December 2013 - The Bakken Magazine

www.THEBAKKEN.com Printed in USA

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CONTENTS

DECEMBER 2013

VOLUME 1 ISSUE 9

DEPARTMENTS

DATA & TRENDS

Pg 16 PRODUCTS & TECHNOLOGY

Water Recycling’s New Reality

There’s more to the process of recycling flowback and produced water from a Williston Basin well than just technology. The all-access story of Halliburton and Nuverra Environmental Solutions offers proof.

BY LUKE GEIVER

30 Industry Talk

A year-end report indicates the future of hydraulic fracturing services. A look-ahead survey reveals what oil and gas CFOs are thinking heading into 2014.

BY THE BAKKEN MAGAZINE STAFF

IN PLAY

32 The Other Geologists

Developing and operating a saltwater disposal well is a complex process and a boon to geologists not already in the oil-retrieval business.

BY THE BAKKEN MAGAZINE STAFF

Pg 24 INFRASTRUCTURE & CONSTRUCTION

A Pipeline Blueprint

The Alliance Pipeline project was completed during difficult conditions using state-of-the-art steel, directional drilling technology and an approach that could be a model for future pipelines.

BY LUKE GEIVER

RELIABLE STORAGE: To ensure safe handling and storage of flowback water,Nuverra Environmental Solutions will use tanks that have already proven safe for storing frack fluids.

PHOTO: NUVERRA ENVIRONMENTAL SOLUTIONS

6 Editor’s Note

Bonafide Game Changers

BY LUKE GEIVER

8 ND Petroleum Council The Gift of Petroleum

BY TESSA SANDSTROM

10 Bakken News

Bakken News and Trends

THEBAKKEN.COM

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EDITOR'S NOTE

Bonafide Game Changers Luke Geiver

Editor The Bakken magazine lgeiver@bbiinternational.com

Two years ago, Mark Johnsrud and Walter Dale met in Houston to talk about the possibility of recycling flowback and produced water created from Williston Basin wells. As the story goes, the discussion points offered by both Johnsrud and Dale as the meeting began were the same.

Dale, a water guru hired by Halliburton in 2011 to lead the global energy service provider’s push to make recycled water technology viable in the shale energy industry, told Johnsrud that every completion engineer he’d spoken with on the subject said a fracture fluid had to be made of freshwater. Johnsrud, the CEO of Nuverra Environmental Solutions, the parent company of Bakken-based logistics giant PowerFuels, reiterated to Dale a similar view. “For as long as we’ve been in this business, we have always been told it had to be freshwater,” Johnsrud explained.

Earlier this summer, Johnsrud and Dale teamed up on a presentation meant for operators, completion engineers, media members and others in Watford City, N.D. The presentation came two years after their private meeting in Houston, but the topic of discussion was the same: frack water recycling. The presentation provided basic information on the merits of the joint-effort between Halliburton and Nuverra to make frack water recycling a reality in the Bakken and Three Forks Shale plays. Halliburton has the technology, Dale said then, and Nuverra had the ability to handle, store and provide recycled water, Johnsrud added.

Following that presentation, The Bakken magazine reached out to both parties hoping to learn more about the process that was touted as a major operational game-changer for the Williston Basin. As most of us know, this description is typically product hype, but it can have actual merit, and we wanted to find out what it meant here.

Both Dale and Johnsrud were happy to provide insight and never-before-shared information on frack water recycling, and why it is time to rethink what we know about hydraulic fracturing fluids. This month’s story of Halliburton and Nuverra reveals why technology is only part of the dilemma of converting incredibly salty and traditionally wasted flowback or produced water into a viable vehicle to move proppant and other chemicals downhole during the completion process. It also shows how two companies have invested in the future of the play and, most likely, have changed the frack water game.

Alliance Pipeline’s 80-mile lateral expansion from Tioga, N.D., to Sherwood, N.D., is also a story about the future of the play. Although a completed pipeline may not garner a high volume of attention, there are many reasons the Alliance Pipeline’s 80-mile project is worth reading about, from the Japanese steel used in the pipe to the non-typical construction process deployed to install the pipeline. The completed pipeline may not be a game changer, and it may only be 80-miles, but it will go a long way in highlighting what it takes to responsibly develop the oil and gas resources of the Williston Basin.

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The BAKKEN MAGAZINE DECEMBER 2013

ADVERTISER INDEX

www.THEBAKKEN.com VOLUME 1 ISSUE 9

4

EDITORIAL

Avitus Group

15

Bakken Park, LLC

Editor Luke Geiver lgeiver@bbiinternational.com

20

BakkenJobs.com

Copy Editor Jan Tellmann jtellmann@bbiinternational.com

12

Building Business in the Bakken Seminar

PUBLISHING & SALES

14

Capps Van & Truck Rental

Chairman Mike Bryan mbryan@bbiinternational.com

21

Clarks Field Service

CEO Joe Bryan jbryan@bbiinternational.com

28

Don's Directory

29

E&B Green Solutions

President Tom Bryan tbryan@bbiinternational.com Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Vice President of Content Tim Portz tportz@bbiinternational.com

3

Enerflex Ltd.

2

Highland Projects LLC

19

Hyatt House

Business Development Manager Bob Brown bbrown@bbiinternational.com

26

J-W Energy Company

Account Manager Tami Pearson tpearson@bbiinternational.com

18

Mattracks

Marketing Director John Nelson jnelson@bbiinternational.com

35

Quality Mat Company

34 The Bakken Magazine

Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com Advertising Coordinator Marla DeFoe mdefoe@bbiinternational.com

ART Art Director Jaci Satterlund jsatterlund@bbiinternational.com

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The Bakken-Three Forks Shale Oil Innovation Conference & Expo 2014

27

Tri-Pac Engineering

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Wells Concrete

Subscriptions Subscriptions to The Bakken magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www. thebakken.com or you can send your mailing address and payment (checks made out to BBI International) to: The Bakken magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com.

Advertising The Bakken magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about The Bakken magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to The Bakken magazine/Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to lgeiver@bbiinternational.com.

COPYRIGHT © 2013

by BBI International TM

Please recycle this magazine and remove inserts or samples before recycling

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NORTH DAKOTA PETROLEUM COUNCIL

THE MESSAGE

The Gift of Petroleum

By Tessa Sandstrom

Before the holidays, many of us hit the shopping mall in search of perfect gifts for loved ones. What many don’t realize, however, is that nearly every one of us will either give (or receive) the gift of petroleum this holiday season.

“Petroleum!?” you say.

