SPE-172191-MS

Water Chemical Treatment, Management and Cost

Dr. Adrian J. Wiggett, BAKER HUGHES

Copyright 2014, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Saudi Arabia Section Annual Technical Symposium and Exhibition held in Al-Khobar, Saudi Arabia, 21-24 April 2014.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, its
officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission t o
reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract mus t contain conspicuous acknowledgment of SPE copyright.

Abstract
Recycling produced water for re-use in gas and oil fields for hydraulic fracturing and re-injection to maintain reservoir
pressure is becoming increasingly important due to the scarcity of this natural resource. This is especially the case when these
activities are not near a readily available source of free water such as seawater or an aquifer.

We explore ways to use water management to lower Operational Expenditure OPEX overall by eliminating fresh water
sourcing, transportation, storage and its treatment as well as the storage, transportation, treatment and disposal of produced or
flow-back water.

The water management approach enables operators to re-use produced waters in hydraulic fracturing fluids. Pre-treatment
testing and analysis characterizes the chemistry of the water to ensure an effective fracturing fluid design and to determine the
appropriate water treatment solution for every application. By using a comprehensive water treatment suite of technologies, we
demonstrate that virtually any oilfield water can be treated. Post-treatment testing confirms the water meets the customer's
specific requirements.

Integrating water management service technical expertise with water chemistry and chemical treatments maximizes
hydrocarbon production, minimizes reservoir damage, and reduces the costs of fresh water sourcing by as much as 90%. The
techniques also offer real routes for oil operators to meet regulatory requirements, mitigating environmental impact.
SPE-172191-MS 2

Introduction

According to the paper Produced Water Volumes and Management Practices published in 2009 from the Argonne National
Laboratory written by C.E. Clark and J. A. Veil of the Environmental Science Division, the USA State and federal onshore
hydrocarbon production contributed to the majority of produced water (more than 20 billion barrels) in the United States. A
significant amount of produced water (more than 700 million barrels or about 3% of the national total) was also generated
from federal offshore production activities and from production on tribal lands.
The five states with the greatest produced water volumes in 2007 were Texas, California, Wyoming, Oklahoma, and Kansas.
The produced water volumes from these states represented nearly 75% of total U.S. production (onshore and offshore). Texas,
with more than 7.3 billion barrels, contributed 35% of the total volume of produced water generated in the United States in
2007. The contributions from the other five states with produced water volumes exceeding 1 billion barrels were California
(12%), Wyoming (11%), Oklahoma (11%), Kansas (6%), and Louisiana (5%).
The greatest produced water contributors are not necessarily the greatest producers of oil and gas. While Texas was the largest
gas producer in the United States (nearly 6,900,000 million cubic feet [MMCF] in 2007), federal offshore production activities
provided the largest volume of crude of more than 467,000,000 barrels. Although federal offshore production generated nearly
27% of U.S. crude oil production, less than 3% of total U.S. produced water was generated from federal offshore activities.
In addition to total volumes produced, it was useful to consider the water-to-oil ratios (WORs) and water-to-gas ratios (WGRs)
from production activities as this information could be used to evaluate the relative production age of resources within the
production lifetime. To that end, they asked the agencies to provide produced water volumes by hydrocarbon types (i.e., crude
oil, conventional gas, coal bed methane, unconventional gas, or other) to the extent of the data available at that level of detail.

Most states were unable to break out produced water volumes for all categories, but some states could provide estimates of
produced water from oil production vs. natural gas production. States that segregated produced water by hydrocarbon type
categorized 6,666,144,270 barrels of produced water. Eighty-seven percent (5,770,327,439 barrels) of produced water came
from oil production activities.

These are large water production numbers from the United States alone and so in any hydrocarbon recovery operation the main
consideration should be related to the handling of water as well as the hydrocarbon. There should be consideration of the
amount of water needed, as well as the amount expected. Water can be seen to be an additional troublesome cost for
treatment, but in many cases it is often over-looked as a valuable resource for many applications such as for reservoir pressure
maintenance or fracturing.

Water is such a concern that many service providers focus specifically on the subject of Water Management to enable
hydrocarbon producers to fully utilize every last drop of water, efficiently.

Water Management

Consideration of Water Management provides surface water treatment and subsurface water shut-off focus to reduce operating
expenses and improve production from new and mature wells. By integrating these services with the full breadth of our
product and service portfolio, we have been able to address the entire water lifecycle of oil and gas wells.

