# Final Petroleum Association of Wyoming

Technical Review and Analysis of Kuipers' / NPRC Documents Related to the Management of CBNG Produced Water in the Powder River Basin

December 21, 2004

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# Contents

List of Figures

List of Tables

Section 1 Introduction 1.1 Summary of Kuipers' Study Findings................................................1-1 1.2 Industry’s Major Concerns with Kuipers’ Study..............................1-2 1.3 Project Objectives ..................................................................................1-4 1.4 About CDM............................................................................................1-4


### Section 2 Feasibility of Injection of CBNG Produced Water
2.1 Hydrologic Storage Considerations for Injection .............................2-1 2.2 Injection and Interaction with CBNG Production............................2-2 2.3 Compatibility of Injected Water..........................................................2-2 2.4 Injection and Land Subsidence ...........................................................2-3 2.5 Injection Testing and Operations in the PRB ....................................2-4 2.6 Surface Disturbance ..............................................................................2-6 2.7 Injection and Aquifer Depletion .........................................................2-7


### Section 3 Feasibility of Treatment
3.1 Evaluation of RO Technical Issues .....................................................3-1 3.1.1 Water Quality and Flow Variations ....................................3-1 3.1.2 Treatment Objectives.............................................................3-2 3.1.3 System Recovery ....................................................................3-2 3.1.4 Pretreatment ...........................................................................3-3 3.1.5 Location...................................................................................3-5 3.1.6 Brine Disposal.........................................................................3-5

3.2 Evaluation of Kuipers' RO Treatment Costs.....................................3-6 3.2.1 Assumptions...........................................................................3-6 3.2.2 Recalculation of Costs Using Kuipers' Model....................3-7

3.3 CDM's Cost Estimate for RO Treatment ...........................................3-9 3.3.1 Design and Cost Assumptions...........................................3-10 3.3.2 Cost Estimate Results ..........................................................3-12

3.4 Alternative Treatment Options.........................................................3-13 3.4.1 Conventional Ion Exchange (IX)........................................3-13 3.4.2 Counter-Current IX..............................................................3-13 3.4.3 Hydro Process ......................................................................3-143.4.4 HERO Process....................................................................... 3-14 3.4.5 Zeolites

.................................................................................. 3-14 3.4.6 Mechanical Evaporation/Crystallizer

.............................. 3-14 3.4.7 Cost Comparison

................................................................. 3-15



### Section 4 Beneficial Use
4.1 Water Quality Comparison

.................................................................. 4-1 4.2 Managed Irrigation for Beneficial Us e

............................................... 4-3



### Section 5 CBNG Economics

Section 6 Conclusions
6.1 Injection of CBNG Produced Water

................................................... 6-1 6.2 Treatment

............................................................................................... 6-2 6.3 Beneficial Use

......................................................................................... 6-3 6.4 CBNG Economics

.................................................................................. 6-3 6.5 Flexible Water Managem ent

................................................................ 6-4



### Section 7 References
Appendices Appendix A Feasibility, Design, Operation and Monitoring of CBNG Managed Irrigation Syst ems Appendix B Re-evaluation of Kuipers ’ Reverse Osmosis Treatment Cost Estimates Appendix C CDM Cost E s timates for Reverse Osmosis Treatment



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# List of Figures

Figure 2-1 Modeled Drawdown vs. Time for Selected Uppe r Fort Union Monitoring Locations

.............................................. 2-8 Figure 3-1 Alternative 5a. RO Treatment with Commercial Brine Disposal

......................................................................................... 3-9 Figure 3-2 Alternative 5b. RO Treatment with I n jection Brine Disposal

......................................................................................... 3-9 Figure 3-3 Comparison of CDM Cost Estimate t o Original Estimate for Alternative 5a

....................................................... 3-13



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# List of Tables

Table 2-1 Fort Union Formation I n jection Well Data from Two Operators in the PRB

.................................................................... 2-5 Table 2-2 Lance and F o x Hills Injection Well Data from Tw o Operators in the PRB

.................................................................... 2-6 Table 3-1 Kuipers' Assumption s for RO Treat m ent of PRB Produced Water

............................................................................ 3-7 Table 3-2 Revised Cost Estimates Using Corre ct Data

............................. 3-8 Table 3-3 Design Ass u mptions for CDM's RO Treatment Cost Estimate............................................................................... 3-10 Table 3-4 Comparison of CDM an d Kruipers' Cost Estima tes for RO Treatment

........................................................................ 3-12 Table 3-5 Comparison of Estimate d Costs for Various Treatment Options

..................................................................... 3-15 Table 4-1 Selected Water Quality Characterization Dat a f o r CBNG Well Fields in North America

........................................ 4-2



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# Section 1 Introduction
CDM, Inc. was contracted by the Petroleum Association of Wyoming (PAW) to complete a technical evaluation and review of key information presented in the two documents prepared by Kuipers and Associ ates (Kuipers) for the Northern Plains Resource Council (NPRC). The PAW is based in Casper, Wyoming and members include companies from all segments of the petroleum industry including exploration, production, well service, drill ing, transportation, land, environmental, and processing. The NPRC is based out of Billings, Montana and is a non-profit organization that is active in the debate over coal bed natural gas (CBNG) development underway in the Powder Ri ver Basin (PRB). The following two documents were prepared by Kuipers for NP RC and are the subjects of this review:
Kuipers, J.R. Machardy, K., Merschat, W., and Myers, T. 2004. “Draft-Coal Bed Methane Produced Water: Management Options for Sustainable Development”. Prepared for the NPRC, Billings, Montana. August.
Kuipers and Associate 2004. “Draft Technology Based Effluent Limitations for Coal Bed Methane-Produced Wastewater Disc harges in the Powder River Basin of Montana and Wyoming”. Prepared for th e NPRC, Billings, Montana. August.
For the purposes of this review, the first re port will be referred to as the “management options report” and the second as the “effluent limitations report.” The combined documents are referred to as “Kuipers’ stu dy” or the Kuipers study.” The documents as well as the study brief prepared by the NP RC were obtained electronically from the NPRC website located on the internet at: http://www.northernplains.org/
CDM also reviewed the draft, unpublished United States Environmental Protection Agency (EPA) report Guidance for Developing Technology-Based Limits for Coal-Bed Methane Operations: Economic Anal ysis of the Powder River Basin, which was referenced as providing base information used in the Kuipers study. This document was given to CDM by PAW member companies. 

## 1.1 Summary of Kuip ers’ Study Findings The management options report provides a very general overview of CBNG produced water management issues, incl uding a discussion of produced water management options, potential environmental effects, treatment alternatives, and an evaluation of the benefits and costs associated with selected options under a “sustainable management” analysis. This document was presumed to be directed at CBNG management issues in the PRB.
The effluent limitations report was prepar ed as a companion document and provides a cursory analysis of the technical feasibil ity and economics of each of the water management options and recommends to the permit writers in Montana and Wyoming that technology-based limits be established for CBNG produced waterSection 1 Introductio n

discharges in the PRB. As stated in the document, much of the technical and economic information used to complete th is a nal ysis was tak e n from an unpublished EPA report Guidance for Developing Technology-Based Limits for Coal-Bed Me thane Operati o ns: Economic An alysis of the Powder Rive r Basin

.

Acco rding to the Kuipers study briefi ng document, key asser t ions are:

The most har m ful disposal options for t h e CB NG pro d uced water a re direct discharges to rivers, streams, unlined impoundments and soils. These disposal options unnecessarily put agricultural wat er re so urces at ris k and damage s o ils.
It is practical and affordabl e to return C B NG produce dwater to aq uifers – either by reinjecting it into the aquifer fro m which it came or inj e cting it into other suitable formations. Reinjection a n d injection are prov en tec h nologies and affordable given current and forese eab le gas prices.

In cases wher e reinjection/i njecti on are n o t feasible, tr e a ting all wate r prior to disc harge is feasible via a number of tr e a tment t e chnologies –parti c ularly revers e osmosis – a n d affordable fo r industry.

As a result of these findi n gs, Kuipers’ major recommendatio ns to t h e EP A and both the Wyomin g and Mont ana Dep a rtments of E n vironmental Quality are to adopt the following technology-based effluent limitat ions in accordance with the C l ean Water Act’s “mand ate” t hat ind u stries use the “b est available technology” to eliminate the discharge of pollutants into the Nation’s wat e rs:

ZERO DISCHAR G E. Kuipers propos es that no dis c harge of CBNG produced water should be allowed to surfac e wate r. Kuipers suggest s that companies can achieve this “Tier 1” mandate by retur ning the CBNG prod uced water t o the aquifer fro m which it

came o r injecting it into other appropria t e formations.

TREATMENT. Kuipers concludes that if a company demonstra t es that retu r ning the CBNG produ c ed water to t h e ground is techni cally fe asible for a po rtion of the produced water, the company should be required to t reat 100% of the water prior to discharge to achieve this “Tier 2”.


## 1.2 Ind u s try’s M a jor Concer ns with Kuipers’ Study Prior to fully engaging CDM to complete a te c hnical evaluation of Kuipers’ study, the PAW issued a st ateme n t to the me dia that prese n t s an overview of the maj o r issues and concerns about the f i ndings and recomme ndations prese n ted in Kuipers’ study. The following list is a s u mmary of concerns an d issues:

 Produced water quality in the PRB is very good compared to other producing basins in the United States. Conse q uently, PRB produced water ha s a high potential for direct discharge or be neficial use an d should be managed accordingly. Ex perience has shown t hat m any la ndowners w ant t h e wa te r for 

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irrigation an d livestock and are opposed to injecti n g the w a ter back into the ground. Injecting good q u ality wate r into a formation contai ning poorer water q u ality results in a loss o f the wa ter f o r beneficial use and do es not m a ke sense. The beneficial uses of produced water and its po sitive impacts are notad eq uately discussed or addressed i nKuipers’ study.

 Kuipers’ stu dy fails to take into acc ount site specific issues related to water managemen t , including injection and treatment. Selecting and practicall y implementing the best water manage ment opti on, includin g treatment and injection, must consider a number of si te specific factors, such as geolog ic formations; geographic l o cation within the basin; technical feasibility; pra c ticality, simplicity and reliability of water manage m en t options; dy namics of produced water production rates, a n d sea s onal variation and conditions.

 Kuipers’ fai l s to address the single most important site specific issue: The landowners’ desires to use the CB NG p r oduced water an d contractual agreements negotiated by landowners or their representatives on their behalf. With few ex ceptions, lan d owners wa nt a ccess to CBNG produced water for their stock, agricultural, and industrial uses.

 Injecting produced water in the Po wder River Basin is not technically feasible in many locations. As indicated in Kuipers’ study, the petr oleum indus t ry is not opposed to injection, which it regula rly practices in many pa rts of the Un ited States, including the Po wder Rive r Basin. How e ver, few viable formations have been found to exist with sufficient p o rosity , permeability, and reservoir extent that can accept t h e volume of water produced. In several attempt s to inject w a ter into sands in the Fort Union, Lance, and Fox Hills Formations, o p erators have found that they would need to drill one inject ion well for every one to two producing wells. This issue was no t addressed in Kuipers’ study.

 Water treatment technologies, specifically for coal bed nat u ral gas operations,

are an em erging and ev olving science. Water treatment makes sense w h en it takes place near where t h e treated w a ter c an be discharged, such as a ye ar-round rive r system, or used in a managed i rriga tion system. However, when the CBNG operation is in a remote area water t r eatment m a y not be t h e best wat e r manage m en t tool. Indu stry realizes treatmentis necessary in some situat ions and is currently testing and using different water treatment tec hnologies throughout the basin.

 Kuipers’ stu dy fails to recognize an d/or grossly underestimates many o fthe
costs to trea t and manage the concen trated byp roducts asso ciated with
treatment. The logistics and costs as sociated with man a ging and disposing of the concentrated waste brine are the grea test challenges whe nimplementing
treatmentoptions.



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 Kuipers does not consid er the lost production and revenues , including royalties and state tax revenues, resulting from significantly increased CBNG operating costs if the study recommendations are implem ented . I n creasing operat ing costs greatly decreases the economic life and recovery from a well.
Industry regulators and operators requ ir e flexibility to manage CBNG produced water so th a t they accommodate sit e specif ic factors, satisfy landowners, protect the environment and ensure long-term economic viability of ope r ations. Where it makes

sense and is technically feasible, CBNG operators consider injection and water treatment opportunities as manage m ent option s. However, while the K u ipers studies lead the public to bel i eve that injectio n and w a ter treatmentare widely available manage m en t tools, it is industry’s ex perience in the PRB tha t these option s are only technically feasible on a site-specific basi s and wi thin limited geographic areas. 

## 1.3 Proj ect Obj e ctives CDM’s key objectives ar e to provide an inde pendent technic a l evaluation of Kuipers ’ main findings, primaril y related to:

 Injection, includ ing surf ace impacts, l and subsidence and aq uifer depletion.

 Treatment using reverse osmosis, ion ex change a n d other me thods.

 Beneficial us e with a foc u s on mana ged irrigation.

 CBNG economics.
This study concludes that continuing flex ib le water man a ge ment practices in the PRB is necessary to allow beneficial use of pr oduced water where applicable, manage site

specific char acteristics, minimize th e environmental effects a n d maximize the economic benefits of coa l bed natural gas production in both Wyoming and Montana

. Project objectives were achieved using a vari ety of in-house and ex ternal resources. CDM relied on experts in the areas o f water and wastew ater treatment , injection, an d managed irrigation; wat e r q u ality and econ omic data provided by PRB operators; industry experience usi n g a variety of water manageme n t to ols, includin g water treatment , injection, an d manag ed irri gation; industry-wide publication s and references; a n d discussions with age n cy pe rsonnel. Wherever possible, technical evaluations, engineering calculations and co st e s t i mates were completed using typical produced water quality and industry data.


## 1.4 About CDM

CDM is one of the largest full service engi neering consulting firms in the United States. Headq u artered in Cambridge, Massachu s etts and e s t a blished in 1947 , CDM has over 3,7 00 professionals in more than 100 offices worldwide, includin g Montana. We offer global consulting, engine ering, construction, and contract operations


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services to b o th the public and priva t e sectors. C D M is an e m ployee-owned company with annual revenues exceed ing $650 million last year.
With respect to wat e r treatment, CD M is consistently ranke d by Engineering News Record as one of the top 10 water/wast ewater treatment firms and top f i fteen environmental firms in the country. As a company, we h a ve considerable ex perience developing, designing, constructing and operati n g water/w a stewater treatment systems for municipal a n d industrial se ctors using conventional and ad vanced
treatmentte chnologies, such as reverse osmosi s. In fact, a large percentage of CDM’s business revolves aroun d water reso urce de ve lopment, sup p ly, and tre a tmentissues. CDM has su bstantial experience and capa bilitie s for develo ping and/or improving water and w a stewa t er m anagem ent and treatm e n t strate gies for purposes of meeting stringent dis c harge limits, water con s erva tion, water reuse and reducing operating
costs.
CDM personnel have ex perience developi ng, testing and evaluating advanced systems , including reverse osmosis a n d ion ex change processes, for ma n a gementan d
treatmentof CBNG produced water since th e lat e 1990s. This, combined with CDM’s extensive experience providing desi gn/build/operate services to the water/wast ewater industry, gives us an ex cellent understanding of the technical challenges, l o gistical issues and cost s associ ated with water t r eatment and disposal of CBNG water. In additio n , CDM has several geologists with r e gistrations in Wyoming that have a wide range of injection-related ex perience in several states

.
CDM contracted the services of Kevin Harv ey, an independent consultant specializing in soil science. Mr. Har v ey is a well known ex pert in the PR B area for issues related to water man a gement and permitting. During the past several years, he ha s assis t ed many opera t ors with th e development an d implementation of managed irrigations systems to maximize th e beneficial us e of produced water where feasi b le.



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# Section 2 Feasibility of Injection of CBNG Produced Water
The Kuipers studies present two of the pref erable or most sustainable development options for CBNG water as:
1. Injection or percolation into depleted aquifers with water treatment as required, protecting and/or enhancing water quality.
2. Reinjection into aquifers depleted or otherwise affected by CBNG production.
Kuipers considers aquifer recharge by in jection/reinjection as a very favorable beneficial use water management practice for CBNG produced water within the PRB.
To assess the feasibility of injection, CDM reviewed results from two active injection projects in the PRB and evaluated several technical issues that must be considered for injection to be an option. In addition, a discussion of land subsidence and aquifer depletion issues, which the Kuipers study indi cates would be alleviated by injection, is also included. 

## 2.1 Hydrologic Storage Cons iderations for Injection The Kuipers study presents injection (or re-inj ection into the depleted coal bed) as the preferred option for the PRB and states that several factors are important for successful injection, including:
To be suitable for injection, a formation must have sufficient porosity, permeability, and storage capacity to hold and transmit the water; and static water pressures low enough to allow water movement from the injection well to the formation.
While subsurface injection is a viable wate r management option that is successfully applied in other CBNG producing basins (e.g., the Uinta Basin in Utah), injection has not been proven to have wide spread viabil ity (technical or economical) in the PRB. The feasibility of injection must consider not only the total porosity and storage capacity of the target zone, but also the storage capacity available. Most of the potential target zones for injection in the PRB are fully saturated, with the exception of shallow sandstones in the Wasatch or Fort Union Formations near the basin margins, or near surface alluvi al deposits. When this pore space is full, the available storage capacity is small.
The aquifer property that relates the change in storage capacity as a function of pressure is the storage coefficient. This describes the amount of water released from an aquifer under a unit change in pressure. In an unconfined aquifer, such as the shallow unconfined alluvial deposits in stream valleys, this volume of water is associated with physical drainage or re-satur ating of the pore space. As water levels rise in the unconfined alluvial aquifer, the po re space fills with water. In the case ofSection 2 Feasib ility of Injectio n of CBN G Produced W a ter

deeper confined aq uifers that are already fu lly saturated with water, such as the Fort Union sands t ones, addin gwater results ina change in the pre ssure within the confined aq uifer, since water is ne a r ly incompressible.

The difference between t h e physical pore volum e and storag e capacity under confined conditions is very large. For exam ple, the storage capacity of an unconfined alluvial sand and grave l aq uifer may rang e up to 25 percent of its volum e , so an increase of one foot of water level in this aquifer over one acre would provide storage for about 81,500 g a llons of water. By comparison, a confined coal bed or sandston e aq uifer in the Fort Union Formation, at depth s of 1,00 0 to 2, 00 0 feet, is un der pressure from both the overlying water colum nand g e ological materials and has a very small fraction of volume available fo r water storage (o ften less than 1 percent). In t h is case , water storag e can only be accomplis hed by increasing the pressure in the available pore spaces which are already satura ted. In jectin g CBNG wa ter into thes e formations is limited by the regulation of the inject ion pressure, which must remain under the pressure at which the fo rmation will be arti ficially fractured as req u ired by state and federal Underground Injection Control (UIC) re gulations. Water can onl y be injected into the receiving format ions within this narrow pressure envelope, which severely limits the available storage capacity for CBNG water. 

