# Site Visit Report Citrus Energy Corporation Marcellus Shale Gas Operations

January 2 2

, 201 3i TABLE OF CONTENTS

Page

1.0 I NTRODUCTION

................................ ................................ ................................ ........ 1

2.0 B ACKGROUND AND O BJECTIVES

................................ ................................ .............. 1

3.0 O VERVIEW OF S HALE G AS P RODUCTION

................................ ................................ . 2

3.1 Company Background

................................ ................................ ................ 2 3.2 Permitting

................................ ................................ ................................ .... 3 3.3 Shal e Gas Well Development

................................ ................................ ..... 4 3.3.1 Well Pad Construction

................................ ................................ .... 4 3.3.2 Drilling

................................ ................................ ............................ 4 3.3.3 Hydraulic Fracturing

................................ ................................ ....... 5 3.4 Wastewater Management

................................ ................................ ............ 6 3.5 Solid Waste Management

................................ ................................ ........... 8

4.0 C ITRUS S ITES V ISITED

................................ ................................ ............................. 8

4.1 P&G Source Water Withdrawal Site

................................ .......................... 9 4.2 Freshwater Impoundment

................................ ................................ ......... 10 4.3 Mattocks Well Site ( Shut in)

................................ ................................ ..... 11 4.4 Ruark Well Site (Production)

................................ ................................ .... 12

A PPENDIX A L IST O F P ARTICIPANTS ON THE C ITRUS S ITE V ISIT

................................ .............. 17

A PPENDIX B M AP OF S ITES V ISITED

................................ ................................ ........................... 19

A PPENDIX C S UMMARY OF C OSTS P ROVIDED B Y C ITRUS

................................ ......................... 21ii LIST OF FIGURES Page

Figure 3

- 1. Citrus Active Shale Wells in Northern Pennsylvania

................................ ................... 3

Figure 4

- 1. Proctor and Gamble Source Water Withdrawal Site Flow Diagram

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

Figure 4

- 2. Main Source Water Pump Housing

................................ ................................ ............. 10

Figure 4

- 3. Freshwater Impoundment

................................ ................................ ............................ 11

Figure 4

- 4. Mattocks Well Pad

................................ ................................ ................................ ...... 12

Figure 4

- 5. Mattocks Fracturing Tanks

................................ ................................ ......................... 12

Figure 4

- 6. Production Separators

................................ ................................ ................................ . 12

Figure 4

- 7. Production Site Flow Diagram

................................ ................................ .................... 13

Figure 4

- 8. Wellheads of Ru arck (left) and Sand Traps (right)

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

Figure 4

- 9. Line Heater (left) and Gas

- fueled Water Gas Separators (right)

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

Figure 4

- 10. Solar

- Powered Well Monitors

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

Figure 4

- 11 . Produced Water Storage Tanks

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

Figure A

- 1. Overview of Sites Visited in ArcGIS

................................ ................................ ......... 20iii LIST OF TABLES

Page

Table 3

- 1. Shale Gas Wastewater Management Practices in Pennsylvania

................................ .... 6

Table 3

- 2. Citrus Wastewate r Management Costs

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

Table 3

- 3. Citrus Solid Waste Management Costs

................................ ................................ .......... 8

Table 4

- 1. Ruark 1H Production Data

................................ ................................ .......................... 16

Table 4

- 2. Ruark 2H Production Data

................................ ................................ ........................... 16

Table A

- 1. List of Attendees

................................ ................................ ................................ .......... 18

Table A

- 2. Summary of Costs Provided by Citrus

................................ ................................ ........ 221

1.0 I NTRODUCTION

On June 19

, 2012

, t he U.S. Environmental Protection Agency (EPA) met with Citrus Energy Corporation ( Citrus ) and visited four sites in the Marcellus Shale Play in northern Pennsylvania

. These sites included:

 Mattocks Well Site (shut in during fracturing)

 Ruark Well Site (produc tion )

 Proctor & Gamble source w ater withdrawal s ite

 Freshwater impoundment

Meeting participants are listed below. C ontact inform ation is included in Appendix A.

