Meeting Summary

Topic: Conference Call with BLX, Inc Regarding Shale Gas Extraction 

Operations in Pennsylvania

Meeting Date: 15 May 2012

Participants: Brian D’Amico, Lisa Biddle, Erik Helm (EPA/EAD)

Betsy Bicknell, Meghan Camp, Brent Ruminski (ERG)

Richard Brewer (BLX)

On 15 May 2012, the U.S. Environmental Protection Agency (EPA) held a conference 

call with BLX, Inc. (BLX) to discuss their Marcellus Shale Gas operations in Pennsylvania. 

Discussion topics included:

 Company Background;

 Marcellus Project Investment Structure; and

 Marcellus Well Operations.

Attachment 1 lists the meeting participants. Attachment 2 provides a summary of costs for 

BLX’s Marcellus wells and wastewater management.

Company Background

BLX is an independent natural gas producer that operates approximately 700 gas wells in 

the Appalachian Basin. The company has drilled conventional wells since 1986 and decided to 

drill their first Marcellus well in 2006. To date, BLX has drilled 18 vertical Marcellus wells and 

no horizontal wells. Due to the low gas prices, BLX is not currently drilling new wells. BLX 

fractured the first 16 wells using slickwater techniques and the last two using high-pressure 

nitrogen. BLX explained that most small producers active in the Marcellus tend to drill vertical 

wells. BLX does not drill horizontal wells because they require relatively large capital

investments. In addition, horizontal wells require larger gas pipeline capacity than vertical wells 

due to enhanced production rates. BLX explained that the natural gas pipeline infrastructure is 

limited in the Marcellus region where they operate. 

Figure 1 shows all BLX oil and gas wells (Marcellus shale and other oil and gas) located 

northwest of Pittsburgh, Pennsylvania using EPA’s Geoplatform mapping tool and coordinates 

from DrillingInfo, Inc’s HPDI database and PA DEP’s database.

1 BLX’s Marcellus shale wells 

are located in Armstrong, Butler, and Indiana Counties. Figure 1 also shows the centralized 

waste treaters (CWTs) that have treated BLX’s shale gas wastewater (see Wastewater 

Management).

 

1 HPDI database last updated in December 2011. 
Meeting Summary

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Sources: DrillingInfo, Inc’s HPDI database, PA DEP database, EPA’s GeoPlatform maping tool.

Figure 1. BLX Shale Gas Wells (yellow), Other Oil and Gas Wells (red), and 

Treatment/Disposal Sites (green)

Marcellus Project Investment Structure

BLX explained that investments for new wells are grouped into projects consisting of two 

to ten wells (approximately $15 million total for project). Up-front costs include:

 Land leases;

 Well pad construction;

 Drilling; and

 Hydraulic fracturing and well completion.

Typically, BLX covers 25 percent of the initial capital cost to develop the project while 

investors pay for the remaining 75 percent of the cost. BLX stated that this type of investment 

structure is typical for small producers.

Once the well begins producing gas, BLX no longer pays a land lease, and instead pays 

royalties to the land owner. For a recent project, BLX paid approximately 12.5 percent of its

revenue directly to the landowner. BLX noted that royalties have risen since their last project and 

Patriot Water Treatment

Reserved Environmental Services

Pennsylvania Brine 

Treatment

Tunnelton Liquids Co.

McCutcheon Enterprises, Inc.

Advanced Waste 

Resources of PA

Treatment/Disposal 

Facilities

Non-Shale Gas Wells

Shale Gas Wells
Meeting Summary

Page 3 of 12

are now in the range of 15 to 18 percent of total revenue and these royalty increases are 

becoming common in the industry. After royalties are deducted, the investors and BLX split the 

remaining revenue at the same ratio in which they invested. For example, if BLX covered 25 

percent of the initial capital cost, they keep 25 percent of the remaining revenue after the 

landowner is paid. Figure 2 illustrates this structure.

Figure 2. Overview of Marcellus Project Investments and Revenues

Marcellus Well Operations

This section describes the portion of the discussion on BLX’s Marcellus shale gas well 

development process. Table A-2 in Attachment 2 provides a summary of costs BLX provided 

during this discussion. The processes discussed include:

 Geological survey and land leasing;

 Source water management;

 Well pad construction and drilling;

 Hydraulic fracturing;

 Well completion; and

 Production.

