Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 1 of 33 

# P aper # 2

- 24



# WASTE MANAGEMENT

P repared by the Technology Subgroup
of the Operations & Environment Task Group

O n September 15

, 2011, T he Na ti on a l P e t r o l e um C oun c i l ( N P C ) i n a pp r ov i ng it s r e po r t

, Prudent Development: Realizing the Potential of North America’s Abundant Natural Gas
and Oil Resources

, a l s o a pp r ov e d t he m a k i ng a v a il a b l e of ce r t a i n m a t e r i a l s u s e d i n t he

s t udy p r o ce ss , i n c l ud i ng d e t a il e d, s p ec i f i c s ub j ec t m a tt e r p a p e r s p r e p a r e d or u s e d b y
t he study’s T a s k G r oups a nd/or S ubg r oup s

. T h e s e T op i c and White P a p e r s we r e

w o r k i ng do c u m e n t s t h a t we r e p a r t of t he a n a l y s e s t h a t l e d t o d e v e l op m e nt of t he

s u mm a r y r e s u lt s p r e s e n t e d i n t he r e p o r t ’ s E x ec u ti ve S u mm a r y a nd C h a p t e r s

.

T h e s e T o pi c and White P a p er s re p r e s e n t t h e v i ew s a n d c o n c lu s i o n s of t h e a u t h o r s

. T h e N a t i o n al P e t r o l e u m C o un c i l h as n ot e nd o r s e d or a pp r ov e d t h e s t a t e m e n t s a n d

c o n c lu s i o n s c o n t a in e d i n t h e s e d o c u m e n t s, bu t a pp r ov e d t h e publi c a t i on of t h e s e

m a t er i a l s as p a r t of t h e s t ud y p r o ce ss

.

T he N P C b e li e v e s t h a t t h e s e p a p e r s w il l be of i n t e r e s t t o t he r ea d e r s of t he r e po r t a nd

w il l h e l p t h e m b e tt e r und e r s t a nd t he r e s u lt s

. T h e s e m a t e r i a l s a r e b e i ng m a de a v a il a b l e i n t he i n t e r e s t of t r a n s p a r e n c y.

T he a tt ac h e d p a p e r i s one of 5 7 s u c h w o r k i ng do c u m e nts u s e d i n t he s t udy a n a l y s e s

. A l s o i n c l ud e d i s a r o s t e r of t he S ubg r oup t h a t d e v e l op e d or s ub mitt e d t h i s p a p e r

. A pp e nd i x C of t he f i n a l N P C r e po r t p r ov i d e s a c o m p l e t e li s t of t he 5 7 T op i c and White

P a p e r s a nd a n a b s t r a c t f or eac h. T h e full p a p e r s ca n be v i ewe d a nd do w n l o a d e d fr om

t he r e po r t s ec ti on of t he N P C we b s it e ( www

. np c

. o r g )

.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 2 of 33 

## Technology Subgroup

Chair
J. Daniel Arthur Managing Partner ALL Consulting

Assistant Chair
H. William Hochheiser Senior Energy and Environment Manager ALL Consulting

Members
Mark D. Bottrell Manager

– Field, Eastern
Division Chesapeake Energy Corporation
André Brown Associate W. L. Gore & Associates,

Inc.
John Candler Manager, Environmental
Affairs M

- I SWACO

Lance Cole Operations Manager Petroleum Technology
Transfer Council
David DeLaO Manager, Drilling Engineering, Southern
Division Chesapeake Energy Corporation

Larry W. Dillon Completions Manager, San
Juan Business Unit ConocoPhillips

Donald J. Drazan Chief

– Technical Assistance Section, Bureau of Oil and Gas Permitting
and Management, Division of Mineral Resources, Department of
Environmental Conservation State of New York

Maurice B. Dusseault Professor of Geological Engineering, Department of
Earth & Environmental
Sciences University of Waterloo

Catherine P. Foerster Commissioner Alaska Oil & Gas
Conservation Commission
Linda Goodwin President DOT Matrix Inc.
Edward Hanzlik Senior Consultant, Petroleum Engineering, Heavy Oil &
Unconventional Resources Chevron Energy Technology Company

Ron Hyden Technology Director,
Production Enhancement Halliburton CompanyWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 3 of 33 Jake Jacobs Environment, Health and Safety Advisor Encana Oil & Gas (USA)

Inc.
Valerie A. Jochen Technical Director,
Production Unconventional

Resources Schlumberger

Bethany A. Kurz Senior Research Manager,

Ene rgy & Environmental
Research Center University of North Dakota

Matthew E. Mantell Senior Environmental Engineer Chesapeake Energy Corporation
John P. Martin* Senior Project Manager, Energy Resources R&D New York State Energy Research and Development Authority Dag Nummedal Director, Colorado Energy
Research Institute Colorado School of Mines

Jerry R. Simmons Executive Director National Association of Royalty Owners
Steve Thomson Manager, DeSoto Water

Resources Southwestern Energy Company
Denise A. Tuck Global Manager, Chemical Compliance, Health, Safety
and Environment Halliburton Energy Services, Inc.

Mike Uretsky Member, Board of Directors
Executive Committee Northern Wayne Property
Owners Alliance
John A. Veil** Manager, Water Policy Program, A rgonne National Laboratory U.S. Department of Energy

Donnie Wallis Manager

– Regulatory Affairs, Air Programs and Design Chesapeake Energy Corporation

Chris R. Williams Group Lead, Special Projects, Environment, Health and Safety Encana Oil & Gas (USA)

Inc.

Ad Hoc Member Douglas W. Morris Director, Reserves and Production Division, Energy
Information Administration U.S. Department of Energy

* Individual has since retired but was employed by the specified company while participating in the study.

* * Individual has since retired but was employed by the specified company while participating in the study.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 4 of 33 

### Table of Contents

ABSTRACT

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

THE ROLE OF WASTE MANAGEMENT IN OIL AND GAS EXPLORATION AND
PRODUCTION

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

BACKGROUND ON DRILLING WASTES

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

DESCRIPTION OF THE TECHNOLOGY

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

A. Many Different Options for Managing Drilling Wastes

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

B. Historical Waste Management Technology Drivers

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

C. Timeline of E&P Waste Management

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

VARIATIONS BASED ON RESOURCE TYPE AND LOCATION

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

ENVIRONMENTAL BENEFITS

................................ ................................ .................... 25

OUTLOOK FOR DRILLING WASTE MANAGEMENT

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

A. Innovation and Future Use

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

B. Barriers and Opportunities

................................ ................................ ....................... 28

C. Long

- Term Vision

................................ ................................ ................................ .... 28

FINDING S

................................ ................................ ................................ ........................ 30

REFERENCES

................................ ................................ ................................ ................. 32Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 5 of 33 

### ABSTRACT

Waste management technology is a critical element of successful drilling and production operations. Proper application of waste management principles is required for both efficient drilling operations and environmental protection. Use of any given waste

management approach will continue to be decided by the interplay of economic, technical and operational barriers

.

During drilling the largest potential waste stream is used drilling fluids and cuttings that are produced while drilling the well. Options f or handling the fluids and cuttings, or “muds”, can be organized into a three

- tiered water

- management or pollution

- prevention hierarchy :

• Tier 1

– Minimization : The generation of waste is minimized within the processes for drilling a well. This approach i s mutually beneficial across all three objectives of minimizing the cost of drilling the well, meeting the technical of the drilling operation and minimizing the impacts on the receiving environment. When feasible, inhibitive drilling fluids and efficient mechanical solids

- control equipment can often save money for operators and results in greater protection of
the environment.