U.S. EPA Office of Water, Office of Science and Technology Engineering and Analysis Division

Lis a Biddle Erik Helm

E astern R esearch G roup, Inc

. (ERG) (EPA Contractor)

Meghan Camp Casey Mac Q ueen

Citrus Energy Corporation

Rick Fields

Entech Engineering , Inc. ( Entech) (Citrus Contractor)

Heather Burkhart

2.0 B ACKGROUND AND O BJECTIVES

The Citrus Marcellus Shale site visit was the s e cond in a series of site visits that the EPA plans for this industry

. During the visits, the EPA planned to view a range of shale gas operations that demonstrate a variety of production and wastewater management options

, including reuse, underground injection, centralized waste treatment (CWT), and publicly owned treatment w orks (POTW)

. The purpose of the site visit was to collect background information on the shale gas industry and observe wastewater management practices

. To initiate site visits, the EPA reviewed information about Marcellus shale gas producers and their was tewater management practice s

. During this review, the EPA identified Citrus as a small producer in terms of number of wells and gas production, active in the Marcellus Shale Play

.

Rick Fields

, Citrus’s drilling and completions manager , led the discussion of the company’s Marcellus operations and the site tour

. Heather Burkhart of Entech, contractor to Citrus, provided input on relevant national and state environmental requirements during the discussion

. The remainder of this report summarizes th e site visit, including a general discussion2

held with Citrus prior to going into the field (Section 3.0 ) and information provided by Citrus during the tour (Sectio n 4.0 )

.
3.0 O VERVIEW OF S HALE G AS P RODUCTION
Prior to a tour of operations near Tunkhannock , Pennsylvania, the EPA and Citrus discussed general shale gas operations

. At this time, Citrus provided an overview of shale gas extraction

. Topics discussed include :

 Company b ackground

 Permitting

 Shale gas well development (well pad construction, drilling, and fracturing)

 Wastewater management

3.1 Company Background

Citrus is a cl osely held private corporation with two owners. Prior to drilling in the Marcellus region, Citrus was active in the Anadarko basin in Oklahoma and Barnett Shale in Texas. In 2010, Citrus moved all of its assets to Pennsylvania to focus on Marcellus shale g as and is no longer active in Oklahoma or Texas. They have acquired 26,500 acres in Wyoming county in northern Penneylsvania. According to Citrus’s website, the company plans on drilling and fracturing 20 wells during 2011 and 2012. 1

Figure 3

- 1 shows Citrus ’ active Marcellus wells in northern Pennsylvania using the EPA’s GeoPlatform map p ing tool and coordinates from Pennsylvania Department of Environmental Protection’s ( PA DEP ) database. Currently, Citrus operates 14 producing wells and is waiting to complete hydraulic fracturing of seven drilled wells

.

1 Information from Citrus’s website was accessed July 2, 2012. Available online at: http://www.citrusenergy.com/regions.htm3

Source: EPA’s GeoPlatform map p ing tool

.

Figure 3

- 1

. Citrus Active Shale Wells in Northern Pennsylvania

3.2 Permitting

Citrus provided general information on the well pad design and permitting process for an existing lease . Before construction or excavation may begin, PA DEP requires operators to obtain a drilling permit . Issuance of a drilling permit requires operators to:

 Conduct b aseline groundwater quality testing

 Prepare and obtain approval of an Erosion, Sediment and Stormwater Control Plan (E&S Permit)

 Prepare an d obtain approval of a Water Management Plan

Baseline groundwater quality testing documents the presence of water contaminants such as methane in existing wells within a 3 ,000

- foot radius of a planned wellbore. PA DEP requires sampling of a list of sel ect analytes.

The Erosion, Sediment and Stormwater Control Plan documents the presence of wetlands, existing structures ( e.g., power lines), and endangere d species (e.g., rattlesnakes) in proximity of the planned well site

. The Water Management Plan documents planned source water withdrawal methods. This plan is reviewed for approval by either the Susquehanna River Basin Commission (SRBC) or Delaware River Basin Commission (DRBC) , depending on the planned withdrawal location.4

Citrus withdraws water from the Susquehanna River, and is therefore within the SRBC’s jurisdiction.

