Petroleum Environmental Solutions Dan Gurney, Product Manger Strategic Center for Natural Gas and Oil Draft FY04-FY09 Plans / Roadmap for 5 year plan June 19, 2003

Mission and Strategy Mission: Encourage Maximum Recovery and Use of Domestic Natural Gas and Oil Resources by Reducing the Cost of Environmental Compliance and Improving Environmental Protection thus Opening Access to New Supply Provide new technologies that enable industry to reduce compliance costs and improve environmental protection Develop sound scientific data to support cost effective, risk-based regulatory decisions by State and Federal agencies Improve communication and technology transfer among industry, government, and the public

Determine Program Priorities Basis Clear Federal Role Window of Opportunity Ability to Impact Impact of the Issues

Petroleum Environmental Solutions Structure

Petroleum Environmental Solutions Roadmap Past and Future STRATEGIC OBJECTIVES Foster partnerships with industry, government and others on technologies and policies to foster domestic oil and natural gas supplies Foster aggressive technology transfer Produced Water Gas & Oil Federal Lands Access Legacy Programs (lower priority post FY03) Outreach & Education Potable Water from Produced Water Regulatory Streamlining Processing Heavy Crudes Bio-Processing Reduce Cost of Produced Water Management (nationwide) operations by 15% Streamlining Permitting Processes Communicate Best Practices New Tech- Low Impact Small Footprint Exp/Drilling/Production Hydraulic Fracturing Air Emissions Remediation Provide Tools for States to Expand Risk-Based Corrective Action by 25% Regulatory Impact Analysis CBM Water Issues Fed Land Access Issues

Petroleum Environmental Solutions Roadmap FY04 FY04 STRATEGIC OBJECTIVES Foster partnerships with industry, government and others on technologies and policies to foster domestic oil and natural gas supplies Foster aggressive technology transfer Produced Water Gas & Oil Federal Land Access Air Outreach Modeling Control & Techniques Chemistry & Chemical Analysis Regulatory Streamlining Permitting Processes Federal Public Communicate Best Practices Technology Mgt Analysis Technology & Applications Remediation Regulatory Impact Analysis Gas & Oil Conventional Environmental Barriers Soil Sound Science CBM Water Issues

Rollup Petroleum Environmental Solutions Roadmap FY04-09 FY04-09 STRATEGIC OBJECTIVES Foster partnerships with industry, government and others on technologies and policies to foster domestic oil and natural gas supplies Aggressive Technology Transfer Produced Water Federal Land Access Air Outreach Modeling Control & Techniques Chemistry & Chemical Analysis Reduce Cost of Produced Water Management (nationwide) operations by 15% Regulatory Streamlining Permitting Processes Federal Public Communicate Best Practices Technology Mgt Analysis Technology & Applications Remediation Regulatory Impact Analysis Gas & Oil Conventional Environmental Barriers Soil Sound Science CBM Water Issues Refining

Petroleum Environmental Solutions - Water Management Approach & Analysis Toxicity, TMDLs,Characterization, Disposal Land Use Applications, Impact Basins Management Techniques Treatment, Cleanup, Interactions Produced Water Coal Bed Methane - Fate and Transport, Ground vs. Surface Effects Beneficial Use, Best Management Practices, Modeling Conventional Natural Gas - E&P Goals, Best Management Practices, Fate & Transport, Beneficial Use, Modeling Oil – Separators, Best Management Practices, Fate & Transport, Beneficial Use, Modeling

Petroleum Environmental Solutions - Federal Lands Modeling Analysis Environmental Barriers Streamlining & Regulatory Impact Technology & Applications Cooperation with Federal Agencies Some Tasks Continue over Entire Program

Petroleum Environmental Solutions - Air Modeling Analysis Environmental Barriers Regulatory Impact Technology & Applications Some Tasks Continue over Entire Program

Petroleum Environmental Solutions Air Soil Sound Science Soil Remediation Environmental Barriers Regulatory Impact Control & Techniques Air Modeling Analysis Regulatory Impact Environmental Barriers Technology & Applications Refining Refining Bioprocessing Refinery Efficiency Emissions Reduction High Sulfur Heavy Oil Potential Liquid Fuels Sound Science Response to Regulation Support for Decision Makers Chemistry & Chemical Analysis Examination of Alternatives

Petroleum Environmental Solutions - Soil Remediation Environmental Barriers Regulatory Impact Control Technologies

Petroleum Environmental Solutions – Sound Science Chemistry & Chemical Analysis Response to Regulation Support of Decision Makers Examination of Alternatives

Petroleum Environmental Solutions – Outreach Federal State & Local Involvement Public Involvement Partnerships

Petroleum Environmental Solutions – Outreach & New Technologies Federal State & Local Public In Partnerships Outreach New Technologies New Technologies

2005 Develop low-maintenance, laboratory scale processes to treat produce water at lower cost. Develop techniques and strategies beneficial reuse or sale of produces water Develop pilot-scale low- maintenance, lower-cost produced water treatment unit. Goal: By 2015, reduce the cost of produced water management for oil and gas operations by 15%. Produced Water Management Issues/Barriers: Produced water characteristics vary significantly both between regions and within regions. It is unlikely that a given treatment technology will work for all applications. Current produced water treatment technologies are either too expensive or are not robust enough for oilfield applications or both. The economics of produced water treatment vary significantly from region to region. Laws and regulations governing surface discharge and water rights may inhibit some beneficial use applications.