Geological Survey and Land Leasing 

BLX uses geological survey data to identify potentially active areas in the Marcellus for 

drilling. BLX stated that that they have found the survey data to be quite accurate. However, 

there is a lot of uncertainty regarding gas production despite the geological data accuracy. BLX 

explained that they have often observed significant differences in gas production between wells 

that have been drilled in the same area and geological conditions.

Remaining 

Revenue

Total 

Investment

Revenue to 

Royalty Fees

25 % (BLX)

25 % (BLX)

12.5 % (Landowner)

75 % (Investors)

75 % (Investors)
Meeting Summary

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Once BLX identifies an area to drill, they set up a lease agreement with the land owner. 

As part of this agreement, BLX pays a land lease2until the well begins producing gas. Once the 

well starts to produce gas, BLX pays royalties to the land owner, as described in the previous 

section.

Well Pad Construction and Drilling

Figure 3 shows a diagram of a BLX well pad as described on the conference call. A BLX 

well pad, designed for one vertical well, is typically 4.5 acres and includes a one million gallon

pond for freshwater and wastewater storage lined with 30 mil liner. The wellhead must be 

located at least 350 feet from the property line. BLX did not discuss other well pad requirements 

such as primary or secondary containments or stormwater management. Each well pad costs 

approximately $50,000 to construct. BLX provided the following approximate cost breakdown:

 Geological survey—$1,500;

 Permits—$2,500;

 Access road construction—$10,000 to $15,000; and

 Storage pond—$25,000 to $30,000.

On average, BLX drills vertical Marcellus wells to 7,000 feet. The cost for BLX to drill a 

vertical well is approximately ten dollars per foot of vertical depth. After additional costs (e.g., 

installing casing, cementing), the final cost to drill each vertical well is approximately $90,000.

Figure 3. BLX Marcellus Well Pad

Source Water Management

BLX currently withdrawals water from the following sources to use in the drilling and 

hydraulic fracturing processes:

 Public access to waterways (e.g., Allegheny River);

 

2 BLX reported a land cost of $10 per acre. However, according to Pennsylvania’s Department of Conservation and 

Natural Resources, the lowest lease bid for state land in 2010 was $2,000 per acre. Available online at: 

http://www.dcnr.state.pa.us/forestry/naturalgasexploration/faq/index.htm . 

7,000 ft deep vertical 

well bore

15 acre well pad

1MGal lined water 

storage pond Well head
Meeting Summary

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 Private property access to waterways (e.g., rivers, streams); and 

 Purchase from municipality.

BLX also reuses treated flowback for hydraulic fracturing. BLX did not mention the typical 

blending ratios for slickwater fracturing jobs, but noted that their most recent nitrogen fracturing 

jobs were completed using 100 percent recycled flowback, which was treated at the McCutcheon 

CWT prior to reuse.

Freshwater is trucked from the water source to the well pad where it is stored in lined 

ponds. BLX reported transporting the water from the source to the pad is typically a 2 to 3 hour 

round trip. The trucking companies typically charge $80 per hour on the road and each truck 

holds approximately 100 barrels. Using these cost assumptions; BLX pays $1.60 to $2.40 per 

barrel to haul fresh water from the source to the well site. Assuming that each slickwater and 

nitrogen-fractured well requires 900,000 and 180,000 gallons, respectively, BLX pays $7,000 to 

$51,000 for trucking per fracturing job.

In addition to the cost to truck fresh water, BLX may pay a onetime fee for water 

withdrawals. For example, when using private property to withdrawal from a source, BLX 

typically pays the landowner per fracturing job. BLX estimated this cost at $1,000 per fracturing 

job. BLX also withdrawals fresh water from a boat ramp owned by a local municipality. This 

municipality is now considering charging BLX $25,000 per year for use of boat ramp. In 

addition to rivers and streams, BLX has purchased treated municipal wastewater. 

Well Completion: Hydraulic Fracturing

As described previously, BLX has fractured 16 wells using slickwater fracturing fluid 

and 2 wells using compressed nitrogen. Both types of fracturing fluids require make-up water; 

however, the nitrogen fracturing fluid requires significantly less water than slickwater fluids. For 

example, fracturing one vertical Marcellus well in western Pennsylvania typically requires 

approximately 900,000 gallons of water when using slickwater techniques. In contrast, the 

nitrogen fracturing technique only required approximately 180,000 gallons of water per well. 