When talking about petroleum, most people likely have the image of a barrel filled with a black gooey substance, or at best, a gift card for your local gas station, neither of which seems like an ideal holiday gift. But, what I’m talking about and what most people don’t realize is that petroleum is part of some of the most popular gifts, from the iPad, Kindle, or TV on the top of your wish list, to the PlayStations or Barbies that will be asked for in children’s letters to Santa.

When thinking about the role of oil and gas in our lives, most people look only as far as their vehicles and the price of gasoline, but petroleum plays an integral role in nearly every aspect of our lives. Oilbased products are likely the first thing you touch at the beginning and end of each day, whether it is your alarm clock,

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Oil-based products are likely the first thing you touch at the beginning and end of each day, whether it is your alarm clock, television remote, iPhone, or even the toothpaste and toothbrush you use to brush your teeth. television remote, iPhone, or even the toothpaste and toothbrush you use to brush your teeth. Those who wear make-up or synthetic fibers, such as polyester or nylon, are using or touching petroleum nearly 24 hours a day, and, as a key component in heart valves, seat belts, helmets, life vests, and even Kevlar, petroleum is saving tens of thousands of lives daily. Furthermore, oil and gas are improving our living environments by heating our homes in the winter, cooling them in summer, and keeping our lights on and petroleumbased gadgets fully charged.

These are just a few of the improvements that oil and gas makes in lives and societies around the world, and as the nation’s second largest oil producer, North Dakota has become a major contributor to that. And, in the same way that we take great pride in our agriculture sector and the

The BAKKEN MAGAZINE DECEMBER 2013

CLOTHING & TEXTILES

Tights & Nylons Windbreakers Polyester & Permanent Press Clothing Shoes

role it plays in feeding people around the world, we should also begin taking pride in this new role our state plays in providing a commodity essential to our very way of life.

Some may criticize this declaration saying it does not consider the impacts.

Certainly, as in any industry, sector or business, there are inherent risks and impacts. The petroleum industry, however, remains committed to AGRICULTURE mitigating these Fertilizers risks through Food Preservatives extensive training Pesticides & Herbicides for employees and by developing safety and response protocols to prepare and protect their employees and the environment around them. There are state and federal agencies involved in regulating every phase of oil and gas production, and more

NORTH DAKOTA PETROLEUM COUNCIL

SPORTS, HOBBIES & GAMES Fishing Lures & Rods Golf Balls & Bags Footballs, Volleyballs & Soccer Balls Oil Paints

often than not, companies voluntarily place more strict regulations upon themselves to ensure our energy resources are produced and transported as safely, efficiently and responsibly as possible.

BEAUTY Shampoo Accidents do happen, but Toothpaste & overall, petroleum remains a Toothbrushes tremendous benefit and has Lotion helped fuel years of progress.

Steve Jensen, the landowner affected by a recent oil spill near Tioga perhaps put it best in an article printed in the Tioga Tribune in October: “If you had to shut HEALTH & progress down, what MEDICINE sort of future would Allergy Medication you have? We all Aspirin like our cars, our Heart Valve Replacement planes, our warm Cough Syrup houses. If I had Contacts, Eyeglasses to go back to & Sunglasses horses to farm and chopping wood to stay warm, I don’t know. […] It’s all about progress to the future.”

ELECTRONICS This year will go down Mobile Phones as another year of historic Televisions & Radios growth of oil production and DVDs opportunity. As we approach the historic benchmark of producing 1 million barrels of oil per day in 2014, we should take a moment to recognize

the incredible impact North Dakota has had on our nation and the world. The technology that has been developed here to unleash the Bakken is now being deployed in other shale formations across our nation, bringing us ever closer to energy independence.

North Dakota will continue to be a top oil producer for years to come. As an industry, we are proud to produce a resource that is used to fuel the airplanes and vehicles that will bring families together this holiday season; the resource that will go into the gifts that will be exchanged in the coming months; and, with time, the resource that will bring us closer to that goal of energy independence, which will help bring our servicemen and women home for future Christmases. This is a legacy North Dakota can be proud of.

On behalf of the industry, we wish you all Happy Holidays and Happy New Year.

Author: Tessa Sandstrom Communications Manager, North Dakota Petroleum Council tsandstrom@ndoil.org 701-557-7744

For a full list, visit www.ranken-energy.com/Products%20from%20Petroleum.htm

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BAKKEN NEWS

BAKKEN NEWS & TRENDS

Whiting Petroleum Exploits Cemented Liners For Major Production Gains Whiting Petroleum Corp.’s transition to a cemented linerbased completion design has increased initial production rates without increasing well completion costs. Previously, the Denver-based exploration and production firm had been using a sliding sleeve and swell packer method for completing its Williston Basin wells. James Brown, president and chief operating officer of Whiting, said newly gained information on the quantity of fracture stimulations helped the company realize that, in many cases, the amount of fractures placed per discrete fracture stage using the sliding sleeve method was only allowing one or two fracks per stage. In some cases, the fractures were lining up with the swell packers that barricade one fracture zone from the next.

The new method uses a cemented liner system instead of

Missouri Breaks Cumulative Production Data: Prior Completion Design vs Cemented Liner

Swell Packers with Sliding Sleeves

a sliding sleeve, and, according to Brown, creates more fractures along the entire well bore. In Whiting’s Missouri Breaks acreage, eight wells have been completed using the new completion method. Production numbers on those wells have been 60 percent or more than to the previous 31 wells completed in the same area using an uncemented liner and sliding sleeve approach. The success of the completion design isn’t limited to one area, however, according to James Volker, chairman and CEO, the method is applicable nearly everywhere in the Williston Basin.

In its Hidden Bench Prospect, Whiting has reported IP rates for two different wells both completed on Oct. 1. One used the new cemented liner approach, and the other was completed using the sliding sleeve method.

The IP rate for the cemented liner well totaled 3,795 barrels of

Annulus: Free fluid between packers Stages: 30 Frac Ports per Stage: 1 Potential Entry Points: 30

Cemented Liners with Plug & Perf Annulus: Cemented Stages: 40 Perforation Clusters per Stage: 3 Potential Entry Points: 120 10

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BAKKEN NEWS

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12 reissue its EOR numbers to more accurately reflect the positive impact the new completion methodology will have on the company’s ability to retrieve crude.

The new completion methodology doesn’t affect Whiting’s costs to complete a well either. A 30-stage sliding sleeve system, including the swell packers, costs roughly $350,000 per well, Brown said.

The cemented liner system costs roughly $80,000 per well.

Whiting is so high on its newly proven method that it is also using the completion design in its Permian Basin acreage, according to Brown.

But, that doesn’t mean the company isn’t nearly a pure play Bakken operation. One of the knocks against Whiting is that the company isn’t a pure play, and because of that, investors don’t know how to evaluate the company, Brown told attendees at an investor’s conference earlier this year in Florida. “Thanks to the Bakken in North Dakota, we are becoming a pure play.”

oil per day while the well using the uncemented liner reached just 2,715 bopd.

