs closer to drilling centers to reduce trucking. If you’re within a 60

- mile radius of a plant that could be in that $5

- 6/ bbl. range and it took you an hour to return an empty haul, you might take that $20/ bbl. price and get it down to $10.

 Guaranteed unload time of 20 minutes and there is never any wait.

 The cost for a 12,500 barrels per day plant is roug hly 50 million dollars and our 6 0,000 barrels per day plant design is just about 150 million dol lars. T hey have the capital and a partner to help finance

.

 Have found that salt produced through their process is cleaner than salt normally used for road treatment; want to be able to locally produce road salt for the Northeast US

.

 Another reason to rem ove barium (other than to get rid of radium) is because barium chloride interferes with sodium chloride crystallization. On the calcium chloride side, it’s a matter of when you turn it into a dry vs. liquid product. We see that in our water, for every barr el we get about 50 lbs. of sodium and 16 lbs. of calcium. You want to monetize enough salt on per barrel basis.

12. TENORM Evaluating The PA's Technologically Enhanced Radioactive Material Study And Current
Practices For Handling And Disposal of Waste

Jason Hubler, Senior Engineer, PA DEP

 TENORM Regulatory Framework

- Environmental Protection Agency (EPA)

- Nuclear Regulatory Commission (NRC)

- Dept. of Energy (DOE)

- Dept. of Labor

- Occupational Safety & Health21 - Administration (OSHA)

- Dept. of Transportation (DOT)

- States (e.g., Pennsylvania)

 The first, horizontal drilling, is one in which a vertical well is directed horizontally so that it penetrates a maximum number of vertical rock fractures

 The second is hydrofracing, a process in which portion of a well is seale d and water is

p u mped in. this produces pressure that fractures the surrounding rock to form a reservoir.

 Up till 2015: a total of 9,031 gas wells were drilled. Between 2014 and 2015, 1,593 wells were built.

 PA DEP Required SW Radiation Monitoring in 2001 , and the facility to have an ‘Action Plan.’

 TENORM: Technologically Enhanced Naturally Occurring Radioactive Material

- TENORM, a naturally occurring r adioactive material not subject to re gulation under the laws of the Commonwealth of the atomic energy act of 1954, whose radionuclide concentrations or potential from human exposure have been increased above levels encountered in the natural state by human activities.

- NORM

- Naturally Occurring Radioactive Material: NORM i s a nuclide, which is radioactive in its natural physical state

- that is, not man

- made

- but does not include source or special nuclear material.

 Background

- Generation of TENORM had increase d significantly due to expansion in unconventional natural gas expl oration

- Issues that needed to be addressed included: potential worker radiation exposure, possible public radiation exposure, unknown environmental contamination, waste disposal.

- Study began is 2013 and was completed in 2014. Final study report posted in January 2015.

 Site categories for sampling

- Well pads

- Wastewater treatment plants(WWTPs)

- Waste sludge loads to landfills

- Landfills

- Underground natural gas storage sites

- Gas f ired electricity generating facilities

- Compressor stations

- Gas processing facility

- Beneficial use sites ( e.g. Roads )

- Decommissioned well casings

 Sample types

- Solid samples (i.e., drill cuttings, muds, proppant, sludge, soils and sediment)

- Liquid samples (i.e., pre frac, flowback and produced water )

- Natural gas samples

- Radiation surveys (i.e., μ R/h, direct surface dpm /100 cm^222 - ‘Smear’ samples for removable radioactivity

 Sample analysis

- The samples were analyzed for the presence of alpha

, beta and gamma radiation ( gross counting and spectroscopy )

- Some solid and liquid sample s analyzed by XRF

, ICP MS and neutron activation

- The gas was sampled for radon

- 222 concentrations.

 PA TENORM waste issues

- Oil and gas sludge, rock cutting

- Numerous sludge samples exceeded DOT criteria for Ra

- 226 and Ra

- 228

- Initial disposal RESRAD modeli ng performed c2002

- Additional c2004 MicroShield Calculations

- PA TENORM Study data has informed DEP for the need to update our approach for TENORM disposal

 Conclusions

- Well sites and pads have low worker exposure

- O&G well frac and produced water high in Ra

- Potential for environmental impact with spills

- Unclear impact with the use of brines on roads

- Several wastewater treatment plants and environs require follow up for clean up

- ~25 % of TENORM sludge over DOT Class 7 limits

- Long term Ra in landfill leachate monitoring needed

- Sludge from wastewater treatment not in equilibrium between Ra 226 and Rn 222 decay products

- O&G industry data on samples taken during DEP study in line with our data

- Landfill TENORM disposal protocols developed circa 2002 need to be re

e xamined

- Follow up needed on ‘pigging’ and gas processing plants for potential worker Pb

- /Po 210 exposure

 New ND Regulations

- 50 pCi/g23

 Other notes from the speaker

- Doesn’t believe that conventional wells are being drilled in PA anymore

- Radiation protection system

- Who’s handling the waste and what are we doing with it?