## 2.2 Injection and Interaction with CBNG Production The Kuipers study stat es the following:
CBM production involves dewate ring of a coal sea m which subsequently leads to a decrease in h ydrostatic pre ssure, co mpa c tion, and subsidence. Reinjection into a dewate red coal sea m (post- C BM production) or reinj e c tion into a coal se am conc urrent with CBM production could be used bene ficially to reduce and/or minimiz e such effects.
Any injection alternative must consider bo th lateral and vertical pro x im ity of the depressuriz a tion zone f o r CBNG wells and the injection wells. Since the storage capacity of the sa ndston e and coal bed aq uife rs is very low, pressure changes due to pumping or injecting will rapidly spr e ad ov er large distances. Injecting water into receiving formations ne ar producin g coal zones that are being depressurized for CBNG prod uction may cause recir c ulation of some of this w a ter, increas i ng pumpin g requirements. The potential loss of recove ra ble CBNG due to increased pumping and water management costs would also signific antly impair the economic vi ability of the project. In addition, reinjecting into deplet ed coal bed zones must also consider their formation characteristics, which ma ke the co al b e ds poor rec e iving form ations due to their low porosity, storage capaci ty, and fracture pressure.


## 2.3 Com p atibility of Injected Water The geoche mistry of the injected w a ter and th e native water s must also be considered. The formation can be fo uled if the injected wat e r is not compatible with formation water and p r ecipitation of minerals occurs when the waters mix. Precipitating 

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minerals will cause plug ging within the form ation in the vicinity of the i n jection well either rende r ing the wel l inoperable or grea tly reducing its injection capacity. When this occurs, the well generally requi r e s ch emical reconditioning or replacement.


## 2.4 In jection and La nd Subsidence The Kuipers study stat es the following:

There is als o potential for ground subs idence related to CBM-prod uced water withdrawal ( C ase, 2004). Reinjection would decrease or elimin ate t h e potential for subsidence by replacing the water in coal seam aquifer s

.
Subsidence occurs when pressure is reduced in fine grain se diments th atare not fully compacted. Hydrogeologic conditions in which measurable subsidence has occurred are in areas where a heavily pumpe d , confin ed sedimentary aq uifer is situated above or below low permeability aquitards of satu rate d clay or silt . These satu rated clays and silts are not fully compacted due to ra pid deposition and bu rial, or they have been hydrologically cut off from re lease of abnor m al pore pressure.
Pumping lo wers the water pressure in the aquifer, which in turn causes water to slowly drain from adjace nt clay and s ilt be ds. The reduction i nwater pressure causes a loss of support for the uncompacted clay and si lt beds. Because these beds are still compressible, they compact (become thinner) due to the overlying litho static load no longer being supported by the previous pore water pressure. The effect i s a slow lowering of the land surface over the area of pre ssure reduction and is k n own as lan d subsidence. Land subsidence is a p e rmanent co mpaction of the adj a cent aq uitards and canno t be compensated or recovere d (U.S. Geological Survey, 1999)

. The Kuipers study incorrectly claims that re injection into the depressuriz e d aquifer o r other zones, either concurrently or po st-produc t ion, will mi tigate or reverse compaction. An evaluation of the po te ntial for land subsidence from CBNG extraction in the PRB was performed by the Wyoming Geological Survey (WGS). That study s h owed th at the maximum comp ression of the W y odak coal bed from depressuriz a tion in the Gillette area would be 1⁄2 inch (1.3 cm) or less (Case and other s 2000). The r e port also indicated that the en tire compression may not be t r ansmitted t o the surface.

Additional field observa t ions support this study

. The WGS also reported that significant q u antities of groundwater had alread y been pumped from a s andston e unit underlying the Wyo d ak Coal Zone inthe eastern PRB. This unit supplied drinking water to Gillette prior to C B NG develo pment. No surface subs idence has been observed in the Gil l ette area associat ed with this groundwa ter withdrawal or the subseq uent withdrawals from the o v erlying Fort Union Formation Wyodak coal units beginning in the 199 0s.



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In describing the potential impacts from CBNG production, the Kuipers study also concludes that:

Impacts as soc iated with drawdown a re l oss of the aqu ifer stor age ca pacity as a re sult of collapse or co mpaction of a q uifer and land surface su bsidence, which can occur if the aquifer mater i al is unconso lidated.
Surface subsi d ence may also be evident if the aquifer collapse is sig n ificant. Thi s could cause excessi ve damage to buildings, roads, and other infrastructur e (i.e., bridges, railro a ds) loc a ted over the collapsing aquifer; howeve r, if the coal aquifer is locat e d in stable consoli d ated rock, then aquifer co l l apse probabl ywill be minimal and not b e noticed at the ground surfa c e.
Again, as ex plained above and supported by long term evaluations of su bsidence by the U.S. Geo l ogical Survey and site specif ic e v aluations by the WGS, compaction of the coal bed and adj a cen t units is ins i gnificant an d immeasurable at the s u rface in the PRB. In add i tion, the ter m “collapse” is not used in any s t udies evaluating regional subsidence related to gro u ndwater pumping. Using the term collapse in the Kuipers study as a d e scriptor of the land subs idence process is mislea ding.
Geologic co nditions in the PRB are not the sam e as in t h ose areas wh ere significant land subsidence has occurred. The Fort Union Formation within the PRB is fully consolidated. Furthermore, the amo u nt of groun d water withdrawn from the low permeable c o al beds is insignificant inthe conte x t of supporting the ove r lying lithostatic load.


## 2.5 In jection Testing and Oper ati o ns in t h e P R B CBNG operators are act i vely injecting pr oduce d CBNG water in areas of the PRB where evaluation of subsurface geological data identified zo nes with pot e ntial to receive water. These op erations began more thr ee years ago in Wyoming. Injection wells are currently operating in th e eastern and northwest p o rtions of th e basin. Target receiving zones include the Fort Union Formation an d the deeper Lance and Fox Hi lls Fo rmations.

Tables 2-1 a n d 2-2 prese n t tes t ing an d operational results of injection wells completed by two CBNG operators in both the s hallow (541 to 2,32 0 fee t ) Fort Union Formation and th e dee p er (4,000 to 4,47 0 feet) L ance and Fo x Hills Form ations. Successful wells are defined as tho s e th atwere able t o continuously receive water at inj e ction pressures below the formation fracture pressu re . As shown, some wells were able to receive water for a perio d of time, but eventu ally exceeded the frac ture pressure of the formation a n d injection was stoppe d (ex c ept as noted in Ta ble 2-1 for well 36A). The overall succ ess ratio for the Fort Union inje ction wells was 4 7

. 6 percent (1 0 out of 21) and th e average injection rate was calculated to be 36. 7 gpm.



### A 2-4 Deeper injection testing was also conducte d in the Upper Cretaceous Lance and Fox Hills formations, which have poorer water q u al ity. Testing of the Lance and Fox Hills

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formations indicates an overall success of 2 5 percent as sho w n in Table 2-2. However, the actual success ratio may be much lower sinc e the size of the dat a se t is small and it appears tha t the risk of finding a successful receiving zone in the Lance and Fox Hi lls may be much higher. I n sufficient data are availa ble to determine a reaso nable average inje ction rate in these format ions.

T a b l e 2-1 Fort Uni on Fo rma tion Inje c t ion We ll Da ta from T w o Ope r a t ors in the PRB

Injection Well Tota l De pth

(ft) Re ce i v ing Forma tion Cumm. Injection Volume (gallons) Cumm. Dura tion

(d ays) Av e r ag e Injection

Rate (gpm) Su cces sfu l

Iv y Creek SR- 1 1,621 F t. Union Ne w 0 0 Yes Lan e y S R -1 1,648 F t. Union 0 0 0 No LS Dra w 1 2 -28 I 541 F t. Union 21,63 1,38 6 359 42 Yes LS Dra w 5- 28 I 568 F t. Union 15,73 5,13 2 539 20 Yes LS Dra w 6- 28 I 630 F t. Union 15,08 2,45 2 539 19 Yes S J W o lff SR-2 2,050 F t. Union 0 0 0 No S J W o lff SR-3 2,320 F t. Union T e st Onl y 0 0 No S J W o lff SR-4 2,000 F t. Union T e st Onl y 0 0 No Steinh offel SR- 1 1,508 F t. Union 125,0 40,4 26 1,169 74 Yes Steinh offel SR- 4 1,404 F t. Union 23,06 3,08 2 811 20 Yes Steinh offel SR- 2 1,500 F t. Union 188,6 00 34 4 No Steinh offel SR- 3 1,507 F t. Union 366,4 00 23 11 No Sunb urst SR-1 1,400 F t. Union 2,052,9 00 28 51 Yes Sunb urst SR-2 1,000 F t. Union 7,121,7 00 102 48 Yes T i etjen 7-33 722 F t. Union 43,58 3,86 2 729 42 Yes W o lff SR-1 1,864 F t. Union 20,81 2,60 0 198 73 No 7 A

- 3 1
, 6 1 4 F t

. U n i o n 4,601,9 8 2 4
, 3 8 0 9 (1 ) No 3 6 A 1
, 6 3 2 F t

. U n i o n 151,6 54,3 1 4 13,14 0 96 (1 ) Yes 3 6 B 1
, 7 0 0 F t

. U n i o n 50,76 9,47 4 5
, 4 7 5 77 (1 ) No 14-3 4 1
, 5 9 1 F t

. U n i o n 59,87 9,61 0 4
, 3 8 0 112 (1 ) No Unkn o w n N A F t

. U n i o n N A N A N A N o Av e r ag e 1 , 4 4 1 36.7 (2 ) SR = 0.48
Notes: gpm = gallons per minute; SR = s u ccess ratio; NA = Not Available (1) Wells w e re o perated at injection pressures e x ceedi ng the receiving formation fra c ture pressure fo r an unspecified period of time: therefo r e data was not u s ed in average injection rate calcu l ation (2) Calculated fr o m all succe ssful w e lls w i th injection rate histor y e x cept w e ll 36A

Overall, bas e d on this data, approxi m at ely two successful i n jection wells in the shallow Fort Union Formation are r e q u ired to handle the volume from 10 producing wells having an averag e flow of 60- gpm. Howe ver, the data also indicates that due t o the low success ratio, approximately four inje ctio n wells will need to be drilled to find two successful wells capable of hand ling the flow from a 10- well producing system

. Injection int o the deeper Lance and Fox Hills Formations carries a substa ntially higher risk and likely loss of beneficial use due to the poor water quality in the receiving formations.



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T a b l e 2-2 Lance and Fo x Hills Formations I n jection We ll Data from T w o Operators in the PR B

Injection Well Tota l De pth

(ft) Re ce i v ing Forma tion Cumm. Injection Volume (gallons) Cumm. Dura tion

(d ays) Av e r ag e Injection

Rate (gpm) Su cces sfu l

Inklin e 5-23 I 4,228 Lanc e-F o x Hills 67,47 7,07 4 4 2 7 1 1 0 Y e s Cab a ll o SR-1 4,066 F o x Hi lls 0 0 0 No Dunc an SR-2 4,000 F o x Hi lls 0 0 0 No

Green Mans io n 4,470 Lanc e-F o x Hills 2,040,3 6 0 4 2 34 (1 ) No Av e r ag e 4,191 SR = 0.25
Notes: gpm = gallons per minute; SR = s u ccess ratio (1) Wells w e re o perated at injection pressures e x ceedi ng the receiving formation fra c ture pressure fo r an unspecified period of time, data n o t used in averag e injection rate calculation
In summary, the injection well data from these t w o CBNG operators reflects the uncertainty in subsurface geologic condit ions w h ere porous and permea ble zones in the Fort Union Formation and de epe r Lance and Fox Hills Formations ha ve limited extent and t h erefore limited storage capacity. This limited success and high

ex ploration risk associated with locati ng successful injection wells also adds appreciable economic uncertainty, whic h significantly reduces the viability of injection as a water m a n a gement too l . The results indicate that injection of CBNG water may b e a management option in only a small portion of the PRB.


## 2.6 Surface Disturbance Implementi ng injection to manag e C B NG throughout the bas i n would ca use a significant increase in surface disturbance. This surface disturbance was not fully evaluated by the Kuipers study and was underestimated in t h e cost mod e l evaluations (Alternative 4a in t h e tec hno logy limits report). The Kuipers model accounts for only one ac re of surface di sturbance and reclam ation costs f o r a 10 well (800 acre) de velopment. However, using th e actual injection success dat a presented in this report, the following additional and ex pa nded surface disturbance would

occur:

 An additional two acres would be distur bed for t h e extra drill pads and access roads neede d for drillin g and te stin g a minimum of four (Fort Union) injection wells to get two successful injection wells capable of handlin g the flow a s proposed in Kuipers’ cos t model.

 The storage and se ttling pond for the inje ction wells would r e qui r e appr oximately a 1-acre pond for a 30-day storage capacity (2.6 million gall ons) of produced
water.

 The well piping estimate of 10,0 00 fe et in Kuipers’ cost mode l to connect the producing wells to a centralized injection well i s too low for a well spacing of 80 acres/well. More than 2 0 ,00 0 feet are needed to accommodate the two F o rt Union 

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injection wells necessary for handling the averag e injection rate of 6 0 gp m, resulting in a temporary distur bance of about 1.8 acres.
Overall, bas e d on actual operator data, th e total surface disturbance associated with injection as a preferred water man a gement m e t h od is approx imately 4.8 acres per 1 0

- well producing system
, or more tha nfour time s that considered in Kuip ers’ model. 

## 2.7 Injection and Aquifer Depletion As previous ly discussed, where receiving formations are available, injection is a valuable manageme n t to ol for perma n ent s t or age of CBNG water in the s u bsurface. However, in jection alone will not pro v ide a me ans to restore depleted pressure to the coal beds. This process will oc cur nat urally thro ugh leakage from adjacent formations, which will equili brate with the depr essurized coal bed over time. The depressuriz a tion is mea s ured by water leve ls in wells compl e ted or screened in the producing coal beds. A common misconceptio n that is used in the Kuipers study is that lowering water levels in wells, or “drawdown,” created during pumping operations immediately causes an eq uivale nt water level decl ine across confining shale units a n d other formations ad j a cent to t h e coal bed. It also does no t eq uate to lowering shallow uncon f ined “water table” elevations.

As discussed in Section 2.1, t h e wa te r storag e capacity of the coal beds is very small compared to shallow unconfined sa nds or even to more porous Fort Union Formation sandsto n es. CBNG prod uction opera t ions on ly remove a fraction of water stored in the coal to recover the adsorbed gas. Once CBNG pumping production ceases at economic li mits (approximately seven years in t h e PRB), the pressure in the coal bed will begin to equi lib rate with surrounding formations, and leakage from the adjacent formations will ultimately restore pressure to pr eexisting conditions. Slight pressure drops will b e observed i nsurroundi ng fo rmations during this recovery period, depending on the hydraulic communicationbetween t h e co al bed and s u rrounding formations. Based on an intensive d e velopment scenario, the BLM (2003) Wyoming EIS evaluated the pressu re response (as drawdo wn) throughout the bas i n and demonstrate d that 75 to 85 percent o f the deplete d pressure would be recovered within approx imately 15 years af ter producti on ceases (Figure 2-1). The propagation of this pressure response into other units would result in a fraction of the decline measured in coal bed wells.



### A 2-7

P:\3 141 0 ( P AW ) \ 7.0 Repor t s \T ec hnic a l Re vi e w \F i n a l R epor t\ Sec t i on 2.docFi gure 2- 1 Modeled Drawdown vs. Ti me for Selec t e d Upper For tUnion Mo nitoring L o cation s

Appl ied Hy drology Associ ates . 2002. “T echnical R e p o rt-Groun dw ater Modeli ng, Pow der River Basi n Oil and Gas Envir o n m e n tal Impa ct Statement ” p r epar ed for the U.S. Bureau o f Land Man a g e m e n t, Buffalo Field Office. Decem b er.



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# Section 3 Feasibility of Treatment
Kuipers’ management options report presen ts an overview of a wide range of treatment technologies that are being used or being developed for treating CBNG produced water in the PRB. Some of the technologies listed include reverse osmosis (RO), ion exchange, freeze-thaw/evaporation, and mechanical evaporation. Kuipers’ technology limitations report focuses on RO as the preferred alternative and was used as the basis for the economic calculations th at conclude that RO treatment is proven, available and can be broadly applied as a technically feasible and “affordable” treatment technology to industry.
This section presents the results of an independent review by experienced CDM personnel of the technical feasibility and th e economics of applying RO as a broadbased treatment alternative. In addition, a discussion of other treatment options and their applicability and costs is presented to provide a better understanding of the variety of methods available.
CDM personnel have direct experience with the development and testing of several of the technologies (and combinations of technologies) mentioned in the management options report. Specifically, these techno logies include the Hydro process and High Efficiency Reverse Osmosis (HERO) process. CDM has also installed numerous largescale RO treatment systems world-wide for the conversion of brackish groundwater resources into beneficial use as municipal drinking water supplies.


## 3.1 Evaluation of RO Technical Issues Before selecting RO as a preferred treatment alternative, there are many important site-specific and technical factors that must be carefully considered. Unfortunately, most of these factors were not discussed or considered in the tec hnical discussion or economics sections of the Kuipers study. This section presents a summary of the important technical factors that were not ad equately addressed in Kuipers’ study to support RO as a broad-based treatment technology. 

## 3.1.1 Water Quality and Flow Variations The quality of water produced during CBNG development varies widely from basin to basin, within a basin, and over the lifetime of the CBNG well (ALL Consulting, 2004). The same holds true for flow. The flow of water is generally the highest near the beginning of the well life and then tapers off.
Variations in water quality present te chnical challenges when designing and operating an RO system and make it difficult to apply the same treatment system at different locations within the basin. Changes in water quality can cause pressure fluctuations in the RO membrane system , increased membrane fouling, increased maintenance costs, higher level of operator attention, and a much greater potential for system “down time.” To manage fluctuations in water quality, selecting the appropriate pretreatment is critical for long-term success.Section 3 Feasib ility of Treatment

Fluctuations in feed flow at a single s i te ma ke it difficult to co st-effectively size an RO system to handle initial peak flows and the long- t erm average flow. Assuming a 10- well system having a pe ak well flow of 25-gpm a n d an average flow of 6- gpm, the
treatmentsy stem would need to be c a pable of treating flows ranging from 60-gpm to 250-gpm. R O system s o p erate at a fix e d flow rate. Fluctuations in flow are handled either by providing feed storage capacity or designing the system to handle the peak flow. Regardless of the method employed, the capital requirements for designing an RO treatment sys t em to handle wid e fluc tuation s in flow are much higher than indicated in Kuipers’ study.

The assume d method fo r managing fluctuatio ns in flow and q u ality in the Kuipers study is by using a storage pond. Using a storage pond upstream of th e RO system will help stabilize fl uctuations in both flow and water qualit y, but it also increases the potential for membrane fouling. CDM’s ge neral experience i s that collecting and storing groundwater in a pond ah ea d of an RO s y stem signif icantly increases t h e potential for membrane fouling due to ae ration, precipitation of minerals and biological growth on t h e membrane s u rface, which results because oxygen is added. 

## 3.1.2 Treatment Objectives
The cost of t r eatment sy stems d e pends not only on the flow, the quality of water, tot a l system reco very, but als o the treat m ent objectives. The Kuipers study makes no mention of t h e target treatmentobjectives. Such objectives are important since they, among other things, directly or indi rectly determine the ty pe of treatment required, equipment, labor, chemicals, waste d i sposal , and operating costs. For ex a m ple, if a comparison of the feed water q u ality and treat m ent objectives indicate that only cation removal is required, ion ex change m a y be a better tre a tment choice. Therefore,
treatmentobjectives need to be a p a rt of any di scussion that relates treatment technology t o cost. 