3.3 Shale Gas Well Development

The following subsections summarize general information Citrus provided on shale gas well development. Citrus estimated the tot al cost to construct a well pad and associated pipeline and water infrastructure , drill a horizontal well, and complete using hydraulic fracturing is approximately $ 7.6 million. A typical well of this type would have an 8,000

- foot depth, 4,000

- foot lateral , and 16 fracturing stages. Citrus is unsure of the expected production lifetime of each Marcellus well

.
3.3.1 Well P ad Construction

Citrus contracts well pad design to Entech , headquart ered in Reading, Pennsylvania. Construction of a well pad takes place over three to four weeks and costs between $400,000 and $600,000 . Construction costs include excavation, access roads, well pad containment, and permits. Entech typically designs e ach Citrus well pad to accommodate two to four horizontal wells on approximately two acres. The default minimum well p ad size is 300 by 300 feet for one well. For each additional well, 15 feet is added to both dimensions , and wells are spaced 12 to 15 feet apart

. Stormwater management practices are dictated by the approved E&S P ermit

. Citrus typically uses a vacuum truck to collect any precipitation captured in secondary containment on the well pad ; collected fluid is added to fracturing makeup water. Secondary c ontainment is constructed of 4 0

- mil high density polyethylene liner and is left in place until all wells on the well pad are in the production phase and no future wells are planned. Citrus routes all storm water runoff away from the well pad and does not attempt to collect any for use. If spills occur within secondary containme nt, they may be collected via vacuum truck for treatment separately from precipitation.

From mid

- 2010 through the second quarter of 2011 , Citrus used open pits for containment of drill cuttings and flowback

, and reused the pits for fracturing makeup water storage. However, PA DEP later determined that this type of impoundment is considered a central impoundment which would require special permitting, and Citrus ceased its use of this type of storage.

3.3.2 Drilling

Constructing and drilling one well in the northe rn Marcellus requires 14 to 21 days on
average. Citrus historically has contracted with Patterson Drilling to perform drilling. The average well in this region is drilled 8,000 feet deep, with horizontal laterals up to approximately 6,000 feet long. Citrus currently plans to drill a 6,500 foot lateral on one future well . Citrus estimated the cost to drill a single horizontal well i s approximately $ 2.4 million.5

3.3.3 Hydraulic Fracturing

Citrus contracts hydraulic fracturing to a third

- party service provider. Pre viously, Citrus contracted a company from Texas, but recently has contracted Universal Well Services of Meadville, Pennsylvania to perform fracturing

. The cost for Citrus to fracture a single horizontal well is $ 4.8 million. Each Citrus well is fractured in stages of 250 to 300 lateral feet. The total lateral length is usually dictated by lease lines. Relatively short laterals comprise 8 to 10 stages, while longer laterals comprise 20 to 25 stages. Fracturing each stage requires 9 to 10 t housand barrels of water (378,000 to 470,000 gallons) ; f or a horizontal well with 10 stages, this equates to approximately 3.8 to 4.2 million gallons of water. Typically, Citrus fracture s between one and four stages per day , and does not operate 24 hours a day like some larger operators

. The last full set of wells Citrus fractured incl uded 50 stages for three wells and required 17 working days to complete.

Although Citrus contracts hydraulic fracturing operations to a third party, Citrus provide s the fract uring makeup water

. Prior to fracturing, Citrus pipes f reshwater directly from a storage impoundment to fracturing tanks at the well pad (see section 4.2 for more information on the freshwater impoundment ). Flowback or produced water from previously fractured wells, al so stored in fracturing tanks, is hauled to the well pad prior to fracturing. Fracturing makeup water comprises up to 10 percent reuse water (all reuse water that is available) and the remainder freshwater. Fracturing tanks are rented at $40 to $50 dollars per tank per day. Each tank is capable of holding 500 barrels (21,000 gallons).

Fracturing tanks located on the well pad and used for make up water storage are connected via piping headers; one header connects approximately 15 tanks ( see Section 4.3 for a site

- specific photograph )

. During fracturing, makeup water is pumped through piping headers into a set of five “working tanks” which are co nnected to piping routed down the wellbore. Because the total volume of fracturing fluid required per well is greater than the combined capacity of well pad fracturing tanks , Citrus must replenish the fresh water in the storage impoundment during the fract uring process (see section 4.1 for more detail on freshwater withdrawal).