- Oil and gas well types

- Shale formation: problem starts with uranium series. In uranium formations it occurs unaltered. 4.47 billion years of half

- lives to smaller than a few seconds long.

- None of the isotopes from uranium

– thorium are water soluble. Radium is the first soluble isotope. Radon 222 is the only gas and that has a special place.

- PA DEP required all landfills to have radiation detectors and develop action plans for when alarms go off.

- TENORM , radioactive material that’s been altered in conce n t r ation by human activity.

- NORM

- the unhuman impacted version of radioactive material. We don’t see it in things like wastewater sludge

 Study: issues with O& G TENORM needed to be addressed

 Issues included: waste disposal, unknown environmental impacts

 Developed a sampling plan and QAPP and identified labs for analysis . Conducted samples and report was prepared in 2014.

 Result

- report will be revised one more time.

 Wen t to well pads, CWT, landfills, compressor stations, water treatment facilities, etc. for samples

 Samples collected in natural gas, liquids, solids, radiation surveys , UOG well, conventional wells, pipe recycling facilities, gas processing facil ities, etc.

 Samples were analyzed for the presence of alpha, beta, and gamma radiation

 Gases were sampled for radon

- 222 concentration (longer lived of the two radon)

 RESARD series of code: computer program that models to get to public dose limit. If you’r e going to claim a property and live on that property . Found a number of samples that exceeded the DOT criteria for total radium. The initial disposal model from 2012 is not adequate anymore. Need to reevaluate their approach of TENORM disposal.

 CWT plant s: no impact in indoor areas but contaminated sand in one of the facilities. Not a lot of exposure to truck drivers.

 Landfills: no surface contamination issues

 Conclusions: more work needs to be done

13. REUSING MARCE LLUS WATER IN UTICA WELLS Hearing How to Reduce Water Management Costs by Reusing Marcellus and The Practicality of Dis

posal in Utica Injection Wells

Yael Tucker, Research Scienti st, U.S. Department of Energy, National Energy Technology Lab

 Marcellus produced water chemistry

- Calcium and sodium self

- scale to produce calcite and halite24 - High level of Ba, Sr, Ca as time progresses, may cause scaling within the infrastructure if fluids are reused without treatment. Low sulfate minimizes effects, if the same in Utica

- High levels increase toxicity of water

- Iron may create pyrite if hydrogen sulfide is present in formation

 Prediction based on the chemistry

- Scaling is a possibility. High salinity in Marcellus produced water is less likely to cause clays in Utica shale to swell than freshwater

- High levels of TDS produced fluids could cause plugging of pores in the formation

- Lower dissolved oxygen in produced fluids may minimize oxidizing reactions detrimental to steam or production

 Problems from biocide degradation

- Biocides degrade to more toxic and diffic ult to treat products

- Degradation products could be less efficient at microbial control and more toxic for transport and injection.

- Studies have found that produced water contains sulfur reducing bacteria , acid producing bacteria and other organisms.

- In Utica, it may be important to continue to consider the biological component

 Marcellus vs. Utica

- Biologically

- Marcellus shale: depth of 5000 to 8000 feet.

- 1.9 trillion cubic feet of natural gas and thought to be microbiologically sterile, but unlikely.

- Utica shale: depth of 3

- 7,000 feet.

- 38 trillion cubic feet of natural gas and about 940 million barrels of oil

- variety, petroleum rich areas. Variety of microbes

.

 Extracting DNA

- Which kit, how much water

, how much rock, is there anything as too much?

 M icroorganisms in Utica and Marcellus

1. Organisms found only in Marcellus:

 Deltaproteobacteria

- includes sulfate

- reducing bacteria

 Alphaproteobacteria

- acid producing bacteria.

 Methanomicrobia

- can produce methane. 2. Organisms found only in Utica and not Marce llus:

 Deinococcus spp.

