MEMORANDUM

TO: Brian D’Amico, EPA/EAD Lisa Biddle, EPA/EAD

FROM: Meghan Camp , ERG Besty Bicknell, ERG Brent Ruminski, ERG

DATE: 01 February 201 2

SUBJECT: Notes on Conference Call with Reserved Environmental Services, LLC on 5 January 2012

On 5 January 201 2 , EPA held a conference call with Reserved Environmental Services, LLC to discuss their plant operation in Mount Pleasant, PA. Discussion topics included:

• Introductions ;

• Company Background ; and

• Plant Flow Description

.

Attachment 1 lists the meeting participants

. Attachment 2 is a database of manifest records provided by RES.

Introductions

Two representatives from Reserved Environmental Services (RES) , LLC participated on the call : Andy Kicinski (President) and Nicholas Haden (Vice President). Mr. Kicinski has a chemical engineering background and worked in the consulting industry for 30 years.

RES operates a centralized waste treatment plant located on 133 acres of la nd in southwest Pennsylvania. The plant was Pennsylvania’s first centralized waste plant to treat shale gas extraction wastewater. The Pennsylvania Department of Environmental Protection (PA DEP) had no guidelines in place when RES applied for permits. As a result, many of the guidelines set
i n place today were formed through work between PA DEP and RES

. At the time of the call, t he plant ha d been operating for 18 months

, treating approximately 100 million gallons to date

. RES is also in the process of developing a satellite treatment plant that will be approximately 1/3 the size of the Mount Pleasant, PA plant and will also operate in PA.

Company Background

Customers: RES ’s customers include approximately 16 operators with wells located in Pennsylvani a and West Virginia. Due to the high cost of trucking wastewater more than one to two hours from the well site, RES has an approximate 60 to 90 mile radius of service area.Memorandum 13 January 2011 Page 2 of 8 Although customers will occasionally truck wastewater further distances, the recurr ing customers operate within a 90

- mile distance of Mount Pleasant, PA. This includes some portions
of West Virginia. Specific operators mentioned included XTO, Atlas, Rice Energy, Range Resources, and Chevron.

Although RES ’s customers include 16 operator s 1

, RES explained how it is difficult to predict how much wastewater they will treat on any given day . This is because the wells owned by their customers are in different stages of production and produce different volumes of

waste water depending on the current production activities at the well

. Typically, at any given time, there are at least 5 or 6 customers who are fracturing and delivering wastewater for

treatment

.

Services: The plant is a 100% recycl e, zero discharge facility . This means that all o f the
influent wastewater is treated and returned to the field for reuse in shale gas extraction activities. The company offers two main services (dumping and recycling) and one new service (emergency dumping):

• Dump ing

— Operators pay to drop a load of was tewater off and leave.

• Recycling

— Operators pay to drop o f f a load of wastewater and pick up a load of
treated wastewater at the same time . They use the treated wastewater for the next fracturing job. The price for this service is actually lower than dumping only but

may involve signing a contract. Operators that pick up treated wastewater can reduce trucking costs because the truck never has an empty load.

• Emergency dumpin g

— Holding pits in the fields occasionally develop leaks forcing operators to move a large amount of wastewater out of the pit in order to fix the problem. RES recently built a 10 million gallon holding pond where an operator can pay to temporally store a l arge amount of wastewater. They have provided this service 3 or 4 times.

Flow Rate: The plant typically treats 400,000 to 600,000 gallons per day. W astewater arriv ing from different trucks is comingled and immediately mixed in a 200,000 gallon equalization tank

.

Costs: Due to the high variability in wastewater characteristics, the cost of treatment is difficult to estimate. Chemical adjustments are made every two hours depending on the influent
wastewater characteristics. Treatm ent costs will increase and decrease depending on required treatment chemistry. Mr. Kacinski estimated that, on average, it costs approximately 7 cents per gallon to operate the treatment system. Mr. Kacinski provided the following cost information,

summar ized in Table 1 :

• Charges to customers for dumping wastewater and recycling wastewater (dumping and clean water pickup);

• Average cost to RES to operate the treatment system;

1 Attachment 2 contains a full list of operators that have dumped or recycled wastewater at the plant between November 1, 2011 and December 31, 2011.Memorandum 13 January 2011 Page 3 of 8

• Estimated cost to RES to transport clean water via truck;

• Capital cost to RES to build the current treatment plant in PA; and

• Capital cost to RES to build a satellite plant 1/3 the size of the existing plant (in progress).