The cemented liner portion of Whiting’s new completion methodology isn’t the only element of the new approach, however. The company has increased the amount of proppant used in its wells, and in some cases, deployed a slick water frack fluid system. A normal fracture job requires approximately 60,000 to 80,000 barrels of water. A slick water frack job usually requires roughly 250,000 barrels of water. The slick water does not contain the gelling agents used to suspend the proppants in the water before they arrive at the fractured regions. More water is needed to move the same amount of proppant when slick water is used.

The combination of cemented liners, slick water and greater proppant volumes has Whiting rethinking previous estimated oil recovery numbers of its Williston Basin acreage. In 2014, Brown says he believes the company will

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MBO

Cemented Liner Average in 30 days

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MBO Sliding Sleeve Average in 30 days

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0 Cumulative Oil (MBO)

Prior Well Design vs Cemented Liner Completion

PRIOR COMPLETION DESIGN 31 WELLS Total Proppant: 1.8 MMLBS

Average 24-Hr IP: 587 BOEPD Frac Stages: 30 Drilling & Completion Cost: $7.5 MM

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95%

NEW COMPLETION DESIGN 8TotalWELLS Proppant: 4.0 MMLBS

Average 24-Hr IP: 1,290 BOEPD Frac Stages: 30-40 Drilling & Completion Cost: $7.5 MM

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THEBAKKEN.COM

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BAKKEN NEWS

Railroad Association Urges Flammable Tank Car Changes If the U.S. Department of Transportation answers the Association of American Railroad’s call to retrofit or phase out tank cars used to transport flammable liquids, roughly 78,000 cars would be altered or removed from the nation’s rail fleet. “We believe it’s time for a thorough review of the U.S. tank car fleet that moves flammable liquids, particularly considering the recent increase in crude oil traffic,” said Edward Hamberger, president and CEO of the leading railroad policy, research and technology organization. “Our goal is to ensure that what we move, and how we move it, is done as safely as possible.”

The rail organization submitted its proposals to the Pipeline and Hazardous Safety Administration in November.

Recommendations by AAR included four main points. First,

the AAR wants increased federal tank car standards for all new cars. The standards would require outer steel jackets around the car with thermal protection along with full-height head shields and high-flow capacity pressure relief valves. Next, the AAR wants additional safety upgrades to cars built since 2011. The upgrades would match industry standards put in place since 2011, including the use of modifications to all cars that prevents bottom outlets from opening in the event of an accident. Then, the AAR says all tank cars not retrofitted to meet new standards of hauling flammable liquids should be “aggressively phased out.” Finally, the AAR’s proposal would disallow rail shippers to classify a flammable liquid with a flash point between 100 and 140 degrees Fahrenheit as a combustible liquid.

COMMON SIGHT: The truck-to-rail-to-market supply chain for moving Bakken crude is expected to remain relevant for many years to come.

PHOTO: OVERLAND AERIAL PHOTOGRAPHY

In its comments to the PHSA, AAR cited the flammable rail car accident that took place earlier this year in Lac-Megantic, Quebec, Canada, as a major reason to revamp flammable railcar safety standards. “The discussion of tank car standards takes place in the context of the accident,” AAR said.

According to the AAR, 99.998 percent of all rail ship-

ments of hazardous material reach their destination without an accidental release (spill).

“We believe our suggested approach to improving tank car safety allows railroads to continue to serve their customers, while taking rail tank car safety to the next level,” Hamberger said.

PRE-CONFERENCE SEMINAR FEBRUARY 10, 2014

This full-day seminar will provide professionals of all types—production and drilling companies, service providers, suppliers, consultants, engineers, investors, developers and others—with a comprehensive look at the opportunities present in the Williston Basin.

Topics will include:

LUNCHEON VIDEO PRESENTATION

Sen. John Hoeven, R-N.D.

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The BAKKEN MAGAZINE DECEMBER 2013

BAKKEN NEWS

Oneok’s 7th NG Plant to be Largest in Williston Basin

THE NEWEST AND BIGGEST: Oneok has built seven natural gas processing facilites in North Dakota and six since 2010.

PHOTO: ONEOK

Production in the Williston Basin shows no signs of leveling off. Neither does the natural gas investment plans of Oneok Partners LP. The Oklahoma-based natural gas company has announced plans to build its sixth natural gas plant in the Williston Basin since 2010. The plant, a 200-millioncubic-feet-per-day processing facility in McKenzie County, could be complete by the end of 2015. The cost to build the Lonesome Creek facility will range from $320 million to $390 million, and once complete, it will be Oneok’s largest in North Dakota.

The new plant does have consequences for Oneok.

The added capacity means the company will need to expand its Bakken NGL Pipeline. Current capacity of the pipeline is roughly 135,000 barrels per day, but after a $100 million investment, the pipeline will feature 160,000 bpd capacity.

Earlier this year, Oneok announced that by 2015, the company will have invested up to $1.9 billion in natural gas processing infrastructure in the region. In total, Oneok has created a gas-gathering system of more than 5,000 miles.

The Lonesome Creek facility is the company’s seventh natural gas-inspired build-out project in the region, and, according to Oneok, it might not be the last. A backlog of unannounced growth projects, potentially totaling $2 billion to $3 billion, still exists. The projects are currently being evaluated, and, “additional projects included in this backlog will be announced when sufficient supply commitments are completed.”

THEBAKKEN.COM

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BAKKEN NEWS

Sandpiper Pipeline Gains Anchor Shipper The nation’s fourth largest refiner, Marathon Petroleum Corp., has become an anchor shipper for a major Bakken pipeline system currently under development. MPC has agreed to fund 37.5 percent of the Sandpiper Project, a 610-mile interstate crude oil pipeline planned

by Enbridge Pipelines LLC. The $2.6 billion pipeline now has the anchor shipper needed to solidify the future of the project. MPC’s commitment demonstrates “the economic attractiveness of establishing a low-cost reliable pipeline solution for Bakken producers to access the premium North American markets for light crude oil,” said Stephen Wouri, president of Enbridge Liquids Pipelines.

In return for the 37.4 percent funding agreement, MPC will receive 27 percent equity interest in

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the North Dakota system, with the potential to own 30 percent. When complete in 2016, the pipeline will be capable of moving between 225,000 to 580,000 barrels per day.

The Sandpiper is only one part of Enbridge’s Light Oil Market Access Program, a plan designed to move light oil from western Canada and the Bakken oil play of North Dakota to markets in eastern Canada or the U.S. Midwest. The Southern Access Extension Pipeline will move crude from Flanagan, Ill., to the Patoka, Ill., Oil Hub. In 2012, MPC agreed to be the anchor shipper for the Southern Access Extension Pipeline.