Oilfield water management upstream operations such as Completion, production, stimulation, and workover all involve
water. Whether we like it or not, oil and gas producers are also in the water business. Surface and subsurface oilfield water
management solutions can help reduce water-related costs and improve hydrocarbon production and/or water-to-oil ratio.
Water re-use and limitation can be split into two areas i) Surface and ii) Subsurface Water Management.

Surface Water Management

Re-use, disposal, storage, and transportation of surface water requires water management services to be deployed onsite. With
these water management services onsite, hydrocarbon operators can be assured that operational objectives, minimization of
operating expenses, and full compliance with regulatory requirements are met.

There is no need to source the water, treat it and in some cases transport it to site. By treatment of the water onsite, it is more
than possible to fracture with it, collect the flow-back and treat it for the next job. With proper produced water handling this
can lower OPEX and ensure environmental compliance using proven water re-use solutions.
SPE-172191-MS 3

When necessary, the water has to be disposed of, but the main focus is on total re-use of water. Application of comprehensive
and most advanced suite of water treatment technologies in the industry is available.

Subsurface Water Management

Subsurface water management service must combine the expertise of reservoir development services with reservoir
conformance and water shutoff technologies, which may be a combination of mechanical and/or chemical. By combining
resources this way it is possible to effectively diagnose, design, and deploy custom solutions to solve excess water production
issues efficiently and economically. This would readily enable hydrocarbon operators extend the life and profitability of their
producing assets.

Technologies in a variety of disciplines to help improve production have to evolve to meet the hydrocarbon producer demands.
Subsurface production conformance and assurance services combine technologies for water avoidance, shutoff, conformance,
and production assurance.

We have found that the Integration of advanced mechanical and chemical technologies with unsurpassed geoscience resources
allows the detection of water inflow, selection of the best conformance or shutoff solution and implementation of it in a safe
and economical manner. Downhole chemical and mechanical intervention tools decrease the amount of water produced. These
tools include inflow control devices, gels and relative permeability modifiers. However good the methods are, it is essential to
look deeper into the chemistry contained within water especially using proven Flow Assurance techniques.

Flow Assurance

If an operator is to look to re-use of the water for sub-surface benefits, then there is a real need to consider Flow Assurance
issues, which are primarily residual additive effects on the reservoir (for clay swelling prevention etc) and the possibility of
mineral scaling in the formation.

In addition, ad-hoc treatments to eliminate contaminants which can damage the wellbore and reservoir face are usually
considered as well as Flow assurance services which combine hydraulic fracturing and production chemistry to help maximize
post-fracture production and minimize post-fracture intervention costs from scale, organic deposition, bacteria, and corrosion.
Hydrocarbon operators need to be confident from the first day of production of flow assurance for the long term, so it is
important to get it right from day one.

As an example, a deep-water Gulf of Mexico operator had plans to complete an oil well. The challenges were offshore, 1,200
foot water depth, a vertical completion of 10,800 feet and high closure pressures of 5,400 psi.

In reviewing potential flow assurance issues, barium scale deposition was identified as a likely problem. This was due to the
fact that the well was designed to be a seawater flood and the connate water was known to contain a high percentage of
barium. Because seawater was high in sulfate, the mixing of this high barium water and the seawater in the reservoir created a
scenario for harmful scale deposition.

Barium sulfate scale is a non-acid soluble scale. Once formed, it is quite difficult to remove. Unlike carbonate scale, which is
soluble in acid, barium scale must be handled in a progressive and expensive manner that includes chelating chemistry,
sufficient downhole temperature, and long periods of soaking. Even under optimum conditions, barium scale removal often
calls for the use of mechanical means such as coil tubing.

A plan was developed to address the issue by proactively treating the well against barium scale. The operator needed a scale
inhibition strategy that both provided sufficient inhibition and lasted for a prolonged period. Liquid chemical alternatives
offered good inhibitory service, but tended not to last for extended periods. The operator decided to use our latest impregna ted
material offering for injection into the formation/perforations.

The newly modified impregnated material is based on the same concept as the established product line which has proven
effective at providing long-term inhibition in numerous wells since 2005. The new impregnated material technology combines
a high-strength nano-material that is the same size as a proppant and that provides a high internal and external surface area
SPE-172191-MS 4

onto which a robust scale inhibitor is adsorbed. The end result is a proppant-sized material stronger than an intermediate
strength proppant that contains a high amount of an active scale inhibitor.