T he fracturing company determines the mixture and concentrations of fracturing fluid chem icals and supplies the required chemicals . The chemical mix is dictated by formation chemistry and geology, but usually includes biocides, friction reducers, and gels. Sand is fed by a belt into a hopper which controls the sand addition rate. Additives and sand are combined with fracturing makeup water in an in

- line blender. Twelve pump trucks operating in parallel pressurize the fracturing fluid to 8 ,000 to 9,000 psi into a main header. From the main header, the fluid is pumped down the well a t a rate of 80 barrels per minute. Fracturing is conducted in stages beginning at the end of the lateral and progressing toward the vertical wellbore, with plugs insert between each stage.

After fracturing, the plugs separating each fracture stage are drilled through, releasing pressure at the wellhead and allowing flowback to begin

. Citrus routes flowback through test separators which separate the water and gas phases to identify when the w ells are producing gas (see section 4.3 for a site

- specific photograph)

. Initially, the flowback is composed of nearly 100 percent water

. As the flowback phase pro gresses, the stream becomes increasingly rich in gas
content

. Significant gas production may occur in as little as two days, but typically begins a week6

after flowback begins. When the gas pressure increases enough to trigger a pressure relief valve in the test separators
, the gas stream is routed to a flare for combustion or piped to a sales line if available

. Flaring is only employed when production infrastructure (e.g., gas pipeline, dehydrators, separators) has not been installed before the operator releases the wellhead
pressure. 2 To date, Citrus has employed flaring for 3 of its 1 4 northern Marcellus wells

.
Citrus estimated that for horizontal wells in the northern Marcellus region, before the well starts gassing, a pproximately eight percent of th e total volume of injected fracturing fluid returns to the surface as flowback

. The flowback wastewater is routed from the test separator into fracturing tanks. Citrus is allowed to store flowback in fracturing tanks for up to 12 months under current PA DE P regulations.

3.4 Wastewater Management

Following the flowback period, each well produces approximately two to three barrels of water per day , according to Citrus

. As described in Section 4.4 regarding one of Citrus’s producing well sites that EPA visited, e ach produced water tank has a 300

- barrel (12,600 gallon) capacity. Under these conditions, a water truck must empty the tanks every two to four months.

According to the PA DEP’s oil and gas reporting data, Citrus managed 100 percent of its
wastewater through reuse in 2011

, compared to 35 percent statewide (PA DEP, 2012). Table 3

- 1 provides an overview of statewide management practices.

Table 3

- 1 . Shale Gas Wastewater Management Practices in Pennsylvania

Management Practice Citrus All Other PA Marcellus Operators Percentage (%) Volume (bbl ) a Percentage (%) Volume (bbl ) a

Direct Reuse 100 24,911 35 11,161,367 Underground Injection 0 0 7 2,252,615
Centralized Waste Treatment (CWT) 0 0 56 17,630,923

Publicly Owned Treatment Works (POTW) 0 0 < 1 47,629

Other (unknown) 0 0 1 397,318
Landfill 0 0 <1 33,216
Total 100 24,911 100 31,523,069

a

— Wastewater volumes include produced water, flowback, and drilling fluids. Source: PA DEP’s Oil and Gas Reporting Database. b bl

— Barrels.

For 2012, Citrus plans to continue reusing all flowback and produced water

. At present, Citrus tests for salinity and total dissolved solids (TDS) content of wastewater. To use flowback for blending with fresh water for reuse as fracturing fluid makeup, Citrus typically adheres to a flowback TDS limit of no higher than 8 0,000 ppm ; typical TDS content is 50,000 to 60,000 ppm.

2 The National Emissions Standards for Hazardous Air Pollutants require reduce d emission completion (based on gas recovery) for certain sources constructed after January 15, 2015.7

After blending, typical TDS content is less than 20,000 ppm

. According to Citrus, the northern Marcellus shale formation is not particularly sensitive, and the fracturing contractor likely conducts minimal, if any, testing of reused makeup water. However, Citrus noted that the PA DEP recently requested information about the concentration of certain constituents (completion of Form 26

- R, “Chemical Analysis of Residual Waste

– Annual Report Form by the Generator”
3 ) i n flowba ck wastewater that is disposed

. The instructions for the Form 26

- R require operators
to submit test results for 51 analytes. Citrus typically completes Form 26

- R annually for each
waste stream.