For Mike Palmer, senior vice president of supply, distribution and planning for MPC, the Sandpiper Project will help to provide needed transportation of oil out of

The BAKKEN MAGAZINE DECEMBER 2013

COMMITTED TO SHALE: Marathon Petroleum Corp. has also invested to move and refine shale oil from other plays in the U.S., including the Utica shale.

PHOTO: MARATHON PETROLEUM CORP.

the region. The shipping agreement also highlights MPC’s commitment to shale energy and the growth of its midstream logistics business. The company has also made investments in other shale plays, including the Utica Shale, to move crude oil and condensates. The company currently operates seven refineries in the U.S., sells gasoline at roughly 5,100 retail outlets and owns Speedway LLC, a subsidiary that represents the fourth-largest convenience store chain in the U.S. Marathon Oil, an independent energy exploration and produc-

tion company operating in the Williston Basin, was formerly part of a broader energy company, Marathon.

Although MPC has signed on as the anchor shipper for the Sandpiper Project, an open season will take place to allow other potential shippers to enter into capacity commitments. And, a portion of the pipeline’s capacity will remain reserved for uncommitted shippers.

BAKKEN NEWS

WPX Debuts Frack Film WPX Energy is now a documentary film making company.

The exploration and production firm has released a 30-minute film on hydraulic fracturing and the process used to explore, drill and produce oil and natural gas.

The film features several testimonial and informational descriptive scenes provided by WPX Energy executives, industry experts and

others affiliated with hydraulic fracturing. The film not only explains the process of hydraulic fracturing, but points to the two main arguments against the practice—water usage and chemical usage.

According to the film, water usage is a concern, but completion teams across the country are finding ways to reduce or reuse

flowback water produced during the process. And, the chemicals used in the process can now be viewed at the website, fracfocus.org, a chemical disclosure registry.

“There is an important debate underway regarding the future of American energy,” the film’s narrator says as the first scenes develop, adding an

explanation of the film that, “this documentary examines one small but critically important piece of the energy puzzle about a process called hydraulic fracturing.” Although the film focuses on natural gas production, WPX Energy does operate in the Williston Basin. The film can be viewed at www.downdeep.com.

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PRODUCTS & TECHNOLOGY

WATER RECYCLING’S

NEW

REALITY

The Halliburton, Nuverra Environmental Solutions water recycling relationship builds momentum.

By Luke Geiver

Recycling flowback and produced water created from a Bakken well is akin to fool’s gold—the process has great appeal but little economic value. The cost of implementing and operating an appropriate technology to treat the water is too high to justify the long-term investment. The risk of disrupting a proven freshwater-based fracturing fluids strategy with recycled water is too great. And the logistical nightmare that would emerge from such a process has been too daunting for a single technology provider to manage.

When Walter Dale and Mark Johnsrud met in Houston two years ago to hypothesize about making flowback water recycling an economic, sustainable and logistically feasible reality in the Bakken, those were the opinions each had heard. “For as long as we’ve been in this business, we have always been told it had to be freshwater. It had to be water that you could drink in order to create a frack fluid,” says Mark Johnsrud, CEO of Nuverra Environmental Solutions, a Bakken shale logistics provider.

Earlier this year, Nuverra formed a contractual relationship with Dale, strategic business manager of global energy service provider Halliburton, and his team to handle the logistical elements related to Halliburton’s flowback recycling efforts. “There are a lot of customer completion engineers that for the history of the industry have been told that they need a high-quality water to make stable frack fluids that don’t harm their wells,” Dale says. Stable water means virtually no presence of boron or other suspended solids that might prohibit the proppant solution by plugging or gelling the solution in a negative way.

In 2011, Dale was hired by Halliburton to look at water treatment technologies capable of helping the shale energy industry re-use water. His hiring was a direct result of Dale’s long history with water, spanning several companies and countries. That same year, Dale

WELL-SITE PRESENCE: As the Halliburton and Nuverra Environmental Solutions partnership continued to prove out its recycling technology and logistics method in the Williston Basin, Nuverra's presence on the well pad will increase.

PHOTO: NUVERRA ENVIRONMENTAL SOLUTIONS

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The BAKKEN MAGAZINE DECEMBER 2013

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PRODUCTS & TECHNOLOGY

and his team successfully experimented with recycled water technology in the Haynesville Shale, but the process deployed merely combined fresh water with high total dissolved solid-infused flowback water for use in new well fracture fluid mixes. In 2012, the team got serious about us- Johnsrud ing 100-percent high TDS flowback water as the main water source for new well completion fluids. During 2012, Dale had also met and spoken with various individuals from Nuverra at several industry conferences and events about the topic of recycling flowback water and the necessity of a logistical strategy Dale suitable for the handling, treatment and storage of flowback water and eventual transport of the recycled water back to a wellsite. By mid-2013, Nuverra and Halliburton announced their venture.

Today, pending the permitting process, the water expert working for one of the world’s most recognizable oil industry technology brands and the leading Bakken logistics provider are on the heels of creating a paradigm shift in the industry, and for all parties linked to the Williston Basin and beyond, the dual-effort is turning that fool’s gold into something worth a second look.

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The Cost of Recycling For every barrel of oil produced through hydraulic fracturing, roughly three barrels of water is produced along with it. During the fracking process, a fluid mixture of water, chemicals and proppant (either sand or ceramic) is mixed and then pumped down the wellbore at high pressure. Water’s main role in the process is to suspend the proppant mixture before it arrives in the horizontal, fractured section of the wellbore.

After the well has been fractured completely, water injected in the well, along with small amounts of water trapped in the shale formations, resurfaces. The resulting flowback water is incredibly salty and mixed with sand, sediment and other elements. It is unusable and, in most cases, trucked or piped to a saltwater disposal well.

That flowback water is not used in its untreated form in fracture fluid mixtures for many reasons. The suspended solids in the water can compromise the proppant’s suspension ability, and microbes in the water can hurt polymers in the water mixture, also degrading the fluid's stability.

To date, most water treatment technolo-

The BAKKEN MAGAZINE DECEMBER 2013

gies have failed for one of two reasons: the process worked too hard to remove boron and other contaminants in the flowback water, or, the process negated certain treatment steps resulting in non-desirable fluids. Overtreatment of flowback water is the main culprit, say those calling the process too expensive, and misapplied treatment is the reason some believe the process isn’t worth the work.