 Geobacillus stearothermophilus

 Paracoccus aminovorans 3. Although some organisms known to degrade petroleum are already found in Utica core: Pseudomonas, Flavobacteria, Vibrio, Actinobacter
4. Organisms from Marcellus shale could have det rimental effects on petroleum from Utica shales: Thermatogae 5. Same organisms may aid Enhanced Oil Recovery in Utica: Pseudomonas and Bacillus create several emulsifiers (Surfactin, rhamnolipid, lichenysin,25 Rhamnolipid, glycolipids ). Bacillus creates biopoly mers, Methanobacterium produces methane

 Potential benefits:

- Minimization of wastewater treatment

- Water preservation through reuse

- Less chance for clay swelling due to high salinity of Marcellus fluids

- Inoculation with beneficial organisms

 Potential problem s:

- Degradation or inactivation of biocides before reuse

- Contamination of APB, SRB or oil degrading organisms

- Plugging of wells from high TDS

- Scaling from high Ba, Sr, Ca concentrations

 More notes from the speaker:

- Putting microbes from gas to petroleum areas.

- Usually people overlook this part, sulfur reducing and acid producing bacteria

- Studies show that H2S producers can sour our gases. Halanaerobium and other alphaprotobacteria can produce acids

- Biocide degradati on is a problem and they are degrading due to hydrolysis and photolysis.

- Preferred sequencing methods to look for DNA in subsurface

- Getting live cells out of rock samples is very hard so sequencing is a better option than culture methods because we don’t know what these microbes need to grow

- Extract DNA out of cores or water using a kit to tell where microorganisms came from

- Relate the water in microbes to those in cores and water out

- We had about 61 different genera found both in rock and water and 4 in w ater in and water out alone

- Some microorganisms love dry conditions and radioactivity and they can survive in Marcellus shale.

- Methanogens are microorganisms that can produce methane. These organisms can be helped by giving them nutrients and then rely on them to produce methane at a faster rate.

- Some microorganisms grow really well in shale alone and fluids really help methanogens too. Some of the water to be disposed can be used to inject fluids

- Currently studying what nutrients are best for these methano gens. She analyzed one Utica core and compared it to Marcellus to see how they differ

- Core came from dry gas Utica (WV), she found sulfur reducing bacteria that wasn’t found in Utica core, we are introducing sulfur reducing in Utica. Methanogens were only found in Marcellus. We are potentially putting methanogens in Utica as well and since the conditions are pretty similar they probably can make it.

- These organisms are really good at making biofilms

- Radioactive species are found in Utica as well.

- Carbon degraders can switch growth modes and can survive in harsh environments as well26

- Introducing Marcellus to petroleum producing Utica wells, we need to be concerned about petroleum reducing bacteria. Carbon degraders already exist in Utica so we aren’ t really making a difference.

- Should fluids be recycled? These are positives to it but there are potential issues of introducing microorganisms f r om one scene to the other can cau se problems

- We need to perform test to determine the efficacy of biocides to control injection of these micr oorganisms and address microbial issues faced by microorganisms.

14. David Yoxtheimer, Hydrogeologist, Marcellus Center For Outreach & Research Low Cost Produced Water Management Marcellus and Utica Shale 2016

Yael Tucker, Research Scientist, U.S. Department of Energy, National Energy Technology Lab

 Water use and brine generation
PA DATA:

- 1.5 million gallons per 1000 ft. of lateral

- 7 million gallons per well on average

- 7% returns out of the Marcellus based on DEPs number, 7. 2 MMBBLs of flo w back were generated

- 6.7 barrels for every million cubic feet of gas produced

- 4.6 trillion cubic feet of gas came out of Marcellus

 Shale fluid management options 1. Produced fluid management options

- Direct reuse (blending)

- On

- site treatment w/reuse

- Off

- site treatment w/reuse

- UIC well disposal 2. Recycling treatment technologies include

- Filter socks

- Chemical precipitation

- Electrocoagulation

- Filtration (micro, nano, ultra)

- Evaporation (MVR common)

- Costs of <$2 to $10+/BBL 3. Disposal technologies include

- Desalination with discharge

- Class IID UIC well injection In Pennsylvania during 2015 a total of 38 MMBBLs of fluids generated

- 87.5% of shale gas return fluids recycled

- 6.4% disposed of via injection wells

- 4.5% treated to meet discharge standard

- 70% of fluids management for recycling occurring in the field

 Current Production27

- 17 BCFD of Marcellus gas w/12.6 BCFD in PA

- Current estimate of 105,000 BBLs/D of produced fluids in PA

- In PA 87.5% recycled, 6.4% to Class IID wells, 4.5% to NPDES facility, bala nce in storage, landfills, transfer