Prior to 2011, Citrus hauled a portion of their wastewater to Ohio for underground injection and to Pennsylvania centralized waste treatment facilities ( CWTs ) for disposal

. After the PA DEP promulgated new discharge requirements in August 2010, Citrus stopped discharging wastewater to CWTs. Table 3

- 2 provides a summary of Citru s’s wastewater management costs, including costs for CWTs that Citrus no longer uses

.

Table 3

- 2 . Citrus Wastewater Management Costs

Management Option Wastewater Management Costs ( Dollars per bbl , unless otherwise noted )

Notes Disposal Cost Trucking

Cost Total Cost

Direct r euse in fracturing None 2.00 4.00

- 10 .00 Total wastewater storage cost depends on duration of storage time (see fracturing tank rental cost in Section 3.3.3 ). Underground injection well in Ohio 3.00

- 4.00 10.00

- 12.00 13.00

- 16.00

Sunbury Generation Facility (CWT in Pennsylvania) a Not Available 6.00

- 7.00 Not Available Citrus Energy states that they did not have enough volume of flowback water to constitute business with Sunbury , though the time period referred to is unclear

. Clean Harbors (CWT in Baltimore, Maryland ) 3 .00

- 4 .00 15.00

- 18.00 18 .00

- 22 .00 Trucking costs include the following: Storage tanks from C lean Harbors, transfer from storage tanks for disposal vehicles. Terraqua Resource Management (CWT in Pennsylvania) a Not Available 6.00

- 9.00 Not Available

Fracturing tank rental N/A N/A 40 to 50 dollars per day per tank

a

— Total cost is unknown for these facilities because a quote for disposal cost was not currently available, according
to Citrus. bbl

— Barrels. N/A

— Not applicable.

3 Form 26

- R is available online at: ht tp://www.elibrary.dep.state.pa.us/dsweb/Get/Document

80512/01%20Instructions%202540

- PM

- BWM0347.pdf . Chemical analysis requirements are located on Page 3 of the form.8

3.5 Solid Waste Management

Solid waste generated during well development includes drill cuttings and sediment that settles out of stored wastewater. Drill cuttings are removed from oil

- based reusable drilling fluid using a shaker screen, drying shaker, and desilters/desanders

. All drilling fluid is returned to the drilling service provi der. To solid if y cuttings for handling purposes, Citrus mixes the cuttings with woodchips , saw dust, or lime . Solid waste is hauled to a Pennsylvania landfill or transported via rail to an Ohio landfill

. Citrus stated that it is easier and more affordable to dispose of solid waste in Ohio landfills rather than obtaining approval to di spose in Pennsylvania landfills. C urrently, Citrus only hauls solid waste to Ohio landfills. Once previously, due to time constraints, Citrus contracted to dispose of solid was te in a landfill in New York. Table 3

- 3 summarizes Citrus solid waste management costs

.

Table 3

- 3

. Citrus Solid Waste Management Costs

Management Option Solid Waste Management Costs (Dollars per ton, unless otherwise noted)

Notes Disposal Cost Trucking or

Rail Cost Total Cost Clean Earth of Carteret Landfill (Pennsylvania) 200

- 210 100 300

- 310 Cuttings are trucked to disposal facility, 24 ton s per load

.

Tunnell Hill Reclamation Landfill (Ohio) 100 75 175 Cuttings are raile d to disposal facility, 110 ton s per car

.
Keystone Sanitary Landfill (Pennsylvania) 175

- 200 100 275

- 300 Cuttings are trucked to disposal facility, 24 ton s per load

.

N/A

— Not applicable.

Citrus discussed recent state regulatory requirements related to solid waste generation and disposal. The disposal facility dictates analytical parameters required for solid waste disposal. According to Citr us, landfills typically require the analytical parameters listed in PA DEP Form U. 4 For disposal of drill cuttings, landfills typically require sampling for lime, pH, heavy metals, and toxics content

.