• Tier 2

– Recycle/Reuse : For the drilling fluid and cuttings that cannot be managed through water minimization approaches, operators can plan for reuse or recycling of drilling byproducts. The most common ways to reuse drilling fluids
is to re

- deploy them at another drilling location or at least to recover the most valuable constituents of the drilling fluids from one locatio n and move them to another drilling location. Substantial efforts are ongoing to develop economic methods to treat drilling fluids and drill cuttings so that

• they can be beneficially reused in oilfield and non

- oilfield applications.

• Tier 3

– Disposal : Wh en drilling waste cannot be managed through minimization, reuse, or recycle, operators must dispose of it.

Four main lines of technology have been developed to address drilling waste management which is centered on handling muds that can include water, o il and certain chemical additives:

• Thermal treatment uses heat to separate more objectionable components from less objectionable components based on differences in volatility. It is a common process applied to oil

- based mud and cuttings where centralized processing is feasible and disposal options are available for the objectionable residuals.

• Injection technology sends treated or untreated waste streams underground into geologic formations that can accept and safely isolate the waste. If geology and re gulations permit, injection can serve to substantially simplify waste management while also reducing the surface footprint.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 6 of 33 • High

- order beneficial reuse on land comprises a combination of bioremediation and re

deployment of treated wastes as soil amendments . It is most readily applied to water

based muds although variations have been developed for some synthetic

- based muds.

• Lower

- order beneficial includes re

- deployment as construction aggregates. The treatment criteria for aggregate use can focus more on stabilization rather than complete remediation so that the stabilized waste is rendered environmentally inert.

Future waste

- management technologies and practices most likely will find growing attention on biodiversity protection; changing energy policy wit h increasing focus on greenhouse gas emissions; progressively more difficult drilling environments such as offshore deepwater,
Arctic conditions and extended

- reach wells; and reduced landfill space available for waste disposal with implied greater reliance on beneficial reuse options.

.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 7 of 33 

### THE ROLE OF WASTE MANAGEMENT IN OIL AND GAS
EXPLORATION AND PRODUCTION

Waste management plays a role in the process of drilling a well as the drilling fluid circulates the cuttings from the wellbore, then as the fluid and cuttings are managed during and after the ir
surface return and finally after the drilling has been comple ted and the cuttings and fluid s are further process ed or sent for dispos al . As the evaluation of drilling waste has progressed, a larger view of drilling waste management has grown to incorporate a larger view of management
activities

. I n addition to hist orical focus on drilling muds and cuttings management, the impacts on associated air pollution, resource management, and biodiversity protection has evolved waste management into a broad

- based evaluation of all wastes associated with drilling and producing
wells.

During drilling the largest potential waste stream is used drilling fluids and cuttings. During hydrocarbon production, the largest potential waste stream is produced water. The operational source of the drilling fluid and cuttings waste is the uphole return of drilling mud with entrained
rock cuttings that are produced while drilling the well. The cuttings are generated by the drill bit and tend to break apart as they are transported to the surface. Drilling fluids are ci rculated
downhole to capture and lift the cuttings to the surface where they are removed with mechanical separation equipment. The residual cuttings that cannot be removed from the drilling fluid become entrained into the drilling fluid as fine solids. I n order to manage the buildup of fine solids, drilling fluids are diluted with fresh volume of base fluids. Excessive volumes of drilling
fluids contaminated with fine solids become waste.

According to an American Petroleum Institute (API) waste survey, the exploration and production segment of the U.S. oil and gas industry generated more than 360 million barrels (bbl) of drilling wastes in 1985 (API, 2000) . The report estimates that 28% of drilling wastes are
sent to offsite commercial facilities for dis posal ( Wakim 1987 ). A similar API study conducted ten years later found that the volume of drilling waste had declined substantially to about 150
million bbl (API, 2000) . While there are other sources of waste generated at the drill site, this paper will focus the generation and management of drilling fluids and cuttings from drilling operations.



### BACKGROUND ON DRILLING WASTES

Before addressing the array of waste management strategies and technologies, it is important to understand the nature of drilling wastes and the process that generates the waste.

Drilling f luids, solids

- control equipment and the drilling fluid circulation system all are critical
part s of the drilling operation. Drilling f luids (sometimes call drilling mud) consist of a
continuous l iquid phase and additives which modify the properties of the fluid to achieve better performance . The critical functions of drilling fluid include removing cuttings from the well, maintaining wellbore stability, cooling and lubricating the bit and control ling subsurface pressure. Once the drill cuttings are carried to the surface by the drilling fluid, they are separated from the fluid using mechanical solids

- control equipment. Once the drill cuttings are removed, the drilling fluid can be re

- circulated down the drill pipe. Depending on the geologic formation,Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 8 of 33 environment, application and well objectives, drilling fluid systems are customized to meet performance requirements.

Water

- based drilling muds (WBMs) use water or brine as the continuous or externa l phase with the critical functions (density, viscosity, filtration, lubricity) achieved with the addition of
various materials. Non

- aqueous systems use non

- water

- soluble base fluid as the continuous phase with water (or brine) emulsified and dispersed in the base fluid. Non

- aqueous drilling fluids (NAFs) include diesel, mineral oils, low

- toxicity mineral oils (LTMOs), and synthetic base fluids. Studies in the North Sea and elsewhere in the 1980s, raised concerns about the environmental effects of the orig inal high aromatic content of diesel fluid s which drove the introduction of LTMOs and ultimately the development of synthetic

- based muds (SBMs) in the 1990s. The SBMs were developed to have the same performance as oil

- based muds (OBMs) but
with a lower env ironmental impact and enhanced worker safety through lower toxicity,
elimination of p olycyclic a romatic h ydrocarbons (PAHs), faster biodegradability, and lower bioaccumulation potential (Neff et al., 2000)

.

In selecting a drilling fluid one must consider the formations that are being drilled through (e.g., whether there are unstable shales present), the wellbore complexity (e.g., whether the hole is
vertical , directional or extended reach), casing design, and pore pressure analysis. While WBMs
maintain an important role in many drilling operations, NAFs offer a number of technical advantages over WBMs in difficult drilling situations (such as extended reach or drilling of high

temperature/high

- pressure wells).

As compared to WBMs, NAFs inhibit shale hydra tion, consequently wellbore stability is maintained. NAFs are intrinsically lubricious; therefore, the ability to drill highly deviated (non

vertical) extended

- reach and horizontal holes is enhanced over that with WBM use. In addition, NAFs are generally m ore stable in high

- temperature applications such as those encountered in deep wells. Furthermore, NAFs are less susceptible to the formation of gas hydrates that might potentially occur during deepwater drilling operations. As a result of th o se characteris tics, NAF use allows faster drilling rates and results in fewer drilling problems. Faster drilling also assures fewer rig days (less cost and emissions) and reduces health and safety risks to personnel. In addition, better wellbore maintenance with NAF use results in reduced quantities of waste solids.

Despite their high performance, there are limitations to NAF use. Th o se limitations include their cost, limitations on the fluid physical properties particularly in cold

- water applications, reduced logging quality over WBMs, the high cost of lost circulation problems, and environmental concerns associated with NAF disposal.

