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# Water Management for Shale Plays
An Overview of the Bakken Shale

Don Warlick

– Warlick Energy/Houston

Infocast 3 rd 

## Water Management for Shale Plays Conference Pittsburgh

– October 29, 2012 

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### About Warlick Energy

An oil & gas intelligence firm in based in Houston with special experience in Unconventional Resources

– has served the E&P, oilfield services & manufacturing and financial sectors since 1976

Two practice areas:

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- Market Research

-- Market studies involving new product potential, technology reviews, competitor analyses, market audit, acquisition search and evaluation, perception of image and performance, market forecasts, litigation support.

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- Unconventional Resource Reports

-- Warlick publishes a series of proprietary reports addressing unconventional oil & gas in North America.

More: www.WarlickEnergy.com

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### Leading US Unconventional Shales in 2012

– Wet Plays in Green

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### Focusing on the Bakken Shale

 The Bakken is deposited in deep portions of the Williston Basis

 It’s 15,000 sq. miles in northwest ND into north east SD and into Saskatchewan

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### Describing the Bakken

 A centerpiece of the Williston basin, the Bakken ranks #6 among world - class oilfields

 It could be the largest oil discovery in the US outside of Alaska with 4.3 billion barrels
of oil recoverable -- with current technology

 It is estimated that by 2017 the Bakken will be producing 1 million barrels per day

 The Bakken and its associated Three Forks formations are among the largest contiguous deposits of oil in the US

 The average TVD of a Bakken well is 10,000 feet
– with horizontal laterals that range from 5,000 feet to more than 9,000 feet. That equates to a 20,000 foot TMD

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### A few Companies Lead development and add Momentum Seven E&P companies account for ~ two - thirds of Bakken drilling

 Continental Resources drills about 20% of shale wells today

 Hess is right behind with around 12% of wells drilled

 Then there is Whiting with 9%

 Statoil/Brigham comes next (Statoil paid $4.4 billion for Brigham earlier)

 Oasis Petroleum follows

 Then comes Marathon oil who has spent $2.5 billion for 116,000 acres here

 #7 is EOG which has a 7 - 10 year drilling inventory -- they also have their own frac
sand mines plus an innovative rail crude delivery system out of the Bakken

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### Drilling in the Bakken

 It has occurred in a steady uptrend since 2010 and earlier

 Three - fourths of all Bakken drilling takes place in just four counties: Mackenzie, Williams, Dunn and Mountrail

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### Recent Acquisitions/Actions in 2012

 Heckmann paid $381 million in cash and stock to acquire Badlands Energy (dba Power Fuels ), the largest water management/environmental service company in the Bakken

 Also last month Unit Corp sold 35% of its Bakken assets to QEP Energy for $228 million

 Exxon Mobil paid $1.6 billion in cash to acquire the Bakken assets of Denbury Resources, that included 196,000 net acres in North Dakota and Montana

 In August, QEP Resources paid $1.3 billion for Bakken properties held by Black Hills E&P and Helis Oil & Gas

 To enhance its Bakken position via their Brigham acquisition, Statoil is at work in leasing over 1,000 railcars to help move up to 45,000 BD of their production

 Continental Resources added 23,000 net acres for $276 million

 Plains All American Pipeline began construction of a 50 - 75 MMCFD cryogenic gas processing plant with deep - cut ethane near Ross, North Dakota

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### What’s Important in Water Management

 Technology must be effective, satisfying all protocols imposed by oversight and regulatory entities (vendors’ oilfield history a plus)

 Quality of disposed/released volumes should be equal to or better than standards set
for all volume releases into streams

 Re - use of treated water is much more important since earlier Marcellus upsets

 Costs must be reasonable, especially in light of growing water volumes

 Oil & gas companies are concerned about vendors taking responsibility for handling and being responsible for volume treatment, recycling, disposal.

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### Water/Fluids Management for the Life of the Well

 The Bakken is a big share of Williston Basin development with an estimated 1,400 to 1,780 shale wells to be drilled this year

 At EOY 2012 the Bakken/Williston is estimated to have the following number of producing wells Shale Wells 3,803 Conventional, Other 1,955 Total 5,758

 Two opportunities for equipment , chemicals and services in the shales:

- Those used in the drilling & completion process in managing frac flowback plus related fluids (such as drilling fluids, etc.)

- Those required for long - term production & maintenance, largely involved with managing produced water

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### Water/Fluids Management for the Life of the Well...more

 Flowback and drilling fluids in shale well completions

- Today’s hydraulic fracturing of shale wells call for 2

- 4 million gallons of water per well

- In most of the plays the frac flowback is the volume of returned water, chemicals, proppant that comes back up the wellbore

- Typical frac flowback volumes can be at least 25% of frac fluid volumes

- e.g. a shale well with 4 million gallons on a frac job can have ~ 1 million gallons in flowback

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 Produced water and fluids

- Over a 25

- year lifetime a typical US gas shale well can have 4 million gallons of produced fluids while a typical oil well averages ~ 18 million gallons

- In many older US wells the water:oil production ratio can be > 50:1

- Principal constituents of produced fluids can include salt/brine, oil and grease (a measure of organic chemical compounds), various natural inorganic and organic compounds and naturally occurring radioactive materials or NORM.

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### Markets for Services in the Bakken

 The top 7 US liquids - rich shales will account for more than $54 billion in all types of oilfield services expenditures this year

 Of that total we estimate $1.3
- $1.7 billion is for Engineering & Environmental plus Water Management equipment and services

 We estimate the Bakken’s share of the above could range from $210 to $260 million
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### Bakken Summary

 Expect more growth in the water and fluids realm in the upstream space

 The EPA will continue to evaluate and oversee water management issues

 Much has been learned in the Marcellus (and in other shales) about fluids and water management and oversight

 This is now being applied to the Bakken also

 Water management plus related engineering/environmental equipment and services is a hot subject, as evidenced by recent acquisitions

 We anticipate steady growth in all shales, with related practices going forward in conventional developments as well.

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### End of Presentation 

# Water Management for Shale Plays An Overview of the Bakken Shale

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