Water Online

May 2016

Water Innovations gives Water and Wastewater Engineers and end-users a venue to find project solutions and source valuable product information. We aim to educate the engineering and operations community on important issues and trends.

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total water management cost savings for E&P; for both CAPEX and OPEX. However, any model is only as good as the input and assumptions that it is based on. MWH decision support tool results, preliminary engineering analyses, and business economic assumptions are uploaded into a financial model to evaluate the proposed holistic water management solution compared to the status quo. The status quo is the E&P; current water management costs. These are important and must be collected to be able to compare existing water management costs of the proposed solutions with the current operations to analyze the total cost savings for the E&P; company. At the end of the day, with the current low commodity price environment that appears to be in place for the longer term, it is critical that water management solutions achieve a significant reduction in overall water costs to be effective. It is our experience that cost savings must be in the 30 to 70 percent range to be interesting to E&P; companies in the current volatile commodities price market. True Savings Utilizing the aforementioned approach, MWH has developed integrated approaches to overall water management and has analyzed water supply and conveyance infrastructure solutions in two unconventional oil and gas plays — Delaware Basin (Permian) and Greater Wattenberg (Niobrara). These examples demonstrate that through proper planning, the use of decision support tools, and preliminary engineering, E&P; companies can save significantly in their water management for a minimal cost. Example 1: Delaware Basin water supply and conveyance infrastructure solution MWH is working on a confidential project with a water rights owner in the Delaware Basin (Figure 4) to develop a groundwater resource on the owner's property and design and build a water conveyance system to provide D&C; water to E&P; companies that are currently assessing a multiple horizon UCOG play adjacent to this property. In this arid region of West Texas, the E&P; companies currently use a combination of trucking fresh water from small water depots, shallow wells that produce at low rates (10 to 100 gpm), or treatment and reuse flowback and produced water. These water sources are used to fill a frac pit (100 to 300,000 bbls) and once the frac pit is filled a single well can be completed. While this approach allows maximum flexibility, it is costly, inefficient, and not sustainable during field delineation or development operations, as it cannot keep up with water volumes required in the time frame needed for multiwell completions on a pad. Water supply and transportation costs associated with this current industry water solution approach were estimated at $2.68/bbl, exclusive of transfer from the frac pit to blender and on pad water management costs (IHS Vantage analysis Nov 2015 3 ). MWH's proposed solution is to develop the groundwater resources on our client's property by (1) installing the desired number of deeper, larger diameter wells that are able to produce 500 to 1,000 gpm, sustained and (2) designing and building an infrastructure system consisting of permanent, buried pipelines and in-ground pits to convey the groundwater at rates of 50 to 200,000 bbls/day to E&P; companies in the area. MWH analyzed numerous configurations. On the basis of the initial engineering design and construction cost estimates, MWH determined that the groundwater resource can be developed on the property and a 24-mile pipeline and 600,000 bbls of storage designed and installed for a cost ranging from $1.50 to $0.70/bbl, depending on volume and term commitment that the operator is willing to agree to. With these costs, when compared to the above-cited IHS current industry average water supply and transportation costs, the operators in the area will save between $1.18 and $1.98/bbl, or 44 to 74 percent and have a reliable, large-volume water supply for D&C; operations. Moreover, MWH evaluated the use of private capital to fund the project, which allows the E&P; company to preserve its capital for core operations. Example 2: Niobrara water supply and conveyance infrastructure solution In the Niobrara, MWH evaluated fresh water supply and conveyance infrastructure solutions for an operator east of Greeley, CO. The focus of MWH's evaluation was to 26 wateronline.com n Water Innovations PRODUCEDWATER Figure 4. Permian Basin project Figure 3. Water management decision support tool, MWH mFlowPlan 2015 1

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