- Disposing of ~6,600 BBLs/D of brine via UIC wells

- Currently require ~13 UIC wells capable of 500 BPD to dispose of brine in PA

 PA class IID disposal well locations

- 11 EPA

- permitted Class IID UIC wells in PA w/ 5 permits in review

- 278,700 BPM of total capacity with 90,000 BPM of commercial capacity via 3 wells

- Most wells targeting depleted sandstone gas reservoirs (Oriskany, Medina, Elk Sands)

- Total 2014 unconventional brine injection in PA UIC wells was 157K BBLs (430 BPD )

- Nearly 95% of PA unconventional brine disposed of via OH wells

 Examples of injection

- capacity O riskany sandstone

- calcite

- cemented quartzite to chert with variable primary and fracture porosity

- depleted conventional gas reservoir used for brine injection and gas storage

 Estimated Brine Injection Capacity (Volumetric)

- Using effective porosity of 4%, 50 feet of pay, and 40

- ac injection zone area

- A typical injection well in the depleted Oriskany sandstone could ultimately accommodate an estimated 620,000 BBL s (~26 million gallons) of brine before filling available porosity

- Need to determine reservoir frac pressure to determine actual upper limit of injection

 WV Class IID Disposal Wells

- 46 active disposal wells

- 14 commercial disposal wells

- Target formations in clude: Oriskany, Newburg, Upper Devonian (Gordon, Gantz), Mississippian units

- Geology and injection rates similar to PA wells (estimated range of 100

- 1,000 BPD)

 Utica

- Pt. Pleasant Production in OH

- 2015 Summary of Ohio’s Utica and Point Pleasant Shale Produ ction

- 1

, 246 producing wells (to date)

- 21.9 MMBBLs oil

- 954 BCF of gas produced

- 13.5 MMBBLs of brine produced

- 12.5 BBLs of brine/MMCF of gas (including BOE)

 Utica/Pt. Pleasant Shale Energy and Brine Production

- 3.6 BCF/D of gas

- 90 MBBLs/D of oil

- Current estimate of 37,000 BBLs/D of produced fluids (assuming 12.5 BBLs brine per MMCF gas)

 Class IID UIC Wells in Ohio

- 227 permitted with 215 operational Class IID wells in OH28 - Estimated 31.2 MMBBLs injected in 2015

- Approximately 47% of injected fluids from out o f state

- Average injection rate of 400 BPD/well

 Considerations for Class IID Siting and Use

- Finding suitable areas for projects, ideally away from residential areas yet near production

- Locating area with appropriate geologic setting with sufficient depth an d permeability and lack of faulting

- Proper maintenance to ensure well integrity

- Permitting can take several years

- Public opposition

 More notes from the speaker

- Longer laterals = increased number of gallons used and produced

- Water use per foot: well lengths have increased over time. Water use stayed pretty steady

- Relative volumes of frac water being used: more recycled water being used

- Shale fluid management option: depends on direct reuse/ on site or offsite or some sort of disposal, thermal capacity or u se of disposal wells.

- Disposal: desalination, NPDES discharge options, class 2D wells

- 87% of 28 million barrels were recycled and 6.4% disposed via injection wells and 4.5% treated to meet discharge standards

- 17 billion cubic feet of gas being produced in PA, a little over 100,000 barrels of fluids being generated.

- Class 2d

- disposal wells: 430 barrels per day.

- Disposal wells in WV: 46 total in WV 14 are commercial and estimated range of 100

- 1000 barrels per day

- Projecting the Marcellus gas (WV and PA), 5.5 TCF

- 2015: 1246 producing wells in Ohio and 13.5 million barrels of brine

- 12.5 million barrels of brine/ MMCF of gas in Ohio

.

DAY 2 Evaluating Long Term Produced Water Disposal and Discharge, Regulatory U pdates and Compliance Strategies

1. CHAIR’S OPENING REMARKS
Ian Cameron, Consulting Engineer, Regen Innovative Technologies

 More collaboration as an industry

 Safety is a priority

 Costs for treating water varies as technology improves

 Coordination of resources will help the industry29

2. KEYNOTE PANEL: LONG TERM DISPOSAL & DISCHARGE STRATEG Evaluating All Possible Options for Long Term Handling of Produced Water Whilst Ensuring 24

- Hour Water Supply, Sustaining Production Levels and Lowering LOE

Jide Famuagun, Vice President Production, Rice Energy

 Develop their own technology and work with operators

 Started working and developing a water application

 Developed a forecast on how much water they are going to produce depending in the next 5 years depending on activity

William Bates, Geologist, EPA

 93% of all wastewater was injected

 Don’t have a good handle on how the actual volume is being recycle or managed other than disposal wells