. Table 1. General Costs

Type of Cost Reported Cost Dollars per
bbl Cents per gallon Other Cost
C harge to customers to dump wastewater only 5.25 12.5

--

C harge to customers to recycle wastewater ( dump and pick up makeup ) 3.99 9.5

--
Cost to RES to operate treatment system 2.94 a 7 a

-- Cost to RES to transport clean water via

t ruck b 1.26 3

-- Capital cost for existing plant c

-- -- $6

— 7 million Capital cost for new satellite plant d

-- -- $3.5 million

a

— Mr. Kacinski estimated this number based on the fact that he has a 20

— 25% profit margin.
b

— These numbers are on $ per bbl per hour and cents per gallon per hour basis based on the fact that a typical trucking company charges $95 an hour regardless of whether or not the truck is loaded.

c

— Estimated cost for the plant installed in southwestern P ennsylvania that is currently operational.
d

— Estimated cost for a potential satellite plant that is approximately 1/3 the size of the current plant.

Plant Flow Description

Figure 1 presents a flow diagram of the treatment system, which consists of the following
components:

Wastewater Screening: When a truckload of wastewater arrives on site, the truck driver must first identify the type of waste and provide proof of the name of the generator. The types of fluids accepted include produced water, flowbac k water, top hole water 2 , and drilling muds. Next, the load is sampled for pH, TDS, hydrocarbons, and TSS. Material that is prohibited includes the following:

• Condensate s

— No hydrocarbons are allowed to be unloaded into the main treatment train. If possibl e, an RES worker will withdraw wastewater from the bottom of a truck load leaving floating oils behind. If the customer desires, they may dump the remaining oil in a hydrocarbon recovery tank located on site. Periodically RES delivers the content of this r ecovery tank to a different company who processes the material to produce fuel.

• Synthetic muds

— These are drilling fluids where the base of the fluid is synthetic
oil. T reatment of t his fluid requires a special treatment unit that RES does not
have

. RES ma de it clear that this fluid is not accepted at their plant. They also
mentioned this fluid is very valuable and runs about $13 per gallon. Synthetic

2 W ater that flows to the surface during the initial drilling process.Memorandum 13 January 2011 Page 4 of 8 muds may be picked up from a well site by truck drivers thinking it is a waste fluid.

Main treatment train : After wastewater is sampled and screened, it exits the screening building and flows to the unloading area and enters the treatment system. The average treatment system flow rate is 600 ,000 gallons per day. T reatment steps include:

• S ettling tanks

— Several rectangular clarifiers (8’ x 24’ x 10’) are operated in parallel and in series to remove large suspended materials , such as sand and
rocks

. Sand and rocks are removed from the bottoms of the tanks while residual oil is skimmed from the top of the t anks and transported off site to be used as an energy source. The water is withdrawn from the middle layer and is sent to a
flash mix box.

• Flash mix box

— The flash mix box has a detention time of 2 minutes. Chemicals (e.g., sodium sulfide

, sodium hydroxide) are added to assist in removal of iron
and other metals. The treatment chemicals added depend on the specific
characteristics of the wastewater at that time. Wastewater is tested and chemical adjustments are made every two hours.

• Equalization tanks

— RES o perates two equalization tanks in parallel

• Reaction tanks

— RES operates three 8,000 gallon reaction tanks in series. Water
is chlorinated for disinfection . Chemicals may be added to assist in disinfection (e.g. sodium hypochlorite).

• Clarifiers

— Two clarifiers are operated in parallel. Flocculants and other
treatment chemicals are added to assist in the precipitation of solids.

• Filter feed tank

— Following clarification, wastewater is collected in the filter feed tank prior to entering the polishing f ilters.

• Polishing filters

— Anthracite c oal filters are used to remove suspended solids.