## 3.1.3 System Recovery Treatment using RO technology makes two streams: perme a te (treat ed water) and reject (concentrated brine). The RO system recovery refers to the volume of permeate produced per volume of feed water. For example, a sy stem designed for 90 percent recovery p r oduces 90 percent permeate an d 10 percen t reject brin e.
RO systems can be desig n ed for a wi de range of recoveries and are gener a lly limited by the precipitation of a feed wat e r compon ent or osmotic pressure. Since nearly all of the ions i nsolution are taken out of the water by the membrane, the hi gher the recovery the higher the c o ncentration of dissolved salts in t h e reject sol u tion. A system desi gned for 75 percent reco very, w ill co ncentrate feed water salts by four fold; at 90 p e rcent recovery the concentration fac t or is 10-fold; and at 9 5 percent recovery, th e salt conce n tration fact or is 20-fold. Conseq uently, the high er the recovery, th e greater the chance for membrane f o uling to occur due to precipitation of sparingly soluble salts.



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Conventional, “off-the-shelf” RO systems ar e designed for a recovery of between 75 percent and 85 percent. With some minor changes, th e recovery of these syste ms ca n often be increased to 90 percent. Howeve r, above 90 percent recovery, c u stomized systems are req u ired and are more e x pensiv e. Based on C D M’s experie n ce, the total system reco very for a typical brackis h -water RO system treat i ng CBNG produced water is gen e rally limited to about 90 percent. I nsome cas e s, a high er recovery can be achieved. Silica is often the limiting factor that prevents higher recove rie s from being achieved even with sea water RO sy stems.



## 3.1.4 Pretreatment Some form of RO pretre atmentis required for a n y syst em tr eating produced water. In general, t h e higher the RO system recovery and/or the poorer the fee d water quality, the greater the need (and comple xity) for pretreatment. The Kuipers study presents t h ree RO pretreatment opt i ons, but does not include these opt i ons in the costs. In ad dition, two of the three pret reatment options presented (sodium carbonate and aeration ) would likely do little, if any thing, t o prevent membrane fouling and could poten t ially have the opposite. Aera tion will form p r ec ipitate (requiring filtration) and enha nce t h e potential for biol ogica l fouling. Adding sodium carbonate would like l y not precip itate minerals, as in te nd ed, since the water alrea dy contains high concentrations of bicarbonate. Acid (hydrochloric or sulfuric) addition is an appropr i ate selection for controlling calci u m car b onate scaling, but may exacerbate potential scaling from barium sulfate (if sulf uric acid is used). Adding an tiscalants and cartridge filtration are the two most comm on forms of pretreatmen t used to control min e ral and particulate fouling on RO m e mbranes. However, these options
were not me ntioned in K u ipers’ study. Regardless, non e of t h e costs ass o ciated with any of th ese pretreatmen t options me ntioned in t h e Kuipers study was in cluded in Kuipers’ RO cost estimat e

.

Since RO tre a tment results in the concentrat ion of dissolved solutes on th e membrane surface, one of the mostimportant consider ations for successful design an d operation of a RO syst em is selection of the appropriate pretreatment system. In g e neral, there are four objectives of pretreatment :

 Insure the compatibility of the feed water wit h the RO membrane. Thin film composite membranes usually can n ot tolera te chlorine or other chemical ox idants or high concentrations of hydrocarbo n solvents. The membranes also ca nnot tolerate any oil and grease.

 Reduce or eliminate the potential for mine ral sc ales to form on the membrane surface. Mineral scale can form from the prec ipitation of sparingly soluble salts includ ing calci u m carbo nate, calcium sulf ate, calci u m fluo ri de, barium sulfate, strontium sulfate and si lica, to nam e a few.

 Reduce or eliminate the potential fo r organic, biological and colloidal particulate fouling. Biological and colloidal foulants are t w o of the gr eatestchallenges for design and operation of an RO syst e m

. Biological foulants a r e among th e most 

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diffic u lt to c o ntrol and remove. Iron precip itation and silt can cause coll oidal fouling by s e ttling onto the membrane surface.

 Reduce the RO membrane cleanin g frequency by minimizing or eliminating the fouling potential of the feed water. Increased membrane cleaning results in reduced membrane life and higher operating costs.
The resultant performance effects of RO membrane fouling are:

 Loss of or decline in specific memb r ane flux, resulting in a lower water productivity or increased feed wat e r pre ssure to maintain a constant permeate flow.

 Reduction in permeate q u ality.

 Increase in differential pressure le ading to high er energy consumption.

 Freq uent ch emical cleanings, triggeringan increase in opera t ing and m a intenance (O&M) cost s.

 Shortened membrane s e rvice life.

There are a wide range of methods used to prevent an d/or control membrane (and equipment) fouling. For produced water in the PRB, pretreatment m a y i n clude:

 Filtration. All membrane syste ms in clude cartri dge filtration, but if the total suspended solids (TSS) c o ncentration is more th an about 5 mg/L, a mu lti-media sand filter should be co nsidered. Filtrati on results in a wa st e stream an d adds both capital and operating costs.

 Chemical Ad dition. Adding acid and /or antiscalants is of ten necessary to control mineral scales. This res u lts in the n eed to haul, store and m anage che m icals on-site and adds costs.

 Activated Carbon. Carbon polishers are sometim e s used ah ea d of an RO s y stem to remove trace organics or oil and grease. While effective, usi n g carbon adds a waste
stream to t h e process; increases the pote ntial for biologi c al f o uling of the RO membranes; and add s costs.

 Ion Exchange Softeners. To increase the recovery of RO system s and/or prevent mineral scales on t h e me mbrane surface, ion ex change softe n ers may be req u ired. The purpose s of the softe n ers are to r e move polyvalent cations th at formsparingly soluble salts in solution. Polyvalent ca tions removed in a so ftener include iron, barium, calcium, magne s ium and str o ntiu m. While extremely effective as a pretreatment option, sof t eners nece ssitate t h e ne ed to ha ndle chemicals, produces a
waste strea m that req u ires manag e m ent a n d di sposal, and adds costs.



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These are a f e w of the major pretreatment issues that may ne ed to be considered. However, identification of the best p r etreat ment system is sit e specific and depends on a variety of factors, includ ing feed wa ter chemistry, syste m recovery, treatment objectives and cost. Again, Kuipers ’ stu dy ment ions pretreatment but it does not include eith er the capita l or operat in g costs in th e economic analysis.



## 3.1.5 Location A benefit of RO systems is that they are skid-mounted and c an be inst alled in mobile trailers for fl exib le, adaptable applic ation even in remote locations. However, if
treatmentis required in a remo te location, which is very lik ely in the PRB
, other issue s need to be c o nsidered. Some of the s e include operator safet y , road access, power, chemical hauls, waste di sposal and discharge location. None of these issues were discussed in Kuipers’ study.
Many operators in the b a sin have fo un d that dis c harging “clean” w a ter i n to ephemeral d r ainages located a f a ir distanc e from the receiving stream so metimes results in the dissolution of salts pr esen t o nthe ground. Consequently, the water reaching the receiving stream could be sim ilar or worse in q u ality than th e untreated produced water. An obvio u s solution woul d be to install a pipeline to the discharge location. However, this adds cost and en vironmental effec t s th at were not address e d in Kuipers’ study. 

## 3.1.6 Brine Disposal The feed water quality a n d recovery of the RO sy stem dictate s the volume and q u ality of the of brine stream requiring disp osal. At 90 percent reco very, 10 percent of the feed flow would re quire disposal. F o r ex ample, a 10-well sy stem operati n g at 90 percent recovery and ha ving an initial peak flow of 250-gpm would result in a 2 5 -gpm brine stream requiring di sposal. At the lo nger-te r m average feed flow of 60-gpm for a 10-well syst em, the average brine rate would be 6-gpm at 90 percent recovery.
The logistics and costs as sociated with the m anag ement and d i sposal of th e concentrated waste brine are the greatest ch allenges with im plementing RO and othe r treatmentoptions in the PRB. The K u ipers study almost com p letely ignores the discussion of brine disposal options and greatly underestimates the disposal cost.

In CDM’s ex perience, there are three mainoptions for disposing of concentrated brine. They include injec t ion, natural evaporation and comme rcial disposa l

. Acco rding to operators, injection sites for RO brine rarely exist and are not considered a viable option. In any c a se, t h e s e lection of the best option, if any, can o n ly be determined after considering a number of site-specific facto r s, including landowner requirements, distance to the nearest comme rcial disposal site, availabilit y of a deepwell injection site, permitting requir ements, atmospheric evaporation rates a n d
cost.



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## 3.2 Ev al uation o fKui p ers' RO T r eatmen t Costs

An evaluation of the ec onomics of reve rse osmosis treatme n t and brine disposal (Alternatives 5a and 5b i nthe techno logy lim its report) was conducted to verify the projected treatment costs in the study do cument. Both options assume surface discharge. 

## 3.2.1 Assumptions
Table 3-1 lists the process design a s s u mpti ons for each RO treatment alte rnative. Based on th ese as sumptions, the ma ximum produced water flow to the tr eatment system is 25 0-gpm with an average f l ow of 60-gpm. At a 9 5 percent RO recovery, th e average brin e flow rate is 3-gpm.
While many of these ass u mptions appear to be consistent a n d/or acceptable for purposes of this evaluation, the follo wingassumptions were found to be either inaccurate o r unrealistic, resulting in an underesti m ate of t h e t r eatment economics:

 Estimating 10,000 feet of pipe to connect the wells to a central treatmentplant is too low given a well spa c ing of 80 ac res/well. A more reason able length of pipe needed to efficiently con n ect all of the we lls toget h er to a trea tment plan t is 16,7 00 feet.

 Assuming that all wells were broug h t into production at about the same time, the entire treat m ent capacity of 250-gp m woul d need to be provided. As the flows decline, the treatment capacity could be adjusted in increments, depending on the capacity of each RO treatment module. The assumed RO treatment capacity of 120-gpm is t h erefore not accurate; however, its use for these p u rposes is understand able given the difficulty trying to relate cost to c a pacity when capacity changes wit h time.

 An assumed RO recovery of 95 percent is more t han likely th e max i mum possible using typical pretreatment met h ods and is therefore very aggressive. Als o , this recovery is c o nsidered unconventional and will result in custom manufacturing, which adds both time and cost to the project. A recovery of 90 percent w o uld be more appro p riate.

 The produced water volume to gas r a tio of 1.0 b b l/MCF is inconsistent with all available data for the PR B. In f a ct, th e table listed in Kuipers’ study shows an average ratio of 2.7, not 1.0. Using a lowe r ratio of 1.0 in economic calcul ations is significant since it underestimates th e impact of treatment o noverall gas production and return on investment (ROI) economics by a factor of 2.7. In other words, treat m ent results in much lower ROI’s than indicate d in the t e chnology limits report

.



### A  Based on input from operators, injection sites fo r RO concen trate are diff icult to locate and r e q u ire an ex ploratory program t hat i s cost-prohibitive. Conseq uently, Alternative 5b may be te chnically and economically infeasibl e

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T a b l e 3-1 Kuipe r s ’ A s s u mptions for R O Tre a t me nt of PRB Produc e d Wa te r

De sc ription 5a – RO w i th Co mmer c ial Brine Disposa l 5b – RO w i th Brin e Injection / Rein jection No. of W e lls 10 10 Estimated W e ll Densit y 80 acres/ w e ll 80 acres/ w e ll Estimated F l o w / W el l (ma x) 25-g p m 25-g p m Estimated F l o w / W el l (avg) 6-gpm 6-gpm Estimated Life of W e ll 10 years 10 years Life of W e ll – F l o w /Gas Rati o 1 bbl/MCF 1 bbl/MCF Lan d Disturb an ce 1 acre 1 acre Pipi ng from ea ch w e ll to p o n d to treatment 1,000 fe et 1,000 fe et Storage p o n d capac it y 30 da ys stora g e 30 da ys stora g e RO capacit y 120- gpm at 10 0 HP 120- gpm at 10 0 HP RO recover y 95% 95% Brine Stora ge 15 da ys 15 da ys Membra ne Re plac ement F r e q Once/y r Once/y r RO Pump Rep l aceme n t O n c e /y r Once/y r Lab or 0.35 F T E (90 d a y s /y r) 0.35 F T E (90 d a y s /y r) Injectio n w e l l d epth Not Appl icab le 1,500 fe et Injectio n po w e r deman d 100 HP 100 HP Injectio n Pump Repl aceme n t F r eq Once/y r Once/y r



## 3.2.2 Recalculation of Co sts Using Kuipers’ Model
The technol o gy limits report presents the input d a ta a n d results of spread sheet calculations used to esti mate t h e capita l and operating costs of RO treatment for Alternatives 5a a n d 5b. Using the in put data an d spreadshe e t model, C D M completed an evaluation of calculations to ve rify treatmen t costs. B a sed on the result s of this evaluation, it was determined that several calculation errors and cost omission s had occurred. To avoid confusion and to deter m ine the magnitude of these errors and omissio n s, Kuipers’ same spread sheet mo del was used to recalculate the costs. For comparison, an esti mate of RO treatmentcosts using C D M’s model is presente d in the nex t s e ction.

For Alternative 5a, the r e sults of CDM’s fi ndings and recalculation of costs using Kuipers’ mo del are as follows:

 The quantity of pipe required to co nnect all the wells together was underestimated. Using t h e more accurate lengthof 16,7 00, th e capital cost increased by $11 8,59 0.

 The brine storage tanks appear to be unders ized to collect 5 percent of the average feed flow for 15 days. Assuming a 5 pe rcent brin e rate, t h e to tal 15 d a y st orage volume is 68 ,400 g a llons. Assuming a unit purch a se price of $0.7 5 per gallon, the cost of brine storage increases from $ 20,0 00 to $4 8,60 0.

 Capital costs do not appear to includ e the cost of installing the RO system or brine tanks. This cost generally ranges bet w een 1 00 a n d 300 perce n t of the purchased equipment price. For purposes of this stu dy, an installation factor of 150 percent



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of the purchase price of the RO syste m and brine storage ta n k s was used . This adds $ 297, 9 00 to t h e cap i tal cost.

 The capital costs do not appear to incl ude all of the indirect costs such as engineering, construction ov ersight, contractor’s fee, etc. t hat are typically associated with a proje c t of this typ e

. The indirect costs we re therefore increased from 10 to 2 0 percent. T h is increase d the tot a l capital cost by $12 9,98 0 ( a fter adjusting th e direct costs per the su ggestions lis ted above).

 The total ca pital cost, after making t h ese cha n ge s, increased from $450, 5 78 to $1,0 25,6 48. This represents a total in crease of about $575, 000

.

 Based on a r e view of the operating costs for Alternative 5a, itappears th a t the annual brine volume was misc alculated. At a 5 percent brin e rate, t h e a nnual volume of brine requiring disposal is 37,5 43 no t6,25 7 as ind i cated. Using the unit disposal cost of $5/bbl, the an nual disp osal cost increases from $31 ,28 5 to $187 ,71 4 , re presenting a nincrease of about $156, 429 in annu al O&M costs.

The same evaluation was completed for Alternative 5b. The results of these spreadsheet calculations are included in A ppendix B. Table 3-2 shows a c o mparison between the reported co sts (with errors and omi ssions) a n d recalculated costs after fix i ng the errors and ad ding omitted items.

T a b l e 3-2 Re v i s e d Cost Estimate s Usi ng Correct Da ta
5a – RO w i th Co mmer c ial Brine Disposa l 5b – RO w i th Brin e Injection / Rein jection De sc ription
Re porte d R e ca lc ula t e d R e porte d R e ca lc ula t e d Capit a l Cost $45 0,57 8 $1,02 5,64 8 $ 7 4 4,27 8 $1,26 9,24 8 Annu al O&M Cost $13 7,81 0 $ 3 0 9,88 2 $16 4,99 3 $ 1 6 4,99 3 NPV (1) $1,44 0,56 5 $3,41 8,47 6 $1,92 0,17 9 $2,54 3,28 0 NPV cost per bbl $0.19 $ 0.46 $0.26 $0.34 (1) Assumin g 5 percent disc ou nt rate for 10 years.

Based on a direct comparison of costs before and after recalculating the costs using Kuipers’ sa me spreadshe e t model, the net present v a lue per barrel of water treated increased from $0.1 9 to $0.4 6 for Alternativ e 5a and from $0 .26 to $0.3 4 f o r Alternative 5b. As sho w n in Figures 3-1 and 3- 2, Kuiper s’ cost estima te s resulted in an omission of approx im ately 59 perc ent an d 23 percent of the costs for RO treatment for Alternatives 5a a n d 5b, r e spectively.

In addition t o the calculation errors and omission s for Alternative 5a, Kuipers’ cost estimate also does not i n clude the cost of pretreatment . For example, cartridge filtration is req u ired ahead of a first- pass RO treatment syst e m to protect the membranes from collo id al fouling. This invo l v es capital costs for dual cartridge filte r pressure ves s els and mo nthly replacement of 5- micron filter cartridges. Also (as 

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F i g u r e 3- 2. A l t e r n at i ve 5b

. R O T r eat m e n t wi t h I n j ect i o n B r i n e D i s p o s al

$0.2 6 77 %

$0

. 0 8 23 %

O m i t t e d C o st s: A d di t i on al P i p i ng E q ui p I n s t al l a t i on E n gi ne e r i n g A d di t i on al B r i n e S t o r age K u i p er s ' R e po r t e d C o s t E s ti m

a te F i g u r e 3-1. A l t e r n at i v e 5a. R O T r ea t m en t w i th C o m m er ci al B r i n e D i s p o s al

0. 19 41 % $0. 2 7 59 %

O m i tte d C o s t s : A d di t i o nal P i pi n g E q u i p I n s t al l a t i o n E n g i ne er i n g A d di t i o nal B r i n e S t o r age F u l l B r i n e D i s pos al K u i p e r s ' R epo r t ed C o s t Es ti m a te

noted in Kuipers’ study) chemical treatmen t(acid or antiscala nt addition) is usually incorporated as a pretre atmentstep to prevent mineral scale on the me mbrane surface. This is especially true for a syst em operating at 95 percent recove ry. Major capital equipment for reagent addition in volves a storage t a nk with seco ndary containmentand a p a ir of chemical meteri ng pumps. Annual operating costs must include the cost of the c h emical. Hydrochl oric acid generally costs around $0. 15 per pound (100 percent basis) while an a n tisc alant co sts about $1. 25 per pound. The amount and type of che m ical is site-specifi c and depends on the water chemistry. In addition, Alternative 5b does not inc l ude the cost of explorat ion needed i nthe PRB to find a well that will accept the requir ed amou nt of brine for di sposal, as di scussed in Section 2.5.

In summary , Kuipers’ cost estim a tes do not re present a realist i c estimate o f capital or operating costs for treat m ent of produced water using RO in the PRB. T h e costs include several miscalculati ons and omit the mo st importantrequirement when considering RO, which is pretreatment. Sele ction of the appropriate pretreatmentcan not be assu med without site specific info rmation, namely the feed water chemistry and potenti a l foulants. Pretreatmen t is even mo re important when tryin gto att a in 9 5 percent reco very since c o nstituents i nthe fe ed water will be concentrated 20 times.