 Flex steel is the answer for corrosion free high quality pipes

Rob Wingo, Chief Operating Officer, Rice Energy

 Produce water lines to aggregate water to a central location for treatment

 Use whatever solution is best for where the pads are located

Jeremy Manno, Infrastructure Design Coordinator, Carizzo Oil & Gas

 Water chemistry affects the hydraulics of a system

 Stainless steel doesn’t mean anything, corrosion is always a problem

 High chlorides water will cause stainless ste el to start cracking

 Meter the water going in and coming out to make sure there are no discrepancies

 Leak protection: periodic pressure testing is done to monitor it

 They have an app where you can scan barcodes on each tank and enter numbers from the meter, also used for invoicing, prevents drivers from charging extra hours for just sitting and not doing work

- this takes all the guess work out of it.

 Carizzo uses a bar code system to track water from tank to tank

o Uses QR codes

o Records meter reading

o Invoicing is done through the system as well

 Ohio has more capacity for disposal than Pennsylvania. Second quarter last year, the industry put away about 80,000 barrels a day. Ohio capacity could theoretically take c a re of about 15,000 wells. Price is more expensive than Pennsylvania

, but the capacity will be there.

 Disposal is expensive

 Operators treat for solids, bacteria, and scale30

3. MITIGATING INDUCED SEISMICIT Y Outlining Steps for Characterizing the Geology of Marcellus and Utica Formations Prior

to the Development of Salt Water Disposal Wells to Mitigate Induced Seismicity

William Bates, Geologist, EPA

 There has been an increase in seismic events: Increase in seismic activity due to injection wells and other human activities especially in O klahoma.

 3 components to injection induced seismicity:

 Increase in formation pore pressure

 Optimally oriented for movement

 Need a pathway to allow pressure to get to the fault of concern

1. Pressure buildup: an increase in the formation pore pressure from disposal activities 2. Faults of concern: optimally oriented for movement and under critical stress, sufficient size for movement to potentially cause a significant earthquake; maybe a single fault or a zone of multiple faults and fractures. 3. Pathway: a perme able avenue allowing the pore pressure increase to reach the fault.

 Kilometers away from injection site, you can still see seismic effects even years after injection stops

 Correlation between higher volumes and bigger earthquakes

 Looked at case studies, fundamentals of induced seismicity, explored petroleum injection methods to eliminate the interaction

- report was completed in 2012

 Case studies were in OH, WV, AK, and ND: wanted to see what the state did a nd what else they could look at. “Minimizing and managing the potential for injections induced seismicity associated with class II disposal wells: a practical approach”

 Study was broken down into 5 steps: 1. Literature review and compilation 2. Analysis of four case examples 3. Development of decision model 4. Funda mentals of induced seismicity 5. Explore petroleum engineering methods

 Development of decision model: based on director’s discretion authority. Look at existing and new class 2 wells, look at the geologic seismic history, is there a concern for seismicity? Look at faults, pressure pores, pathways etc., if the concerns still remain

, go through changes in monitoring and operational appr oaches to decide if a permit is to be assigned or if the potential can be eased or not.

- Work flow and action plan: collect data such as volume and pressure numbers, perform GIS mapping and analysis, figure out if the potential can be reduced or its frequency: it’s not definitive that reducing something will re du ce the risk, most importantly to not wait to have a 100% defensive proof to say these wells caused this event, we need a proactive approach31 - Multi

- disciplinary site assessment: regional and lo cal seismicity, detailed well information, geologic setting, reservoir characterization, reservoir pressure, flow character, pathway, and stress direction.

 Petroleum engineering methods: quality of data is very important. More data= better evaluation. Loo king at magnitude and frequency of events. Engage operators early for voluntary actions and to have more data. Modify operations if the need exists.

- Two fundamental approaches: 1. Well testing: pressure transient or fall off testing can determine if a res ervoir is fractured, as well as static formation pressure. Function of near well conditions. 2. Analysis of operational data: hall plots using operational data indicate changes in transmissivity at distance. Covers both near wellbore and distance increasin g with time.

 Buildup is usually directional and can extend miles. Important to have a contingency plan in the permits.

 Take a proactive approach and engage operators and external expertise if warranted.

4. DISPOSAL IN INJECTION WELLS How Injection Wells Are Being Cost

- Effectively Constructed, Implemented and Operated Within State Regulations and Ensuring Seismic Events Are Mitigated

Moderator: Ian Cameron, Consulting Engineer, Regen Innovative Technologies

 All but 9 states have obtai ned primacies: where states handle most of the activities and conduct investigation and respond in terms of regulations.