Owing to the minimal technical demands, low

- cost WBMs typically are used in the upper
sections of m ost wells. As the well deepens, and/or becomes directional, the technical demands increase proportionately, necessitating displacement with either a specialized water

- based system

or a non

- aqueous drilling fluid.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 9 of 33 Environmental regulatory considerations play a significant role in both the selection of drilling fluids and the overall economics of drilling a well. The specific regulatory requirements of an area often dictate the technologies that can be used and what, if any, material can be discharged
into the environment (EPA, 1999) . This, in turn, influences what and how wells can be drilled. The ability to discharge NAF cuttings significantly expands the inventory of wells that can be economically drilled in an area.

While it is not possible to describe drilling waste using a single set of chemical properties and concentrations, several groups of constituents are present in most types of drilling waste. The major constituents of concern in produced water are:

• Salt content (expressed as salinity, total dissolved solids, or electrical conductivity)

.

• Oil and grease (this is an analytical test that measures the presence of families of organic chemical compounds)

.

• Various natural inorganic and organic compounds or chemical additives used in drilling and oper ating the well that may have some toxic properties

.

• Solids generated from the drill cuttings.



### DESCRIPTION OF THE TECHNOLOGY

A. Many Different Options for Managing Drilling Wastes

The characteristics of drilling waste water vary from location to location and over time. Different locales have different drilling conditions, regulatory/legal requirements, receiving environments, and infrastructure. As a result, no single waste manage ment technology or technique is used at all locations. Many different technology options are available that can be employed at specific locations. Selection of a management option for waste management at a particular site varies based on:

• The nature of the technical requirements of the drilling operation.

• The economics of drilling the well and managing the associated byproducts.

• The environmental requirements for a receiving environment and regulatory structure perspective.

Much of the information for th is paper is derived from the Drilling Waste Management Information System (DWMIS) website, developed by Argonne National Laboratory (ANL) for the US Department of Energy ( DOE ) . DWMIS currently is housed as part of the website for
DOE’s and ANLs informatio n transfer system (ANL, 2011)

.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 10 of

33 Drilling w aste management technologies and strategies can be organized into a three

- tiered

water

- management or pollution

- prevention hierarchy (i.e., minimization, recycle/reuse, and disposal). Examples of technologies and practices for each group are shown in Tables 1

- 5.

Tier 1

– Minimization

. In the waste minimization tier, the generation of waste is minimized within the processes for drilling a well. This approach is mutually beneficial across all three objectives of minimizing the cost of drilling the well, meeting the technical requirements of the drilling operation and minimizing the impacts on the receiving environment. When feasible, inhibitive drilling fluids and efficient mechanical solids

- control equipment can often save money for operators and results in greater protection of the environment. Examples of waste minimization approaches and technologies are shown in Table 1.

Table 1.

— Water Minimization Technologies.

Approach Technology Pros Cons

Drilling Mud and Cuttings

Reduce the
volume of drill solids entering
the wells Smaller diameter casing programs Reduced cost of casing and less volume of drill cuttings Difficult to use on deep holes where multiple casing strings are required. Less volume capacity for producing the well.

Inhibitive water

based drilling fluids Reduces degradation of cuttings and reduces wellbore instability. Increases rate of penetration. Use of advanced products encourages
additional research Shale inhibitor chemistry is expensi ve and adds either organics or salts to the drilling byproducts. Proprietary chemical ingredients generate public uncertainty about unknown potential hazards.

Oil

- b ased drilling
f luids Reduces degradation of cuttings and reduces wellbore instability. Increases rate of penetration. Typically requires additional waste

management processing, Some OBMs contain toxic organics.

Synthetic

- based drilling fluids Reduces degradation of cuttings and reduces wellbore instability. Increases rate of penetration. Expensive base fluids and alternative internal phases are frequently cost

- prohibitive.

Using Drilling
Fluids and
additives with
lower
environmental impacts New drilling fluid products that

remove a recognized
environmental
hazard such as heavy metals, s alt
or oil Removal of environmental hazard from the product
removes or deduces the
concentration of the hazard in the drilling fluid waste. Some constituents that have
environmental hazards are extremely effective products that are required for efficient d rilling.

New drilling f luid systems t argeting drilling fluid products that act together to achieve better performance Can increase drilling efficiency, reduce cost and
i m prove environmental performance Can be cost

- prohibitive. Proprietary chemistry can result in public concerns about unknown chemistry.

Alternative

w eighting a gents Higher solids

- control efficiency, lower trace metal Increased cost.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 11 of

33 Approach Technology Pros Cons

Alternatives to
traditional use of barite either by
ch ang ing the size of the particles or
the chemical makeup content.

Improve
mechanical
solid control efficiency Shale shakers Advanced technology promotes high removal efficiency Advanced performance is
ineffective in situations where cutting size degrades in the
wellbore

Cuttings d ryers and drying shakers Secondary treatment for OBM and SBM cuttings reduce retention on cuttings Ineffective on w ater

- based mud cuttings due to shale hydration
issues.

Screens and screen
selection Improved removal of solids from drilling fluids Screen improvements req uired
new shale shakers to take full advantage of increased performance.

Hydrocyclones,
mud cleaners and other secondary
solids

- control equipment Advanced technology promotes high removal efficiency Advanced performance is
ineffective in situations where cutting size degrades in the
wellbore

Centrifuges Advanced technology promotes high removal efficiency Low treatment volumes and removes drilling fluids additives along with the solids

Mud tanks and reserve pit settling
basins Simple and low

- co st
alternatives Inefficient and frequently generates large volumes of waste.

Closed

- loop secondary
treatment systems for drilling fluids Chemically
enhanced fine solids separation equipment Recovers water from drilling
fluid contaminated with fine
solids Requires additional equipment and
costs

Drilling Practices

Directional drilling Extended reach, horizontal drilling multiple laterals Reduced volume of cuttings and other waste by increasing efficiency May be impractical in some
locations and can increase cost.

Drilling smaller
diameter
wellbore Closer spacing of
successive drill strings, slimhole drilling, coiled tube drilling Smaller wellbore produces
less waste. Reduces production volumes in

some cases.

Pneumatic Drilling Use of air or other gases to as the drilling fluid Removes need for drilling fluid and reserve pit Not applicable in many areas.

Advanced drilling fluid
containment systems Pipe wipers, mud vacuum systems,
mud buckets designed to reduce spills on the rig
floor. Effective red uction of drilling
fluid loss Does not address fine solids buildup and can lead to contamination of drilling fluids.

Advanced Reducing Effective product delivery into Advanced product deliveryWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 12 of

33 Approach Technology Pros Cons
drilling fluid product delivery systems packaging waste though bulk product delivery systems reduces
solid waste mud systems improve s efficiency. Packaging waste such as drums and empty sacks are a major waste
stream systems increase cost and are not applicable in some situations.

Advanced communication,

ana lysis, and
wellsite engineering Effective and
efficient use of
available technology improves both drilling efficiency
and waste
minimization Computer

- based data acquisition improves
information transfer and analysis so only the necessary products are used. Over

- reliance on technology diminishes sensitivity to onsite
evaluation and action to address problems at the wellsite.