## 3

. 3 CDM’s Cost Es timate for RO Trea tme n t This section presents the results of a new co st est i mate of RO treatment of produced water in the PRB using CDM’s internal spreadshe e t model an d RO membrane vendor software for comparison to Kuipers’ estima te. This model uses actual fe ed water q u ality as a ninput variable to produce a material and energy balance for the entire
treatmentprocess. The model includes pe rformance and wa ter chemistry calculations for all treatment steps, i n cluding pretreatme nt. For the feed water chemi s try used in this study, p r etreatment includes acid and a n tiscalant additi on and cartr i dge filtration.

The results of the material and ener gy balance a r e linked to a cost table t hat calculates operating and mainte nance costs fo r the trea tm ent sy stem. Capital costs are estim a t e d based on C D M’s experience.


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## 3.3.1 Design and Cost Assumptions
Table 3-3 sh ows the maj o r design as sumptions used for CDM’s cost esti mate.

T a b l e 3-3 Desig n A s su mp tio n s fo r C D M’s RO Treatment Cost Estimate Des c rip t io n 5a – RO w i th Co mmer c ial B r in e Disp o sal No. of Wells 10 Estimated W e ll Densit y 80 acres/ w e ll Estimated F l o w / W el l (ma x) 25-g p m Estimated F l o w / W el l (avg) 6-gpm Estimated Life of W e ll 10 years Lan d Disturb an ce 1 acre Pipi ng from ea ch w e ll to p o n d to treatment 1,670 fe et Storage p o n d capac it y 10 da ys stora g e RO capacit y 120- gpm at 10 0 HP Averag e RO feed flo w 60-g p m RO recover y 90% Brine Stora ge 15 da ys Membra ne Re plac ement F r e q Once/3- y rs Lab or 1 FT E (2080 h ours)

A discussion of thes e as sumptions a n d the assu mptions used to develop the e s timat e d capital and O&M costs is as follows:

 To be consistent with Ku ipers’ cost esti mate, the design feed flow was as sumed to be 120-gpm with an average feed flo w of 60-gp m. However, in order to handle the peak flo w of 250-gp m for a 10-w e ll gas syst e m , addition al treatmen tcapacity or storage capacity would need to b e temp oraril y installed. Since this requires additional, s i te-specific information t h is co st was not include d in this evaluation.

 For purposes of this study, the fe ed wa ter chemi s try was selected using “typical” PRB water quality data as presented in ALL Consultings’ “Handbook of Coal Bed Methane Produced Water: Manage m ent a n d Be neficial Use Alternatives ” (ALL Consulting, 2004).

 While this chemistry is relatively po or comp are d to most w a ter in the b a sin, it is fairly repres entative of a quality t hat may require treatme n t as a w a ter manage m en t practice in the PRB.

 The total tre a tmentsyst e m recovery was 90 percent and the design membrane flux was 1 3 .9 g a llons per sq uare feet me mbrane per day (gfd). B a sed on the feed water chemistry, this recovery and flux is at or near th e max i mum limit without installation of more complex and costly pretreatment equipment. At 90 percent recovery an d an averag e feed flow of 60-gpm, t h e brine rate is 6-gpm. F o r comparison, Kuipers’ report assumes 95 pe rcent recovery an d a 3-gpm b r ine rate at the average feed flow of 60-gpm.

 Membrane cleaning freq uency was a ssumed to be once every four months. The frequency was as sumed to be once per thr ee year s at a single element replacement 

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cost of $60 0. These are r e asonable a s su mptions for treatment of industrial water

sources.

 Antiscalant is required t o control fo ulin g caused by barium sulfate and calcium fluoride. The amount of antiscalant needed for e a ch option was based on discussions with chemical vendors. The cost of antiscalant w a s estimated to be $1.25 per pound of prod uct.

 Hydrochlo r i c acid is also required to control membrane foul ing from calcium carbonate. The cost of a c id was assu med to be $ 0 .15 per pound (100 percent basis).

 Cartridge filter use was based on having a low amount of suspended sol i ds in the feed water, and changin g filters every month. C a rtridges were assumed to be $25 each.

 Energy use was calculated based on flow and pressure for all pumps in the
treatmentprocess. Ener gy costs are based on a u n it rate of $0.07 per Kw- h r.

 Labor was a ssumed to be one full-time eq uivalent (FTE) em ployee. This assume s that t h e em ployee is drawn from a roun d-the-clock labor po ol that provides support for other production activities, such as o t her RO syst ems, in t h e s a me vicinity. If t h is is not true, a higher labor rate would like l y be necessary.

 RO br ine will be disposed of in a commercia l facility at a cost of $6 per barrel. Injection of brine was not considered based on i n dustry’s experience and diffic u lty fin d ing suitabl e injection sites.

 In CDM’s ex perience, RO treatment costs generally do not include the cost of 1) gathering and piping water to the trea tment facility, 2) a stor age pond, 3) discharge st ructures and 4) reclama t ion cost s as presented in Kuipers’ study, since these compo n ents are ge nerally provided by the operator. However, these items were added for comparison to Kuipers’ cost esti mate.

 Well water will be pi ped directly fr om th e well s to the RO treatment system to eliminate ae ration and minimize th e potential for membrane fouling. Conseq uently, the storag e pond was reduced from 30 d a ys s t orage to 10 days storage sinc e it will be used only for contingency purposes.

 Total cost es timates for mechanical eq ui pment were established based on the percentage cost basis me thod of cost estimation ( 1991 , Pet e rs, et. al.). This method uses purchased eq uipm ent costs to calculate tot a l installed costs, based o n historical in dustry percentage s for equipment installation.

 The annual maintena nce cost for all eq uipment was es timat e d to be 2 pe rcent of the installed capital cost.



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 Net present value calculations are b a sed on a 5 percent discount rate over 10 years.


## 3.3.2 Cost Estimate Results
Table 3-4 sh ows the res u lts of CDM’s cost es timate and a co mparison to Kuipers’ cost estimate for Alternative 5a. Append ix C include s a det a iled summary of CDM’s capital and operating costs for treat m ent of t h e selected produced water quality from the PRB.

Based on th ese results, CDM’s cost estimate res u lted in a unit treatmen t cost of $0. 7 3 per barrel offeed water. This compares with Kuipers’ origin al cost estimate of $0.19 per bbl and the corrected cost estimate of $0 .46. One of the major differences between the two costestimate s involves brine dispos al. C D M’s costs are based on disposal of 6-gpm brine (90 percent recovery) ve rsus 3-gpm (95 percent recovery) assumed in Kuipers’ study. Based o nvendor softwa re, a 90 percent reco very is the maximum allowable without a significant incre a se in capita l costs for additional pretreatmen t and specialized equipm ent design. Therefor e, a 6-gpm of brine disposal rate is reasonable and should be used for purp oses of comparing to Kuipers’ study.

T a b l e 3-4 Co mp ariso n of CDM an d Kuip ers’ Co st Estimates fo r R O T r eatmen t Kuiper s' Esti mate Des c ription I n i t i a l R e c a l c u l a t e d CDM Estimate (1) Capit a l Cost $45 0,57 8 $1,02 5,64 8 $ 1
, 0 1 3,38 0 Annu al O&M Cost $13 7,81 0 $30 9,88 2 $58 2,92 0 NPV (1) $1,44 0,56 5 $3, 41 8,47 6 $ 5
, 5 1 4,53 6 NPV cost per b b l $0.19 $0.46 $0.73
(1) C D M dete r mined that the m a xi mum RO recover y is 90% (6 -gpm brine) vs. a 95%

recover y (3-g pm) assumed b y Kui pers.
Figure 3-3 illustrates the difference between CD M’s cost esti mate a n d K u ipers’ original cost estimate for RO treatme n t and commercial brin e disposal. In general, CDM’s experience indicates t hat Ku ipers’ co st estimate capt ures only about 25 percent of the cost f o r RO treatment. As pr esente d earlier, Kuipe r s’ low cost estimate was a result of calc ulation erro rs and omission s of important capital and operati n g cost items.



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Fi gu r e 3

- 3

. C o mpa r i s on of C D M C o s t E s t i ma t e t o O r i g in al E s t i m a t e f o r A l t e r n at ive 5 a

$ 0

. 19 26 % $0. 54 74 %

M i ssi n g C o st s B a s e d o n C D M 's E s ti m a te of A l t er na ti v e 5 A K u i per s ' R e p o r t ed C

o s t E s ti m a te



## 3.4 Alternativ e Treatment Optio ns As discussed in Kuipers ’ study, ther e is wide range of treat m ent options besides conventional RO that ha ve been developed, teste d , and applied in the PRB for treating produced water. The treatment cost for the IX and RO options will be similar to CDM’s cost estimate presented above, but will vary based on the amount of brine requiring disposal. Eac h treatment op tion has a d vantages a n d disadvan tages depending on various site specific c o nsider ations. Some of t h e specific treatment options CDM has experience with and/or is aware are included in this d i scussion. 

## 3.4.1 Conventional Ion Exchange (IX)

Ion ex chang e technology is similar to RO in that it is capable of removin gsoluble, dissolved salts, such as s o dium, from solu tion. Appl ication of IX in the PRB is generally tailored to remove cations with a corresponding removal of bic a rbonate. Acid is used to regenerate the resin once lo aded with cation salts. Like R O , a waste stream is ge nerated th at req u ires disposal. The s e lection of IX over RO depends on site specific requirements, including feed water c h emistry, tr eatment objectives, waste brine vo lum e and disposal options and cost . Generally, if lo w-level anions (such as fluoride, arsenic, nitrate, etc.) req u ire remova l, R O is the preferred option since it is non-specific for cations or anions. Howeve r, anion specific treatment t e chnologies, such as activated alumina for fluoride remova l, can be used in combination with IX t o meet treat m ent objectives.



## 3.4.2 Counter-Current IX

A This technology is similar to conventional IX, but regeneration of the resi n is performed c o unter-cu rre ntly resulting in a much lower volume of was t e brine requiring disposal. Currently, there are se veral units operating in the PRB. Waste brine generated by the tr eatment process is acidic and may require neutra lization

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prior to disposal. Like most IX processe s, the sys t ems are g e nerally designed to remove cati ons and bicarbonate alkalinit y and will re quire additional treatment components if other ani ons requi r e removal. Selection of this treatme n t t e chnology depends on site-specific conditions, incl uding feed water che m istry, treat m ent objectives, p r oxim ity to a disposal well and cost. 

## 3.4.3 Hydro Process The Hydro process, which is patente d , cons ists o f ion ex change, reverse osmosis and degasification. The process was developed specifica lly for t h e PRB water chemistry and ha s a to tal syste m recovery as high as 9 5 percent depend ing on feed water chemistry and treatme n t objectives. The process is designed to cost-effectively remove cations and alk a linity. Although th e process uses acid for rege nerating the resin, the w a ste brine is less acidic than co nvent i onal IX and Higgins Loop treatmen t processes. B e nch-testing has bee ncomplete d, but no sys t ems are currently operating in the basin.



## 3.4.4 HERO Process The High Efficiency Reverse Osmosi s (HERO) process is also patented. HERO is a specialized reverse osmosis syste m t hat combines IX, degasification and high recovery sea water RO technologies to allo w very high system recover i es (above 95 percent in many case s) w i th little or no membrane fouling. The waste brine is generally ne utral and ha s TDS levels as high as 1 20,0 00 mg/ L . The primary benefit of this technol o gy is thatit operates in a self-cleaning mode a n d can ha ndle small amounts of oil and grease, organics, high silica concentrations, colloidal solids and other foulants th at typically foul RO membranes

. The disad v antage is t hat it is generally more complicated to oper ate th an ot h e r systems a n d costs mo re. It h a s be en pilot-tested in a number of different basins , but no full-scale system s are operating in the PRB.



## 3.4.5 Zeolites Natural zeolites have properties very sim ilar to IX and are c a pable of removing cations and bicarbonate alkalinity. Becaus e the s y stems have much lower capacities than conven tional IX resins, they ten d to have limited application for high TDS feed water, but are suitable for some wat e rs pres ent i nthe basin. The cost is much lower than ot her t e chnologies and its use i s highly dep e ndent o nsi te-specific conditions. Currently, there are sev e ral zeolite treatment sy stems operating in the b a sin. 

## 3.4.6 Mechanical Evaporation/Crystallizer Mechanical evaporation systems and crys tallizers are another proven technology capable of producing high qua lity water for discharge or beneficial use. The primary disadvantages include high en ergy c o sts; high capital costs; and limited flexib ility to handle fluctuations in flow (the tech nology is not modular like IX and R O ). Like IX and RO, fee d chemistry and pretreat ment ar e critical to prevent fouling of heat

ex changer tubes. Currently, at lea s t one sys t em is being test ed.


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In summary , there are a wide range of trea tment technologies and combinations of technologies that ca n be used to convert prod uc ed water into high quali t y water for beneficial us e or discharge. Selecting the most cost-effective technology is based on the feed w a t e r chemistry, discharge limits and site specific co nditions. Since each technology generates a waste strea m , brine di sposal is usually the primary issue (due to cost of dis p osal) that n eeds to be c o nsidered in the overall treatment selection process. 

## 3.4.7 Cost Comparison Table 3-5 presents a co mparison of esti mated costs for various treatme n t options discussed in this section. Treatment costs for each of these o p tions were based on the same feed w a ter chemist r y, flows an d other relevant assum p tions used to estimat e t h e cost of RO treatment in Section 3.2.1. Th e results of this comparison illust rate the importance of system re covery to minimize the c o st of brine disposal.

T a b l e 3-5. Compa r is on o f Es tima te d Cos t s for Va rious Tre a t me nt Optio n s
Ion Ex c h a nge Re v e rs e Osmo sis De sc ription Con v Counte r current H y d r o C o n v H E R O
Sy s t e m R e co ve ry 9 3

. 0 % 9 8

. 6 % 9 2

. 0 % 9 0

. 0 % 9 5

. 0 % NPV cost per b b l, break dow n by cost categor y (3) P r i m a r y T r e a t m e n t ( 1 ) $ 0

. 2 2 $ 0

. 2 2 $ 0

. 2 0 $ 0

. 2 2 $ 0

. 2 4 Ancill ar y F a cilit ies (2) $ 0

. 0 6 $ 0

. 0 6 $ 0

. 0 6 $ 0

. 0 4 $ 0

. 0 4 Commerci a l Br ine Dis pos al $ 0

. 3 2 $ 0

. 0 6 $ 0

. 3 7 $ 0

. 4 6 $ 0

. 2 3 T o t al Co st $0.60 $0. 35 $0.63 $0.73 $0.51 (1) Includes all tr eatment capital and O&M costs except brine disposal (2) Ancillary facilities include pipin g , impoundment and reclamation related costs (3) Unit t r eatmen t costs are based on the Net P r esent Value (10 yrs at 5%) of the ca sh flowdivided b y

the volume of w a t e r ( bar rels) tr eated over ten years



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# Section 4 Beneficial Use
In general, the two documents prepared by Kuipers and Associates provide an overview of produced water volumes and qua lity that typically occurs in each of the producing basins, including the PRB. The study documents also include a discussion of the produced water disposal practice s, uses, and potential impacts to the environment. Some of the beneficial uses identified in these documents include:

 Aquifer recharge

 Improved surface flows

 Increased water to downstream users

 Constructed wetlands

 Increased irrigation water and crop yields

 Increased native plant pasture

 Wildlife and livestock watering

 Municipal

 Recreation and

 Industrial
However, while the common uses of CBNG produced water are listed in the study documents, the primary focus of the discussion is on the potential negative effects to the environment rather than on the benefits that can be, and are being, provided in the PRB.
To provide a more balanced perspective, this section presents data to show that, in general, CBNG produced water in the PRB has a much higher beneficial use than water from other areas of the country (where injection is the preferred option). This section also presents an example of how one important water management option, managed irrigation, is used convert relatively poor quality water into quality suitable for beneficial use. Of course, it is recogniz ed by industry that in some cases the water quality is simply not amendable to benefi cial use; in these cases, treatment and injection are the next best options for managing produced water. 

## 4.1 Water Quality Comparison The quality of the water generally dictates the preferred water management practice, including beneficial use. As presented inKuipers’ study, Table 4-1 shows a general comparison of the quality of various CBNG produced water sources in the U.S. CDM calculated the bicarbonate and TDS values and added these to the table for purposes of comparison. Also, while there is pote ntial disagreement with some of the data presented in this table, new information was not presented in an effort to simplify this analysis.Section 4 Benefic ial Us e

As shown, the quality ofproduced water in the PRB varies widely throughout the country and even within the PRB. T h e dat a also shows t hat PRB basin water is much better than most parts o f the country where inje ction is often the o n ly disposal alternative. Additional data in t h e r e gion shows that the SAR can be lower (near 7) and also higher than shown in Table 4-1, indicating the variability and need for sitespecific water managem ent alterna t ives.

T a b l e 4-1 Selected Wate r Quality Char acte r ization Da ta for CBNG Well Fields in North A m eric a

Wa te r Chem. Hors es hoe Ca n y on Forma tion A l be rta , Ca nada Po w e r Ri v e r Basin , W Y Picean ce Basin , CO San Ju an Basin, CO, NM, A Z , UT Black W a r r io r Basin , A L

Max Min Max Min Max Min Max Min Max Min Catio n s Na 861 112 800 1 1 0 2 6 7 3 197 6 5 9 3 9 367 4 310 0 5 7 0 Ca 128 2.7 69 5

. 9 1 8 3 9 1 3

. 2 118. 7 6

. 5 1 0 0 2

. 5 Mg 23.5 0.2 46 1

. 6 7

. 7 7 0 3 9 2

. 8 8 3 4 1

. 1 K 8.9 2 18 3

. 8 N A N A N A N A 6 2 Anions As 0.002 2 < 0 .0002 0.002 6 < 0

. 0 0 0 2 N A N A N A N A 0

. 1 1 0 F e 0.16 < 0 .01 4.9 0

. 2 N A N A N A N A 1

. 5 0

. 0 5 HCO 3 172 0 3 8 4 246 6 (2 ) 314 (2 ) 661 2 5 2 5 0 147 0 1 608 3 112 0 6 7 0 C l 2 2 9 0

. 5 64 5

. 2 6 0 0 4 249 9 6 6 8 420 0 4 5 0 SO 4 132 0 1 17 0

. 0 1 1 3 5 8

. 3 2 1 6 6

. 8 0 N A N A TD S 429 1 5 0 2 348 5 4 4 1 1 1 8 6 7 725 2 2 3 4 6 4 104 3 4 856 2 169 6 SAR 1 8

. 3 6 1 7

. 7 2 18.3 1 0

. 3 7 1 7

. 1 1 149.7 7 1 2 0

. 9 3 0 1

. 6 6 6 8

. 3 3 7 5

. 5 7
Source: Taken f r om Kuipers’ managed irrigat ion r e port (Altera Ge ological Survey

, 20 03) NA = Not Available; All value s in mg/L as ion (1) T D S w a s calculated based on t he sum of ions (2) Bicarbonat e a l kalin ity was calculated based on an ion balance at pH 7.0 and 15 C
Using the d a ta presente d by Kuipers, the follow i ng direct comparisons can be made :

 Some water produced in the PRB is v e ry good, with TDS values lower than the secondary d r inking water standard of 500 mg/L

.

 The poorest water qualit y in the PRB is better than the highest quality water in most CBNG producing regions in the United States.

 Based on minimum wat e r q u ality data, t h e TDS of produced water from the Sa n Juan Basin i s 24 times hi gher than in the PRB.