Halliburton believes it has found the sweetspot, treating flowback water just enough for reuse. “Our new approach is to treat the water just enough to ensure fluid integrity and well production. We change the fluid chemistry to allow for the use of these impaired waters,” Dale says. “When you do this, you have a very low cost of treatment.”

A Bakken operator’s water costs are directly linked to the acquisition price of fresh water, transportation of the water to the site, transportation of the flowback and produced water to a disposal well and the price of disposal. In the Bakken, Dale says, water costs run between $7 and $15 per barrel. And, in some cases, operators add brine to their water to form a better fluid for completions, a step that can add an additional $1 to $3 per barrel. “For every barrel of water you recycle, you negate the cost of disposal completely,” he says. On average, 9 million barrels of freshwater are used for well completions annually

PRODUCTS & TECHNOLOGY

in the Williston Basin. Roughly 12 million barrels of flowback water is produced. Halliburton’s multifaceted approach to water recycling could save approximately $200,000 to $400,000 in well completions and water costs per well.

The Benefit of Just Enough Halliburton’s trademarked H2O Forward water recycling and reuse process emphasizes two main features. First, the process, which utilizes electrocoagulation, reduces the amount of suspended solids in the recycled water. Contaminated water is passed through a series of tubes, or cells, that release positively charged ions into the water, which attach themselves to the suspended matter that has a negative charge. The matter then has enough weight to be surfaced by gas bubbles introduced into the water. A surface skimmer removes the matter. The system can treat up to 20 barrels of water per minute and can remove 99 percent of the total suspended solids.

The second element of the process involves ultraviolet (UV) light used to eliminate microbes and bacteria that are present below the earth’s surface and are introduced into the water stream during the fracture process.

The presence of these bacteria strains in the water can cause corrosion to infrastructure

PROVEN SYSTEM: To store and handle the flowback water, Nuverra intends to use frack water storage tanks already used in the industry. The tanks are proven and reliable, the company believes.

PHOTO: NUVERRA ENVIRONMENTAL SOLUTIONS

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PRODUCTS & TECHNOLOGY

MORE IN A NAME: The PowerFuels brand has been known for moving oil and water in the Williston Basin. The new push to recycle flowback water will add a new dimension to the company's presence.

PHOTO: NUVERRA ENVIRONMENTAL SOLUTIONS

and damage the chemical mixtures used in fracture fluid mixes. To treat the unwanted bacteria in the flowback and produced water, a UV light is used to disinfect the water in the same way it may be used in hospitals or water treatment plants. When UV light is flashed through the passing water stream, it is

absorbed by the bacteria, damaging the DNA structure, rendering it harmless in the water.

Typically, a chemical known as biocide is used to treat such water.

Halliburton’s mobile treatment unit can treat up to 100 barrels per minute. Normally, a 5 million gallon fracture treatment

would require 5,000 gallons of biocide. The CleanStream service unit can drastically reduce the amount of biocide required in a fracture treatment, in some cases, to zero.

The combination of the electrocoagulation process and the bacteria clean-up step has allowed Halliburton to create a highperformance fracture fluid based entirely on flowback water. The trademarked UniStim fluid is a gelled water system that is tolerant of salt concentration in excess of 300,000 mg/L, according to the company. The process removes just enough boron and other solids to make a clean brine suitable for complex and slick water fracture fluids. To date, the H2O Forward process has been used on 60 wells, over 260 fracture stages and, according to Halliburton, shown no decrease in production versus wells that use freshwater fracture fluid.

“We had some customers out there that were very open to this concept,” Dale says.

“They allowed us to come out and try this.”

Through 2012, the company worked be-

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PRODUCTS & TECHNOLOGY

hind the scenes to test the process in the field and verify it in the lab, Dale says. Although the team knew it could do what others said could not be done with recycled flowback and produced water, Dale also says the team knew it had to prove the system. After roughly 18 months, the team published its work in March. “These waters are very challenging and we knew if we could make stable fluids in the Bakken and Permian, we could do it anywhere. Fortunately, there were a few forward thinking customers that were willing to try our technology advancements that have allowed us to get to this point.”

From Field Trial To Reality The future success and implementation of the H2O Forward process as it applies to the Bakken isn't just about the work done in the lab or the technology package created and honed by Halliburton, it is also affected in some instances by the abilities of Nuverra. Because the process will require transport and storage of toxic flowback water, and other solids, Nuverra has created a plan to ensure the process has no weak links.

For proper storage of the water, Johnsrud says it will be stored in frack water tanks that typically contain fracture fluid mixtures. The tanks, he says, have already been proven to contain frack water properly.

The process of recycling will be performed at centralized locations, based on the geographic locations of operators and their Bakken or Three Forks wells. The price point per barrel of water will depend largely on the amount of water an operator is recycling or reusing in future wells. Johnsrud anticipates that a handful of companies will try the process (in addition to a handful that already are) over a three- to six-month period after Nuverra obtains the necessary permitting to house the flowback water and recycle it at a certain location. “I think everybody is going to be cautious just to make sure there is a consistent plan,” he says.

It’s that foresight and recognition of the need for a solid plan that helped Johnsrud develop the contractual relationship with Halliburton in the first place. “We are not a

downhole company. We are not that part of the technology package. We wanted to partner with somebody that when we went to the customer, we went with a single vision,” Johnsrud says. “We didn’t want to worry about whose technology we should use and how we should use it. We wanted to make sure that we were looking for a complimentary partner.

Halliburton provides that.”

Despite the industry’s aversion to flowback recycling and reuse, Johnsrud has always been looking to make Nuverra a part of the answer to the challenge. “The industry is changing very rapidly. What we were doing a year ago has changed. There is a lot more focus on how we do things cost-effectively with long-term sustainability in mind,” he says.

“What we are doing [with Halliburton], that is really the focus of where we are trying to take this.”

To make the process part of the Bak-

ken’s normal operational structure, Dale continues to educate potential clients about the knowledge Halliburton has gained on what truly constitutes a suitable frack solution. “I’ve been involved with some very talented people in similar projects before when it comes to combining chemistry and equipment into new product development for recycle applications,” Dale says. “All of them were really fun projects that resulted in a new way of thinking about how to solve these technical challenges.

If we can continue to build momentum, this is really special when you think about the total impact hydraulic fracturing has on the economy and energy supply.”