The Scale inhibitor was mixed with the proppant at 10% loading by weight during a frac-pack operation for the operator. The
well was put on production and immediately flowed both oil and water. After two months and two fluid sample tests, the
analysis of the residual scale inhibitor found in the produced water demonstrated that the scale inhibitor from the new
impregnated material was still present and was still inhibiting scale in the formation.

These early results indicated that the impregnated material program proved successful at inhibiting the formation of barium
sulfate scale sub-surface.

As another example, a Permian Basin operator was experiencing declining production rates from wells in the Wolfberry play
due to scale. Traditional liquid chemical treatment methods, including acid, chemical squeezes, and backside continuous
injections only provided a partial solution, as scale would build up when the well was being completed. Most flow-back water
in Wolfberry is high in iron, and most liquid scale inhibitors have limited compatibility with iron. Dissatisfied with their
current chemical program, the operator sought a reliable, long-term solution.

Knowing the excellent reputation of impregnated solid inhibitors in addressing long-term scale inhibition, the customer relied
on the flow-assurance services team for assistance. The operator specified that the treatment needed to last more than 10
months and eliminate scaling issues. The treatment also needed to address commingled, multi-interval production.

To ensure proper treatment selection, first it was necessary for the services team to verify the scale composition. Based on this
analysis, the team recommended the required solid scale inhibitor which was pumped into the formation during the proppant
stage because it can be tailored to the operators scale-prevention requirements to provide an economical, long-term treatment.

The impregnated material treatment has proven highly successful at eliminating scale for this operator after treating more than
120 wells and with eight wells per month still being treated. The solution implemented by us has eliminated one intervention
per well over a two year period, saving the operator around USD 2 million on the 120 wells treated with the impregnated
inhibitor. (The figure for this saving is based on the elimination of interventions only and does not include any additional
revenue received from uninterrupted/increased production.)

The impregnated inhibitor performance continues to be monitored by field specialists with routine wellhead sampling, which
is reported to the operator for evaluation. Ongoing performance evaluations have enabled our service team to refine future
applications to enhance treatments.

According to the operators vice president of operations, the only intervention required has been the replacement of a single
rod pump and parts, and no scale was found on the downhole equipment. The operator plans to continue completing eight
wells per month for the foreseeable future, using the impregnated inhibitor approach.

The benefits were that it saved the operator more than USD 2 million over a two-year period, provided long-term scale
inhibition for 120 wells and increased production with limited downtime

The challenges were dealing with commingled, multi-interval production leading to fracturing water source incompatibility.
There was the issue of limited life of liquid chemical treatments. Our solution was to fracture with special solid material
impregnated with liquid scale inhibitor into the formation during the proppant stage of fracturing. This eliminated remediation
requirements. The chemical residuals were continually monitored and subsequent treatments have been refined through
continuous performance evaluation

Pressure Pumping Fracturing Operations & Produced Water Control

Fracturing operations are high energy and are an integral part of shale gas recovery. Reservoir water conformance technology
needs to reach deep into natural and hydraulically fractured reservoirs to decrease water production and extend the commercial
life of the well.

Challenges have been predominantly excessive water production in marginally profitable formations, cement squeezes used
for water shut-off which were uneconomical, the formation of low permeability, low porosity and naturally fractured system.

A successful solution was to utilize gel systems which achieved penetration into the formation. Timing, temperature, and
SPE-172191-MS 5

pressure of the injections were customized for the application where initial treatments were completed in 24 hours. Three years
later, production is virtually the same in 34 wells.

The methods utilized are summarized in the following sections.

Produced Water Control Subsurface

Increasingly, Middle East operators are calling on service providers to bring them their knowledge on any technology/product
related to downhole water shut-off and management. Subsurface control of water may involve any one of the temporary and
permanent gel & water-shutoff mechanical or chemical methods. These needs can be divided into the following categories:

1) Mechanical - Flow management of series of fluid phases (gas, water and oil), reconnecting downhole technology
as operators are facing a lack of wellbore accessibility.

2) Chemical - Total or partial water shut off in horizontal wells, relative permeability modifiers, gels and/or near
wellbore cleaning products (polymers and/or surfactants).

Mechanical methods usually require well intervention and work over to install units which can control the water flow
mechanically and permanently in most cases.