BLX commented that the major benefit of nitrogen fracturing is the reduced 

environmental footprint, including:

 Reduced pond and well pad size;

 Reduced fresh water requirements; and

 Reduced wastewater disposal.

BLX noted that there may also be production benefits to nitrogen fracturing, but because the 

nitrogen-fractured wells are fairly new, they do not have enough production data to fully 

evaluate these benefits. BLX has observed that the initial production is slightly higher than the 

average slickwater-fractured well. However, to accurately compare nitrogen-fractured wells to 

slickwater-fractured wells, they will need a five-year decline curve.
Meeting Summary

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Figure 4 shows a diagram of a typical BLX well pad during hydraulic fracturing. The 

fresh water is pumped from the storage pond to a blender where it is mixed with chemicals and 

proppant as it is injected into the well. BLX estimates that the cracks created by the pressurized 

fluid extend approximately 700 feet from the well bore.

Figure 4. BLX Well Pad During Hyrdaulic Fracturing

Well Completion: Flowback

Figure 5 shows a diagram of a typical BLX well pad during the flowback portion of the 

completion process. Both slickwater and nitrogen-fractured wells flowback approximately 40 

percent of the total injected fracturing fluid volume within 30 to 90 days. Because the volume of 

injected fracturing fluid is less for nitrogen-fractured wells (180,000 gallons compared to 

900,000 gallons), they in turn generate less flowback. According to BLX, typical flowback TDS 

concentrations start at 20,000 mg/L and gradually increase to 50,000 mg/L. Because TDS 

concentrations in flowback are relatively low compared to produced water, most flowback can be 

reused without significant treatment. BLX did not provide specific reuse criteria because a 

fracturing service provider typically determines if the water quality is suitable for hydraulic 

fracturing and determines the appropriate mixture and quantities of chemical additives. 

Because BLX operates outside of the Susquehanna and Delaware River Basins, they are 

subject to Pennsylvania Department of Environmental Protection (PA DEP) requirements, and 

not the more stringent Susquehanna River Basin Commission and Delaware River Basin

Commission requirements. PA DEP does not require operators to store flowback or produced 

water in closed tanks. Therefore, BLX can use the same lined pond that was used for freshwater 

storage during drilling and hydraulic fracturing, to store flowback and produced water. Flowback 

Freshwater Sources:

• Allegheny River,

• Other private streams,

• Treated municipal wastewater,

• Treated flowback from McCutcheon

Trucked to Site

Blender and pump

Chemicals

Proppant

Injected 

fracturing fluid

700 ft fractures
Meeting Summary

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flows directly from the wellhead to the lined pond. All gas present in the flowback is flared. 3

Once the pond is full, trucks haul the wastewater to the ultimate disposal facility. The wastewater 

destination is determined in part by BLX’s drilling activity. For example, if BLX is actively 

drilling and fracturing wells and has a need for freshwater, BLX will send wastewater to 

McCutcheon for treatment and reuse. If BLX is not actively drilling or fracturing wells (as was 

the case during EPA’s conference call), BLX will send the wastewater to RES for treatment and 

disposal or to underground injection wells.

Figure 3. BLX Well Pad During Flowback

Production

The well is switched into production mode once the well begins producing flowback 

containing around 100% percent gas. This involves the removal of flowback equipment (e.g., 

flaring units) and installation of production equipment (i.e., dehydrators, final connection of gas 

to sales line). Figure 6 shows a diagram of a typical BLX well pad during well production. 

During production phase, wastewater flows decrease to approximately 6.5 barrels per day (200 

bbl/month). 

Gas production from BLX’s vertical Marcellus wells ranges from 50,000 cubic feet per 

day to 400,000 thousand cubic feet per day. It was estimated that fractures protrude 700 feet, 

which is far enough to drain approximately 35 acres (0.06 sq miles). BLX’s estimates that

vertical Marcellus wells have a 70 percent production decline after two years. When asked what 

the expected life of a vertical Marcellus well, BLX explained it is difficult to answer because all 

 

3 BLX has not used any reduced emissions completions or analyzed projected costs. The New Emissions Standards 

for Hazardous Air Pollutants requires reduced emissions completion for sources constructed after 1/15/2015.