Author: Luke Geiver Managing Editor, The Bakken magazine lgeiver@bbiinternational.com 701-738-4944

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INFRASTRUCTURE & CONSTRUCTION

22

The BAKKEN MAGAZINE DECEMBER 2013

INFRASTRUCTURE & CONSTRUCTION

A PIPELINE

BLUEPRINT Alliance Pipeline has proven how to plan and build a Bakken pipeline

By Luke Geiver

Troy Meinke is well versed in Japanese steel, migratory wildfowl and cover crop mixes. As the Direc-

tor for Health, Safety and Environment for the Calgary, Ontario-based Alliance Pipeline team, he has to be. For the past three years, Meinke has helped lead the efforts of an 80-mile pipeline project connecting a Tioga, N.D., Hess Corp. natural gas facility to Alliance’s mainline in Sherwood, N.D. The $170 million project first proposed in 2011 is now complete. Every day, the 12-inch diameter line moves 126 million cubic feet of rich natural gas, the kind that contains natural gas liquids (NGLs) such as ethane, propane, butane or pentane, all produced from shale energy resources in the Williston Basin. The NGLs eventually end up in Chicago at an Aux Sable-owned NGL processing facility.

The build-out of the pipeline required long hours for Meinke and his team, and included many consultations with federal agencies, landowners and biologists on topics ranging from conservation easements to wetland impact issues to rerouting options created to move a pipe around an obstruction as simple as an old tree. “All of these issues play a huge role in the routing of the project—it is a big challenge with pipeline companies today. We always have a point A to start at and a point B to get to, but it’s getting from A to B that is the challenge, finding the right route that minimizes the impact on all fronts,” Meinke says.

Although the project is now complete, Meinke is still working on the pipeline. For the next five years, the team will monitor the pipeline route through aerial photos, GPS sensors linked to individual welds on

DOWN TIME: The welded portion of the Alliance pipeline being lowered into the trench.

PHOTO: ALLIANCE PIPELINE

THEBAKKEN.COM

23

INFRASTRUCTURE & CONSTRUCTION

the pipelines and other built-in monitoring devices embedded throughout the system (the team will unofficially monitor for much longer). Meinke is also working with North Dakota State University on a seeding study that will determine the best way to restore the right-of-way impacted during the pipeline construction and installation process. “We want to try and give back and to give some good data to the industry,” Meinke says of the reseeding effort that will restore native grassland areas.

The Alliance pipeline may be small compared to other proposed North Dakota pipeline projects that could move natural gas across the state from western N.D., to Duluth, Minn., or the 375-mile Sandpiper project planned from Beaver Lodge, N.D., to Clearbrook, Minn. But, as those projects are just now starting where the Alliance Pipeline team was three years ago, Meinke and the rest of the team have proven, regardless of size, how to successfully complete a pipeline project that moves Williston Basin energy out of the region.

Non-typical Construction The first thing Meinke noticed when he looked at a map showing the proposed route for the pipeline was the presence of three different wildlife refuges. “My background is in biology,” he says, “and I knew right away this was significant.” Meinke knew the U.S. Fish and Wildlife Service would have a keen interest in the pipeline due to the role the refuges played in migratory bird patterns, but he didn’t know the extent of the interest level until he met with members from the FWS. Not only did the FWS explain that no real infrastructure had been built in the proposed route area to date, the FWS also revealed that it had acquired a significant amount of conservation easements in the area. The easements protected certain parcels of land from certain development types, and in some instances, the easements disallowed surface development of any kind. After several discussions, Meinke found a way to work around two of the refuges. At the Des Lacs National Wildlife Refuge situated along the Des Lacs River near Kenmare, N.D., it was possible to tweak the pipeline route that passes under U.S. Highway 52 on stateowned property.

In addition to the joint-effort with the FWS, Alliance provided the FWS with voluntary mitigation dollars to help the service acquire additional conservation easements in other areas.

After finding a solution to the routing issues created by three national wildlife refuges, the construction crew had to cope with precarious, non-typical construction conditions.

“We had to construct this project in the winter, that is not typically done,” he says. In Canada, where portions of the ground stay frozen for much of the year, it is more typical, 24

The BAKKEN MAGAZINE DECEMBER 2013

MAJOR CONNECTION: The hot tap welding process shown here was used to connect the Tioga lateral to the Alliance Pipeline mainline.

PHOTO: ALLIANCE PIPELINE

but not in the U.S. Working in the winter extended the construction process and forced the team to tweak its normal operation strategies.

“Our construction methodology was different than what you would use during the summer,” he says. Normally, a pipeline construction crew will grade the right-of-way on the other side of where the pipe will be laid. On the graded right-of-way, the pipeline will be strung together and welded before being lowered into the pipeline trench. After the majority of the pipeline is lowered into the trench, the trench will be backfilled and the right-of-way cleaned up and replanted.

The winter conditions prohibited the team from following that process.

The team wanted to minimize the amount of open trench exposed to the freezing temperatures. The goal was to get the subsoil removed from the trench back in the ground as soon as possible. The temperatures could have created problems in the removed soil for the pipeline as the temperatures varied from cold to warm, Meinke says.

The team actually strung out the pipeline before it dug the trench. The

METER STATION: The Sherwood Meter station provides pressure regulation for the Tioga Lateral Pipeline as it moves natural gas on to the main Alliance system.

PHOTO: ALLIANCE PIPELINE

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INFRASTRUCTURE & CONSTRUCTION

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THE RIGHT DIRECTION: A roller cradle connected to a backhoe was used to support the pipe during a horizontal directional pull through.

process limited the workspace for the crews and the large machinery situated in the vicinity, but the team had no choice. There were also issues moving and storing snow on the right-of-way workspace, another element of winter work that slowed the construction process.

To minimize surface impacts in some areas of the route, the construction crew had to utilize a practice commonly linked to the oil and gas industry—directional drilling. According to Meinke, the team used a directional drill similar in purpose to those used in the oil industry, to lay pipe under a handful of ponds, portions of the Des Lacs National Wildlife Refuge and the Souris River. “While directional drilling is a great resource to minimize the impacts on certain areas, it isn’t without its technical challenges,” Meinke says.

The process employs a drilling mud to lubricate the drill bit and well bore as the drill slices through the soil. Through pressure, the drilling mud is pumped into the well bore as the drill spins. In some instances, fissures or cracks were present below ground in the areas of the drill. The drilling mud entered those fissures and surfaced. Meinke says the drilling team had to be very careful about the pressure and amount of drilling mud used in the event that the mud did surface. In the few instances the mud did surface, Meinke worked with state and federal regulators to report and properly clean the affected areas, all of which, he says, have been remediated.

INFRASTRUCTURE & CONSTRUCTION

The pipeline used for the entire project was made with special steel sourced from a Japanese mill that could provide high-quality steel.

Compared to most pipes, the wall is thicker, he added, and prior to installation, the pipe was coated with a fusion-bond epoxy that protects the pipe from corrosion. Cathodic protection, an electrical process used to aid in corrosion protection, was also implemented before pipe installation. After backfilling, each section of the pipeline was water and pressure tested multiple times for a period of 8 hours to verify the integrity of the pipeline.