 SAR values in PRB produced water are, in gener a l, much better than the SAR values in other produc i n g basins. Using this data, it can be concluded t hat the relatively high SAR and TDS values in produ c ed water from other basins severely limit s beneficial uses; consequently, in most inst ances, th e petroleum industry sele cts injection as th e preferred disposal



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alternative. However, the same data also shows t hat wa ter in the PRB is, i nsome cases, very g o od, making it ideal for beneficial us e.

Based on dis c ussions with industry, it “doe s not make se nse ” to dispose o f some PRB water into d eep formations of potentia lly poorer water q u ality. Many C B NG producers b e lieve the high quality water should be put to beneficial us e. Operators’

ex perience is tha t many landowners who ho st C B NG development on t h eir land want this water available fo r their livestoc k or for other surface uses. Many la n d owners would be opposed to inj e cting the water, and essentially wasting it, espec i ally dur i ng the current drought conditions in th e region.


## 4.2 M a n a ged Irr igation for Beneficial Use

One effective method of managing p r oduced wa ter in the PR B is irrigation. Some Powder River Basin ope r ators have applied CBNG-prod u ced water as irrigation using circle pivots and a t omiz ers. The complexity of the pivot system depe n d s on th e q u antity of water, SAR, and th e char acterist ics of the land bei n g irrigated. CBNG operators are required to obtain a p e rmit from the Wyoming State Engi neer’s Office or the Mont ana Dep a rtment of Env i ronmen tal Quality prior to irrigation. The operators must manage the disc harg e to prevent impacts if th e SAR is elevated and sodium-sensitive soils are present. This se ction presents a n analysis by Kevin Harvey of managed irrigation, which has s h o w n to be very effective at making be neficial use of a wide range of produced waters in the PRB.

Kevin Harve yof KC Harv ey, Inc. in Bo zeman , Mont ana carri ed out this review

. Mr. Harvey is a b oard certified professi onal soil scientist with 24 years experience, providing environment al consulting serv ices to the private and public sectors throughout the U.S., Canada, Mexico, Asia, and Europe. Mr. Ha rvey earned a B.S. in Resou rce Con servation wit h an emphasi s in soil scien c e from the University of Montana School of Forestry and a M.S. in Land Rehabilitation with an emphasi s in soil science fr om Mont ana State Univer sity. He is currently pursu ing (part time) a Ph.D. in soil and water r e s o urces fro m Montana Sta t e University . He has held executive level positions in the consulting industry and has managed complex, multidisciplinary projects involving all environ mental medi a. Mr. Harve y 's technical strengths ar e in soil science, surface wat e r res ources, l a nd reclamati on, and general environment al problem s o l v ing. He has p articular expertise in the manage ment of water f or the oil and gas, and mining industries, including the assess ment of saline/s o dic soil and water, development of innovative managed irrigation techniques, and NPDES permitting. Mr. Harvey’s e xperience includes over 100 CBNG produced water man a gement proj ects throughout Wyoming, Montana, and Color a do.
For the CBNG industry in Wyoming and Montan a, “m anage d irrigation” with CBNG produced water has bee ndefined a s : the application of applied soil science, water chemistry, an d agronomic principles to utilize CBNG produced water in a be neficial mann er to produce forage for livestock and wildlif e while protec ting soil phys ical and chemical properties (Harvey et al., 2004 a; Harvey et al., 200 4b; Harvey, 2004).



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Managemen t practices include, among other thi n gs:

 Selection of appropr i ate irr i gation site s with suitable topogra p hy, soils, and hydrology.

 Water balance modeling to support irrigation system design.

 Water treat m ent or soil amendme n t s to mitigate the risks associated with the sodium bica rbonate water chemistry.

 Irrigation scheduling and mainten a nce of a suitable leaching fr action to prevent the accumulation of salt s in the root zone.

 Selection and mainten a nce of a suitable crop that is tolerant of irrigated conditions and expected soil salt levels.

 Prevention and control of irrigation water runoff.

 Systematic monitoring of water, soi l , and veget a tion during the life of the project.

 Implementi ng site closure actions in accordance with lando w ner objectives.

 A close wor k ing relationship with the landown e r to achieve the benefic i al objectives ofirrigation and the production of a crop. Managed irrigation is on e alternative ou t of several available for managin g CBNG produced water. Its suitability as a wate r management alternative depends on many factors, incl uding prod uced water chemistry, s i te and soil characteristics, landowne r objectives, and project economics. As such, its suitabil ity can only be evaluated on a project- and site-specific basis. There is no techni cal, regulato ry, or economical reason why this alternative should be elimi nat ed for use by industry or throug hout applicab le r e gions of the U.S.

Based on a r e view of the two study docume nts, Kuipers’ study does not address or analyze the process of managed irrigationas d e fined above. However, the manage m en t options report does make several positive statements rega rding irrigation with CBNG w a ter, including “[Irrigation] can be used to supplement precip itation in arid regions during the normal growing sea s on...;” a n d “CBMproduced water of suitable quality c an be be nefi cially used i nagricult ur e for livesto ck watering or crop i rrigati on;” and “incre ased livestock and w ildlife rangeland and enhanced cr op growth [can be achi eved] due to irrigation.”
Regarding sustainability of the selected water management al ternatives, the manage m en t options report concludes th at “c rop, livestock, municipal, or industrial use with water treatment and ot her mitigati ons, as req u ired....” is amon g the “ m ost sustainable practices.” These st ate m ents seem to be at odd s with the re st of the two reports since irrigation does not sur v iv e the “an alysis” as an alternative water manage m en t tool for project- and si te-specific consideration.



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The analyse s and conclusions regarding irriga tion in the rep o rts are largely based on two inheren t weakn e sse s: (1) t h e relevancy of th e Clean Wat e r Act and NPDES permitting to managed irrigation; and (2) th e lac k of a true te chnical and comparative analysis of water man a gement alternatives.

Section 1.1 o f the effluen t limitations report states that, “[this report]...evaluates wate r manage m en t practices to meet tech nology- based performance standards ” and “this report is based on the re quirements of [the] Clean Water Act (CWA), which authorizes t h e Environmental Prot ection Ag ency (EPA) and various state age n cies to issue National Pollutant Discharge Elimi nation System (NPD ES) permits or their equivalent.” It goes on t o state th a t “the CWA req u ires technology-based performanc e standards for industria l wa ter dischargers” an d that “a B P J (best professional judgment) analysis mu st be conducted before NPDES CBM permits are issued.” Th e mana gem e nt options report al so reflects the influence of the CWA on evaluating water man a gement alternatives.

It is important to not e th at the Clean Wa ter Act regulates the point-source discharge of wastew at er to surface water in accord ance with the NPDE S permitting program. The term “d ischarge” is defined by the EPA in the Code of Federal Regulations (40CFR122. 2 ) as th e “dis charge of a pollut ant” o r “discharge of a combination of pollutants” t o “waters of the United States” from “surface runoff” which is “collected or channele d by man” o r “through pipes, se wers, or other conveyances. ” Irrigation used to grow forage is clearly not a “discharge” as defined b y EPA. The r efore, it appears tha t the reviews described in the two reports are largely based on a regulatory program and a process th at do no t ap ply. Irrigation with CB NG is not regulated by the CWA, and an NPDES permit is not requi r ed if the water is applied in an agronom i c manner a n d if there is no di rect communication (i.e., s a turated flow) between applied water, shallow groundwate r and surface water (as may be the case in flood plain areas). Th is is not to s a y tha t irrigation of CB NG water is not regulated. For example
, in Wyoming, irrigation proj ects are reviewed by the Wyoming State Engineers O ffice (water rights approp riations), the Wyoming Departme nt of Environmental Quality (in the event pre-trea tment is req u ired), and t h e U.S. Bureau of Land Ma nageme n t (in the event water from federal coal leases are in volved).
It appears f u rther that t h e study elimi nates irrigation as an alternative water manage m en t tool based on convenience ra ther t han tech nical evaluation. The introduction of the m ana gement opti ons report promises an “ analysis of a v ailable technologies.” While the r e is a compar ative economic analysis presented in the effluent limitations repo rt, there is n o anal ysis of irrigation comparing it to other alternatives on a tech nical and regulato ry basis. Inste a d, there are several unsupported state m ent s describing potential ne gative impacts associate d with the u n

managed ap plication of CBNG produced water and an appa rent lack of a thorough review of the scientific li terature. In addi tion, no data is presented to substantiate generalizations th at rule out irrigation as a poten t ial water m anagem ent option.



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It is true tha t soil chemical and physi c al impacts may occur with the un managed application of CBNG produced water, depe nding on the chemistry of t h e water and the characte ristics of the soil receivin g the w a ter. However, managed irrigation (as defined above) systems that are desi gned, locate d, and m ana ged in the p r oper manner will protect soil physical and chemical conditions. Anything else would be counter-productive to the CBNG producers and landowners who rely on the soil for application of water an d production of forage.

As previous ly stated, m anaged irrigati on of CB NG produced water involves techniques b a sed on applied soil scie nce, water c h emistry, an d agronomic principles to use CBNG produced water in a b e neficial manner to produce forage while protecting soil physical and chemica l prop erties. To successfully employ manag ed irr i gation, knowledge of soil and water chemis try is a must. This review er feels that the two NPRC reports provide an incomple te s u mmary of soil and wat e r chemistry associated with CBNG produced water irri gation, which is unfortunate because the primary rea s ons th at t h is water mus t be manag e d are the soil and water chemical phenomena associated with salinity and sodi city. Appendix A provides additional information on man a ged irrigation practi ces to introduce rele vant soil and water chemistry concepts whi l e describin gth e process for evaluating and ope r ating managed irrigation projects on a pr oject- and si te-specific basis.

The conclusions listed in the m anage m ent option s report stat e that“industry should undertake significant investment into rese arch and development of new technologies for CBM-produced water treatmentand di schar ge practices.” With resp ect to managed irrigation, this has occurred. Beginnin gin 200 1, Ba rrett Resources (now Williams) and Fidelity Exploration & Prod uction Company funded unprecedented laboratory and field studies to support th e development of irrigation using CBNG produced water. The st udies and te sts were ext e nsive and i n cluded:

 A review of the scientific literature.

 Geochemical equili bri u m modeling of va rious produced wa ter chemistries and
treatmentscenarios.

 Laboratory chemistry experiments.

 Several statistically designed bench- scal e colum ntest s using produced water and soil from the Powder River Basin.

 Full-scale field tests usin g center pivot irrigation equi pment and various soil and water conditioning practices.

 Continued ex perimental monitoring of full- scale operational irrigation systems. Scientists with KC Harvey, Inc. in B o zeman, Montana carried out the res e arch and development programs with assis t a n ce from noted researchscientists a tMontana State Univer sity. Much of this informatio n ha s already been presented at technical



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conferences sponsored by academia, govern ment and industry (Harvey et al., 20 04a ; Harvey et al., 20 04b; Harvey, 2004 ; B r own and Harvey, 2004).

In addition t o the gen e ra l comments discu ssed above, the managem ent options report identifies se veral potential concerns associat ed with land a pplication/irrigation with CBNG prod uced water, includ ing:

 Soil sodic i ty and soil damage.

 Impacts to d r ought tolerant native vegetation.

 Plant toxicity of ions in produced water.

 Increased er osion from runoff and w i nd.

 Discharge to streams.

 Landowner cooperation.

 Suitabi lity o f produced water with or without treatment.

 Groundwater contamination.

These are re asonable concerns for an alter native that involves the application of sodium bica rbonate-based water to t h e soil. However, these are the issues that “managed” irrigation is designed to addre ss. Co mments reg a rding these issues are in Appendix A regarding the feasibility and oper ation of managed irrigati on systems.
In conclusion, the production of natural gas in the Powder River Basin of Wyoming and Montan a and the co ncurrent productionof unaltered groundwater are occurrin g in a region that is naturally arid duri ng a time of unprecedented drought. Research and development programs and full-scale irri gation projects have demon s trated t hat CBNG wate r can be beneficially used to grow forage where t h ere was no ne, while protecting the soil resource. Upwards of fo ur tons per acre of alfalfa from three cuttings per season are routinely produced with CBNG irrigation water. Managed irrigation ha s evolved in to a practice that is based on established soil science, water chemistry, and agronomic pr inciples

. The Kuipers study did n o t appropria t ely cons ider managed i rrigation in its an alysis of the Clean Water Act policy. The Clean Water Act and the associated NPDES permitting program regulates point sour ce and non-point source discharges of
wastew ater to surface waters of the U.S. The provisions of the Clean W a ter Act cannot be us ed to deter m ine whet h e r irrigation with CBNG water is a t e chnically, legally or economically suitable water m anagem ent alterna t ive. Inste a d, managed irrigation represents an important and be neficial use alterna t ive that sho u ld be considered on a project- and site- s pe cific basis.



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# Section 5 CBNG Economics

In the final s e ction of the technology limits report, Kuipers presents a brief analysis of the economi c basis used to conclude that injectio n and tre a t m ent is econ omical and affordable to industry. An example of th is analysis for injection is as fol l ows:
If CBM producers in the Powder Rive r Basi n receive $2.50 per MCF of gas and are presently ma king a 40% re turn on inve stment ( or $1.00 per MCF in profit), then if the cost of rei njection or injection is $0.15/ MCF, their return w o ul d be reduced by the same amountresulting in a 34% return on investme nt, which would be unlikely to result in a sig n ificant reduction in CBM development in the Powder River Basin

. If future demand and supply causes an inc rease in the price of gas as mos t econo m ists forecast i s likely to happen, then the impa ct on the economics woul d be significa n tly less. At $5.00 per MCF, the return to CBM producers would be 233%, and the added cost of $0.15/ MCF to achieve zero disc harge would red uce the return to 223%.

The result is that in the short-term, some g as may notbe produced at lower prices as a result of impl ement a tion of zero discharg e lim itation s , but eventually such limitations will have little or no effect on longer-term production and are therefore both sou nd and

reas onable.
Although the conclusion s from this analysis may appear convincing, the a ccuracy and source of inf o rmation of the cost and ROI va lues must be det e rmined. Unfortunately, however, th e document provides no informatio n to complete this evaluation as stated in the report:
The informati o n necess ary to conduct an in-depth eco n omic evalua tion of how application of a zero discharg e requirement will affect CB M production in the Powder River Basin would necessi tate data that is not present l y available. EPA has completed a draft econo m ic analysis on the CBM indu stry if re-injection/inje ction were r e q uired. However, an y analysis performed will rev eal that the economic imp a cts on CBM production will be directly related to future prices as can be illustrated using information contained in this report
It is presumed that the r e ferenced EPA report is Guidance for Developing TechnologyBased Limits for Coal-B ed Methane Ope ratio ns: Econ omic Analysi s of the Powd er River Basin . Although CDM was issued a c o py of this report by the PAW, each page of the report is cle a rly marked Interagency Draft R e port – DO NOT QUOTE OR CITE. Conseq uently, a det a iled economic analysis cann ot be completed to eval uate and verify Kuipe r s’ findings.

Inste a d, based on CDM’ s review of the trea tment and injecti o n economics in Kuiper s’ study, available industry publications and input from industry on the ec onomics of CBNG gas p r oduction, the following general comments nee d be considered when evaluating findings pres en ted in Kuipers’ study:



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 All water m a nagement cost estimates e rroneously assume that 1.0 barrels of water is equal to 1.0 uni ts of gas production (1000 cubic feet or MCF). As shown in Kuipers’ r e port, appro x imately 2.7 ba rrels of water were produced for e v ery unit of gas production between the years 19 96 a n d 200 0. Us ing a one-to- o ne ratio, as Kuipers did, had a significant economic impact in their analysis, since the effect of treatment(and other water management prac tices) on overall gas production economics was underestimated by a factor of 2.7.

 Site specific factors need to be consid ered for developing c o sts for inje ction and
treatment to accurately assess overall gas production economics. For example, based on act u al injection success dat a descri bed i nSection 2.5, the capital costs for injection must include the cost of installin g four i n jection wells to find two wells capable of accepting the average volu me of wate r from a 10- well producing system. With respect to treatment , costs must co nsider the c o st of man a ging and disposing of waste brine.

 A recent stu dy (Sproule and Associates 2004) of current economics for CBNG production in the PRB indicates that in itial development was marginal based on a gas pri c e of $2.00/MCF. An extrapolation of this dat a may indicate thatsome areas within the PRB may experience le ss development th an anticipated in the EIS's.

 Most indust r y operators in the PRB believe that production of multiple coal
seams at on ce versus back-to-back, single seam production is critical to the economic success of CBNG projects in the PRB since an economy of scale is achieved. However, m u lti-seam pr oduction in vol v es larger up-f ront capital investments , which put companies a t risk, given the na ture of market fluctuations in the gas market. Consequently, a higher return on invest ment is n e cessary th an conventional projects. This needs to be considered in any eco n omic evaluation of the gas production indus t ry.



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# Section 6 Conclusions
Kuipers’ study conclude s that injection and tre a t m ent are t e chnically feasible and affordable produced wa ter manage m ent opti on s in the PRB and should be required by operators as “bes t ava ila ble treatment” t e chnologies. To evaluate the b a sis for these recommendations, CDM completed a de t a iled technical review of the two study documents. This section presents t h e ma jor find ings from this evaluation. 

## 6.1 Injection of CBNG Produced Water Injection and reinjection is one of the prim ary methods used by industry throughout the U.S. for manage m en t of CBNG produced wa ter. Injectio n is currently practiced in the PRB. H o wever, based on the results of CDM’s study, s e ve ral impo rtant factors unique to the PRB precl u de its required use as a preferred water man a ge ment option

. The major fa ctors include:

 Injection/re injection is not technically feasible in most Tertiary and Upper Cretaceous Formations within the PRB. Two CBNG operators have t e sted and are currently operating injection wells that are c o mpleted in sands t ones within the coal bearing Fort Union Formation a n d in deepe r sandston es in the La nce and Fox Hil ls Formations. Data from these two op erators indicate th at the overall success ratio for shallow Fort Union injection we lls was 48 percent and deeper L ance-Fox Hil ls injection wells was only 25 percent. This lo w success ratio combined with decreased injectivity ove r time reflec ts th e discontinuous nature of the majority of the injection zones teste d and indica tes insufficient storage capacity to accept appreciable volumes of CBNG prod uced water.

 Additional wells and infrastructu r e would be required for injection of CBNG produced water with a significant surface environmental i m pact not considered in the Kuipers study . Where injection was found to be successful in the Fort Union, the a v erage injection rate averaged 36 .7-g pm per well, indicating that more than o n e inj e ction well would be req u ired to handle the average flow of 60-gpm from a 10-w e ll CBNG producing system. With t h is alternati v e, the Kuipers cost model for a 10-well, 80 0 acre development (Alternative 4a) is significantly underestimated in terms of surface distur bance and other cap i tal costs. Actual development would require a surface di sturbance of approx imately 4. 8 a c res (versus 1 acre in the Kuipers model). The surface disturbance includes four injection well locations (two successful and two unsuccessful) ,well access roads, two permanent injection well pads, pump ho uses, pump electrical uti litie s, a 30- day storage/settling pond, and water gathering pipelines.

 CBNG prod uction in the PRB will not ca use subsidence and injection will not alleviate su bsidence problems as indicated in the Kuipers study . The Wyoming Geological Survey has d e termined t hat no significant potenti a l ex ists for subsidence associated with CBNG producti on in the PRB. This is supported by



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field observations a n d long term st udie s of groundwater induced subsidence in other areas of the United States by t h e U.S. Geological Surve y

. In summary, the Kuipers study does not adequately consider the technical feasibility and environmental impact of injection/in jection as a preferred water ma nageme n t alternative in the PRB.


