## Solving the World ’ s Water Challenges.

3 rd 

### Water Management for Shale Plays October 20122 Corporate Presentation
– October 2012 

# Ecosphere Energy Services, LLC 

# Today’s Agenda

• Oil & Gas Industry Challenges

• Water Treatment Challenges

• Water Treatment Strategy

• Company Introduction

• Technology Overview

• About Ozonix®

• Products & Services

• Benefits & Capabilities

• Oil and Gas Applications

• Microbial Control Validation

• Scale Control Validation • Case Studies

• Arkansas

– Fayetteville Shale

• Oklahoma

– Woodford Shale

• West Texas

– Permian Basin

• Pennsylvania

– Marcellus Shale

• Environmental Impact

• Industry Recognition

# Oil and Gas │ Industry Challenges

3 Corporate Presentation
– October 2012 Source: Energy Information Administration, Annual Energy Outlook 2012 

# Gas Prices are Down Not Coming Back Soon

U.S. spot market prices (2010 dollars per MMBtu ) Gas Price Projections (2010 dollars per Mcf )

# Oil and Gas │ Industry Challenges

4 Corporate Presentation
– October 2012 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

0 20 40 60 80 100 120 140 160

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008Gas Price $/Mcf (Real 1976 Dollars) Operating Cost Index

Equipment Cost Index
Gas Price

Source: Energy Information Administration, Office of Oil and Gas 

# Operators Must Reduce Costs

Indices for Gas Equipment and Annual Operating Costs and Gas Prices in Real 1976 Dollars

# Oil and Gas │ Water Treatment Challenges

5 

# Water Related Task

Corporate Presentation
– October 2012

Water Acquisition

Chemical Injection

Completions Process

Flowback & Produced Water

Wastewater Disposal • Source Water Availability
• Environmental Impact
• Water Quality

• Chemical Transportation
• Risk of Chemical Handling
• Environmental Impact of Chemical Spills

• Environmental Risk of Accidental Release
• Fracturing Fluid Migration into Water Aquifers

• Exponential Increase of Produced Water
• Cost and Availability of Storage
• Environmental Risk of Spills

• Lack of Disposal Options
• Costs of Disposal & Transportation
• Treatment and Handling of Solid Residual Waste 

# Associated ChallengesWater Acquisition

Chemical Injection

Completions Process

Flowback & Produced Water

Treatment For Reuse, Recycling 

# Oil and Gas │ Water Treatment Challenges

6 Corporate Presentation
– October 2012 

# Water Has Become a Major Industry Concern Recycling flowback and produced water is now a PRIORITY
Ecosphere’s Approach:

• Chemical

- Free Treatment

• Disinfection Treatment with a Patented AOP

• No Waste Stream

## • Barium Sulfate

• Hydrogen Sulfide

• Iron
- Sulfide 

# Microbial Control & Scale - Inhibition

• Microbial Induced Corrosion (MIC)

• Sulfate Reducing Bacteria (SRB)

• Acid Producing Bacteria (APB)

• Calcium
- Carbonate

7 Corporate Presentation
– October 2012 

# Oil and Gas │ Water Treatment Challenges

# Oil and Gas │ Water Treatment Challenges

8 

# Historic Fresh Water Fracturing Methods

Corporate Presentation
– October 2012 

# Flowback and Produced Water Challenges

• Biocides

• Scale Inhibitors

• Corrosion Inhibitors

• Surfactants

• More Organics , Bacteria , Heavy Metals, Frac Chemicals , TDS, TSS

• Requires More of the T raditional Chemicals Previously Used

• Potential for H2S Souring, Corrosion, Scale, etc.