Wastewater Destinations:

• Centralized treatment for reuse (McCutcheon 

facility),

• Centralized treatment for disposal (RES),

• Underground injection wells (Ohio)

Trucked from Site

Flowback

Freshwater pond is now 

used for flowback

storage

Gas to flare

Gas/water 

separator

Flare
Meeting Summary

Page 8 of 12

Marcellus wells are only a few years old. However, if Marcellus wells are similar to Devonian

wells, they may produce for up to 100 years. BLX also noted that it is possible to refracture

Marcellus wells after approximately ten years, but because all of their wells are relatively new, 

they do not currently have plans to refracture.

BLX provided an overview of operating costs once a well goes into production mode.

BLX charges the well owner approximately $500 to $700 per month to keep the well producing 

gas. This service includes sending a technician to the site daily to check equipment and perform

basic maintenance. In addition to this basic maintenance, BLX charges the well owner for water 

hauling and any extra work to fix mechanical breakdowns. BLX passes these additional costs

directly to the well owner and estimated them as $300 per month.

Figure 4. BLX Well Pad During Production

Wastewater Management

BLX manages its Marcellus wastewater using three options:

 Treatment for Reuse: If BLX is planning to fracture a well in the near future, they 

will send the wastewater to McCutcheon. This company charges 10 cents per 

gallon, and requires their customers to take a load of treated wastewater equal to 

the wastewater volume that the customer dropped off for treatment. The 

wastewater treatment facility removes bromides, bacteria, and some TDS.

 Treatment for Disposal: If BLX does not need treated wastewater for reuse, they 

send the wastewater to a CWT that does not require their customers to take a load 

of treated wastewater. On the conference call, BLX stated that, in these cases, 

Wastewater Destinations:

• Centralized treatment for reuse 

(McCutcheon facility),

• Centralized treatment for disposal (RES),

• Underground injection wells (Ohio)

Trucked from site

Gas &

Produced Water

Freshwater pond is now 

used for produced water 

storage

Gas to pipeline

Gas/water separator
Meeting Summary

Page 9 of 12

they send their wastewater to RES who charges 12.5 cents per gallon.

4 However, 

PA DEP’s statewide waste data5indicate BLX only hauled Marcellus wastewater 

to McCutcheon and four other CWTs in 2011 including:

 PA Brine Treatment, Inc. (Joseph plant in Indiana County, PA);

 Tunnelton Liquids Company; 

 Patriot Water Treatment, Inc. 6(Warren, OH); and

 Advanced Waste Services (New Castle, PA).

 Underground Injection: If BLX does not need treated wastewater for reuse, they 

may also haul their wastewater to underground injection wells in Ohio for 

disposal. This management practice requires BLX to hire a trucking company to 

haul the wastewater across state lines. Typical costs include $1.30 per barrel for 

injection and $6.30 per barrel for trucking. The $1.30 per barrel fee includes 

$1.10 to the underground injection company and a $0.20 state fee. The total cost 

is approximately $8.50 per barrel for injection and trucking. According to BLX, 

some of the companies that own and operate underground injection wells in Ohio 

include: 

 DBD Energy Disposal (Trumble County, OH); and

 Northstar Disposal (Youngstown, OH). 

BLX noted that it is not difficult to find Ohio injection wells with available capacity. 

However, BLX did have a problem using underground injection once when they detected

bacteria levels in their flowback exceeding the Ohio injection well acceptance criteria. After 

trying several treatment methods including aeration and biodegradable chemicals, BLX 

eventually hauled this wastewater to McCutcheon. After treatment, BLX hauled the wastewater 

to Ohio for injection. BLX did not suggest this is a common occurrence for Marcellus shale gas 

wastewater but it is a potential problem.

According to PA DEP’s oil and gas reporting data, BLX managed 60 percent of its 

wastewater through CWTs in 2011 compared to the statewide percent of 56 percent (PA DEP). 

Table 1 provides an overview of the 2011 practices BLX used to manage shale gas wastewater in 

Pennsylvania with statewide management practices.

 

4 Reserved Environmental, Inc is a CWT with that treats shale gas wastewater using chemical precipitation and 

filtration. The facility has a NPDES permit to discharge but currently returns treated wastewater to operators for 

reuse in fracturing. This facility offers two types of services: recycling (i.e., operators drop a load off and pick a 

treated load up) and dumping (i.e., operators drop a load off). Recycling costs 9.5 cents per gallon and dumping 

costs 12.5 cents per gallon.

