1. MSSC 2011 Annual Salinity Summit Charles Ahrens Vice President / Water Resources and Conservation Challenges in Brackish Groundwater Desalination Project Development February 17, 2011

2. Challenges in Brackish Groundwater Desalination Project Development Page 2 Presentation Outline Why Brackish Desalination? Project Location Project Components Project Challenges Next Steps Lessons Learned Summary

3. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 3 Why Brackish Desalination? Governor’s 2002 Desalination Initiative Resource close to San Antonio Un-utilized resource Diversification SAWS Brackish Test Site 1

4. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 4 Project Location Located on Aquifer Storage & Recovery property 11,800 acre-feet (Phase 1) Potential to expand to 25,000 acre-feet 45-mile Integration Pipeline will deliver water to south and west, may be built in phases

5. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 5 Project Components Production / Monitor Wells Reverse Osmosis Treatment Plant Pipeline System Brine Injection Wells Electrical System

6. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 6 Project Challenges Groundwater District Regulation State Water Management Concentrate Disposal Real Estate Public Perception Funding SAWS Membrane Pilot Test Unit

7. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 7 Project Challenges Groundwater District Regulation State Water Management Region L Plan Groundwater Management Areas

8. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 8 Project Challenges Concentrate Disposal SAWS Disposal Options –Surface Water –Deep Well Injection Permitting –General Permit

9. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 9 Project Challenges Public Perception Citizen’s Advisory Panel Project Opposition Response to Opposition –Science Committee –Project starts in Bexar County –Construct Monitor Wells –Continued information to political leadership in Bexar County and surrounding Counties

10. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 10 Project Challenges Funding – Water Resources CIP Budget

11. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 11 Project Challenges Other Funding Sources TWDB Water Infrastructure Funds –$35 Million – low interest deferred loans for Planning and Design –$24 Million – low interest loans for Construction Federal Funds – Bureau of Reclamation

12. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 12 Next Steps Additional Pilot Testing (2011) Drill Test Injection Well (2011) Engage Program Manager (early 2012) Engage Construction Manager at Risk (late 2012)

13. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 13 Lessons Learned Inform political leadership early (preferably before feasibility work) Never underestimate project opposition Start land acquisition early Determine water quality early Pilot membranes early Refine concentrate disposal options early

14. February 17, 2011 Challenges in Brackish Groundwater Desalination Project Development Page 14 Summary 279,000 AF 222,000 AF Project Benefits –Diversification - project relieves pressure on the Edwards Aquifer – Additional use of previously purchased System property –“State-of-the-Art” Treatment – Phase 1 supplies approximately 5% of SAWS water needs 2020 – Worst Year of DOR 253,000 AF 151,000 AF Edwards 102,000 AF Non-Edwards Note: Excludes Recycle Water

15. MSSC 2011 Annual Salinity Summit Charles Ahrens Vice President / Water Resources and Conservation Challenges in Brackish Groundwater Desalination Project Development February 17, 2011