Tier 2

– Recycle/Reuse

. For the drilling fluid s and cuttings that cannot be managed through

water

- minimization approaches, operators can move next to the second tier, in which drilling byproducts are reused or recycled. The most common way to reuse drilling fluids is to reuse
the m at another drilling location. Another common technique is to recover the most valuable
constitue nt of the drilling fluids with mechanical separation equipment (barite and base fluids) and reuse them on another drilling location.

Substantial efforts are ongoing to develop economic methods to treat drilling fluids and drill cuttings so that they can be beneficially reused in oilfield and non

- oilfield applications. Some of
th o se treatment option s are also used for treatment prior to disposal of the residual byproducts which are discussed in the next section. Examples of water reuse and recycle managemen t options and some of the specific uses are shown in Table 2.

Tier 3

– Disposal

. When drilling waste cannot be managed through minimization, reuse, or recycle, operators must dispose of it. Table 3 lists water disposal technologies.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 13 of

33 Table 2

. Drill Cuttings Reuse and Recycle Management Option

.

Management Option Specific Use Pros Cons

Thermal
Incineration Rotary Kilns Use of base fluid for energy No residual hydrocarbons on cuttings. Limited application and transportation of cuttings to
offsite treatment / use. No oil or

energy recovery

. Cement Kilns Use base fluid for energy

. Recovers energy and uses
drill solids. Limited slip stream to main cement production

.

Thermal Desorption Indirect rotary kilns Thermal recovery of base
fluid

. Dust from solids and thermal degradation of base fluids

. Hot oil processors Thermal recovery of base fluid, low operating temperatures

. Lower throughputs. Limited heat
transfer.

Thermal Phase Separation Thermal recovery of base fluid, Better air emission controls than rotary kilns

. Cost of Unit

.

Thermo Mechanical Distillation using
friction Mechanical energy, compact size, limited process temperatures, off shore suitability

. Cost of Unit

. Breakdown of cuttings from
hammer mill results in solids

carry ov er.

Thermal Plasma
Volatili z ation High operating temperatures
and volume reduction

. High Cost

– experimental and no commercial applications yet

. Bioremediation
and beneficial
reuse in land application or
wetlands application Land Farming Low treatment cost beneficial
in some soil conditions

. Not effective for salt and heavy metals, requires available land

area.
Land spreading (one time) Low treatment costs
beneficial in some oil conditions. Aqueous solutions from reserve pits can help irrigate dry lands. Not effective for salt and heavy metals, one

- time use only

Composting Small footprint Limited to temperate regions and requires water

. Vermiculture Soil amendment production Converts byproducts to
beneficial soil amendment Requires specialized drilling fluid and vermiculture experience

. Stabilization
and use as a
construction
material Road building sub
base or surface Has been demonstrated to meet specifications for road
base.

Daily cover for land
fills Stabilized cuttings are an
effective cover material

Other types of
construction material Can be used to develop drill pads

Solvent Extraction using Super Critical
CO2 Treatment of drill cuttings and recovery
of oil Ambient temps. Low energy consumption. High oil quality and recovery ef ficiencies. Exploratory. No commercial unit
available.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 14 of

33 Table 3. Drill cuttings and drilling fluid d isposal t echnologies.
Technology Pros Cons

Onsite bur ia l (Pits, Landfils) Low cost and simple technique. Most common waste management method, low toxicity additives prevent environmental hazards. If waste contains high concentrations of salts and hydrocarbons can leach from pit and create
environmental hazards.

Discharge to
Ocean WBM and SBM cuttings can be disposed
offshore with limited environmen tal impact

. Discharge of OBM cuttings can lead to cuttings piles that are slow to degrade under seafloor
conditions.

Commercial disposal facilities Offsite treatment and disposal allows effective and safe disposal of wastes that can not be disposed of onsite due to high concentrations of
toxic constituents. Requires transportation and associated air pollution. Reduces focus on waste minimization.

Slurry Injection Onsite waste management. Requires engineering studies to protect casing and drinking wate r supplies. Limited formations are available for injection.

Bioremediation / land application Effective treatment of organics, safe management of drilling fluid constituents. Not effective on wastes with high concentrations
of salt and oil

. Requires use of land areas

. Disposal in salt

Cavern Effective disposal in controlled conditions

. Requires transportation and associated air pollution. Reduces focus on waste minimization.

B. Historical Waste Management Technology Drivers

The history of development of oilfield waste management has several key drivers that continue to dominate the development and use of waste management strategies summarized in the previous sections. The first driver has been environmental compliance which has its own drivers
of env ironmental science and regulatory development. Secondly, operational performance required to drill and produce wells has evolved driving forward new requirements for technology. Finally, economic performance of the waste

- management technology and the

ove rall exploration and production operation placed demands on technology.

Within this triad of performance, individual technologies are developed within a business environment that tends to by cyclic in nature. Frequently, when rig counts are high, service companies perform well financiall y and have resources to investing in research and new technology or new equipment. At other times, when commodity prices and rig counts are low, pricing for oilfield services collapses and the focus becomes using existing equipment and technology in the most efficient manner. Regulatory cycles can also impact the introduction of new technology. The need for new technology is s ometimes created when a catastrophic event occurs. Other developments occur when discovery of an environmental hazard is revealed. Most commonly, a scheduled review of current practices requires systematic improvements in environmental performance. Figu re 1 reviews the historical rig count for d omestic operations compared with a key commodity driver, namely, the price of crude oil

.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 15 of

33 Figure 1. Variation of drill

- rig activity with crude oil price

Even when economic conditions are stable and regulatory conditions are stable, new technology is sometime required to address operational targets for the drilling operation. Deeper drilling, high temperatures, lower temperatures, challenging shale formations, directional drilling. All of these conditions req uire higher performance and consequently, new technology to address the challenges. For offshore drilling operations, the major changes have been driven.

C. Timeline of E&P Waste Management

Table 4 summarizes the timeline of development of oil and gas d rilling and associated waste

management technologies. In light of certain benchmark years, the timeline can be viewed as divisible into three main stages:

• Stage 1 (1859

- 1936): Creation of the industry and the earliest technologies

• Stage 2 (1939

- 1969): Fir st availability of standardized drilling methods

• Stage 3 (1970

- Present): Adoption of advanced and computer

- assisted technologiesWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 16 of

33 In Stage 1, simple methods for drilling were used. Early circulating systems in rotary drilling were focused on controlling sub

- surface pressures and cleaning the cuttings from the wellbore. Water is the primary component of drilling fluids and the process of drilling the well entrains solids into the water providing viscosity to help lift the cuttings from the wellbore. Two key components of drilling fluids that were introduced in th o se early years were barite and bentonite.
Th o se two key additives are commonly used today and into the foreseeable future because of
their mud

- enhancing properties. Barite is a heavy mineral th at adds density to the drilling fluid and bentonite is a swelling clay that add viscosity and provides a slick wall cake on the wellbore.
While neither barite nor bentonite were not selected for their environmental performance, as it turns out, both of th o se key additives have low environmental impacts. Also during th o se early years, shale shakers, desanders and centrifuges were introduced to help reduce the solids loading in the drilling fluid system. While the shale shaker w as not introduced as a waste

- management tool, it s function to remove cuttings from the base fluid serves to significantly reduce the volume of drilling mud that must be disposed. While some attention had been made to drilling

- fluid perfo rmance during the early years, the evaluation o f drilling fluids was not uniform. Stage 1 ended with the introduction of a uniform practice of drilling fluid evaluation from API. Early environmental concerns focused on control of blowouts and production. Most waste management was conducted onsite an d involved simple techniques such as storage in pits and
bur ia l

During Stage 2, drilling fluids and solids control evolved to meet new challenges. Th o se challenges generally evolved in two types of drilling environments. Along the Gulf of Mexico
coastal region and in other areas, the drilling issues focus on drilling though geological shale formations that hydrate and cause drilling problems. Th o se formations have many technical descriptions but are know n commonly as “gumbo.” In hard rock regions, the focus of improved drilling fluids focused on lowering the solids content in the drilling fluid so drilling could proceed faster. While new challenges continue to evolve, the basic structure of identifying issues
and us ing drilling fluids and solids control to address them was set in place. Drilling waste management practices for exploration and production continued to focus on onsite management. Production equipment evolved to focus on maximizing production with more advanced storage tanks and separation equipment. As drilling moved from onshore to offshore, onsite discharge of spent drilling fluids, cuttings and produced water was discharged onsite.