 O klahoma is the most widely publicized: Agencies come together and discuss best practices. O klahoma look at it regionally and they have developed regional plans in response to incidents where a plan may call in reductions or even shutting off some of these wells.

 Texas passes some regulations to clarify what states can do in terms of terminating permit

.

 Ohio is the most crucial. North star well in Youngstown of 2011: 2 or 3 million dollar well. Seismic monitoring was about 150

- 170 K. overall about half a million dollars in total.

 Part of the new regulation package: no longer a one

- step process. 1. Need a permit and 2. An order to build the facility in Ohio.

 Communities are engaging in the permitting and regulatory process

 Rex Energy: setup first set of networks and worked with regulators in OH.

 2013: second aftershock and last one correlated with th e north star

 In 2013

- 2014: seismic monitoring was continued to try to increase comfort with their operation.

 Oct. 2014: denial for permit to inject was issued and they got lawyers. Increasing the amount of produced water to be recycled and found that econ omics for disposal started to drop. Plugging the well in summer of 2016.

o Location is crucial

o Audits: extensive audits on injection wells are crucial too

o Evaluations32

Kevin Coleman, Senior Counsel, Appalachian/Michigan Business Unit, Chevron North America

 Regulatory Overview: High level overview of federal, state, and local regulation of UIC wells and recent developments relating to induced seismicity

Derek Smith, Senior Director HSE, Rex Energy

 Youngstown was about a $4 mil well

Jeremy Sokol, Water Sup erintendent, Chevron North America

 Start evaluations with a google search: look for law suits etc. for companies

 Look at the capacity and its cleanliness. Do they have operational discipline?

 Are they in front of regulations?

 Are they interacting with the community?

 Are they able to handle a disruption? What are the economics like?

 Do a geologic review of the facility

 C S SD: if you’re a net consumer of water; you must reuse 90%. There is a difference between net consumer and net producer.

Amanda Fernl ey, Environmental and Regulatory

- Water Resources, Antero Resources

 Liability risk associated with injection

 A company’s largest risk is their regulatory risk

 There are regulatory risks with disposal wells

 Communities are starting to engage in permitting associated with injection wells

 Many regulatory risk s that operators are willing to take on.

5. WV AND OHIO WATER MANAGEMENT

- PERMITTING COMPLIANCE Overviewing Regulatory Agencies and Permit Requirements to Remain Compliant with WV and Ohio Regulations

Amanda Fernley, Environmental and Regulatory

- Water Resources, Antero Resources

 Water management needs to be done with a holistic approach : planning and permitting must conduct a roust, holistic evaluation of short

- term and long

- term solutions based upon anticipated operations.

 Open communication with regulators can really help the permitting process

 Permits are often an afterthought

– pe rmit approvals and preparation take time

 Permit preparation can take up to 6 months, and then another 6

- 12 months for approval

 Federal, State, and Local regulators are involved in large

- scale infrastructure projects

 Must identify appropriate consultations and permits for the operation33

 Local stakeholders are likely to communicate with each other; so open communication is important to be consistent

 Holistic evaluation to water management. Tunnel vision by only looking at water sourcing or disposal methods. N o, we need to look at symbiotic relationships.

 Regular and open communication with regulatory agencies is crucial in getting permit approvals

 Long time associated with permit approvals and permit preparation etc. process has no define time frame can take 6

- 12 months. Preparation can take 6 months for each company for a thorough application.

 Federal: 1. US. EPA: region 3

- NPDES

- important to communicate with EPA representatives to develop limitations. 2. US Army corps of engineers

- nationwide permits (general permits), section 10 consultation (in a region of navigable water), consent for easement (flow of easement) 3. US Fish and wildlife service

- section 7 consultation 4. Ohio River valley water sanitation

- mini inter state agency, no jurisdiction in enforcements b ut get resources for guidance. 5. National Historic Preservation Act : section 106 Consultation

 West Virginia :

West Virginia D epartment of Environmental Protection 1. Office of Oil and Gas:

- Centralized pit/ impoundment permit

- Associated pit/ impoundment permit

- Water management plans

- Class II underground injection wells 2. D ivision of Water and Waste

- 401 certification

- Individual NPDES

- Water Use Reporting

- Multi

- Sector Industrial Storm Water General Permit

- Aboveground Storage Tank Act

- Construction storm water general permit 3. Department of air quality

- Rule 13 permit West Virginia D epartment of Natural Resources 4. Office of Land and Streams

- Right of entry permit West Virginia D epartment of Transportation 5. Division of Highways

- MM

- 109 Entrance permit

- MM

- 109 Crossing permit

- Upgrade/ improvement agreement

 As of Jan 1

- 2016, large quantity users= 100,000

- gallon limit

 US Fish and wildlife service now require monitoring while actively withdrawing. Group 2 withdrawals.34

 O hio :

o Department of transportation

o OH Department of Natural Resources: Division of water resources, Division of oil and gas resource

o OH Environmental Protection Agency: Division of air pollution control , division of materials and waste management, division of surface water

o Required to put water withdrawal sources b ut the operator of the fresh waters is responsible for reporting that so produced water is not that big of a deal.