However, by using and applying chemical Gel Systems, hydrocarbon operators have been able to simply cut water production
by nearly 35% and achieve a sustained rate increased in oil production by 225%. The benefit of gels is that they can be
applied easily and also removed if only needed as a temporary measure. Normally they exist in the formation controlling the
production flow for many years post treatment.

Applying gel systems proved to be a profitable choice for one operator with wells in the Spraberry formation of the Midland
Basin of West Texas.

Wells in the Spraberry formation were marginally economical, so the operator had strict cost controls for any well intervention
procedures. Cement squeezes (a commonly used water shut-off treatment), were uneconomical because of the volume needed,
and the cost of post-treatment drill-out of the cement.

The Spraberry formation produces oil from a single sedimentary unit known as the Spraberry Sand. This unit is a
heterogeneous mix of fine sandstone, calcareous, or silicate mudstone and siltstone, all deposited in a deep water environment
distinguished by channel systems.

Oil recovery is adversely affected by low porosity (10%) and permeability (<0.1 md, often less than 0.05 md). The rocks are
naturally fractured, so oil tends to accumulate in strategic traps that also hamper oil flow. The producing zone is at an average
depth of 6,800feet (2100m).

The operators application of our gel systems successfully mitigated the formation challenges, and proved to be a very
lucrative choice. The gels used had a specific gravity similar to water, which helped penetrate into the formation.

Alternative methods such as cement would not penetrate as deeply as the gels. The set times for these gels were time and
temperature dependent, but could be accelerated or delayed through the addition of catalysts or retardants. Injection of these
polymers into pressured intervals was extremely controllable. Our experts worked with the operator to customize the
injections, and ensure the success of the application.

The initial treatments were completed in less than 24 hours. The average oil production for these wells increased 225%, from
100 to 325 barrels of oil per day (BOPD). The hydrocarbon production was virtually unchanged three years later in 34 of the
wells. In addition, the gel treatments reduced water production by 35% from 6,100 barrels of water per day (BWPD) to 3,950
BWPD thereby reducing the water/oil ratio (WOR) from 55 to 12.5. The WOR on the 34 wells treated in this case remained
flat for at least 3 years. The payout time for the treatment was seven months and the cost of the gel treatments was 20% less
than a cement squeeze.
SPE-172191-MS 6

Figure 1. Return on Investment from employing chemical treatment methods for water.

Produced Water Control Surface

By combining reservoir knowledge with decades of experience in downstream water treatment and upstream production
chemistry, surface water management solutions have been designed to reduce operators total cost of operations through 100
percent reuse of produced and flow-back water.

Chemical treatment of the water to make it 100% re-useable both on receiving and prior to re-injection may include any one of
the following; biocides, oily water clarifiers, scale inhibitors, oxygen and H 2S scavenging.

An example of the 100% re-use of water was in New Mexico where an operator needed to complete wells in a formation that
was extremely sensitive to clay swelling. The operator wanted to maintain the formation permeability by reusing produced
water which had high levels of sodium and potassium, to minimize swelling. If the operator couldnt reuse the water, an
alternative, and more expensive, gas fracturing completion would have to be used.

Unfortunately, the wells from this area had high levels of hydrogen sulfide (H2S) in their produced water. The operator had
collected nearly 25,000barrels (3975 m3) of produced water containing more than 900 ppm H 2S for fracturing. The cost of
mitigating such high levels of H2S safely was a major concern. Traditional H2S treatments cost more than USD 10 per barrel to
treat the H2S.

Would it be possible to effectively treat the problem and reduce costs? After researching alternatives, we recommended our
patent pending technological service. This service provided operational simplicity and minimal chemical consumption whilst
lowering high H2S concentrations and maintaining the water quality required to make-up fracturing fluid.

This treatment method could also cost-effectively reduce H2S oxidizer demand before more expensive and selective oxidizers
would become necessary. While this method was extremely effective in oxidizing H 2S, our technology combined a patent
pending oxidation-method service to provide the most effective balance of treatment and economics.
In full-scale treatment, we were able to completely reduce the dissolved H2S and maintained the chemistry required for
fracturing fluid makeup. The first 23,000 barrel (3,657m3) treatment was performed on time, with chemical consumption 15%
under target.
SPE-172191-MS 7

Three weeks after the fracture stimulation with the treated water, the operator reported that the well was flowing as expected,
and that the operation was planning to use our treated water technology in at least 32 more of their wells to be fractured.