• Compatibility Issues with Anionic Friction Reducers

• Compatibility Issues with Gel Systems

• Leaching Minerals from the Formation • Fresh Water Treatment Costs: $0.10 to $0.70 Per Bbl

# Oil and Gas │ Water Management Strategies

9 Corporate Presentation
– October 2012 

# 1. Sourcing and Disposal

2. On - Site Water Recycling

3. Off - Site Water Recycling • A Traditional Strategy

• An Inefficient Use of Resources

• Recycled Water Treated and Cut with Fresh Water

• Treated Water is Used as the Fracturing Fluid

• Water is Transported via Truck or Pipe

• Flowback and Produced Water is Treated at a Centralized Location

# Oil and Gas │ Water Management Strategies

10 Corporate Presentation
– October 2012 

# Water Treatment Options Ecosphere's Patented OZONIX® Technology
Chemical Biocides Ultraviolet (UV) Flocculent Chlorine Dioxide Thermal Evaporator Membranes Electro Oxidation Hydrodynamic Cavitation Acoustic Cavitation Ozone ( O3) SRB ✔ ✔ ✔ ✔ ✔ ✔ APB ✔ ✔ ✔ ✔ ✔ ✔ GHB ✔ ✔ ✔ ✔ ✔ ✔ ✔
HEAVY METALS ✔ ✔ ✔ ✔ ✔ ✔

SOFTENING ✔ ✔ ✔ ✔ SCALE REDUCTION ✔ ✔ ✔ ✔ ✔

HYDROCARBON ✔ ✔ ✔

FLOW RATES Moderate Moderate Slow Moderate Slow Slow Extremely High (3,360 GPM Per Mobile Unit) SECONDARY WASTE No No No No Yes Yes No
MAINTENANCE Low High Moderate Moderate High High Low Treatment

Objective11 U.S. Patents: 7,699,994 / 7,699,988 / 7,785,470 / 7,943,087 

# │ Technology Overview

Corporate Presentation
– October 201212 

### • REDUCE COSTS

• PRODUCE BETTER WELLS

• Eliminate Bacteria & Prevent Scale

• Destroy Highly
- Resistant Biofilms

• Reduce Chemical Handling & Costs

• Oxidize Oil & Grease, H 2 

### S, Iron, etc.

• Recycle Water for Re
- Use

• Preserve Vital Water Resources



## • Environmentally Friendly

• Customer Friendly 

# Benefits



# With Ozonix® Everyone Wins

Corporate Presentation
– October 2012 

# │ Oil and Gas │ BenefitsPerformance Features

• 420 gallon per minute flow rates

• Self

- contained mobile frac tank

13 

# │ Oil and Gas │ Products 

# OZONIX® EF10, EF20, EF60 & EF80

Performance Features

• 840 gallon per minute flow rates

• Self

- contained mobile frac tank Performance Features

• 2,520 gallon per minute flow rates

• Self

- contained 53’ mobile trailer Performance Features

• 3,360 gallon per minute flow rates

• Self

- contained 53’ mobile trailer

Corporate Presentation
– October 2012

# │ Oil and Gas │ On

- Site Treatment

Recycled Water Source

Pump Trucks Chemical Trucks Blender Wells

Surface Water

# │ Oil and Gas │ On

- Site Treatment

# │ Oil and Gas │ Off

- Site Treatment

# 45 Billion SRB / ml 95 SRB / ml

17 

# │ Oil and Gas │ Results

*Source of the influent water (tested by an independent laboratory) was a 30k bbl storage pit of 100% produced water from the Fa yetteville Shale 

# Proven Microbial Control

Corporate Presentation
– October 2012

# │ Oil and Gas │ Results

18 Corporate Presentation
– October 2012 

### • 610 Oil & Natural Gas Well around the U.S.

• 1.6 + MILLION Gallons of Chemical Biocide Eliminated from Fracturing Operations

• Multiple Long Term Contracts:

• Arkansas

– Fayetteville Shale

• Oklahoma

– Woodford Shale

• Texas
– Permian Basin 

# 2+ Billion Gallons of Water Recycled

## Microbial Control

Scale Prevention
Corrosion Control
Friction Reduction • SRB (Sulfate Reducing Bacteria) Elimination, H 2 