 West VA is pad plan based: required to define water that you’ll need for a full cycle of well pad including water needed for construction, drilling, reclamation etc.

 Ohio is distinctly per withdrawal source : focuses mainly on what you’re withdrawing and how you’re withdrawing and maintaining that 2 million gallons per day average over a 30 day rolling time frame

.

 L ocal S takeholders :

o Watershed conservancy: stakeholder analysis

o Building code and fire marshals: constructing anything with cement, electrical is being brought, fenc ing etc.

o floodplain management: development outside of flood plain as well

o Interbasin transfer: Chesapeake Bay

, L ake Erie : regulatory inhibitions

o Local commissioners

 P lanning and P ermitting: 1. As part of its environmental impact analysis, each site is evaluated for a number of different criteria, including permitting evaluation for all federal, state, and local regulatory agencies 2. Based on the evaluation analysis, the chosen location is considered to be the most practical, safe, cost effective and environmentally sound solution to fulfill the required need. 3. Evaluation criteria: Environmental impact and community impact 4. Site location: minimizing environmental and community impact

6. STATE REGULATIONS Hearing Updates from Regulatory Bodies for Marcellus and Utica On Regulations Will Affect the Use of Surface Water for Disposal and Water Sourcing

Andrew Dehoff, Executive Director, SRBC

 Susquehanna River Basin Commission (SRBC’s) focus is on water sourcing, not disposal

 The Basin

o 27,510

- square

- mile watershed

o Comprises 43 percent of the Chesapeake Bay watershed

o 4.2 million population

o 60 percent forested35 o 32,000+ miles of waterways

 The River

o 444 miles, largest tributary to the Chesapeake Bay

o Supplies 18 million gallons per minute to the Bay

o Supports Public Water Supply and Industry

 Federal interstate compact commission

- Mission: provide for the planning, conservation, utilization, development, management and control of the water resources of the basin

- Commissioners, budget

- Technical staff

- Regulations, fees

 Issues facing the Susquehanna

- Water quality

- Water quantity: flooding, droughts, public water supply permitting

- 19% of streams impaired 8,400 miles out of a total of 49,000

 Stream Pollution Profile

- Agriculture: 3,800 miles or 8%

- Aban doned mile drainage: 2,000 miles or 4%

- Atmospheric deposition: 1,500 miles of 3%

- Urban runoff: 1,500 miles or 3%

- Other: 1%

 Assessment of Water Use Associated with Natural Gas Development

– new report coming out

 Work cooperatively with three states to manage water quality

 Water sourced from multiple pads so developed methods to accommodate that

 Public scrutiny: to make public confident to ensure that water used was coming from frack

 Criteria for renewing existing sources

- Similar criteria as a new source: demonstration of need

. Administrative mechanism. Authorization was needed to use water on the pad is an admin process and allows for

a quick turn

- around.

- Historic usage: infrastructure, limitations . Recognize that there lots of demands for
water, multiple companies targeting similar streams took out any road blocks for water sharing. Great benefit in allowing water to move back and forth and in sharing

- Subject to Dec. 2012 LFPP: new limits?

 Changes in rules

- Recently adopted water tracking methods 1. “CU at the source” 2. Daily gage report for tracking passbys 3. Improvements to post

- hydrofrac reports

- Revised and simplified transfer rule

- New section defining minor modifications

- New section establishing process for general permits

 Tracking changes: to verify that we have a handle on tracking water and where it is going and what’s being done with it36

 Minor Modifications

- Correction of typos

- Changes to metering or monitoring conditions

- Adding sources for consumptive use

- Changing authorized water uses

- Changing schedules set forth in dockets

- Changes to intake designs

- Certain increases in total system limits

- Modifications to extraction well networks

 Transfer Rule

- what are the changes?