A Calgary-based monitoring facility watches the performance of the line 24/7. All valves can be remotely operated. A GPS system was installed on nearly every weld linking pipe to pipe so the team can retest those welds in the future or find problem areas if needed. Meinke calls the entire system state-of-the-art, based on the number of different technologies used to complete and ensure the pipeline. “That is something the industry is taking advantage of—the technology.”

The Business of a Pipeline The story of the Alliance Pipeline doesn’t just reveal the intricacies associated with building pipeline in North Dakota. It also shows why in the fast-paced Williston Basin world of the oil and gas industry, a pipeline project will always be the slowest infrastructure development.

Before the pipeline construction process could ever begin, the Alliance Pipeline team had to create an acceptable route that would be approved by the U.S. Federal Energy Regulatory Committee.

FERC has the power to approve the pipeline, and, it also decides on an acceptable toll charge for using the pipeline. Because the Alliance Pipeline system includes hundreds of miles of line from Canada to Chicago, the team had to deal with both federal and state regulators.

The entire process to solidify the Tioga lateral lasted two years before construction began.

During that time, the company had to assure its financers of its relevance. “We are obviously spending a significant amount of capital to build the pipeline,” says Dan Sutherland, vice president of business development for Alliance Pipeline. “While everyone thinks the gas will come, you still need a certain amount of commitment.”

A pipeline company always likes to have a diverse number of users because it offers better stability of credit ratings, Sutherland says.

From the lender's, perspective, a pipeline should have six to seven investment-grade companies instead of one.

At this point in the pipeline’s brief history, Sutherland has landed Hess Corp. as an anchor shipper for the pipeline, which is sufficient.

The two have made a deal for use of the pipeline and FERC has generated recourse rates for any other shipper looking to use the line.

All potential clients looking to attach to the line would have roughly one year of work before it could become operational. First, a client would have to provide a gas analysis to Alliance. In some cases, Sutherland says, clients may have to build minor treating facilities to remove condensate from its gas streams. In addition, a prospective user would also need to build a connection line to the main lateral including a metering station that would allow Alliance to monitor the amount and quality of the gas being delivered to the Tioga lateral.

THEBAKKEN.COM

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INFRASTRUCTURE & CONSTRUCTION

WORKING CONDITIONS: Most of the pipeline was constructed and installed during the winter. In the photo, sidebooms are used to hold the pipe in place for welding.

PHOTO: ALLIANCE PIPELINE

Above all else, Sutherland believes geographical proximity to the Tioga lateral is crucial, citing the right-of-way and easement acquisition issues as a hurdle to overcome. A potential shipper would also have to contact Aux Sable’s facility in Chicago to arrange an NGL extraction contract after the NGL’s arrive in Chicago. “The operator would look at his gas and what it would cost to arrange for the facilities to get it to us, plus what our toll is, and then he would take the gas value he would get on the Chicago market and then take the value of the NGLs he would get from Aux Sable and that would be the equation,” he says. Although the process sounds daunting, Sutherland says those who use the pipeline can reduce flaring while also gaining value for their NGLs without investing in technology needed to extract the NGLs from the gas stream before the gas is injected into the line.

“We’d love to see a number of other producers in the area look at the volumes that they are flaring and try and get some value for that,” he says.

As Hess continues to use the system and the Alliance team tweaks it with improvements, Sutherland will continue working in the Williston Basin to explain the merits of the Alliance Pipeline to potential users.

Meinke is focused on monitoring and the results of the NDSU study that will provide benchmark results for replanting right of ways in the region. Both the governor of North Dakota and Hess have expressed their excitement for the pipeline. Meinke is not only excited to be finished with the project. He is also admittedly proud of how the team accomplished the project, and, what it can mean to the entire industry.

“We want to be an example that industry can responsibly develop this infrastructure to take those resources away where everybody benefits.”

Author: Luke Geiver Managing Editor, The Bakken magazine lgeiver@bbiinternational.com 701-738-4944

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29

DATA & TRENDS

Industry Talk

By The Bakken magazine staff

30

The number of hydraulic fracturing stages completed in the U.S. onshore market reached an alltime high this year. In 2014, the record-breaking trend will continue, according to a recently released market outlook report from Houston-based energy marketing intelligence firm, PacWest Consulting Partners.

As the number of completed fractures rises, so does the hydraulic horsepower (HHP) used to fracture a well. By the end of 2013, the amount of HHP used in the U.S. will have reached 24.6 million horsepower.

The BAKKEN MAGAZINE DECEMBER 2013

A single Bakken fracture job can require a range of 1,000 to 10,000 HHP depending on the size and scope of the job. In 2013, North America will have accounted for 75 percent of the global HHP total volume, but by 2018, North America’s share of global frack capacity could be reduced by 57 percent. Global HHP capacity will increase by 12 million HHP by 2018, however, with markets outside the U.S. accounting for 80 percent of that growth. According to PacWest, China will be the second largest hydraulic fracturing market in the world by the end of the year, overtaking Canada.

The record num-

ber of stages is a result of fracturing efficiency improvements in combination with more horizontal wells despite a lower U.S. drilling rig count for the year. Even with all-time high fracture stages reported for the year, PacWest still believes the market price for fracturing services will not improve until 2015. Oil and gas drilling, along with completion activity in the U.S., is robust, PacWest indicated, “but increased efficiencies are restraining recovery of fracture demand.” Christopher Robart, partner at PacWest, says that “frack pricing is still highly competitive, with pumpers of all sizes bidding aggressively. However, we do expect stable pricing in 2014.”

DATA & TRENDS

PacWest’s industry intelligence isn’t the only noteworthy information related to the previous year in the shale energy world.

BDO USA LLP, another energy consulting firm, has released its annual survey of 100 U.S. oil and gas chief financial officers.

The BDO 2014 Energy Outlook Survey provides information on a wide range of topics, including survey answers that reveal 71 percent of oil and gas CFOs are more positive about their respective companies’ ability to access capital and credit in 2014 versus 2013, a 20 percent increase over the same financial mood indicator from the previous year. “With the U.S. shale boom continuing and the economy slowly but steadily improving,” BDO says, “the energy industry is experiencing a rebound in confidence and financial stability.”

One of the main 2014 focus areas for CFOs, the report said, will be on environmentally responsible ways to exploit U.S. oil and gas resources. According to the survey, 61 percent of CFOs plan to increase capital investment in environmentally-friendly exploration and production processes, a 15 percent increase over last year’s numbers. “While 60 percent of CFOs similarly anticipate increasing their investment in nonconventional resources, such as shale, this suggests that U.S. energy companies have accepted that environmental stewardship must be a crucial component of their business plans,” the survey said.