• Final s ampling

— An automatic sampler takes an aliquot from the effluent stream and uses a portable GC/MS to measure the hydrocarbon content of the effluent.
In addition to verifying the quality of the treated effluent, the GC/MS results help
inform changes in treatment chemical dosag es for the entire treatment system

.

• Recycle tank

— The wastewater enters a 100,000 gallon storage tank located at the
end of the treatment tr ain until it is picked up by an operator.Memorandum 13 January 2011 Page 5 of 8

Figure 1 . Plant Flow Diagram

Treated wastewater quality requirements : RES explained that operators have changed the

req uirements for treated wastewater because of changes in fracturing chemical additives . When the plant first started, operators required TDS concentrations in the range of 30,000 to 60,000 mg/L. To meet this requirement, RES blended fresh water with treated wastewater. Recently, operators have been willing to us e lower quality treated wastewater because friction reducers can

now handle higher TDS concentrations

. 3 Currently, operators require TDS concentrations in the range of 90,000 to 120,000 mg/L. Table 2 lists the general target levels for constituents in the
treated wastewater.

Table 2 . Target Treated Wastewater Quality

Constituent Current Requirements (mg/L,
unless otherwise specified )
TDS 90,000 to 120,000

TSS <10

Iron <1.0
Bacteria Non detect
Sulfate < 50
Barium < 400 pH 8.5 ( 7 .5

- 9.5 ) a S.U. Hydrocarbons Non Detect

a

— RES reported 8.5 S.U. as the target pH but the range may be between 7.5 and 9.5.

Sludge Handling and Radioactivity Testing : All sludge collected from various units in the plant is treated in a conventional gravity sludge dewatering unit and disposed via landfill

. The

3 Friction reducers are less effective in higher TDS waters. Recent advancement has increased the allowable TDS
concentration that allows the chemicals to remain effective. Sludge Dewatering Settling tanks

Solid waste to
landfill Truck unloading

area

Treated

Wastewater

Storage

Equalization

tanks Screening

Chemical
additives Wastewater Stream

Waste Streams

Flash mix box Chemical Additives

Chlorination Clarifiers Reject wastewater back to operator

Chemical
additives Truck pickup

area

Anthracite
Filters

Sludge Water quality monitoringMemorandum 13 January 2011 Page 6 of 8 receiving landfill requires that RES test the sludge for radioactivity. Radioactivity is detected in the sludge waste typi cally around 80 mrem per hour 4 . The landfill’s limit for accepting waste is 160 mrem per hour. RES has also tested the incoming wastewater for radioactivity in accord ance with their radioactivity management plan. However, radioactive elements have never be en detected in the wastewater itself

. RES was not able to provide specific information about their analytical methods at the time of the call, but stated that all sample analyses are done in house using standard methods.

Record keeping: R ES commented that they have maintain ed detailed manifest records (see Attachment 2) since they first started operations. These records include sampling results, well ID, well GPS coordinates, well operator name, type of wastewater, and volume of

wastewater. They also have adopted a strict policy that truckers who deliver wastewater must provide detailed proof of identification.

Follow Up

Following the discussion, EPA asked RES for the information listed below:

• EPA asked for any sampling results with analy tical methods. RES stated that they can supply the sampling results. However, the analytical methods they use are not
EPA or API standards the analytical method information is not available

.

• EPA asked for a process flow diagram for the plant.

• RES suggest ed that EPA talk to EPA regional offices and the Marcellus Shale
Coalition for additional data. RES has already provided sampling data to those organizations

.

4 Radioactivity measurements in the “sludge box” are take n at 8 different locations.Attachment 1

Table A

- 1. List of Meeting Participants

Name Affiliation Phone Email Andy Kicinski,
President Reserved
Environmental Services, LLC 724

- 454

- 1611 akicinski@reswater.com

Nicholas Haden,
Vice President Reserved
Environmental Services, LLC 412

- 784

- 3399 nhaden@reswater.com

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 Meghan Camp ERG 703

- 633

- 1684 meghan.camp@erg.com
Brent Ruminski ERG 703

- 633

- 1701 brent.ruminski@erg.comAttachment 2
RES Manifest Records