Oilfield and Municipal Water Recovery and Reuse in SE Alberta Water Management in Alberta’s Oilfields - APEGGA PD Seminar April 17, 2008

PRESENTATION OVERVIEW  Water Scarcity in SE Alberta & Relevant Policies  Implications for Oilfield Water Supplies  Conservation & Innovation Developments to Improve Efficiency of Oilfield Water Use  A Case History  Summary

Southern Alberta’s Rivers South Saskatchewan River Basin (SSRB) includes: Bow River Oldman River Red Deer River

Water Scarcity in SE Alberta Water-Short Areas

Fresh Water Use in SE Alberta for Oil & Gas Exploration & Production  Uses: »Drilling »Completions (hydraulic fracturing) »Enhanced/secondary recovery (waterflood)  Sources »Surface water (lakes, rivers, canals, sloughs, etc.) »Municipal water (potable) »Source water wells

Water Use Perception & Reality  Reality »Water allocated to O&G industry in SE AB is small compared to other uses »Water is consumed  Public Perception »The O&G industry can and should reduce its consumption of fresh water Bow R Basin Water Allocations

Key Provincial Policies Influencing Industry Access to Water  Alberta Water for Life Strategy – November 2003  Water Conservation and Allocation Policy & Guideline for Oilfield Injection – January 2006  South Saskatchewan River Basin (SSRB) Water Management Plan – August 2006

Water for Life Strategy  Goals & Outcomes »Safe, secure drinking water supply »Healthy aquatic ecosystems »Reliable, quality supplies for a sustainable economy  Key Directions and Actions »Knowledge & Research »Partnerships »Water conservation (30% efficiency improvement)

Policy & Guideline for Oilfield Injection  “The ultimate goal of the policy is to reduce or eliminate allocation of non-saline water for oilfield injection”  “New projects within water-short areas that propose to use non-saline water must demonstrate that every feasible option has been evaluated”  Policy applies to all new licence applications and licence renewals  AB ENV also requesting voluntary review of permanent licences; Permanent licence holders encouraged to cooperate with the intent of the policy

Policy & Guideline for Oilfield Injection Alternative Water Sources Existing projects in water- short areas encouraged to reduce or eliminate non-saline water use through conjunctive use of alternative supplies Possible Water Sources Produced water Saline groundwater Non-water fluids and methods Industrial wastewater Municipal wastewater Potential offset water supplies Water from coalbed methane

SSRB Water Management Plan (Aug 2006)  AB ENV not accepting applications for new water allocations in the Bow, Oldman and South Saskatchewan River sub- basins  Water may still be obtained through transfer of allocations from existing licence holders; Director authorized to withhold up to 10% of volume transferred as a conservation holdback  Goals: »Protect watersheds, while sustaining the economy »Encourage Albertans to become more efficient and innovative in their use of water

Water Supply Implications for Oil and Gas Development in SE Alberta  Municipalities – are becoming concerned about meeting community needs and more reluctant to supply industry outside immediate service area  New Diversions – not an option with SSRB closure  Existing Licence Holders – under scrutiny and pressure from public and government to find alternatives and reduce fresh water usage

Efficiency & Innovation Developments in Oilfield Water Use in SE Alberta  Recycling & Reuse of hydraulic fracturing blowback fluids  Reduction of fresh water use by Replacement with Recycled municipal wastewater

Recycling & Reuse of Frac Blowback Fluid  Hydraulic fracturing is used to improve the productivity of low permeability reservoirs  Water is used to prepare high viscosity polymeric gels which transport proppant (sand)  Once sand is placed into fractures, viscosity of the fluid is broken, pressure is relieved and “blowback” water is returned to surface for disposal Shallow Gas Fracturing

Water Use for Fracturing  Typical water use: m 3 per zone & multiple zones usually fractured per well  Average fresh water use estimated at 100 to 150 m 3 per well  5000 – 7000 wells/yr drilled in SE AB & SW SK  Estimated water consumption: 1M m 3 /yr  Cost of water supply & transportation represents <1.5% of well completion cost (PSAC 2007 Well Cost Study)

Fate of Hydraulic Fracturing Fluids 100% of fresh water used for hydraulic fracturing is consumed