4.0 C ITRUS S ITES V ISI TED

This section describes the three sites that the EPA visited during the June 19 tour. The list below includes the sites visited in the order of the well development process

.

 Proctor & Gamb le source water withdrawal site

 Freshwater impoundment

 Mattocks Well Site (shut in)

 Ruark Well Site (production)

4 Form U is available online at: http://www.elibrary.dep.state.pa.us/dsweb/Get/Document

80512/01%20Instructions%202540

- PM

- BWM0347.pdf . Chemical analysis requirements are locate d on Page 5 of the form.9

4.1 P&G Source Water Withdrawal Site

Citrus currently operates a source water withdrawal site located on the property of The Proctor and Gamble Company (P&G) in Washington Township

, from which it withd raws water from the North Branch of the Susquehanna River. A large diesel pump , located just onshore

, pumps the fresh water via underground piping directly to the freshwater impound ment located approximately 0.7 miles from the withdrawal site

. Figure 4

- 1 shows the flow diagram of water from the Susquehanna River to freshwater impoundment

. A flow meter, loc ated just downstream of the pump, meas ures the volume of water withdrawn from the r iver

.

Figure 4

- 1

. Proctor and Gamble Source Water Withdrawal Site Flow Diagram

The SRBC issued a permit to Citrus for this site in December 2008 which expire s in December 2012. 5 Citrus’s permit allows a maximum withdrawal of 1.944 million gallons per day
at a maximum flow rate of 1.385 gallons per minute

. Figure 4

- 2 show s the diesel pump

. Citrus explained that the pump is designed to never exceed the SRBC limit, even if the pump were to run at its highest flow rate for a full day

. The pump intake is six to eight feet underwater and equipped with a self

- cleani ng suction intake screen.

5 SRBC docket 20081205

- 1. Available online at: http://www.srbc.net/wrp/ApprovedSourceList.aspx and http://www.srbc.net/wrp/Details.aspx?ID=5055&num=2008

- 11310 Figure 4

- 2 . Main Source Water Pump Housing

4.2 Freshwater Impoundment

Figure 4

- 3 show s the freshwater impoundment that the EPA visited during the site tour. Citrus routes all fresh water directly from the Susquehanna River withdrawal site to this fresh water impoundment v ia underground piping. From the impoundment , which is located from 500 feet up to 8 miles from a typical well site , all fresh water is piped directly to the well pad for f racturing

, eliminating all fresh water trucking. Citrus negotiate d with P&G on the imp oundment location , and eventually constructed it approximately 0.7 miles from the withdrawal site. This impoundment is lined with 60

- mil high density polyethylene liner and has a capacity of 4.1 million gallons

. 6

, 7 At a given time, the impoundment is typically filled to the 12

- foot depth ( Figure 4

- 3 shows a depth scale up to 14 feet , and a current depth level of 8 feet ); the water volume at this typ ical depth does not typically provide enough fresh water to hydraulically fracture one well . During a fracturing job, Citrus simultaneously replenishes the impoundment with fresh water as water is pumped from the impoundment for fracturing ( a typical fractu ring job requires approximately 3.8 to 4.2 million gallons , as discussed in Section 3.3.3 )

.

6 Citrus reported this number as 98,000 barrels.
7 One mil is equal to 0.001 inches.11 Figure 4

- 3 . Fresh w ater Impoundment

4.3 Mattocks Well Site (Shut in)

The Mattocks well pad, located at Latitude N 41.576114 o , Longitude W

- 75

. 999761 o

, includes four Citrus wells that were drilled but not fractured

. Citrus explained that one of the wells was partially fractured ( 6 stages) in an effort to dispose of excess fl owback. Citrus had fractured a 3

- well pad in February 2012 and needed to dispose of some of the flowback due to storage limitations. Therefore, Citrus fractured the first six stages of one of the Mattocks wells in March 2012. After fracturing, Citrus colle cted flowback into a fracturing tank onsite and shut in the well. Citrus plans to finish fracturing this well and the other three wells on the Mattocks pad in September 2012

. The main factors driving this schedule include pipeline availability, fracturing crew availability, and projected decline of existing producing wells. Recently, the low cost of gas has also caused Citrus to delay fracturing wells.