### S Elimination

• APB (Acid Producing Bacteria) Elimination

• Iron Sulfide, Calcium Carbonate, Barium Sulfate Inhibition

• Microbial Biofilm Destruction

• Organic Scale & Corrosion Control

• Iron Oxidation & Scale Crystallization Inhibition

• Compatible with Friction Reducer and Gel System

• Water Softening, Reduced Surface Tension

19 

# Chemical - Free Water Treatment

Corporate Presentation
– October 2012 

# │ Oil and Gas │ Benefits

# │ Field Proven

20



# Validated Case Studies from Major Shale Plays

Corporate Presentation
– October 2012



## Billions of Gallons Treated:

• Fayetteville Shale

• Woodford Shale

• Eagle Ford Shale

• Permian Basin

• Marcellus Shale Ozonix® Treatment Facts:

• 51,418,796 bbl Treated

• 2,159,589,432 Gallons Treated

• 610+ Wells Completed

• 120 bbl /min Capabilities

# │ Field Proven │ Case Study

21 

# Fayetteville Shale, Arkansas On - Site Frac Fluid Treatment with 40% Recycled Water at 120 BPM

Corporate Presentation
– October 2012 *Lab Data Provided by American Interplex Corporation; Compilation of 468 Lab Samples Taken From 142 Wells 163,109

27,099 713

- 50,000 100,000 150,000 200,000

Avg Pit SRB Avg Inf SRB Avg Eff SRBSRB (MPN/ml) Average Sulfate Reducing Bacteria (SRB) Red = Pit ; Orange = Influent ; Blue = Effluent 

# Woodford Shale, Oklahoma 100% Produced Water Recycling

# │ Field Proven │ Case Study

22 

# Permian Basin, West Texas On - Site Frac Fluid Treatment 80/20 Fresh Water/ Flowback Mixture Ratio at 80 BPM

Corporate Presentation
– October 2012 *Source of Case Study is EES’ Sub

- Licensee Hydrozonix, from Operations in the Permian Basin, West Texas. 0 50,000 100,000 150,000 200,000 250,000 300,000

3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11# of Cells Per Milliliter

Stage Number Bacteria Treatment Results Influent Effluent 

# 99.98% REDUCTION

# │ Field Proven │ Case Study

23 

# Permian Basin, West Texas Increasing Use of Flowback and Produced Fluid

Corporate Presentation
– October 2012 *Source of Case Study is EES’ Sub

- Licensee Hydrozonix, from Operations in the Permian Basin, West Texas. 

### 0% 10% 20% 30% 40% 50% 60% 70%10/14/1111/13/1112/13/1101/12/1202/11/1203/12/1204/11/1205/11/1206/10/1207/10/1208/09/1209/08/1210/08/12 120 Wells Completed 14 Million Barrels Treated Of that, 3 Million Barrels Recycled Flowback & Produced Fluid

# │ Field Proven │ Case Study

24 

# Marcellus Shale, Pennsylvania Produced Water Recycling

Corporate Presentation
– October 2012 *Source of Case Study is EES’ Sub

- Licensee Hydrozonix, from Operations in the Marcellus Shale, Pennsylvania -5.00

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

-1.00 1.00 3.00 5.00 7.00 9.00Change in Differential Pressure (PSIG)

Time in Hours 

### Scale - Tube Blocking Test Results
Effluent - Treated Fluid Influent - Raw Fluid25 “One of the Dominant Providers of Water Treatment for the Shale

- Gas Industry”

“Techno

- Economic Assessment of Water Management Solutions ”

Selected as 3x ( 2010, 2011 & 2012) TOP 50 Water Companies

“

Building Momentum for Advanced Water Technology Solutions ” 2012 Product Leadership Award North American Disinfection Equipment for Shale Gas Wastewater Treatment
– Best Practices By: Frost & Sullivan 

# │ Industry Recognition

Corporate Presentation
– October 201226 

# │ Contact Us

Corporate Presentation
– October 2012 

# U.S. Oil and Gas Service Provider Global Energy Service Provider

www.Hydrozonix.com www.EcosphereTech.com600 S. German Lane Building #9 Conway, AR 72034 P: 501.205.0797 F: 772.781.4778 www.ecospheretech.com Stock Symbol: ESPH │ ISO 9001 Certified