Now within Stage 3 , challenges continue to evolve and be resolved wi th both traditional and new technology. While environmental protection has always been part of E&P operations, during the 1970s intense efforts were made across all industries to review discharges for possible
environmental hazards. Th o se efforts have be come an important driver in all E&P activities

, including evaluation of existing drilling fluids, solids control and waste management practices
with particular focus on the discharge of drilling fluids, cuttings and produced water offshore. Many of th o se studies were in conjunction with regulatory development activities driven by the NPDES permitting system. Th o se extensive studies generally concluded that the traditional

water

- based drilling fluid components such as barite and bentonite did not pose a s ignificant impact to the environment.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

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33 Table 4. Timeline of Technology Developments for E&P Waste Management.

Year Drilling Technology Drilling Fluid SCE

Stage 1: Creation of the Industry and the Earliest Technologies

1859 1859 Drake well dug by hand

1870 First cable tool rig

1887 Chapman patent

1890 Rotary drilling developed

1901 Spindletop, use of native clay fluids (gumbo)

1922 Barite first used

1928 Bentonite first used

1929 Shale shaker introduced in
California

1930 First proprietary agent for thinning mud.

1931 Patent for dissolved salts to control shale heaving Desander Introduced

1933 First whipstock for directional drilling Centrifuge introduced

1935 First tri

- cone bit Introduction of sodium
silicate muds to treat heaving shales, also shell began systematic research
into oil based mud

1936 API Standard Field Procedure for Testing Drilling Fluids

Stage 2: First Availability of Standardized Drilling Methods

1939 First horizontal well drilled (Havener
Run field in Morgan County, OH) Introduction of salt water
muds and starch

1942 First commercial oil based
mud introduced.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 18 of

33 Year Drilling Technology Drilling Fluid SCE

1943 Rise in popularity of quebracho (a tree bark extract) , high pH muds to thin muds and manage drill

so li ds along the gulf coast

1946 Principles of Drilling Mud Control (training Manual)

1947 First offshore directional wells drilled (Gulf of Mexico)

1949 Patent for Calcium lignosulfonates

1953 First truly multilateral well drilled Decanting Centrifuge introduced, interest revived in
desanders

1954 First hydraulic rotary rig

First directional drilling assembly

1955 Craig

- Geffen

- Morse waterflooding model developed Benefits of low solids muds recognized in hard rock drilling

1956 First gyp

- chrome lignisulfonate used for high temperature flow control prosperities

1959

1960 Bentonite extenders used to promote low solids drilling muds

1961 First use of dynamic positioning Chrome lignite, Chrome lignosulfonate widely used in Gulf Coast on deep wells and high temperatures.

1963 Patent application for inhibitive properties of potassium based mud systems.

1965 General recognition of the importance of solids control led to the development of more
effective solids control equipment.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

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33 Year Drilling Technology Drilling Fluid SCE

1966 Computerized well data monitoring

1967 Introduction of XC Polymer for
low solids muds

1969 First coiled tubing rig job

Stage 3: Adoption of Advanced and Computer

- Assisted Technologies

1971 Polycrystalline diamond compact bit
introduced

2

- D seismic prevalent, computers convert drill velocity data into geological information

1972 Landsat satellite becomes available for remote sensing

1974 3

- D seismic data acquisition tested
in Gulf of Mexico API bull etin on Drilling Fluids Processing Equipment API
Bulletin 13 C first edition

1975 First floating production system begins operation

First commercial 3

- D seismic survey
recorded

1978 First measurement

- while

- drilling (MWD) system MOBM

1980 Cost of 3

- D post time depth migration (PTDM) estimated at $8 million for 50 square miles

1981 First offshore horizontal well (Rospo Mare field, offshore Italy)

1983 Horizontal wells drilled from vertical shaft (Kern River, CA)

1984 First steerable drilling system

New resistivity measurement
devices

1985 3

- D vertical seismic profiling developedWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 20 of

33 Year Drilling Technology Drilling Fluid SCE

1986 Metal sealed

- bearing roller cone
bits

Neutron porosity measurement capability added to MWD

1987 First logging while drilling (LWD) tool

1988 Extended

- reach drilling exceeds 60

- degree radius

First horizontal well drilled from semisubmersible drill rig

1989 Only 5% of Gulf of Mexico wells
based on 3

- D seismic data

1990 Horizontal well achieves 14,585
linear feet

1991 15,000

- foot horizontal well drilled with directionally controlled coiled tubing

1992 Slimhole horizontal well (3 3⁄8”)
drilled 801 feet

1993 3

- D surveys worldwide cost $1 million for 50 square miles First SBM in GOM

MWD tools advance

— smaller, broader temperature range, pressure detection, geosteering

1994 Digital image processing of 3

- D

1995 3

- D seismic used for 75% of U.S. onshore surveys

4

- D seismic emerges

1996 80% of Gulf of Mexico wells based
on 3

- D seismic data

4

- D seismic characterization methodology applied to previously recorded seismic surveysWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 21 of

33 Year Drilling Technology Drilling Fluid SCE

1997 Extended

- reach drilling achieves 26,450 feet horizontal displacement
in South China Sea

1998 Magnetic resonance imaging begins

on MWD

2000 3

- D PTDM cost reduced to $90,000 for 50 square miles by the year 2000

2005 Deepwater GOM

2010 Deepwater GOM

A major focus of the NPDES permitting system was removal of conventional pollutants such as oil and grease. Therefore, the early permitting efforts in the 1970s for drilling fluids and cuttings discharges, the US EPA restricted and eventually prohibited t he discharge of OBM and cuttings.
Since the evaluation of WBM discharges did not result in a water quality or sediment quality issue the focus of regulatory developments shifted to technology standards which are pursued to minimize conventional, non conve ntional and toxic pollutants using a technology standard. Through a process of regional EPA offshore permits and eventually the effluent limitation guidelines, the US EPA issued e ffluent limitation guidelines for produced water, drilling fluids,
drill cut tings and various other offshore discharges. The resulting limits set the technology criteria and structure for environmental performance for offshore drilling and production. While the evaluation of fluids and development of testing took many years and was not a surprise, when the technology

- based toxicity limit of 30,000 ppm (of suspended

- phase particulates as toxicants) went into effect (EPA, 1996) , it was a steep learning curve for operators to adjust to a new limit on the drilling fluid additives the y could use. Just like a mechanic who has had several tools taken from his tool box, adjustments were made to react to the technology