Provide the tools for States to expand the use of Risk-Based Corrective Action by 25% In conjunction with PERF, establish the scientific basis for clean-up parameters. Goal: By 2005 reduce the cost of remediating soils contaminated with crude or refined product by 15% compared to 1990 approaches. Remediation Issues/Barriers: DOE cannot set the clean-up standards for remediation; we can only provide regulators with the scientific information to appropriate standards. Clean-up technologies are fairly mature and the likelihood of a break-through that would significantly reduce cost is small.

Provide data on the term effects of coalbed methane production on coal seam aquifers Provide impact analyses of coalbed methane production on wildlife species of concern (such as threatened and endangered species) and, where necessary, develop mitigation strategies that allow development to proceed while protecting the environment Resolve questions surrounding the environmental effects of hydraulic fracturing. Goal: By 2010 provide the solutions to current environmental issues and questions that will allow a 25% increase in natural gas produced from coal seams. Coalbed Methane (CBM) Issues/Barriers: CBM development, especially in the West, is a fairly recent phenomenon and new issues may arise Water issues surrounding CBM development, especially in the West, have become an emotionally charged and all barriers cannot be resolved through science or technology. Hydraulic fracturing continues to be an issue despite strong evidence, endorsed by the EPA, that hydraulic fracturing does not cause contamination of underground sources of drinking water. The NEPA process in Montana is moving slowly and once it is completed, litigation may cause further delays in CBM development Develop best management practices for treating and/or discharging coalbed methane water to the surface Provide fate and transport data to determine the environmental impacts of infiltration ponds in the Powder and Tongue River basins.

Survey currently available bio-processing methods. Goals: Biodegradation of chemical bonds or selective removal of heterotane (S,N) from crude oil (upgrade crudes) or refinery cuts offers potential to revolutionize refining with the possibility of reducing processing cost. Develop bio-technologies to economically upgrade crudes or remove sulfur from naptha boiling-range refinery cuts. Bio-Processing Issues/Barriers: The efficiency of bio-processing to upgrade crude or refinery cuts by removal of sulfur molecules has to improve by more than 10 8 to become competitive with current chemical processing. The volume of water used for processing must be reduced by more than 105 over current laboratory volumes to be cost competitive. This is long-term, high-risk research Develop methods to allow bio-processing from best available technology Perform pilot-scale bio-processing of 25% of heavy crudes during the transport time between E&P and the refinery Perform pilot-scale bio-processing of 50% of heavy crudes during the transport time between E&P and the refinery.

2010 Develop dispersion models to reflect E&P contributions in nonattainment areas Develop more accurate and robust air chemistry models and integrate them with dispersion models Develop scientific data to more accurately predict particulate matter precursor formation in SW Wyoming. Air Emissions Issues/Barriers: Visibility science and measures are being developed and are apt to change significantly in the near future. Acceptance and implementation of new model may be slow because of current model is sometime written into state law or regulation. More robust models will require greater computing power that may not be available or affordable for all regulatory agencies. Goal: By 2012 develop and demonstrate air chemistry and dispersion models that accurately reflect the effect of E&P and processing operations on regional air quality and visibility.

Goal: By 2015, Improve the efficiency and yield of processing plentiful Western Hemisphere crudes by Processing Heavy Crudes Issues/Barriers: The Western hemisphere has huge volumes of heavy crudes that are high in sulfur, nitrogen, and heavy metals. Heavy oil is 12% of the total U.S. production and the U.S. imports increasing volumes of heavy crudes from Canada, Columbia, Mexico, and Venezuela Select candidate heavy oils and match to U.S. domestic refinery Characterize heavy oils of the Western Hemisphere Establish pilot-scale operation of 50% of Western Hemisphere heavy crudes Develop alternative processing technologies to allow heavy oil processing costs to be half of base year (2000) cost to light oil.

Questions ? Dan Gurney NETL Oil and Gas Environmental Product Manager 1 West 3rd Street, Suite 1400 Tulsa, Oklahoma Telephone: Facsimile:

Petroleum Environmental Solutions Structure Alternative Organization Structure

Petroleum Environmental Solutions – Air, Soil and Sound Science Modeling Analysis Environmental Barriers Regulatory Impact Technology & Applications Remediation Environmental Barriers Regulatory Impact Control & Techniques Air Soil Sound Science Chemistry & Chemical Analysis Response to Regulation Support for Decision Makers Examination of Alternatives