Project No.: 0317.03.038.040 Page 1 of 4

Project

Name: Unconventional Oil and Gas (UOG) CBI?

Yes

No

TELEPHONE CALL RECOR D Incoming Outgoing Call Date: 10/15/2015 Time: 1:30 am

pm

Company

Name: Veil Environmental, LLC ERG Staff Name: James K. O’Connell

Contact

Name: John Veil Contact Phone Number:

General Subject: Discussion of John Veil’s 2015 Report, U.S. Produced Water Volumes and Management Practices in 2012



## TOPICS DISCUSSED AND ACTION TAKEN

Call Participants

Jo hn Veil, Veil Environmental , LLC Lisa Biddle, EPA Jesse Pritts, EPA Karen Milam, EPA Sarah Yates, ERG Cortney Itle, ERG James K. O’Connell, ERG



### Notes

Introduction

ERG initiated this call to ask John Veil questions about his 2015 Report, U.S. Produced Water Volumes and Management Practices in

2012 (DCN SGE01128) 1 . John Veil is a former employee of Argonne National Laboratory (ANL) , and he now works as a consultant

with Veil Environmental , LLC . To start the call, Lisa Biddle provided an overview of the unconventional oil and gas (UOG) rulemaking effort, and Jesse Pritts provided an overview of the Central Waste Treatment ( CWT ) study

.

Questions ERG Question : Please clarify the difference between “Injection for disposal” and “Offsite commercial disposal .” What types of facilities are included in the latter? Are there specific facility names available for these “offsite commercial disposal” facilities in any of the data provided by the states?

Veil Response :

 Injection for disposal

– Wastewater injected i nto non

- hydrocarbon

- bearing formation s for disposal.

 Offsite commercial disposal

– operator chooses not to manage the wastewater , but pay s for someone else to take it.

ERG Question : How are operators handling water?

Veil Response :
T he majority of operators use disposal wells . Some operators use land treatment, and rarely , operators use a CWT facility

. Pennsylvania has a few CWT Facilities, as does California.

ERG Question : Colorado seems to have provided detailed data on hydraulic fracturing fluid volumes and reuse/recycle. Can you provide any of the

raw data from the Colorado Oil and Gas Conservation Commission ( COGCC ) to us? Is there any way to distinguish between conventional oil and gas ( COG ) and UOG in the data from COGCC (e.g., did they provide the data at the well

- level with associated API numbers)? Operators reported that in 2012, 77,910,189 bbl of frac fluids were used to stimulate wells in Colorado. About 35% of that volume (27,039,785 bbl) was returned to the surface as flowback wat er. Sixty one percent ( 61% ) of the frac fluids (47,648,287 bbl) were made from recycled flowback and produced water. See page 59 of the 2015 Veil Report (DCN SGE01128).

Veil Response : Mr. Veil extracted some data from COGCC’s website with the help of T h om Kerr. Colorado only provided total wastewater

volume data ( i.e., coal bed methane ( CBM ) , COG, and UOG together ).

1 Tables and figures referenced in italics in these call notes can be found in the 2015 Veil Report (DCN SGE01128).ERG Question :

Can you clarify what all is considered in the “surface discharge” management practice? Di gging into the data for each state, it looks like often times this is associated with CBM (e.g., Alabama) or conventional (e.g., California) wells. It also appears that s ometimes “surface discharge” is really indicating beneficial use (e.g., Texas, West Vi rginia). Are there other instances of “surface discharge” not captured in these examples? Please explain where the “surface discharge” in Colorado and Utah are coming from/going to. Please confirm that you identified no direct discharges from oil and gas o perators to POTWs. See second paragraph on page 10 of the 2015 Veil Report which says “...3% of onshore produced water was discharged.”

Veil Response : Colorado has a general permit for surface discharge through the state agency for the environment and/or p ublic health. Mr. Veil does not have any more data than what appears in the report. It was difficult to get data from Texas. Texas has a limited number of wells along the Gulf Coast that are allowed to discharge, but it would be best to follow up with Texas Railroad Commission ( TX RRC ) , EPA Region 6, or the Texas Commission on Environmental Quality ( TCEQ ) about that.

ERG categorized the “ surface discharges ” reported by Mr. Veil to indicate the type of oil and gas resource type they were associated

with

. Surface Discharge s 2 by State :

 AL

– CBM

 AK

– Conventional ( Cook Inlet )

 CA

– Coastal

 CO

– Unknown ( General permit )

 IN

– Unknown

 MT

– Unknown ( Individual or general permits )

 PA

– CWT Facilities

 TX

– Unknown ( Low salinity coastal discharge )

 UT

– Unknow n

 WV

– Unknown ( Land application )

ERG Question : Please confirm that all produced water that was reused/recycled for hydraulic fracturing would have been included in the “beneficial reuse” category

, but that th e “beneficial reuse” category would also include other types of practices (e.g., irrigation, dust and ice control).

Veil Response : Almost no states are tracking reuse /recycle practices , even though reuse/recycle is a prominent wastewater management

pract ice in many states . Dust control and other uses are simply not being reported to states. In Table 4

- 8 of the report, the number

is listed as 0.6%. Mr. Veil believes it is likely less than 5%, but more than 0.6%.

ERG Question : Related to Oklahoma and a few other states, in Sections 3.4 and 6.1 of the report, can you explain how wells located on t ribal lands are covered in the state data you present ?