- based limits that
sometime s resulted in increased cost or alternative drilling practices. For example, traditional

use o f mineral oil as a lubricant and use of potassium chloride ( KCl ) for shale inhibition were stopped because they did not meet the technology

- based limits

. In their place, operators did more short trips and back reaming to control reactive shales and preven t stuck pipe. Since the mid 1980s drilling

- fluid companies have continued to market wave after wave of specialized chemistry to address shale hydration and lubricity. The first systems for hauling drill cuttings and drilling mud were developed during th a t time, since not all drilling fluids and cuttings could be discharged (OBM and some WBM that failed the toxicity limit). Th o se systems typically used cuttings boxes which were transferred by barge or truck to shore for treatment and disposal.
Th e cycle of OBM and WBM technology was broken in the early 1990s with the introduction of SBMs. Both the EPA and industry were challenged to find ways to appropriately use and regulate SBM technology. Eventually, a special set of effluent limitations were develop ed for
SBMs and c uttings dryers were used to remove residual SBM from the cuttings.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 22 of

33 During the 1970s on the other side of the Atlantic Ocean, the operators in the North Sea faced significant operational and drilling challenges. In order to address th o se challenges OBM was used and the drill cuttings were discharged. In the 1970 s, th o se OBMs used diesel, however, as early environmental investigations revealed that diesel muds were toxic to marine life, lower

toxicity mineral oils were introduced. Continuing environmental investigations revealed that
while mineral oils were not toxic, they tended to persist for many years due to their branched paraffin structure. C oncerns about sediment quality resulted in SB M s, and many other advanced technologies to transport and treat OBM and SBM cuttings from 1969 though the current times.

During the same time frame of the 1970s though the current age, research into onshore impacts also developed along the lines of scienti fic research and regulatory development. As with offshore discharges, initial focus on traditional drilling fluid components focused on potential toxins and environmental impacts. As with offshore concerns the basic ingredients of barite and
bentonite we re found to be non

- toxic and have low environmental impacts. Specialty additives
such as XC

- PolymerTM (based on xanthum gum) and starche s that are commonly used in food products also were determined to be low environmental hazards, Consequently, the focus on shore became the use of inhibitive chloride salts (CaCl 2 , NaCl and KCl) which were found to inhibit plant growth and also cause toxicity in freshwater supplies. Other specialty additives
such as s odium bi

- chromate used as an additive in high temperatu re wells were determined to be environmental hazards. Over a short period of time, the compounds that were identified as toxic
environmental hazards in WBMs were removed from drilling

- fluid products and replaced with less toxic components that fulfilled t he same functional purpose. States had traditionally regulated oil and gas operations with organizations such as the T exas R ailroad C ommission and
the Oklahoma C orporation C ommission. As the science

- based evaluations did not reveal the need for regulation under the federal Resource Conservation and Recovery Act ( RCRA ) , states continue d to evolve their rules for E&P waste to address the remaining issues associated with onsite and offsite waste management.

During Stage 3 of development, some advanced technologies have moved well beyond traditional waste management techniques. Th o se advanced technologies are further discussed in
the next section to demonstra te how they evolved within the triad of environmental, operational
and economic drivers.



### VARIATI ONS BASED ON RESOURCE TYPE AND LOCATION

Thermal treatment evolved as a treatment technology for OBMs . As previously discussed,
OBMs were developed as a drilling

- fluid technology because of the operational need to drill difficult formations at high tempera tures. Thermal treatment is a common industrial process used to process slurries and sludge that share physical and chemical characteristics of OBM cuttings. During the evaluation of offshore drilling discharges, OBM cuttings were identified as
an enviro nmental discharge issue in the offshore environment. Thermal recovery of base fluids and the ability to treat a wide range of feedstocks resulted in several designs for thermal treatment. One such treatment approach was provided a demonstration permit in the Gulf of
Mexico to treat mineral oil

- based mud cuttings on

- site and then discharge them if they met a 1%Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 23 of

33 residual oil content (ROC) limit. Th at technology demonstration did not meet the operational or cost targets and other onshore thermal

- unit designs could not compete with the economics of commercial disposal that evolved in the Gulf of Mexico region. Thermal units achieved new life when the regulatory objective of a 1% ROC limit for all non

- aqueous fluids was adopted in the
North Sea in the year 2000. Several commercial onshore thermal units combined with landfill disposal of the residual solids operated successfully because they met the regulatory operational and economic needs of the region. Among the thermal units in use, the hammer mill technology
became a standout and has continue d to evolve into the current effort to place hammer mill thermal units on offshore rigs to meet the 1% discharge limits for non

- aqueous fluids. The high processing rate, small footprint and recovery of bas e fluids are all positive attributes for thermal recovery technology. Because thermal processing is a treatment technology and not a disposal technology it must be combined with some type of onsite or offsite disposal of the residual solids, recovered wat er and oil. Thermal treatments face a range of technical, economic and environmental challenges. One reoccurring issue is the combination of high temperatures and flammable hydrocarbons, a safety issue that sometimes has resulted in thermal units being pl aced away from drilling operations

. More importantly, thermal units are typically not very mobile and therefore must be set up in a centralized facility and then have the cuttings hauled to the
treatment location. Th at lack of mobility means that

, on top of treatment costs, transportation costs and disposal of residuals must also beat the cost curve for other waste

- management options.

Injection technology evolved as a treatment technology to address issues in three areas

. First, on the North Slope of Ala ska, injection was introduced to address a lack of surface area for treatment and disposal. Use of conventional waste

- management approaches like onsite disposal
would have resulted in conversion of tundra to disposal site. In th at situation, operator

con trolled injection wells provided a successful waste

- disposal technology with minimal footprint. Injection continued to see limited use in specialized areas until the market opportunity
in the North S ea which resulted from the 1% discharge limit applied to OBM s . Injection technology practiced in the offshore environment allowed drilling and reinjection to occur without removing the drill mud and cuttings from the point of origin. The use of injection technology has a strong technical advantage because the application of injection technology is related to a strong understanding of underground formations. Clearly the exploration and production industry has a good pool of knowledge, experience and confidence to address complex problems associated with under ground formations. In the case of fracturing formations
and re

- injection of the cutting s, specialized computer models help design planning and operation of injection sites to prevent unexpected results. Like all forms of waste management, injection
techn ology has limitations. The most common limitation for injection technology can be lack of appropriate formations to receive the waste inject ions . Other common problems are limited injection rates which result in the need to store drilling cuttings and mu d during periods of rapid generation of waste. Another significant challenge for injection technology is the difficulty of addressing technical failures of the technology. In the case of thermal units, if a batch of cuttings does not meet discharge limit s the residual solids can be recovered and reprocessed. In the case of injection technology, a technical failure can result in waste being released into inappropriate formations and or creating breaches to the surface. In the failure

- mode cases, the dril ling waste cannot be recovered and if the accidental release is into a drinking water aquifer it is difficult to remove the contaminants from the affected formation. Consequently, continuing evolution ofWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 24 of

33 the technology has focused on the science of predi cting and confirming that the injected waste is going where it is intended to go and staying where it is intended to stay. Injection technology has a strong presence in some areas as a commercial waste

- disposal technology. In the Gulf of
Mexico

, injectio n of oilfield waste into salt domes is the current predominant waste management technique and is enjoying bother commercial and technical success. Other regions that do not have an established disposal infrastructure or have footprint constraints have suc cessfully employed injection technology as a viable waste

- management strategy (Veil and Dusseault, 2003; Puder et al., 2003; Geehan et al., 2006)

.