## 6.2 Tr eatment

Treatment o f CBNG produced water is one of the water managementme thods currently being tested, a n d in some case, be ing used by industry in the PRB. Its primary use is reserved for situations where removal of TDS (namely sod i um and bicar b onate) is required for discharg e or bene fici al use. Due to the high solub ility of sodium in water, all treat m ent sy ste ms produce a wast e brine stream requiring disposal. The logistics and costs rel a ted to brine mana gem e nt an d disposal are the greatest chal lenges faced by industry. Follo wing is a summar y of the spec ific findings from CDM’s evaluation of Kuipers’ study related to treatme n t:

 Options an d costs for RO waste disposal were not adequ a tely addres sed in Kuipers’ stu dy. Brine disposal represents the si ngle most difficult enviro nmental, technical and economic issue related to the use o f RO (and IX) treatment technology in the PRB. This is evidenced by the fact that so many different configurations of RO (an d IX) treatm ent have bee n , or are being, developed and tested. While meeting tr eatment objectives is rel a tively straight forward with these techno logies, mana ging the dis p osal of brin e in an envir o nmentally, costeffective manner is not.

 The assumptions and costs for RO treatment in Kuipers’ stu dy were found to be incomplete, unrealistic and containing significant calculation and omi ssion

errors. Som e of major te chnical and economic conclusions included: a two-fold underestimate of capital costs; a six- f o ld underestimate of commercial br ine disposal costs; omission of capital and O&M costs for RO pretreatment ; a n d a significant underestimat e of the com p lex i ty and cost of achieving 95 percent recovery in conventional RO system s. CDM’s in dependent c o st estima te confirmed this finding. In fact, CD M’s cost esti mate indicat e s tha t Kuipers’ estimate cap t ured only about one-fourth of the e s timated cost of RO treat m ent.

 Only one known RO system is currently being operated i n the PRB, despite the reference in Kuipers’ study that RO is the most common form of treatment being used. The most c o mmon form of treatm ent is ma na ged irrigation followed by ion ex change-based tr eatmen t sys t ems. The se lection of the best techn o logy is based largely on site-specific facto r s, includ ing feed water quality, treatment objectives, location within the basin, brin e rate and disposal method a n d cost, to name a few. As noted above, brine dispos al is probably the most important overriding site-specific issue.



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## 6.3 B e n e fici al Use Kuipers’ study only briefly mentions bene ficial use as a wa te r manageme n t option, but does not address t h e major benefits curre ntly being realized by landowners in the PRB. This s e ction presents a summ ary of th e primary issues that w e re n o t adeq uately addressed:

 Produced water in the P R B has much better quality than ot her basins and, consequently, has a hig h potential for us e as a beneficial water resou rce. In many of t h e other producing basins, where the w a ter q u ality contains 10 t o 30 times the TDS levels found in the PRB, in dustry seeks inj e ction as a primary water manage m en t alternative.

 Injection of produced water represents a loss of a valuabl e resource to landowners in the semi -arid PRB, particularly during the current period of extended drought. Indu stry’s experience is that most lando w ners wan t the wa ter and often ne gotiate for its use for livesto ck watering and ot he r agricultural and industrial beneficial purposes.

 Kuipers’ stu dy did not address or analysis the process of managed irrigation for beneficial use. According to indust ry sources, more than 5 0 man a ged i rrigation systems are currently in operation in the PRB. M anaged irrigation involves the application of soil amen dments to al low beneficial use of CBNG produced water for prod uction of forage for livestock and wildlife, while protecting the soils physical an d chemical properties. Curre ntly in the PRB, m anaged irrigation projects yield two and e v en three crop seasons, the product s from which are highly desired by landowners.


## 6.4 CBNG Econ omics

In the final s e ction of the technology limits re port, Kuipers’ presents a brief analysis of the economi c basis used to conclude that injectio n and tre a t m ent is econ omical and affordable to industry. However, the data used to develop their conclusions could not be evaluated because the inform ation was o b tained from a source that h a s no t been publis hed. The apparent source of information was fro m an unpublished EPA report marked InterAgen c y Draft Rep ort– DO NOT QUOTE OR CITE.

Nonetheless
, the following general c o mments ne ed be considered when e v aluating findings presented in Kuipers’ stud y:

 All water m a nagement cost estimates e rroneously assume that 1.0 barrel of water is equal to 1.0 uni t of gas production (1000 cubic feet or MCF) . As shown in Kuipers’ r e port, appro x imately 2.7 ba rrels of water were produced for e v ery unit of gas production between the years 19 96 a n d 200 0. Th is has a sign ificant economic impact, even in Kuipers’ analys is, sin c e the impact of treatme n t on overall gas production economics was un derestimated by a factor of 2.7.



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 Site specific factors need to be consid ered for developing c o sts for inje ction and
treatment to accurately assess overall gas production economics. For example, based on act u al injection success dat a descri bed i nSection 2.5, the capital costs for injection need to include the cost of i n sta lling four injection wells to find two wells capable of accepting the average volume of water from a 10- well gas producing system. In addition, treatment cost s need to consider the manageme n t and disposal of waste brine.

In summary , the results of this study show th at t h e cost of w a ter man a ge ment options, including injecti o n and treatment, and its effect on CBNG gas production economics is complex and difficult to predict. Any evaluation of these ec onomics will require industry specific data for the results to be meaningful.


## 6.5 Fl exi ble Wat e r Man a gement In summary , there were no data to support Kuipers’ key as se rtions that t h e current water man a gement prac tices in the P R B are harmful to the en vironment and put agricu ltural water resources at risk. In addition, there were no data to support Kuipers’ fin d ings that injection and tr eatment as exclusive w a ter manage ment practices is both practical and affor d able to industry. In fac t , the results of CDM’s evaluation indicate that many of t h e cost estimat e s and key a ssertions by Kuipers’ study were either inaccurate or without a basis for review.

Data prese n ted in this re port supports the curren t need for industry regul a tors and operators to maintain flexibility to re gu late and manage CBNG produce d water for purposes of accommodating site spe c ific fact ors, satisfying la ndowners, p r otecting the environment, maintaining beneficial use of valuable water s u pplies, and ensuring long-term economic viab ility of oper ations. Where it makes sense and is technically feasible, CBNG operators have shown that in jection and water treatment will be used as importan t water ma n a gementpractices. However, limitin g water management practices to only injection and tre a t m ent severely limits operators’ and r e gulators’ ability to achieve maxi mum benefit of bothwater and natural gas resources in the PRB.



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# Section 7 References

Case, J.C. ; E dgar, T.V.; De Bruin, R.H. 2000. “S ubsidence potential relat e d to wat e r withdrawal in the Powd er River Basin.” Wyoming State Geo l . Survey., Laramie, WY. 4 p. http://www.wsgs. u wyo.edu/oilandgas/Subsidence.aspx
U.S. Geological Survey. 1999 . “L and Subsiden ce in the Unite d States, U.S. Geological Survey Circular 1182, D e vin Galloway, David R. Jones, and S

. E. Ingebrits e n, eds.
ALL Consulting, 20 04, “ H andbook of Coal Bed Methane Produced Water: Managemen t and Be neficial Use Alternatives”, p. 5-3. http:/ /www.allllc.com/CB M /BU/inde x.htm

Peters, Max S. and Klaus D. Timmerhaus, “P lant Design and Economics for Chemical Engineers”, Fourth Editi on, McGr aw hill, Inc., New York, 1991.
Ayers, R.S. and D.W. We stcot. 19 85. Wate r Quali t y for Agri c u ltu r e. FAO Irrigation and Drainag e Paper 29 (Rev. 1). Food and Agriculture Organization of t h e United Nations, Rome.

Brown, D.E. and K.C. H a rvey. 2004. Contro lling sodicity during irrigation with CBNG prod uced water. Present a tion fr om the F i rst Annual Coalbed Natural Gas Research, Monitoring, and Applications Conference. University of Wyoming, Laramie, WY. August 17-19, 200 4.

Hanson, B., S.R. Grattan, and A. Fulton. 19 99. Agricultural Salinity and Drainage. Division of Agriculture and Natural Re sources Publication 3375, University of California, Davis.
Harvey, K.C ., D.E. Brown, and A.J. DeJoia. 2004a. Managed Irrigation Systems for the Beneficial Use of CBNG Produced Water. presentation from Living with Coal-Bed Methane, So il and Water Conservation Society

– Montana/ Wyoming Chapter Ann u al Conference, Billings, MT. January 22-23, 2004.
Harvey, K.C., D.E. Brow n, and A.J. DeJoia. 20 0 4 b. Manage d Irrigation Systems for the Beneficial Use of CBNG Produced Water. Prese n tation from t h e Rocky Mountain Coalbed Natural Gas Forum: Produced Wa ter. Denver, CO. April 28-29, 200 4.
Harvey, K.C. 200 4. Man a ged Irrigation Systems for the Benef i cial Use of CBNG Produced W a ter. Presentation from the 20 04 CBM Fair, Gille tte, WY. June 3-4, 2004.

Hill, R.W. and S. Olsen. 200 1. Sprinklers, crop water use, a n d irrigation time, Davi s County. Utah Stat e University Ex tension.
Majerus M. 1996 . Thres h old and m a x i mum salt tolerance levels of various forage an d crop species

. http://www.animalrangeextensi o n.mo ntana. edu/Art i cle s /Forage/



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General/Salt-electrical- c o nductivity.htm . USDA-NRCS Bridger Plant M a terials Center, Bridger, MT. (Verified on 12/1/04).

Merrill, S.D. , J.R. Deutsch, and M.W. Pole. 19 87. Saturation percentage. p. 35-58 . In R.D.Williams and G

. E. S c human, (ed s .) Recl aiming mine soils and overburden in the western United State s

– Analytic parame ters and procedures. Soil Conservation Society of America, Ankeny, IA.

“National E n gineering Handbook. Part 65 2 Irrigation Guide.” 2 001 . United State s Department of Agric u lt ure Natural Resources Conservation Service. http://ww w .wcc.nrcs.usda.gov/nrcsirri g/Handbooks_Manuals/Part_652/part_6 52. html (Accessed 20 Janua r y 2002).

Rhoades, J. D. A Kandiah and A.M. Mashali. 1992. The use of saline waters for crop production – F A O Irrig a tion and D r ainage Pap e r 48. Rome , Italy.
Soil Science Society of America. 200 1. Glo ssary of Soil Science Terms. Madison, WI.

Soil S u rvey Division Staff. 1993. Soil Surv ey Manual. United States D e partment of Agriculture. Washingto n , DC.
Sparks, D.L. 199 5. E n vironmental S o il Chem istry. Academic Press, San Diego, CA.
U.S. Salinity Laboratory Staff. 19 54. Diagnosis a n d Improvement of Saline and Alka li Soils. U.S.D

. A. Agri cu lture Handbo ok No. 60. U.S. Govern ment Printi ng Office, Washington, DC.

Leslie S. O’Connor, Seidle, J.P. 2004. “The Rev e nge of the Powder River Basin: Current Economics of Coal Gas Pro d ucti on”. Presentation at the AAPG Rocky Mountain Section Meeting -Rocky MountainNatural Gas 2 004, D e nver Colorado, Aug ust 9-11.



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# Appendix A Feasibility, Design, Operation and Monitoring of CBNG Managed Irrigation System

A

### Feasibility, Design, Operation a nd Monitoring of CBNG Managed Irrigation Systems The research and development program discussed above, along with four years of full-scale operational experience has led to the development of a process for evaluating feasibility, designing, operating, and monitoring CBNG managed irrigation systems. This process has been presented to industry associations, the regional scientific community, the Wyoming DEQ, and the US BLM (Harvey et al., 2004a; Harvey et al., 2004b; Harvey, 2004; Brown and Harvey, 2004). This process has been employed on managed irrigation projects totaling over 2,000 acres in the Powder River Basin of Wyoming. This process has also been recently employed in the management of produced water from the conventional gas industry in western Wyoming and western Colorado. The primary components of this process are as follows:

Irrigation Feasibility Evaluations: Water Quality Suitability Assessments Derivation of Soil and/or Water Conditioning Prescriptions Project Water Balance Projections Site Selection

Irrigation Design, Operations, and Monitoring: Site Characterization Selection and Design of Irrigation Systems Crop Selection Soil Water Balance Modeling and Irrigation Scheduling Development of Irrigation and Crop Management Plans Water, Soil and Vegetation Monitoring Site Closure Planning

Each step in this process is discussed below in order to demonstrate the level of science employed in managed irrigation and to address the concerns identified in the Kuipers study. 

### Irrigation Feasibility Evaluations To assess the feasibility of irrigating produced water fo r a particular production area several factors are evaluated, including (1) water quality, (2) the need for soil and/or water conditioning to mitigate the sodicity of the water, (3) the project water balance, and (4) the topography, hydrology, and soils of potential irrigation sites.
Water Quality Suitability Assessments CBNG water is naturally occurring groundwater. Chem icals contained in the water result from natural processes that occur as rainfall and snowmelt rechar ge the groundwater system. These natural processes result in what is termed a “sodium-bicarbonate” type water chemistry. This means that the dominant dissolved minerals in the water are sodium and bicarbonate. No chemicals or salts are added to CBNG water by the drilling or production process.

CBNG water is often of higher quality than other availabl e water sources in the Powder River Basin. It is commonly used for domestic purposes. Because of its low to moderate level of salinity, it is a very good source of water for lives tock and wildlife use.

To assess the suitability of untreated produced water for irrigation, four specific areas are addressed: salinity, sodicity, alkalinity, and specific ion toxicity using the criteria specified in Ayers and Westcot (1985) and Hanson et al. (1999). Soil and/or water conditioning prescriptions are then developed (if necessary) based on the chemistry of the water to a llow long-term irrigation with CBNG produced water.

### Salinity All irrigation waters contain a mixture of naturally occurring salts. Soils irrigated with water will contain a similar mix of salts but usually at a higher concentratio n than in the applied water. Salts can be defined as minerals that dissolve in water, e.g., table salt, which is sodium chloride. Typical salt components in water and soil include calcium, magnesium, sodium, potassium, sulfate, chloride, carbonate, and bicarbonate. The concentration of salts in water are measured two ways: total dissolved solids (TDS) or electrical conductivity (EC). The TDS, reported in milligrams per liter of water (mg/L), simply refers to the weight of dissolved minerals or ions (e.g., calcium, bicarbonate, etc.) that remain after the water in a sample is evaporated. The EC is the most commonly used measure of water and soil salinity because it is a rapid and inexpensive test. As the dissolved salt content of a water sample increases, its ability to conduct electricity also increases. Therefore, the EC, measured in d eci-Siemens per meter (dS/m) provides a reliable and widely used index of salinity.

The salinity of irrigation water does not directly impact soil physical properties. Instead, salts make it more difficult for plants to extract water from the soil and are a concern if the crop yield is affected. Plant species vary with respect to salt tolerance. For example, based on research conducted by the USDA National Resource Conservation Service (NRCS) at the Bridger Plant Materials Center in Bridger, Montana, the average root zone soil salinity threshold where alfalfa begins to exhibit yield declines is 5.0 dS/m (Majerus, 1996). The concentration of salts in a soil due to the use of saline irrigation water can be managed by way of agronomic leachin g (i.e., applying more water to the soil than is evaporated and transpired by the crop) to prevent th e concentration of salts in the root zone. With careful management and suitable crops, water with EC rang ing from 4.0 to 7.5 dS/m has been used successfully for irrigation (Rhoades et al., 1992). The “leachin g requirement” is an important mana gement tool and is discussed in more detail below under Soil Water Balance Modeling and Irrigation Scheduling.

The EC of CBNG produced water samples from the Powder River Basin typically range between 1.0 and 3.0 dS/m. At these levels, guidelines developed by Ayers and Westcot (1985) indicate that there would be a slight to moderate restriction on the use of these waters for irrigation for moderately saline sensitive crops and no restriction for use on moderately saline tolerant and saline tolerant crops. It should be noted that soil amendments, such as gypsum, will likely be requiredto add calcium to the soil-water system to lower the SAR risk (see below). Soil amendments will result in an increase in the total salinity of the soil; i.e., they contribute additional salt upon dissolution.


### Sodicity The infiltration and permeability of clayey soils can d ecrease if an abundance of sodium ions are adsorbed by the clay minerals in soil. Excessive adsorbed or exchangeable sodium can result from sustained use of irrigation water that is high in sodium and low in calcium and magnesium. Consequently, the ratio of sodium to calcium and magnesium ions in water is an important property affecting the infiltration and permeability hazard. The index used to measure the hazard related to sodi um abundance or sodicity is the sodium adsorption ratio or SAR.

The SAR is the ratio of the dissolved sodium concentration in water divided by the square root of the average calcium plus magnesium con centration. The SAR can be calcula ted from the sodium, calcium and magnesium concentrations via the formula:

SAR = [sodium] / (([calcium] + [magnesium])/2) 1/2

where the concentrations are in mi lliequivelents per liter (meq/L).

The SAR formula indicates that if calcium and magnesium concentrations are low and sodium is high, the SAR will be high (as is the case for CBNG produced water). Conversely, if calcium and/or magnesium concentrations increase relative to sodium, SAR will decrease.

Clay minerals in soils are negatively charged and cons equently attract ions with a positive charge such as sodium, calcium and magnesium. When sodium comprises more than about 15 percent of theexchangeable ions, the clays can begin to repel one another causing the soil structure to degrade. The continued swelling and dispersion of clay minerals and subsequent degradation of soil structure can reduce the rate of water infiltrating the soil and the permeability of water through the soil. In general, soils with moderately high to high clay contents are at higher risk.

What is not apparent from the SAR formula is the fact that the higher the salinity of the water, the higher the SAR can be without impairing soil infiltration an d permeability. Put another way, for a given SAR, infiltration rates generally increase as salinity (meas ured by the EC) increases. The changes in soil infiltration and permeability occur at varying SAR leve ls, higher if the salinity is high, and lower if the salinity is low.

For irrigation water with a low EC of 0.7 dS/m, an SAR of 3 to 12 will pose a slight to moderate permeability hazard (Ayers and Westcot (1985) and Hanson et al. (1999), meaning clayey soils may be affected at the upper end of this range. When the EC is 2.0 dS/m, the upper SAR range that can be tolerated is 12 to 30.

Most CBNG water produced in the Powder River Basin of Wyoming and Montana have SAR values above this range making them unsuitable for irrigation on most soils. Therefore, to be used beneficially to produce forage some type of water treatment (e.g., sodium removal) or soil conditioning (e.g., calcium addition) is required to mitigate the effects of the el evated SAR. This process is described below under Derivation of Soil and/or Water Conditioning Prescriptions.


### Alkalinity Alkalinity is a measure of the buffer capacity of water or the ability to neutralize an acid. The major form of alkalinity in produced water is bicarbonate. High bicarbonate levels in irrigation water will react with the available calcium and magnesium and form a calcium carbonate (lime) or magnesium carbonate precipitate. As can be seen by the SAR formula abov e, the reduction of availa ble calcium and magnesium thus raises the effective SAR of the water. High levels of bicarbonate can also result in elevated pH values due to degassing of carbon dioxide (this is analogous to a can of cola which is “carbonated” under pressure during the manufacturing process – when it is depressurized, the carbonation degasses causing the cola to become “flat” and the pH to increase). The subsequent increase in soil-water pH hasten s the transformation of bicarbonate to carbonate, which readily reacts with calcium and magnesium forming a relatively insoluble compound. The net result is less dissolved calcium and magnesium relative to sodium and higher effective SAR values.