Figure 4

- 4 shows the four wellheads on the Mattocks well pad. The well with the tallest wellhead is the one that has been partially fractured. Figure 4

- 5 shows the fracturing tanks containing flowback wastewater from other well pads , connected by piping headers . Citrus currently stores all of their fracturing tanks at the Mattocks well pad in anticipation additional fracturing. Citrus pointed out that the different color tanks reflect different companies that own the tanks

. Figure 4

- 6 shows the test separators tha t separate water and gas during flowback. Depth scale12 Figure 4

- 4 . Mattocks Well Pad

Figure 4

- 5 . Mattocks Fracturing Tanks

Figure 4

- 6

. Production Separators

4.4 Ruark Well Site ( Production )

The Ruark well pad, located at Latitude N 41.583364 o , Longitude W

- 76.019791 o

, includes two producing wells. Both wells have been producing for approximately one year

. A ccording to PA DEP data

, p roduction began in June 2011 (see Table 4

- 1 and Table 4

- 2 at the13

end of this section for well

- specific gas and water production data )

. After the first couple of wells are drilled on a pad, Citrus performs basic cleanup of site; no reclamation is conducted until all wells are drilled (there is a DEP requirement to conduct reclamation within six months of the last well being drilled). At this time, C itrus thinks that future refracturing is likely and thus designs the well pad to accommodate this activity. Refracturing is popular in the Barnett shale play in Texas, but has not commonly been used in the Marcellus.

Figure 4

- 7 provides a flow diagram of the production site. The mixtu re of produced water and gas enters adjacent sand traps. Citrus collects a ll sand in a small tank and periodically haul s it to a landfill along with drill cuttings . The gas and water flow underground from both traps through a line heater and into the gas /water separators. P roduced water flows from the separators directly to the produced water storage tanks. G as exits the separators and flows past a metering station that measures gas flow eventually to the Tennessee Pipeline

. The produced w ater storage tanks and the gas /water separators are located with in secondary containment structures visible in Figure 4

- 9 and Figure 4

- 11

.

Figure 4

- 7 . Production Site Flow Diagram14

Figure 4

- 8 shows the two Ruark wellheads on the left and two sand traps on the right

. The sand traps are typically used during flowb ack and early production to remove proppant from the produced fluid. When the sand traps are no longer needed, the system includes piping that allow s the produced water to bypass the sand traps . The sand traps can be removed and used at a different locatio n. Citrus encloses all producing wells and other equipment (e.g., separators

, storage tanks) inside a barbed

- wired fence as shown in Figure 4

- 8

. Figure 4

- 9 shows the water gas separators. Figure 4

- 10 shows solar

- powered well monitors that calculate volumetric gas flow using measurements of differential pressure across the meter and temperature.

Figure 4

- 8 . Well h eads of Ruarck (left) and Sand Traps (right)

Figure 4

- 9

. Line Heater (left) and Gas

- fueled Water Gas Separators (right)15 Figure 4

- 10 . Solar

- Powered Well Monitors

Figure 4

- 11 shows the two produced water storage tanks equipped with vents to the atmosph ere . Each produced water tank has a 300

- barrel ( 12

, 600 gallon) capacity. According to Citrus , each well produces approximately two to three barrels of water per day. Water level in the tanks is monitored by visual inspection. Each time a tank is approximately 75 percent full, a water truck collects water from all tanks located on close well pads (within approximately a four

to five

- mile radius) . Water trucks have a capacity of either 100 barrels or 120 to 130 barrels. Pennsylv ania requires 20 percent freeboard (i.e., the volume of water in the truck takes up no more than 80 percent of available capacity). Citrus hauls this wastewater to fracturing tanks at a nearby well pad for storage until it can be reused

.

Figure 4

- 11 . Produced Water Storage Tanks16

Table 4

- 1 and Table 4

- 2 provide production data for Ruark wells 1H and 2H

, downloaded from PA DEP. Wells 1H and 2H have produced 2.3 and 0.9 billion cubic feet

, respectively

, since the beginning of production in Jun e 2011 through the end of 2011 . The Citrus tour guide suggested that these wells are average in terms of gas production compared to other wells in the

area.