The third evolving technology is a combination of bioremediation, land application, and
beneficial re

- use as a soil enhancer. As with the other two technologies discussed, the process of biodegradation as a treatment technology developed initially to treat the oil in OBM cuttings. Land treatment has been a long

- time practice to manage the low hazard aspects of WBM s. While the traditional focus of these techniques has been on appropriate management of the wastes, there was a recognition that some benefits to soil from the application of residual drilling

- fluid components, Building on the positive aspects of th is technique, both water

- based and synthetic

- based drilling fluids have developed product lines specifically targeted to provide beneficial residual properties to drilling fluids and cuttings so that instead of being approached as waste, the cuttings are a pproached as a byproduct with beneficial applications, In one specific region, cuttings were combined with other byproducts in a vermiculture application to generate a beneficial byproduct that could be used as a soil enhancer. In the case of bioremediat ion and
beneficial reuse as a soil amendment

, technical limitations frequently involve climate and land use. In cases where appropriate land areas or soil application s are available this is a viable technology. In areas such as the Alaska North Slope whe re the focus is on minimizing footprint

, and the climate conditions also are not favorable for bioremediation

, then other waste

- treatment technologies have a technical and economic advantage (Growcock et al., 2002; Norman et al., 2002)

.

The fourth and final technology evolution for waste management is the use of stabilization and
ben e ficial reuse of drilling waste as a construction aggregate. This approach has its origins in the stabilization of salts, heavy metals and hydrocarbons found in oil based m ud cuttings. Rather
tha n attempting to remove the unwanted constituents in OBM and cuttings, this technology focused on chemical stabilization and fixation to prevent leaching of contaminants into the environment. As both drilling fluids and treatment te chnology ha ve evolved, the use of stabilization techniques can combine low levels of contaminants with other byproducts to generate construction aggregate that meets target properties. One of the key technical and economic challenges of this technology is generating sufficient quantities of construction aggregate to meet a sustained building program. Therefore, the current applications have been focused on the large centralized treatment facilities and used along with other available materials

to create a viable construction aggregate.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 25 of

33 

### ENVIRONMENTAL BENEFITS

In practice, the selection of a waste

- management approach is influence by a combination of factors, including what is technologically possible as well as what is required or permitted by regulations. Among all factors, possible benefits to environmental quality are high

- priority considerations although the exact benefits will vary with the waste

- management approach that might be dictated by other limitations. If all other factors were equal in all c ircumstances, and environmental benefits were the main selection criteria, the comparison and contrast of different technologies would be as summarized in Table 5.

Table 5. Benefits Offered by Different Waste

- Management Methods.

Technology Air D ischarge
B en e fits Water D ischarge B en e fits Land D isposal D ischarge
B en e fits

Waste Minimization

Product
substitution to

remove constituents of

concern Removal of
contaminants Removal of contaminants Removal of contaminants

Inhibitive water

based drilling fluids improves drilling efficiency and lowers drilling time. Replacement of soluble salts with polymers and organic

based inhibition chemistry reduces pollutant loading on
water sources Replacement of heavy metals and diesel with other specialty products
reduce pollutant loadings.

New drilling fluid products that

remove a recognized
environmental
hazard such as heavy metals, salt
or oil Removal of environmental hazard from the product
removes or deduces the
concentration of the hazard in the drilling fluid waste. Some constituents that have
environmental hazards are extremely effective products that are required for efficient drilling.

New drilling f luid systems t argeting drilling fluid products that act together to achieve better performance Can increase drilling efficiency, reduce cost and
i m prove environmental performance Can also reduce all pollution loads that require land based disposal.

Improve
mechanical
solid control efficiency Impr o ved removal
efficient increases penetration rates
and reduces ai r discharges
associated with
motors. Advanced technology promotes high removal efficiency and lower loading on water discharges offshore Advanced performance is
ineffective in situations where cutting size degrades in the wellbore and reduced discharges
to land.

Hydrocyclones,
mud cleaners and other secondary
solids control equipment reduce pollutant loads and
sho r ten drilling time Reduced pollutant loads reduce potential impact to
water Reduced pollutant loads reduce land disposal of residuals.

Chemically
enhanced solids Recovers water from drilling
fluid contaminated with fine By minimizing dilution educed solids loading to land discharges.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 26 of

33 Technology Air D ischarge
B en e fits Water D ischarge B en e fits Land D isposal D ischarge
B en e fits

separation equipment solids

Closed loop secondary
treatment systems for drilling fluids Drilling
Practices Mud tanks and reserve pit settling
basins Simple and low cost
alternatives Inefficient and frequently generates large volumes of waste.

Extended reach, horizontal drilling multiple laterals Reduced volume of cuttings and other waste by increasing efficiency May be impractical in some
locations and can increase cost.

Closer spacing of
successive drill strings, slimhole drilling, coiled tube drilling Smaller wellbore produces
less waste. Reduces production volumes in

some cases.

Use of air or other gases to as the drilling fluid Removes need for drilling fluid and reserve pit Not applicable in many areas.

Directional drilling Allows for lower footprint and
reduced number of
wells and
associated air discharges Reduces number of wells an d associated water discharges Reduces number of wells and associated land discharges

Reuse and Recycling

Thermal
treatment Greater drilling efficiency with the
use of OBM and
minimization of air discharged from
treatment with
recover of oil Lower concentrations of
contaminants in residual solids discharged offshore Lower loading rates for land disposal

Bioremediation
and beneficial
reuse in land application or
wetlands application Greater efficiency of drilling reduces air pollutant loading, low energy tr e atment requirem en ts reduce air pollutant loadings Reduced pollutant loading to water discharges Reduced pollutant loading to land.

Daily cover for land
fills Stabilized cuttings are an
effective cover material

Other types of
construction
material Can be used to develop drill pads

Stabilization
and use as a
construction
material Greater efficiency of drilling reduces air pollutant loading, low energy
tr e atment requirem en ts reduce air pollutant loadings Reduced pollutant loading to
water d ischarges Reduced pollutant loading to land.

Water DisposalWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 27 of

33 Technology Air D ischarge
B en e fits Water D ischarge B en e fits Land D isposal D ischarge
B en e fits

Onsite burial (Pits, Landfils) Reduced emissions related to hauling cuttings. Protection of water supplies with appropriate design and operation of pits Focus on pit constituents instead
of pits themselves protects land

use.
Discharge to
Ocean Reduced emissions related to hauling cuttings. Protection of water supplies
with focus on mud
constituents Reduced land disposal with onsite offshore disposal.

Commercial disposal
facilities Reduced treatment
emissions Protection of water supplies in a controlled treatment facility Protection of land resources in a controlled treatment facility

Slurry Injection Reduced emissions related to hauling cuttings Protection of water supplies
with appropriate design and operation of slurry injection Reduction of land use with appropriate design and operation of slurry injection

Bioremediation/ land application Reduced emissions related to hauling cuttings. Protection of water supplies
with focus on beneficial reuse Beneficial reuse increases land
value.