Bicarbonate concentrations in CBNG produced water from the Powder River Basin typically range from 750 mg/L to 3,000 mg/L. These are relatively high values for irrigation water and can cause pH increases in water and soil, and subsequent increases in water an d soil SAR. If calcium addition is used to reduce the SAR of the produced water, the bicarbonate may need to be removed through treatment, or an acidifying agent may need to be added to the soil (e.g., elemental sulfur) as an amendment to maintain the calcium in solution and prevent the formation of lime. This is discussed below under Derivation of Soil and/or Water Conditioning Prescriptions.


### Specific Ion Toxicity Sodium, chloride, and boron ions can be toxic to plants if their concentrations are too high in the irrigation water. Damage from sodium and chloride toxicity us ually occurs only in woody plants such as tree and vine crops where soil salinity is extremely high or wh en saline water is used for sprinkler irrigation. Chloride concentrations in CBNG produced water from the Powder River Basin are typically very low. Since tree and vine crop types are not usually grown on managed irrigation sites, or by local farmers and ranchers in the Powder River Basin, sodium and chloride toxicity is not an issue. Boron concentrations in produced water are typically below detectable levels to very low levels. Based on the guidelines presented in Hanson et al. (1999), boron should not be a potential toxicity problem for any crops grown on managed irrigation sites.Derivation of Soil and/or Water Conditioning Prescriptions Based on the water quality suitability analysis presented above, it is apparent that the natural sodicity of CBNG produced water is the primary issue to be addressed before the water can be used for irrigation and forage production. The SAR formula presented above indicates that two general treatment methods would result in a reduction in SAR prior to irrigation: (1) re moval of sodium, or (2) addition of calcium and/or magnesium (the scientific literature suggests that calci um is more effective than magnesium in lowering the effect of sodium in soils, therefore, magnesium addition will not be discussed further). Sodium removal systems (e.g., reverse osmosis, ion exchange, etc.) are technically feasible and have been described in detail in the two Kuipers reports. The process of calcium addition, however, is not described in any detail by the Kuipers reports and is a common practice in use today; therefore, calcium addition will be discussed further here.

There are geochemical limitations to the maximum amount of calcium that can be dissolved in produced water. Depending mainly on bicarbonate alkalinity and its effect on pH, calcite (calcium carbonate or lime) precipitation will limit the maximum level of soluble calcium delivered to the soil. The chemical process responsible for this is discussed above under Alkalinity. As it happens, the bicarbonate alkalinity of produced water is relatively high. Minimum SAR will be achieved by maximizing dissolved calcium concentrations in the soil-water syst em. Because of the solubility limita tions mentioned above, one cannot simply add amendments such as gypsum (calcium sulfate dihydrate) to the irrigation water or the irrigated soils and expect a marked decrease in water or soil SA R. It will require a comb ination of a calcium source (e.g., gypsum) and pH control (due to the bicarbonate alkalinity levels) to maintain the solubility of the added calcium. The approaches most commonly selected for managed irrigation in the Powder River Basin involve (1) the application of conventional agricultu ral amendments such as gypsum (calcium sulfate dihydrate) and elemental sulfur to the soil, or (2) in jecting gypsum and an acid prod uct (e.g., sulfuric acid) directly into the water before it is applied to the soil. Both processes have been proven to work equally well under laboratory controlled conditions (Brown and Harvey, 2004).

Gypsum provides dissolved calcium to the soil or water as follows:

Dissolution of gypsum (CaSO 4 .2H 2 O): CaSO 4 .2H 2 O = Ca 2+ + SO 4 2- + 2H 2 O

The added calcium will compete very effectively against sodium for the negatively charged exchange sites on soil clay particles. The positively charged calci um ions (two positive charges) are more strongly attracted to clay particles in soil than are sodium ions (one positive charge), resulting in a stronger bond between the particles. This prevents the clay par ticles from dispersing and causing a reduction in soil infiltration and permeability.

The naturally elevated bicarbonate alkalinity of the produced water will result in an increase in water pH upon exposure to the atmosphere after the produced water is pumped to the surface. As discussed above, the rise in pH will result in the precipitation of residual and added calcium to form the insoluble mineral calcite (calcium carbonate). If left unchecked, th is phenomenon will render the added calcium less effective in lowering the SAR. To prevent this, agricultural sulfur products can be applied to the soil. The elemental sulfur product will oxidize in the presence of air, water, and soil microbial activity to form sulfuric acid, which in turn dissociates to su lfate and hydrogen ions (protons) as follows:

Oxidation of sulfur (S): S + 1.5O 2 + H 2 O = H 2 SO 4
Dissociation of sulfuric acid (H 2 SO 4 ): H 2 SO 4 = 2H + + SO 4 2-

Sulfuric acid neutralizes the bicarbonate alkalinity and controls soil pH as follows:

Neutralization of bicarbonate (HCO 3 2- ): H + + HCO 3 2- = H 2 O + CO 2 Another method employed by irrigators is to add sulfuric acid (or other form of acid) directly to the produced water before the water is applied to the soil.The rates of soil and water amendments are based on the chemistry and the volume of water applied to manage the SAR of the soil. Geochemical equilibri um models such as PHRE EQC and MINTEQA are used to derive the application rate of soil or water amendments. The models are used to determine changes in chemistry when produced water is equilibrated with atmospheric pCO 2 levels (-3.5 atm), gypsum and sulfur (or acid); to predict if the gypsum and sulfur at various rates of application would dissolve; and to determine if target pH and SAR goal s could realistically be obtained.

The general approach to geochemical equilibrium modeling is to mix the waters with amendments and determine if the resulting solutions are overs aturated with respect to calcite (CaCO 3 ) and/or gypsum (CaSO 4 .2H 2 O). These minerals are then allowed to precipitate and the solution is equilibrated with atmospheric carbon dioxide (CO 2 gas). This equilibration step is very important because the high bicarbonate (HCO 3 - ) concentrations in the produced water indicate that this water is in equilibrium with considerably higher CO 2 levels, which results in a lower solution pH value. As the carbon dioxide exsolves (degasses) and equilibrates with atmosphe ric carbon dioxide, the pH increases.

Soil amendment rates derived by geochemical equilibrium modeling depend on the chemistry of the water and the expected volume of water to be applied to the soil. Gypsum and sulfur amendment rates for irrigation sites within the Powder River Basin typically range between 2 and 6 tons per acre per year, and 0.5 and 1.5 tons per acre per year, respectively. Soil amendment scheduling is site-specific. Typically, soil amendments are applied proactively in the spring prior to the initiation of irrigation for the season. Calculated soil amendment rates are adjusted for produc t purity and a 1.25 to 1.5 multiplier is applied to account for imperfect field applicati on and irrigation variability. If necessa ry, gypsum alone can be applied in the fall at calculated rates to lower the exchangeable sodium percentage (ESP) of the soil over the winter. This technique takes advantage of winter and early spring moisture to dissolve the gypsum and allow calcium to exchange with sodium on the clay minerals. Not only does this reduce the sodicity of the soil, it also increases the salinity of the soil to safer leve ls at a time when excess leaching may be occurring.

The cost for purchasing, shipping and spreading agricultural gypsum and sulfur amendments in the Powder River Basin is approximately $65/ton (or $0.033/pound) and $125/ton (or $0.063/pound), respectively. The economic analysis presented in the Kuipers effluent limitations report utilizes a cost of $80/ton for gypsum and $2,000/ton for sulfur. With respect to sulfur, the cost input and the resulting economic analysis for managed irrigation is significantly overestimated.
Project Water Balance Projections Development of water management plans for CBNG produced water requires a detailed understanding of water inventory at project startup and throughout the projected operational life. In other words, how much water will we have to manage and when will we have it? Spreadsheet-based water balance modeling or simulations provide a valuable tool to facilitate initial planning, feasibilty evaluations (alternative screening), design and permitting, and operations. During each phase of project planning and development the water balance may be considered one of the most important decision making tools.

The baseline water balance for a new project provid es the foundation for plan ning by estimating the magnitude of produced water that will need to be managed. The feasibility of water management alternatives such as storage and seasonal irrigation, in jection, discharge to surf ace water, treatment, or any other alternatives may be evaluated using the water ba lance as a screening tool. Feasibility costs for these management alternatives may then be evaluated cons idering net present value for capital and operating costs. Once the operation/management strategy is defi ned, design optimization can be evaluated using the water balance. Design assumptions may be updated an d verified as pumping rates and other information become available. The operational water balance is used to monitor and manage operations.

The model should include deterministic functions to reflect project specific oper ations such as annual drawdown rates for wells and development schedules, and probabilistic functions to predict water balance uncertainty and variability associated with climate and pumping rates.Site Selection Screening the soils in the general area of the CBNG project using geographical information system (GIS) technology and published USDA-NRCS soil survey data is conducted to determin e the possible extent and suitability of soils for managed irrigation. The GIS- based screening examines topography, soil texture, soil permeability, and soil depth to categorize the soils on maps as very likely suitable, possibly suitable, and not likely suitable for managed irrigation. Other site selection factors include vegetation presently growing on the site, hydrology and depth to groundwater, current land use, landowner preferences, and the overall beneficial use potential (e.g., can the site be improved as in the case of overgrazed upland areas). The soil screening is a preliminary evaluation to ol used to identify candidate irrigati on sites. If it demonstrates that there is a high likelihood of suitable soils in the ar ea, a more thorough field site and soil investigation would be required (see below). 

### Irrigation System Design, Operations and Monitoring

Site Characterization Soil survey information is developed by the NRCS at fairly large scales, using aerial photographs and landscape relationships to delineate soil types. Because ofthe fairly large scales used to develop the soilmapping units, the accuracy of the GIS-based soil screening information described above must be verified in the field. An on-site evaluation of the soils is necessary to determine the exact soil types present and their current chemical and physical properties. This on-site evaluation will ultimately determine the suitability of a site for irrigation. Th e on-site evaluation is also necessaryto collect soil data to assist in design of the irrigation system, establish baseline (p re-irrigation) soil conditions, and to meet Bureau of Land Management requirements for the Water Management Plan of the Plan of Development.

It is strongly recommended that an Order 1 soil surv ey (as defined by the USDA-NRCS) be completed for all managed irrigation sites. This equates to approx imately one test pit per five to ten acres of area investigated (more for highly variable soils, less for le ss variable soils). Test pits are excavated with a backhoe to a depth of 60 inches. At each soil test p it a soil profile description is performed in accordance with USDA-NRCS protocols (Soil Su rvey Division Staff, 1993). Bu lk samples from each natural soil horizon are collected and submitted to a contract laboratory for analysis of pH, electrical conductivity (EC), sodium adsorption ratio (SAR), saturation percentage , exchangeable sodium percentage (ESP), percent lime, percent organic matter (surface horizon only), fertilizer requiremen ts, bulk density, and soil texture (percent sand, silt and clay). In addition to the soil profile description and soil physicochemical analyses, baseline soil infiltration rates are measured near seve ral of the test pit locations representing each soil mapping unit using state-of-the-art tension infiltromet er, and other scientifically defensible techniques.

Two important soil parameters are introduced in the preceding paragraph, exchangeable sodium percentage or ESP, and saturation percentage. These parameters , in conjunction with soil pH and EC, are used to judge the level of soil sodicity and are therefore very useful measurements in managed irrigation.

The ESP of a soil is the “percentage of the cation exch ange capacity of a soil occupied by sodium ions (Soil Science Society of America, 2001).” Every soil has a definite capacity to adsorb the po sitively charged constituents of dissolved salts, such as calcium, magnesium, potassium, sodium, etc. This is termed the cation exchange capacity (CEC). The various adsorb ed cations (such as calcium and sodium) can be exchanged one for another and the extent of exchange depends upon their relative concentrations in the soil solution (dissolved), the ionic charge (valence), the nature and amount of other cations, etc. ESP is, accordingly, the amount of adsorbed sodium on the soil exchange complex expr essed in percent of the cation exchange capacity in milliequivalents per 100 grams of soil (meq/100 g). Thus,

ESP = (exchangeable sodium / cation exchange capacity) x 100

Sodic soils are “nonsaline soils containing sufficien t exchangeable sodium to adversely affect crop production and soil structure (Soil Science Society of America, 2001).” High levels of sodium tend to disperse soil particles thereby s ealing the soil. The result can produce hard surface crusts, reduced infiltration rates, and reduced oxygen diffusion rates, all of which interfere with or prevent plant growth.By definition, sodic soils are those that have an ESP of more than 15 percent, an EC less than 4 dS/m, and a pH between 8.5 and 10 (U.S. Salinity Laboratory Staff, 1954).

Saturation percentage is the amount of water, by weight, necessary to form a minimally flowable mud from dry soil materials and is used as an index of the swelling capacity and dispersive condition of the soil (Merrill, et.al, 1987). Saturation percentage is affected by clay content, clay mineral type (i.e., swelling vs. non-swelling clay types), and sodium adsorption. In ge neral, a saturation percentage of less than 80 percent indicates non-dispersed, non-sodic soil conditions.
Selection and Design of Irrigation Systems Several mechanized and non-mechan ized irrigation systems are availa ble for applying CBNG water to managed irrigation sites, including center pivot sprinklers, side roll/wheel line sprinklers, hand move/solid set sprinklers, big gun sprinklers, surface drip, subsur face drip, gated pipe flood, and ditch flood. The preferred system is center pivot because of the significant advantages in automation, overall control, runoff control, distribution of water, operation costs, and relia bility. The selection of a particular system is based on topography, soil conditions, landowne r preferences, size of the site, crop type, post-irrigation land use, available labor, and project economics. Other components of the irrigation system include flow equilization ponds and delivery piping systems.
Crop Selection Crops typically grown under managed irrigation systems in the Powder River Basin are alfalfa and native forage grass mixes. Crop selection is based primarily on landowner preference, soil type, available equipment for harvesting, and the projected root zone salinity level resulting from the produced water in equilibrium with the soil amendments. For alfalfa, the average root zone EC at which it is expected to begin to decline is 5.0 dS/m (Majerus, 1996). Alfalfa can tolerate much higher average root zone EC levels before significant yield reductions or mortality. Native forage grass species can typically tolerate much higher average root zone salinity levels than alfalfa. Regardless of the yield, most landowners believe that any reasonably good forage crop is better than no crop yield at all, which is usually the case prior to irrigation with CBNG water.

With respect to potential impacts to native drought tolerant vegetation, most managed irrigation projects are constructed on private land for a landowner who wants and appreciates the extra high quality forage for livestock. The sites are usually overgrazed, upland range areas that support little in the way of native plants, except for sagebrush. Typically, these site s are vegetated with prickly pear cactus and weedy species such as cheat grass. Managed irrigation proj ects have been shown to rehabilitate these small areas into productive forage sources for both livestock and wildlife.
Soil Water Balance Modeling and Irrigation Scheduling A spreadsheet-based soil-water balance assessment is used to determine the amount and timing of irrigation required to produce a healthy fora ge crop and to ensure that sound agronomic leaching practices are followed. With a soil-water balance assessment, all wa ter inputs to and outputs from the soil are identified and balanced according to the following equation (“National Engineering Handbook. Part 652 Irrigation Guide,” 2001):

Fg = ET + LF + SDL – Ppt - ∆ SW

where:

Fg = gross irrigation water applied, ET = crop evapotranspiration, LF = leaching fraction, SDL = spray, drift losses, and canopy inte rcept evaporation from sprinkler systems, Ppt = precipitation, ∆ SW = change in soil-water content within the crop rooting zone.For sprinkler irrigation systems, the following assumpti ons are used in developing the soil-water budget. To account for spray, drift losses, and canopy intercept evaporation, the gross amount of irrigation water is reduced by the efficiency of the irrigation system (i.e., the irrigatio n efficiency) to yiel d the net irrigation amount. Irrigation efficiency values for sprinklers range from 60 to 95% and a value of 80% is assumed for most center pivot sprinkler irrigation systems (Hill an d Olsen, 2001). A leaching fraction of approximately 20 to 30 percent is included in the water balance to prevent the soil salinity c oncentration from exceeding the salinity of the produced water in equilibrium with the soil amendments (Ayers and Westcot, 1985). In addition to these assumptions, regional climate and cr op-specific evapotranspiratio n data are consulted to provide input into the model.

As discussed in the water quality suitability assessmen t above, salt removal thro ugh leaching with excess water is required to minimize the concentration of salts in the root zone. With irrigation, the EC of the produced water by itself should not cause any serious increases in soil salinity. However, amendments applied to the soil to negate the possible impacts cau sed by the SAR of the produced water will cause an increase in soil EC, requiring leaching with excess water. In most cases, a leaching fraction of 20 to 30 percent will result in a soil EC approximately equivalent to the EC resulting from the equilibration of the produced water with the soil amendments. At the end of each irrigation season, actual (as opposed to projected) soil-water balances are prepared for each irriga tion site with site-specific climatic data and total irrigation amounts. This is necessary , among other things, to ensure that the required leaching fraction is achieved.

Discussion of the soil water balance and the amount of water to be applied to support crop growth and a suitable leaching requirement brings up an important point regarding potential groundwater contamination. In order for groundwater to be significantly influenced by managed irrigation systems, or any source of water applied to the surface, there must be saturated flow through the soil/unsaturated zone and into the groundwater. As defined above, managed irrigation is not a process whereby water is applied to the ground on a continual basis throughout the year. It is applied in an agronomic manner in accordance with crop needs, soil water holding capacities, climatic ch aracteristics, soil infiltra tion rates, and leaching requirements. It is not desirable or practical to irrigate crops in a way that results in saturating the soil to the point where water is moving in a continuous wetting front under gravity to the water table. Under these conditions water is moving in accord ance with what is called “saturat ed flow.” When the soil water content is less than saturation, the water moves in acc ordance with what is called “unsaturated flow.” Simply put, water moving through the soil under unsatu rated flow conditions moves from areas of higher water content to lower water content, which means it can move diffusely in almost any direction.

Under managed irrigation co nditions and in accordance with the soil water balance approach to irrigation scheduling, water is applied in amounts that will be evaporated from the soil an d transpired through the roots and out the leaves during crop growth. Under these conditions, there is no net movement of water beneath the root zone. As discussed above, additional water is applied over the course of the irrigation season to ensure that salts do not accumulate within the root zone. This leaching requirement typically equates to approximately 10 to 14 inches of additiona l water spread out over the entire year as it includes natural precipitation. Therefore, a vo lume of water of this magnitude spread out over an entire year is not expected to induce saturated flow conditions beneath the root zone and communication with groundwater. This is especially true in project ar eas that are located on upland range sites that have relatively deep water tables.