5 Available online at: 

https://www.paoilandgasreporting.state.pa.us/publicreports/Modules/DataExports/DataExports.aspx

6 According to their website, Patriot Water Treatment accepts low TDS wastewater (i.e., flowback) for treatment. 

Treated wastewater may be reused in fracturing or is hauled to the City of Warren POTW. More information is 

available online at: http://www.pwtllc.net/index.html. 
Meeting Summary

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Table 1. BLX’s 2011 Shale Gas Wastewater Management 

Practices in Pennsylvania

Management 

Practice

BLX

All Marcellus Wastewater 

in Pennsylvania

Percentage 

(%)

Volume 

(bbls) a

Percentage 

(%)

Volume 

(bbls) a

Reuse 0 0 35 11,161,367

Underground 

Injection 40 16,932 b 7 2,252,615

Centralized Waste 

Treatment 60 25,379 56 17,639,443

Publicly Owned 

Treatment Works 0 0

< 1 47,629

Other (unknown) 0 0 1 397,318

Total 100 42,311 100 31,533,305

a—Wastewater volumes include produced water, flowback, and drilling fluids.

b—Several underground injection wells in PA DEP’s database are inadvertently 

listed as CWTs. The data was analyzed assuming they are underground injection 

wells. The facility names include “MILLER & CO #3 SWIW #28” and “B & B 

OILFIELD SERVICE, INC MILLER & CO #3.” 

Source: PA DEP’s Oil and Gas Reporting database.
Meeting Summary

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Attachment 1

Table A-1. List of Meeting Participants

Name Affiliation Phone Email

Richard Brewer BLX 724-859-9835 rbrewer_blxrmd@windstream.net

Stan Berdell BLX 724-543-5743 sberdell_blxrmd@windstream.net

Brian D’Amico US EPA 202-566-1069 Damico.Brian@epamail.epa.gov

Lisa Biddle US EPA 202-566-0350 Biddle.Lisa@epamail.epa.gov

Erik Helm US EPA 202-566-1049 Helm.Erik@epa.gov

Betsy Bicknell ERG 703-633-1612 betsy.bicknell@erg.com

Meghan Camp ERG 703-633-1684 meghan.camp@erg.com

Brent Ruminski ERG 703-633-1701 brent.ruminski@erg.com

 
Meeting Summary

Page 12 of 12

Attachment 2

Table A-2. Typical Costs for Vertical Marcellus Wells

Type of Cost Reported

Cost

(Dollars) Notes

Well Pad Construction

Permitting 2,500

Geological survey 1,500

Access road 10,000—15,000

Lease 10 This is the cost per acre per year. Most 

BLX well pads require 15 acres.

Pond (slickwater) 20,000—30,000

Slickwater-fractured wells require more 

water. These ponds are approximately 1 

million gallons in capacity.

Pond (nitrogen) 8,000—10,000

Nitrogen-fractured wells require less 

water. These ponds are approximately 

200,000 gallons in capacity.

Total well pad construction 50,000

Well Construction and Drilling

General cost per foot of well

drilled 10

Total drilling cost 90,000

Hydraulic Fracturing

Nitrogen fracturing 325,000 Includes water costs.

Slickwater fracturing 300,000

Total Cost of Well

Total cost of well pad, drilling, and 

fracturing

1,100,000—

1,200,000

Includes well pad construction, drilling, 

and fracturing.

On Going Costs

Basic well maintenance 500—700

This is the cost per month that BLX 

charges to the well owner for normal 

production operations (e.g., sending 

technician to well pad for routine checks).

Water hauling and other 

maintenance 300 This is the average cost per month for hauling water off site per well.

Wastewater Management Costs (Dollars per barrel)

Disposal 

Cost

Trucking 

Cost Total Cost Notes

Truck to 

injection well 

in Ohio

1.10 +

0.20 (state 

fee)

6.30 8.50 

Trucking cost may vary depending on 

well location but this cost is 

representative for trucking from this 

area to Ohio.

McCutcheon 4.20 Varies 4.20 + 

trucking

This facility requires the user to take a 

load of treated wastewater.

RES 5.25 Varies 5.25 + 

trucking

The cost reported is for treatment only. 

This facility gives the option of taking a 

load of treated wastewater.

General 

trucking cost

Varies with 

distance

$80 per 

hour

Varies with 

distance

Cost per hour. Each truck holds 100

bbls of wastewater.