In addition to environmentally friendly resource recovery approaches, CFOs surveyed said they would also look to focus inward in 2014. The survey showed that companies are looking to streamline operations and reduce costs in 2014 in an effort to entrench the gains of recent years.

For investment purposes, 45 percent of CFOs cite traditional debt financing as the preferred source, but also note that private equity is still viable. Roughly 40 percent of the CFOs intend to tap into private equity funds in the coming year to finance their activities, the survey said.

For the coming year, CFOs will have to deal with rising labor costs, the survey results also showed. Nearly half of all CFOs expect labor costs to increase by as much as 15 percent in 2014, and another 12 percent expect to see more than a 15 percent labor cost rise. “The labor market hasn’t yet caught up to the growth of the U.S. oil and gas industry,” says Lance Froelich, senior director of compensation consulting for BDO Natural Resource practice. “A very significant percentage of open positions are being filled by buying talent, and this phenomenon is driving salaries.”

Top 20 risk factors cited by the 100 largest US E&P companies 2013 Rank

Risk Factor Cited in 10-K Filing

2013

2012

2011

1.

Regulatory and legislative changes and increased cost of compliance

100%

100%

100%

1t*.

Volatile oil and gas prices

100%

99%

100%

3.

Inability to expand reserves or find replacement reserves

96%

98%

98%

3t.

Natural disasters and extreme weather 96% conditions

95%

96%

3t.

Environmental and/or health regulations

96%

94%

94%

6.

Operational hazards including blowouts, spills and personal injury

95%

98%

97%

7.

Inaccurate reserve estimates

93%

95%

96%

8.

General national or global economic conditions

92%

94%

91%

9.

Inadequate liquidity or access to capital, indebtedness

91%

94%

95%

9t.

Changes in demand for oil or natural gas

91%

87%

76%

11.

General industry competition

90%

89%

87%

12.

Impact of climate change and greenhouse gas legislation

89%

81%

69%

13.

Shortage of rigs, equipment and personnel

88%

81%

82%

14.

Liabilities for pollution resulting from current or previous operations

87%

79%

59%

15.

Inadequate or unavailable insurance coverage

86%

88%

87%

16.

Hydraulic fracturing regulation

85%

74%

52%

17.

Disruption due to political instability, civil unrest or terrorist activities

82%

72%

52%

18.

Reliance upon third-party transportation and processing facilities

80%

80%

83%

18t.

Insufficient pipeline, storage or trucking capacity

80%

63%

29%

20.

Use of hedging or derivative instruments

77%

48%

NA

*t indicates a tie in the risk factor ranking

THEBAKKEN.COM

31

IN PLAY

The Other Geologists

By The Bakken Magazine Staff

Citadel Energy is in the water rental business, at least that is what Bruce Langhus, chief geologist for the company, calls it. “I tell people we are in the rental business,” he says jokingly, “because we sell fresh water and then take back dirty water.” Langhus recently joined the Citadel Energy team in North Dakota to streamline fresh water depot sites and to develop a new saltwater disposal well south of Watford City, N.D. Although Langhus is a geologist, he isn’t looking for oil.

Langhus is one of many geologists who have moved to the state to research and provide knowledge on geological structures in the Williston Basin that don’t pertain to tight oil. “I’m looking for either acquisition targets or places to drill new disposal wells in the Bakken,” he says. The company currently operates three fresh water depots on the Fort Berthold Indian Reservation, he says, but the main focus for Citadel is in the saltwater disposal business.

The focus makes sense given 32

his background. Langhus is the former state director for Class II Underground Injection Control for the Oklahoma Corporation Commission, an entity responsible for roughly 25,000 oil and gas saltwater disposal wells in the state. For the past 25 years, he has been in the geology industry, and according to Langhus, the Bakken is an exciting play to work in.

For saltwater disposal wells, it’s all about location. Langhus and his team look for areas featuring abundant oil retrieval activity for potential sites of new wells, but they also look for fringe areas where a well may be the first in an area. Because most of western North Dakota offers the appropriate geologic formations in which to drill a saltwater disposal well, most areas are appropriate. There are sweet spots, however, he says.

The process to drill a saltwater disposal well is similar to that of a vertical oil well. The state does require each disposal well to run a mechanical packer on the top of the disposal well.

Mechanical packers are compo-

The BAKKEN MAGAZINE DECEMBER 2013

WATER SUPPLY: Citadel Energy has focused on freshwater supply early in its existence in the Bakken play, but the company is working on saltwater disposal wells for the future.

PHOTO: CITADEL ENERGY

nents in the well used to seal the outside production tubing from the inside of the casing or liner. The packer provides for the presence of a monitoring annulus between the casing and the tubing so that personnel monitoring the well can detect if a leak occurs in the casing or tubing.

The injection capacity per day varies from well to well, Langhus says of the Bakken. Some operators utilize their own disposal wells and can inject 100 to 200 barrels of saltwater per day.

Commercial sites can dispose of much greater quantities per day, reaching capacities of 20,000

barrels of saltwater per day. Depending on which reservoir an injection well is placed into, a well can last 10 to 50 years.

In the Williston Basin, most geologists are looking for porous sandstone or limestone as geologic layers to inject water into. The sandstone looks like a sandy beach that has been solidified and has many holes in it, he says, adding that limestone looks similar. The injection formation “is hard and solid and rigid, but it has a network of pores that we are injecting water into.”

To inject the water into the well, pumps are used in most cases. In the Bakken, wells are

IN PLAY

PIPELINE OPTIONS: Although Citadel Energy doesn't have pipeline infrastructure, many clients choose to run flexible pipeline from the well site to the company's freshwater sources.

PHOTO: CITADEL ENERGY

injected using very low-pressure pumps. “We have a lot of experience in Texas and Oklahoma as well. A lot of the disposal wells there operate with no pressure at all, and they are going essentially into caves or cavern systems at very little pressure.,” he says.

Citadel Energy may be focused on saltwater disposal, but the team is also working to advance its freshwater depots while also exploring the possibility of taking oilfield waste.

“We have some very capable water depots that can deliver a lot of water on a short notice,” he says. To date, several operators have installed temporary pipelines to take water from a

Citadel Energy depot to a well site. There is no current pipeline system installed at any of the depots, but Langhus says the company has talked to a number of people who are interested in that option.

“We are always on the lookout for new things in terms of disposal wells or freshwater supplies. We are also looking at new technologies that we might want to take advantage of,” he says. “There is always something new out there for disposal wells.”

THE GEOLOGISTS: Bruce Langhus (left) and Marian Smith are both geologists who have been added to the Citadel Energy team to develop new disposal wells and look for other opportunities.

PHOTO: CITADEL ENERGY

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