Veil Response : Mr. Veil was not able to get a clear answer from federal or tribal contacts about w hether or not tribal wells were included in specific data sets . Table 5

- 47 of the report include s some tribal wells. To avoid double

- counting tribal wells in his totals, Mr. Veil did not include separately identified tribal wells. He assumed that all tribal wells were already included in the data provided by the state s that are summarized and presented in the report

.

ERG Question : Did any states provide comprehensive produced water management data (e.g., data by API number, specific to UOG o nly)? We are only aware of Pennsylvania Department of Environmental Protection ( PA DEP ) who does this but we are looking for others.

Veil Response : No.

2 Note that the term “surface discharge” as used by Mr. Veil does not ne cessarily constitute a discharge to waters of the United States

as defined in the Clean Water Act.ERG Question :

Are there any produced water management trends that surprised you in the 2012 data (or any changes between the 2007 and 2012 practices that were surprising)?

Veil Response : Mr. Veil was not surprised by the trends he saw, but he noticed that others were surprised. Despite an increase in production, th e industry

- wide water use in creased very little. Crude oil and natural gas production each increase by about 20% between 2007 and 2012, but water use increased only about 1% in the same time period. There was a huge increase in UOG production leading up to

2012. UOG operations genera te large volumes of flowback wastewater initially , but then the wastewater volumes decrease significantly . Essentially, UOG operations are more efficient, producing less waste water per barrel of produced oil and gas.

Final Thoughts

Mr. Veil found it challenging to get data from states to compile his report. He suggest ed researching Energy Water Initiative (EWI) to possibly get more answers from their stakeholders about specific data sets that may be of use to us

. Mr. Veil has no current plans for futu re reports.



### Additional Information

ERG reviewed and compile d supplemental information for these call notes

. Regarding the surface discharge data Mr. V eil presents in his 2015 report, ERG researched 40 CFR 435, Subpart E permit s in Colorado and oil and gas surface discharges in Texas.

40 CFR 435, Subpart E Permits in Colorado ERG found a general permit (expired 0 8/2014) for Colorado, issued by the Department of Public Health and Environment. COG

840000 is the first separate ge neral permit fo r discharge of treated produced water to surface water. Previously these discharges were covered under a variety of permits including the Minimum Industrial Discharge (MINDI) general permit (COG

- 600000) and individual permits.

O n page 6 o f the permit , there are oil and grease limits of 35 mg/L and 10 mg/L . The “Basis for Limitation” listed for “Conventional oil and gas operations subject to Feder al ELG” is “40 CFR 435 (ELG).” This corresponds to the oil and grease daily

maximum limit of 35 mg/L in 40 CFR 435.52. This is the only place 40 CFR 435 is referenced in the permit, which is consistent with oil and grease being the only regulated parameter in Subpart E (where 40 CFR 435.52 falls).

ERG was unable to find specific information for d ischargers permitted under this general permit, or the previous permits.

Oil and Gas Surface Discharges in Texas

ERG was able to identify permits for two facilities that listed “produced water” as one of the waste types that they recycle/reclaim. STF

- 040 (expires 05/2018) and STF

- 026 (expired 01/2011) authorize the facilities to r eceive, store, handle, and treat

certain oil and gas wastes , but they do not authorize discharge or discuss levels of regulated parameters for discharge.

Information on C omm ercial S urface Waste F acilities Commercial facilities may use pits to store or dispose of oil and gas wastes or they may landspread or landtreat oil and gas wastes or treat oil and gas wa stes. Texas Rule 78 defines Commercial Facility as “ A facility whose owner or operator receives compensation from others for the storage, reclamation, treatment, or disposal of oil field fluids or oil and gas wastes that are wholly or partially trucked or hauled to the facility and whose primary business purpose is to provide these services for compensation if:

 the facility is permitted under §3.8 of this title (related to Water Protection);

 the facility is permitted under §3.57 of this title (related to Reclaiming Tank Bottoms, Other Hydrocarbon Wastes, and Other

Wast e Materials);

 the facility is permitted under §3.9 of this title (related to Disposal Wells) and a collecting pit permitted under §3.8 is l ocated at the facility; or

 the facility is permitted under §3.46 of this title (related to Fluid Injection into Produ ctive Reservoirs) and a collecting pit permitted under § 3.8 is located at the facility.

The l ist of commercial recycling and surface disposal facilities can be found on the T X RR C ’s website

. 3

In formation on Surface Discharges Although the TRR has the jurisdiction to regulate the disposal of all oil and gas wastes, very few such wastes are discharged to surface water in the state. The Railroad Commission regulates three major categories of discharges to surface waters: dischar ge of hydrostatic test water; discharge of oil and gas wastes from a gas plant; a nd discharge of produced water. 4

3 http://www.rrc.state.tx.us/oil

- gas/applications

- and

- permits/environmental

- permit

- types

- information/commercial

- surface

- waste

facilities/

4 http://www.rrc.state.tx.us/oil

- gas/applications

- and

- permits/environmental

- permit

- types

- information/discharges/Regarding p roduced w ater d ischarge , h istorically, no form has existed for making application for a produced water discharge permit. A permit application to discharge produced water to inland waters and a permit application to discharge produced water to the

Gulf of Mexico are each by letter of request. An individual permit application is also required if operators want to apply to land

- apply produced water

.