- The requirement to submit NEW applications where the approval is older than 10 years is removed

- The requirement that applications for grandfathered sources be submitted within 90 days of the change in ownership is changed to be required as a condition of the transfer on a timeline approved by the executive director

 Proposed Rule Cha nges

- FY17 fee schedule

- Policy: terminating review of applications

- Policy: expiring approvals

 Other notes from the speaker:

 Management initiatives

 Cumulative impact analysis

 Aquatic resource surveys

 Low flow protection policy: water withdrawal limits. Prohi bition on taking water from stream once it hits a certain limit.

 Withdrawal limits

 Quantity of withdrawal relative to streamflow

 Use results of aquatic resource survey

 Regulatory incentives for using impaired water sources: reduced fees, quicker review, longer term

 Criteria for renewing existing sources: demonstration of need, historic usage and subject to December 2012 LFPP: London fall protection policy.

 Requirement to retain consumptive use approval on operable pads

 Revised and simplified transfer rule

 Established process for general permits

- permits aren’t created but there’s a process for ho w one can be put in place. Request for pipelines? Short term use?

 Policy: encouraging use of dry cooling

- for power plants that use natural gas. Reducing 5 million gallons to only a few thousand gallons for review.

 Minor modifications: issue permits but if change s in operations, we will authorize it following the minor modification process.

 Propose rule changes

 Reduction to fees for new and renewing CU approvals

 T erminating review of applications

- defining and formalizing existing procedures

 Expiring approvals

- formalize process sequence: speak to the needs to submit an application prior to expiration. Send out notices ahead of expiration.37

 Public hearing (May 4) a nd comment period (May 16).

 Upcoming reports: 1. Assessment of water use associated with natural gas development: first 5 years 2008

- 2013, asses the trends where water is being sourced from. How has the progression of permits for fracking and drilling progre ssed with time? Assessing where the water source is occurring. No conclusions are drawn just making people aware. Charts containing administrative vs. technical violations. 2. Cumulative water use and availability study: very discreet. Water use approved

vs. reported. On paper water that’s approved is a lot more than what’s reported to us. A publically accessible online map tool helps in developing statistics for water needed for aquatic ecosystems etc.

7. WATER TRANSFER

- AVOIDING RUPTURES Evaluating Best Prac tices and Quality Control Procedures to Ensure E&Ps Are Pressure Testing Transfer Lines and Guaranteeing There Is No Chance of Corruption and Spills

Eddy Biehl, President & CEO, Stone Bridge Operating

 Transfer Line applications:

- Pad to pad

- Storage (impoundment) to pad

- Pad to treatment/ disposal

- Disposal and treatment facility lines

 Types of Brine Transfer Lines:

- Temporary lines: lay f l at, poly pipe: process and procedure domina te current methods. Continuous metering of volume in and out. Regular sta tic pressure testing throughout the job, continuous monitoring and control of lines, pumps and facility, double

- wall systems are in development. Key elements for success: fluid compatibility with pipe, pumps, manifolds and other equipment. Use of temporar y containment systems at connections. Standard procedures for each method and training.

- Semi

- permanent and permanent: HDPE or other plastic

- Steel

- F iberglass

 Integrity Monitoring

- Construction design dominates current methods: corrosion is a key issue. Lines steel, fiberglass, poly pipe and reinforced poly

- pipe are options. Double

- wall or containment pipe is an emerging standard

.

- Design considerations: fluid composition and pr operties, now and through time. Pressure and volume requirements.

- Key elements for success: stabilize or treat fluid at input to system. Standard procedures for each method.

 Double wall systems:

o HDPE containment piping, reinforced poly

- pipe transfer lines3 8 o Advantages: readily available crews for installation. Competitive and inexpensive. Familiar to regulator and crews.

o Disadvantages: limited sizes available for reinforced poly

- pipe

 Integrity monitoring for double wall systems :

 Experience as contract ors, operator, includes two systems

o Pressured air: difficult to seal systems, requires air compressors, tolerances are difficult to measure

o Unpressurized fluid detection: simple float sensor t o detect fluid level. Require testing and monitoring of boxes, p ower and data communications can be supplied with parallel conduit.

 2016 Oil and Gas Bust

- Most analysts think it takes around 800 rigs to meet long term demand

- Each week we set new record lows for the number of rigs working

- Drilling efficiency cannot make up for no rigs turning to the right

- No rigs= no wells= falling production (eventually)

- Natural gas prices are poised for a recovery, but it maybe next year

- The Appalachian Basin is the primary source of the oversupply of NG

- Utica

- Especially the Marcellus are a huge new resource, drowning the market.

- EIA projects a 25% increase in annual NG production over the next 25 years, nearly all from shale. That implies 800+ NG rigs, up from less than 200 today.