Table 4

- 1

. Ruark 1H Production Data

Time Gas

Production Days Gas

Production (Mcf) Gas

Production (Mcf/day) Wastewater

(bbl) 2010 (1 st half)

-- -- -- 704 2010 (2 nd half)

-- -- -- 2011 (1 st half) 20 305

, 648 15,282 611 2011 (2 nd half) 142 2

, 042

, 335 14,383
Totals 162 2,347,983 14,494 a 1,315 Source: PA DEP’s Oil and Gas Reporting database

. a

— Two

- year average production rate

. Mcf

— Million cubic feet

. b bl

— B arrels.

Table 4

- 2

. Ruark 2H Production Data

Time Production

Days Gas

Production (Mcf) Gas

Production (Mcf/day) Wastewater

(bbl) 2010 (1 st half)

-- -- -- 704 2010 (2 nd half)

-- -- -- 2011 (1 st half) 6 29,579 4,930 212 2011 (2 nd half) 109 881,758 8,090
Totals 115 911,337 7,925 a 916 Source: PA DEP’s Oil and Gas Reporting database.

a

— Two

- year average production rate. Mcf

— Million cubic feet

. Bbl

— B arrels.17 A PPENDIX A L IST O F P ARTICIPANTS ON THE C ITRUS S ITE V ISIT18 Table A

- 1. List of Attendees

First Name Organization Phone Number Email
Lisa Biddle U.S. EPA, SGE Engineer (202) 566

- 0350 Biddle.Lisa@epa.gov
Erik Helm U.S. EPA, SGE Economist (202) 566

- 1049 Helm. E rik@epa.gov
Rick Fields Citrus Energy Corp.,

Drilling & Completions Manager (540) 836

- 7491 Rick@citrusenergy.com

Heather Burkhart Entech Engineering, Inc.,

Environmental Specialist (610) 373

- 6667 Hburkhart@entecheng.com

Meghan Camp ERG , Senior Chemical

Engineer (703) 633

- 1684 Meghan. C amp@erg.com

Casey MacQ ueen ERG

, Chemical Engineer (703) 633

- 1686 Casey

. Macqueen @erg.com19 A PPENDIX B M AP OF S ITES V ISITED20

Source: Generated by ArcGIS using base map information from Bing Maps TM

.

Figure A

- 1. Overview of Sites Visited in ArcGIS21 A PPENDIX C S UMMARY OF C OSTS P ROVIDED B Y C ITRUS22 Table A

- 2. Summary of Costs Provided by Citrus

Process Cost Notes
Well Construction and Development

Well pad construction $400,000 to $600,000 Includes excavation, access roads, well pad containment, and permits.

Drilling (one horizontal well) $2.4 million Cost to drill a horizontal well ready for fracturing. Hydraulic fracturing (one horizontal well) $4.8 million Cost to hydraulically fracture a horizontal well

. Total cost (one horizontal well) $ 7.6 million Total cost of excavation, drilling, and fracturing

. Wastewater Management

Direct reuse in fracturing $ 4.00 to $10 .00 per bbl Since 2011 all flowback and produced water has been reused

. Underground injection well in Ohio $13.00 to $16.00 per bbl Total cost for disposal and transportation

.

Sunbury Generation Facility (CWT in Pennsylvania) Not available Quote not available

.

Clean Harbors (CWT) $18.00 to $22.00 per bbl Total cost for disposal and transportation

. Terraqua Resource Management (CWT in Pennsylvania) Not available Quote not available

.

Freshwater Acquisition and Storage

Fresh W ater $0.21 per 1,000 gallons plus permitting fees Cost for freshwater acquisition to

SRBC.
Other General Costs Flowback storage tanks $40,000 Cost to buy one 500 barrel tank

. Flowback storage tanks $40 to 50 per day Cost to rent one 500 barrel tank per day

.

Trucking $110 per hour Cost per hour. Each truck holds 100 to 130 bbl of fresh water or
wastewater.