Irrigation scheduling also brings to mind the issues associated with runoff and erosion, and potential runoff/discharge into streams. This is certainl y possible if irrigation systems were allowed to run continuously resulting in an exceed ance of the soil infiltration rate. Managed irrigation systems are designed and operated in a way that supplies enough water to meet the demands of the crop, provides for an adequate leaching requirement, and applies water at or below the infiltration rate of the soil.
Water, Soil and Vegetation Monitoring The purpose of the soil, water, crop , and climate monitoring plan is to help ensure that the specific managed irrigation site is operated and managed in a manner that (1) promotes the beneficial use of CBNG produced water to produce forage, (2) maintains soil productivity and sustainability, and (3) minimizes thepossible impacts associated with saline and sodic water i rrigation. The data collected from soil, water, crop and climate monitoring is used to determine the overall performance of the managed irrigation system as well as to make adjustments to irrigation scheduling, water treatment, and amendment application rates. Site monitoring is intended to help document how the managed irrigation system is performing and data collected during monitoring is utilized in the creation of annual operations and monitoring reports.

Each component of the monitoring plan is discussed below.


### Water Monitoring Water quality monitoring is typically conducted prior to the beginning of the irrigation season and in July of each year. Water quality results are reviewed an d modeled using a geochemical equilibrium model to assess if the amendment recommendations need to be mo dified. Produced water samples are analyzed at a minimum for pH, EC, major ions, and SAR.

Water quantity delivered to each irrigation area is meas ured by flow meters. The flow meter readings are recorded on a weekly basis to calculate total volume of produced water delivered to each irrigation area. Monitoring the depth of water applied to each irrigation area is critical in order to monitor the irrigation schedule, leaching re quirements, and soil amendment rates.


### Vegetation Monitoring Vegetation monitoring is typically conducted on an ongoing basis. Vegetation monitoring is intended to ensure that forage crop growth and development is not being negatively impacted by irrigation and is adequate to beneficially utilize the produced wate r. General visual observations regarding crop germination, emergence, establishment, vigor, and weed pressure are noted monthly.


### Soil Monitoring Soil monitoring programs can be based on several di fferent sampling strategies, including discrete grab sampling or systematic composite sampling. All sampling programs include pre-irrigation baseline sampling and analysis conducted in the same manner as subsequent monitoring and closure events. Operational soil sampling and analysis events are us ually scheduled in the spring (pre-irrigation), midseason, and in the fall (post-irrigation). One such sampling and analysis scheme is described below.

Baseline and fall (post-irrigation) soil conditions are defined in the upper eight feet of the soil profile. Spring and mid-season conditions are limited to the upper two feet of the soil profile. For all sampling events, composite soil samples are collected from an established transect ineach irrigation field. Composite soil samples consist of subsamples collected ev ery five acres (if the field is less than 50 acres, a minimum of 10 samples are collected). Samples are typically collected using a truck-mounted Giddings push probe to a depth of two feet in the case of spring and mid-season sampling events, and eight feet in the case of baseline and fall sampling events. Samples are co llected from the 0 to 6”, 6 to 12”, and 12 to 24” increments during the spring and mid-season events, and from 0 to 6”, 6 to 12”, 12 to 24”, 24 to 36”, 36 to 60”, and 60 to 96” during the baseline and fall monitoring events. All subsamples are composited by depth for a total of six composite soil samples per irrigation field for analysis. The composite samples are analyzed for pH, electrical conductivity (EC), sodium adsorption ratio (SAR), saturation percentage, exchangeable sodium percentage (ESP), an percent lime. The 0 to 6” sampling in crement is also analyzed for percent organic matter (OM). Baseline samples includ e textural analysis (percent sand, silt and clay).

The physical structure of the soil is visually inspected by a qualified soil scientist at the beginning and end of each irrigation season. The soil scientist visually in spects the soil structure to at least 24 inches and records general soil structure observations including the presence or absence of soil swelling and/or dispersion. Soil water content is estimated by the feel method and any obvious soil sealing, salt precipitation, crusting, erosion, or other notable observations are recorded.

The infiltration rate of the soil is tested prior to the start of irrigation at the site (baseline conditions) and then as required until the completion of the project.Development of Irrigation and Crop Management Plans The purpose of the irrigation and crop management plan is to address landowner and land use goals, crop selection, site preparation, seeding, irrigation system operations, harvesting/grazing plans, soil amendment application rates and scheduling, irrigation scheduling, leaching requirements, and soil/water/vegetation monitoring. This document serves as the overall planning, operations, and monitoring guide. The irrigation and crop management plan is revised each winter based on the monitoring results and other input from the previous irrigation season, and the operational requirements for the upcoming irrigation season.
Site Closure Planning A critical component of the managed irrigation planning process is site closure. Issues to be addressed during site closure planning are:

• What are the post-irrigation land use goals and landowner preferences?

• Will the site continue to be cropped or will it be put back into native vegetation?

• Will the irrigation equipment be removed or will it be left in place to be used by the landowner?

• If the irrigation equipment is to be left, what are the water sources available for continued irrigation?

• What do we expect in the way of post-irrigation soil physical and chemical conditions?

• What level of post-irrigation monitoring will be required to meet post-irrigation land use and landowner goals?

Some of the answers to these questions can be anticip ated at project startup, while others can only be answered towards the end of the proj ect. In any event, the primary goa l of site closure is to leave a physically and chemically stable site capable of moving towards a sustainable vegetative community that meets or exceeds landowner goals.

# Appendix B Re-evaluation of Kuipers’ Reverse Osmosis Treatment Cost Estimates Figures

# Alternative 5a Reverse Osmosis with Commercial Disposal and Surface DischargeAlternative 5a. Original Reported Cost Estimate

Description Qty Unit Unit Cost Total Cost

Operating Specifications and Assumptions No. Wells 10 Estimated Well Density (acres/well) 80 Estimated PW Flow/Well (Maximum - gpm) 25 Estimated PW Flow/Well (Average - gpm) 6 Estimated Life of Well (years) 10 Life of Well PW/Gas Ratio (bbl/MCF) 1 Capital Costs

Site Preparation 1 acre 5000 $5,000 Piping (from well to pond to treatment) 10,000 ft $17.70 $177,000 Storage Pond Excavation 24,691 cu yd $2.05 $50,617 Reverse Osmosis Plant (120 gpm nominal) 1 lot $150,000 $150,000 Brine Storage Tanks (15 day at 5% flow) 1 lot $20,000 $20,000 Discharge Equipment (header or outfall structure) 1 lot $2,000 $2,000 Reclamation Costs 1 acre $5,000 $5,000 Equipment Installation (Brine Tanks/RO)

Subtotal Direct Costs $409,617 Indirect Costs 10% $40,962

Total Capital Cost $450,578 Annual Operating and Maintenance Costs

Electrical Costs (100 hp @ $0.06 kwh) 683,280 kwh $0.06 $40,997 Supplies and Parts 1 lot $25,000 $25,000 Replacement Equipment 1 lot $10,000 $10,000 Labor 720 hrs $25 $18,000 Commercial Disposal (5% of avg) 6,257 bbl $5 $31,285

Subtotal Direct Costs $125,282 Indirect Costs 10% $12,528

Total Annual O&M Costs $137,810 Total Costs

Total Cost $1,828,678 NPV (5% DROR) Cost (1) $1,440,565 NPV Cost per bbl or MCF $0.19 (1) A re-calculation of the NPV using the same basis and cash flow scenario resulted in a NPV of $1,514,710 compared to $1,440,565 as shown. However, the original reported value was left unchanged to simplify comparisons made in the this report.Alternative 5a. Recalculated Cost Estimate

Description Qty Unit Unit Cost Total Cost

Operating Specifications and Assumptions No. Wells 10 Estimated Well Density (acres/well) 80 Estimated PW Flow/Well (Maximum - gpm) 25 Estimated PW Flow/Well (Average - gpm) 6 Estimated Life of Well (years) 10 Life of Well PW/Gas Ratio (bbl/MCF) 1 Capital Costs

Site Preparation 1 acre 5000 $5,000 Piping (from well to pond to treatment) 16,700 ft $17.70 $295,590 Storage Pond Excavation 24,691 cu yd $2.05 $50,617 Reverse Osmosis Plant (120 gpm nominal) 1 lot $150,000 $150,000 Brine Storage Tanks (15 day at 5% flow) 1 lot $48,600 $48,600 Discharge Equipment (header or outfall structure) 1 lot $2,000 $2,000 Reclamation Costs 1 acre $5,000 $5,000 Equipment Installation (Brine Tanks/RO) 150% Total $297,900 $297,900

Subtotal Direct Costs $854,707 Indirect Costs 20% $170,941

Total Capital Cost $1,025,648 Annual Operating and Maintenance Costs

Electrical Costs (100 hp @ $0.06 kwh) 683,280 kwh $0.06 $40,997 Supplies and Parts 1 lot $25,000 $25,000 Replacement Equipment 1 lot $10,000 $10,000 Labor 720 hrs $25 $18,000 Commercial Disposal (5% of avg) 37,543 bbl $5 $187,714

Subtotal Direct Costs $281,711 Indirect Costs 10% $28,171

Total Annual O&M Costs $309,882 Total Costs

Total Cost $4,124,470 NPV (5% DROR) Cost $3,418,476 NPV Cost perbbl or MCF $0.46Alternative 5a. Comparison between Reported and Recalculated Costs

Description Original Revised Difference

Operating Specifications and Assumptions No. Wells Estimated Well Density (acres/well) Estimated PW Flow/Well (Maximum - gpm) Estimated PW Flow/Well (Average - gpm) Estimated Life of Well (years) Life of Well PW/Gas Ratio (bbl/MCF) Capital Costs

Site Preparation $5,000 $5,000 $0 Piping (from well to pond to treatment) $177,000 $295,590 $118,590 Storage Pond Excavation $50,617 $50,617 $0 Reverse Osmosis Plant (120 gpm nominal) $150,000 $150,000 $0 Brine Storage Tanks (15 day at 5% flow) $20,000 $48,600 $28,600 Discharge Equipment (header or outfall structure) $2,000 $2,000 $0 Reclamation Costs $5,000 $5,000 $0 Equipment Installation (Brine Tanks/RO) $0 $297,900 $297,900

Subtotal Direct Costs $409,617 $854,707 $445,090 Indirect Costs $40,962 $170,941 $129,980

Total Capital Cost $450,578 $1,025,648 $575,070 Annual Operating and Maintenance Costs $0 $0

Electrical Costs (100 hp @ $0.06 kwh) $40,997 $40,997 $0 Supplies and Parts $25,000 $25,000 $0 Replacement Equipment $10,000 $10,000 $0 Labor $18,000 $18,000 $0 Commercial Disposal (5% of avg) $31,285 $187,714 $156,429 Subtotal Direct Costs $125,282 $281,711 $156,429

Indirect Costs $12,528 $28,171 $15,643 Total Annual O&M Costs $137,810 $309,882 $172,072 Total Costs

Total Cost $1,828,678 $4,124,470 $2,295,792 NPV (5% DROR) Cost $1,440,565 $3,418,476 $1,977,911 NPV Cost per bbl or MCF $0.19 $0.46 $0.27

# Alternative 5b Reverse Osmosis with Injection Reinjection and Surface DischargeAlternative 5b. Original Reported Cost Estimate

Description Qty Unit Unit Cost Total Cost

Operating Specifications and Assumptions No. Wells 10 Estimated Well Density (acres/well) 80 Estimated PW Flow/Well (Maximum - gpm) 25 Estimated PW Flow/Well (Average - gpm) 6 Estimated Life of Well (years) 10 Life of Well PW/Gas Ratio (bbl/MCF) 1 Capital Costs

Site Preparation 1 acre 5000 $5,000 Piping (from well to pond to treatment) 10,000 ft $17.70 $177,000 Storage Pond Excavation 24,691 cu yd $2.05 $50,617 Reverse Osmosis Plant (120 gpm nominal) 1 lot $150,000.00 $150,000 Reinjection Well (1500ft) 1 lot $262,000.00 $262,000 Reinjection Pump (100 hp) 1 ea $25,000.00 $25,000 Discharge Equipment (header or outfall structures) 1 lot $2,000.00 $2,000 Reclamation Costs 1 acre $5,000.00 $5,000

Subtotal Direct Costs $676,617 Indirect Costs 10% $67,662

Total Capital Cost $744,278 Annual Operating and Maintenance Costs

Electrical Costs (200 hp @ $0.06 kwh) 1,366,560 kwh $0.06 $81,994 Supplies and Parts 1 lot $25,000.00 $25,000 Replacement Equipment 1 lot $25,000.00 $25,000 Labor 720 hrs $25.00 $18,000

Subtotal Direct Costs $149,994 Indirect Costs 10% $14,999

Total Annual O&M Costs $164,993 Total Costs

Total Cost $2,394,208 NPV (5% DROR) Cost (1) $1,920,179 NPV Cost per bbl or MCF $0.26 (1) A re-calculation of the NPV using the same basis and cash flow scenario resulted in a NPV of $2,018,310 compared to $1,920,179 as shown. However, the original reported value was left unchanged to simplify comparisons made in the this report.Alternative 5b. Recalculated Cost Estimate

Description Qty Unit Unit Cost Total Cost

Operating Specifications and Assumptions No. Wells 10 Estimated Well Density (acres/well) 80 Estimated PW Flow/Well (Maximum - gpm) 25 Estimated PW Flow/Well (Average - gpm) 6 Estimated Life of Well (years) 10 Life of Well PW/Gas Ratio (bbl/MCF) 1 Capital Costs

Site Preparation 1 acre 5000 $5,000 Piping (from well to pond to treatment) 16,700 ft $17.70 $295,590 Storage Pond Excavation 24,691 cu yd $2.05 $50,617 Reverse Osmosis Plant (120 gpm nominal) 1 lot $150,000.00 $150,000 Reinjection Well (1500ft) 1 lot $262,000.00 $262,000 Reinjection Pump (100 hp) 1 $25,000.00 $25,000 Discharge Equipment (header or outfall structures) 1 lot $2,000.00 $2,000 Reclamation Costs 1 acre $5,000.00 $5,000 Installation Costs (RO and well pump) 1.5 Total $262,500 $262,500

Subtotal Direct Costs $1,057,707 Indirect Costs 20% $211,541

Total Capital Cost $1,269,248 Annual Operating and Maintenance Costs

Electrical Costs (200 hp @ $0.06 kwh) 1,366,560 kwh $0.06 $81,994 Supplies and Parts 1 lot $25,000.00 $25,000 Replacement Equipment 1 lot $25,000.00 $25,000 Labor 720 hrs $25.00 $18,000

Subtotal Direct Costs - bbl $149,994 Indirect Costs 10% $14,999

Total Annual O&M Costs $164,993 Total Costs

Total Cost $2,919,177 NPV (5% DROR) Cost $2,543,280 NPV Cost perbbl or MCF $0.34Alternative 5b. Comparison between Reported and Recalculated Costs

Description Original Revised Difference

Operating Specifications and Assumptions No. Wells Estimated Well Density (acres/well) Estimated PW Flow/Well (Maximum - gpm) Estimated PW Flow/Well (Average - gpm) Estimated Life of Well (years) Life of Well PW/Gas Ratio (bbl/MCF) Capital Costs

Site Preparation $5,000 $5,000 $0 Piping (from well to pond to treatment) $177,000 $295,590 $118,590 Storage Pond Excavation $50,617 $50,617 $0 Reverse Osmosis Plant (120 gpm nominal) $150,000 $150,000 $0 Reinjection Well (1500ft) $262,000 $262,000 $0 Reinjection Pump (100 hp) $25,000 $25,000 $0 Discharge Equipment (header or outfall structures) $2,000 $2,000 $0 Reclamation Costs $5,000 $5,000 $0 Installation Costs (RO and well pump) $0 $262,500 $262,500

Subtotal Direct Costs $676,617 $1,057,707 $381,090 Indirect Costs $67,662 $211,541 $143,880

Total Capital Cost $744,278 $1,269,248 $524,970 Annual Operating and Maintenance Costs 0 0 $0

Electrical Costs (200 hp @ $0.06 kwh) $81,994 $81,994 $0 Supplies and Parts $25,000 $25,000 $0 Replacement Equipment $25,000 $25,000 $0 Labor $18,000 $18,000 $0

Subtotal Direct Costs $149,994 $149,994 $0 Indirect Costs $14,999 $14,999 $0

Total Annual O&M Costs $164,993 $164,993 $0 Total Costs

Total Cost $2,394,208 $2,919,177 $524,970 NPV (5% DROR) Cost $1,920,179 $2,543,280 $623,101 NPV Cost per bbl or MCF $0.26 $0.34 $0.08

# Appendix C CDM Cost Estimates for Reverse Osmosis TreatmentRO Treatment Facility Estimated Purchased Equipment Costs

Equipment Description Est. Purchase Price RO System 120 gpm feed, 90% recovery, skid-mounted $155,520 Hydrochloric Acid Storage Tank 6,000 gal plastic storage tank w/secondary containment $15,000 Hydrochloric Acid Metering Pumps Diaphragm metering pumps, duplex $5,000 Antiscalent Storage Tank 500gal plastic storage tank $1,000 Antiscalent Metering Pumps Diaphragm metering pumps, duplex $5,000 Cartridge Filters Two, 125 gpm, 5 micron, 42 10" equiv/filter housing $6,600 Brine Storage Tanks Four 30,000 gallon CS tanks $84,672 Brine Storage Transfer Pumps Two centrifugal, 316 SS, 100-gpm, 30 ft head pumps $7,000 Total $279,792

Estimated Installed Cost

Description Percenta g e (1) Est. Cost Direct Costs

Equipment: Process, Fabricated 40% $279,792 Equipment Installation 11% $76,943 Instrumentation And Control 4% $27,979 Piping, Valves, And Fittings 5% $34,974 Electrical And Lighting 5% $32,176 Buildings And Services 5% $32,176 Land And Site Work 3% $19,585 Utilities And Service Facilities 7% $48,964 Total Direct Costs 79% $552,589

Indirect Costs

Engineering, Design, Management 8% $55,958 Construction Expenses And Fees 8% $55,958 Total Contingencies 5% $34,974 Total Indirect Costs 21% $146,891

Installed Cost for RO Treatment 100% $699,480

Ancillary Facilities Estimated Capital Cost

Item Description Est. Construction Cost Piping 16,700 feet HDPE Burried Piping $283,900 Storage Pond Excavation 10,000 cubic yards excavation $25,000 Reclamation Costs Estimated $5,000 Total $313,900

TOTAL CAPITAL $1,013,380 RO Treatment Facility

(1) Peters, Max S. and Klaus D. Timmerhaus, “Plant Design and Economics for Chemical Engineers”, Fourth Edition, McGraw hill, I nc., New York, 1991.Description Units Qty Unit Cost Total Cost Capital (1) $/yr, 5%,10 yr 1,013,380 $

O&M Costs (2) Energ y

Electricity kw-hr/K gal 3.62 0.070 $ $7,991 Reagents (100% basis) - Chem Market Report Oct. 2003 $0

Anitscalent lb/K gal 0.02 1.25 $ $657 Hydrochloric Acid lb/K gal 6.15 0.150 $ $29,090 Membrane Replacement Mem/yr 9 600 $ $5,600 Membrane Cleaning Mem/yr 84 50 $ $4,200 Cartridge Filters cartrides/mo. 42 25.00 $ $12,600 Labor FTE 1 25.00 $ $52,000 Maintenance % of Total Capital/yr 2.0% 25,946 $ $20,268 Waste Disposal bbl/yr 75,086 6.000 $ $450,514 Total O&M $582,920

NPV (5%, 10 years) $5,514,536 NPV per bbl cost $0.73 (1) Capital costs are based on a design capacity of 120-gpm feed flow. (2) O&M costs are based on an average feed flow of 60-gpm. CDM RO Treatment Cost Summary Based on Typical PRB Water Quality