Blowback can be Recycled and Reused to Prepare New Fracturing Fluids  Linear and Crosslinked Gels – Water quality requirements demand membrane filtration  Surfactant Gels – Water quality is less critical, allowing direct reuse or conventional filtration

Blowback Recycling is Cost-Competitive with Disposal  Lifecycle cost for frac water supply and blowback disposal can be $30 - $50 per m 3, depending upon transportation distance  Transportation represents approx. 50% of cost  Over 80% of blowback can be recycled and reused, reducing fresh water consumption by >40%  Onsite treatment reduces costs of water supply, blowback disposal and transportation

Fresh Water can be Replaced with Recycled Municipal Wastewater Effluent  Even with 100% recycling of blowback, 50 to 60% makeup is required to replace reservoir losses  Although potable water is typically used for frac fluid makeup, municipal wastewater can be recycled to supply this requirement  Membrane filtration and disinfection provides water quality suitable for preparing frac fluids

Municipal Effluent Reuse is Not New  Municipal effluent is commonly treated and reused for industrial and agricultural purposes in semi-arid regions throughout the world (Southwestern US, Mexico, Middle East, Singapore, Australia)  In Alberta, recycled municipal effluent has been used to supply water for energy industry projects in Bonnyville, Medicine Hat and Edmonton

Membrane Filtration Development has Facilitated Effluent Recycling

Market Adoption of Membrane Technology has Driven Cost Competitiveness Zenon, 2004

Frac Water Quality Specifications Parameter Concentration Make-up Water Quality Spec. Recycled Municipal Wastewater Quality Suspended Solids<1 Iron<10<0.1 Alkalinity<500 Hardness<500 pH – 8.5 Dissolved SolidsNot Specified<1500 Bacteria<10 5 /mL

Recycled Wastewater for Waterfloods  Municipal wastewater effluent represents a viable alternative water resource for enhanced oil recovery  Replaces use of high quality fresh water with suitable quality recycled effluent, reducing salt, nutrient and organic loadings to receiving streams

Motivation for Replacing Fresh Water with Recycled Effluent  Lack of alternatives in SE Alberta  Demonstrate industry initiative towards achieving conservation, efficiency and productivity goals  Public and community relations benefits  Economic – transferability of water diversion licences has created market value for existing licences and influenced the price of securing fresh water

Market Value of Water Diversion Rights  As a tradable entity, the value of water diversion rights responds to supply & demand  Creates economic incentive to conserve & replace fresh water w/ alternate supplies of lower cost or lower value

Brooks Water Supply Situation  Licensed diversion from Lake Newell = 4.9 M m 3 /yr  Current average water use = 3.7 M m 3 /yr  Population growth from 1997 to 2007 = 33%  Aug No increased water diversions from Bow River  More efficient use of existing water allocation will be required to support future growth

A Cooperative Industry/Community Water Conservation Opportunity  Brooks’ bulk water sales for oilfield use ~ 90,000 m 3 /year  Lagoon effluent can be treated and recycled to supply this demand, freeing up fresh water for community growth

Proposed Effluent Recycling/Reuse Model

Location Plan City of Brooks Brooks Sewage Lagoons Newalta

Effluent Recycling Process

Project Potential  Initial project expected to conserve ~ 90,000 m 3 /yr  Proposed infrastructure will provide 200,000 m 3 /yr of recycling capacity  Capacity can be further expanded in modular fashion to recycle all wastewater and replace other uses of fresh water: other industrial uses, enhanced oil recovery, irrigation.

Benefits of Wastewater Recycling  Ensures priority access to drinking water for residents and secure supply for industrial users in water-short areas  Provides water supply to support community growth  Potentially reduces or defers municipal expenditures for wastewater treatment expansion  Alleviates water quality concerns with effluent discharges  Presents a positive example of industry/community cooperation to achieve water conservation objectives

Summary  Water scarcity has the potential to limit oil & gas development in SE Alberta  Practical conservation opportunities exist to improve the efficiency of oilfield water use through reuse and recycling of fracturing fluids  Recycling and reuse of municipal wastewater effluent provides benefits to industry, municipalities & environment  Developments in membrane technology have made use of recycled wastewater practical and competitive with securing and using fresh water

QUESTIONS?