Disposal in salt
Cavern Reduced air
emissions related
to treatment of cuttings Protection of water supplies in a controlled treatment facility Protection of land resources in a
controlled treatment facility



### OUTLOOK FOR DRILLING WASTE MANAGEMENT

A. Innovation and Future Use

Innovation has been a continuous presence in the application of technology in the E&P industry. While some become frustrated in the slow pace of the introduction of new technol ogy, field experience has demonstrated that many technologies that have been successfully applied in other industries struggle to perform in the harsh and often unforgiving conditions of the oilfield. Unlike conventional industries that operate in mature, populated locations under controllable conditions, oilfield technology must perform in remote and often extreme conditions. Consequently, new technology must be adapted to work in E&P applications and supported at the field level with experienced personn el.

Innovation is in response to challenges and the environmental, operational and economic challenges will continue to change as they have for the past 100 years. So far the discussion of technology has focused on treatment of contaminants. Equally impo rtant to addressing contaminants in the feed streams and by products are some of the critical innovations have
occurred in the area of environmental assessments , including d evelopment of new tools to monitor and predict environmental performance. In the f uture, environmental performance evaluations will respond to new performance indicators on individual discharges and receiving
environments and will evolve to life

- cycle assessments, biodiversity protection, and multimedia assessments of environmental perf ormance of operational and waste management technologies.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 28 of

33 While the evaluation parameters will continue to evolve, the basic triad of issues will continue to balance environmental control technologies with operational and economic considerations of
E&P o perations.

B. Barriers and Opportunities

The opportunities and the barriers for new technology are the same three elements discussed for all of the past, present and future treatment technologies.

The first barrier is operational. Any pollution prevention, recycling or disposal technology must perform to meet drilling operational or product requirements. Not every well is successfully drilled, and not every waste

- management technique is successful ly applied. I n many cases, it takes several attempts to identify and address the operational needs of the particular region. The application of technology is particularly difficult in the E&P industry due to environmental
conditions and remote locations.

The second barrier is environmental. While economic and operational barriers are usually clearly understood, environmental challenges are frequently a mix of scientific, regulatory and legal requirements. In some cases regulations have exclusively focus ed on regulated existing technology with little or no room for addressing innovative technologies. In some cases the technologies listed above have been prohibited due to past issues but with no allowance for technology improvements. Consequently improve ment in the development of regulations is an overall opportunity for future improvements. Technology associated with evaluation and protection of the environment is also a barrier to development appropriate limitations for technology and is an opportunity for future improvements.

Finally, economic barriers are a major impediment for application of new technology. There are three aspects of economic performance. One evaluation results in the ability of a technology to
address a certain contaminants in a waste stream, A larger economic evaluation looks at the overall economic viability of an enterprise in the context of operational and environmental requirements, Still in a large economic view, energy and environmental policy and the resulting
economic c onditions can drive the need for oil and natural gas in the context of other energy sources with higher and lower end

- use emissions.

C. Long

- Term Vision

As described in the preceding sections, management of waste from oil and gas production is accomplished through many different technologies and practices. It is challenging to envision the future of water management with so many different operational and environmental settings.

Future waste management technologies are likely to focus on:

• Reduced treatme nt costs

• Reduced air emissions, including CO 2

• Minimizing transportationWorking Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 29 of

33 • Minimizing energy inputs

• Capturing secondary value from the waste (extraction of minerals, power, or other factors)Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 30 of

33 

### FINDINGS

Waste management technology is a critical element of suc cessful drilling and production operations. Proper application of waste management principles is required for both efficient drilling operations and environmental protection.

During drilling the largest potential waste stream is used drilling fluids and cuttings. The operational source of the drilling fluid and cuttings waste is the cuttings that are produced while drilling the well.

Environmental regulatory considerations play a significant role in both the selection of drilling
fluids and the overal l economics of drilling a well. The specific regulatory requirements of an area often dictate the technologies that can be used and what, if any, material can be discharged into the environment. This, in turn, influences what and how wells can be drilled.

Many different technology options are available that can be employed at specific locations. Selection of a management option for waste management at a particular site varies based on:

• The nature of the technical requirements of the drilling operation.

• The economics of drilling the well and managing the associated byproducts.

• The environmental requirements for a receiving environment and regulatory structure perspective.

Drilling w aste

- management technologies and strategies can be organized into a three

- tiered

water

- management or pollution

- prevention hierarchy (i.e., minimization, recycle/reuse, and disposal).

• Tier 1

– Minimization : T he generation of waste is minimized within the processes for drilling a well. This approach is mutually beneficial across all three objectives of minimizing the cost of drilling the well, meeting the technical of the drilling operation and minimizing the impacts on the receiving environment. When feasible, inhibitive drilling fluids and efficient mechanical solids

- control e quipment can often save money for operators and results in greater protection of the environment.

• Tier 2

– Recycle/Reuse: For the drilling fluid and cuttings that cannot be managed through water minimization approaches, operators can plan for reuse or rec ycling of drilling byproducts. The most common ways to reuse drilling fluids is to re

- deploy them at another drilling location or at least to recover the most valuable constituents of the drilling fluids from one location and move them to another drilling location. Substantial efforts are ongoing to develop economic methods to treat drilling fluids and drill cuttings so that they can be beneficially reused in oilfield and non

- oilfield applications.

• Tier 3

– Disposal : When drilling waste cannot be managed t hrough minimization, reuse, or recycle, operators must dispose of it

.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

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33 Four main lines of technology have been developed to address drilling waste management which is centered on handling leftover drilling fluids or “muds” that can include water, oil and c ertain
chemical additives:

• Thermal treatment uses heat to separate more objectionable components from less objectionable components based on differences in volatility. It is a common process applied to oil

- based mud and cuttings where centralized processi ng is feasible and disposal options are available for the objectionable residuals.

• Injection technology sends treated or untreated waste streams underground into geologic formations that can accept and safely isolate the waste. If geology and regulation s permit, injection can serve to substantially simplify waste management while also reducing the surface footprint.

• High

- order beneficial reuse on land comprises a combination of bioremediation and re

deployment of treated wastes as soil amendments. It is most readily applied to water

based muds although variations have been developed for some synthetic

- based muds.

• Lower

- order beneficial includes re

- deployment as construction aggregates. The treatment criteria for aggregate use can focus more on stabiliz ation rather than complete remediation so that the stabilized waste is rendered environmentally inert.

Use of any given waste

- management approach will continue to be decided by the interplay of economic, technical and operational barriers :

• Economic barrier s for all waste management technologies are a combination of the cost of drilling and that value of the production. If the value of the production from a region is high then the economic stress on waste management techniques is reduced.

• Technical barrie rs are relative to the type of waste management technology employed. Two areas that continue to advance with combined environmental and waste management benefits are drilling fluids and solids

- control equipment.

• Operational barriers continue to evolve as new areas of drilling challenges must address downhole geological conditions and the difficulty of adapting technologies for the rigors of oilfield applications

.

Future waste

- management technologies and practices most likely will find growing attention o n biodiversity protection; changing energy policy with increasing focus on greenhouse gas emissions; progressively more difficult drilling environments such as offshore deepwater, Arctic
conditions and extended

- reach wells; and reduced landfill space avail able for waste disposal with implied greater reliance on beneficial reuse options.Working Document of the NPC North American Resource Development Study Made Available S eptember 15 , 2011

W aste Management Page 32 of

33 

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