In addition, the work area H2S alarms were never triggered. The lower explosive limit (LEL) was undetectable, so the safety
concern of headspace was eliminated, and there was a surprisingly low level of H 2S off-gas just above the water surface in the
reaction tanks. This level of H2S in the air was predicted to be in the thousands without treatment, but it only measured around
10ppm at the reaction tanks water surface.

Prevent Reservoir Souring

As well as dealing with sour water from the reservoir, there is a need to prevent souring of the reservoir by injection of water.
Here we outline the treatment of water by the addition of chemicals to prevent reservoir souring prior to re-injection of
produced or source water.

Our water management service is a cost-effective method to efficiently treat water in tanks, reserve pits, impoundments, and
ponds with a smaller environmental footprint, lower power costs, and reduced manpower needs compared to alternative
solutions. Based on chlorine dioxide (CIO2) green chemistry technology that has been used downhole and in refineries for
decades, our service is a highly effective, flexible, on-site system to neutralize bacteria, hydrogen sulfide (H 2S), iron sulfide,
phenols, mercaptans, and polymers in produced and flow-back water.

By neutralizing these substances, the water can be reused for downhole operations with no issues related to H 2S corrosion and
FeS equipment plugging, reservoir damage, or health, safety, and environmental concerns caused by the presence of H 2S. The
water management service includes pre- and post-water testing to ensure customer water quality standards. The service quickly
breaks down the emulsions and sludges that often form in surface water through chemical oxidation, allowing the water to
separate from residual hydrocarbons, chemicals, and particulates. The treatment also is a powerful biocide that neutralizes all
forms of microbes in the water. Following treatment, the surface water can be reused with no negative impact to the producing
formation or to downhole equipment, and the residual hydrocarbons can be recovered from the waste water. CIO 2 -based
applications are not pH dependent, so there is no need for costly pre-treatments.

The selective oxidizer CIO2 is generated onsite via a mobile or permanently mounted generator using three common liquid
precursorssodium hypochlorite, hydrochloric acid, and sodium chlorite. A vacuum-based CIO2 generator is used in the new
service, which dramatically improves system safety.

With the fast chemical reaction time, concentrated solutions, and high CIO 2 generation rates of the service, up to 200,000
BWPD (31,796 m3/d water) can be treated with a single unit. Unlike other surface water treatment options, the mobile CIO2
generator system can be set up very quicklyoften in just one hour.

The service can also be used to reduce the environmental impact of oilfield operations. CIO 2, which is used to treat
approximately 30% of U.S. drinking water, does not form any hazardous by-products, and because it is neutralized by
exposure to sunlight, it is not persistent in the environment. Also, by removing H2S from the surface waste water, CIO2
eliminates the offensive odors and dangerous fumes associated with H2S.

Some current service providers can provide an integrated suite of surface and subsurface technologies to solve specific water
management challenges.

The CIO2 technology uses an acid bleach activation method and features a mobile generator that uses three common liquid
precursors: sodium hypochlorite, hydrochloric acid, and sodium chlorite. Its vacuum-based generator ensures that CIO2 is
produced only in water and while motive water is flowing. If power and or water flow is lost, no CIO2 is produced. For
additional safety, CIO2 is generated at a maximum of 3,000 ppm (0.3% solution), which is half the saturation level of CIO 2 in
water. Our automated system also has inline monitoring and built-in automatic alarms and auto shutdown features for added
safety and reliability.

The flexible, high-volume, mobile or permanent onsite-mixing unit is built with automated gauges, sensors, and flow meters to
ensure accurate dosage of chemicals, as well as system alarms and appropriate containments for increased safety. No reaction
chamber is needed as the CIO2 is generated in-situ with the motive water flow. Our water management service treats fresh,
fracturing flow-back, and produced water using environmentally preferred chemistry. The service has a smaller environmental
footprint, lower power costs, and reduced labor needs than competitive water treatments.
SPE-172191-MS 8

Final Comments
As you can see, it is possible to process and re-use this valuable resource using the power of chemical treatments to enable
operators make the best use of available resources whilst limiting the impact on the environment.

What is the True Cost of Water?

What is the true cost of water? Consider that on average 3-4bbls of water are needed for Water Injection or 1-2bbls of water
are produced for every barrel of oil globally. Lifting costs, separation, disposal, scale and corrosion management all
contribute.

Yet today, in the development of unconventional plays, transportation and storage are two of the biggest costs. Everyone
recognizes the cost of sourcing and disposal, but at $1/bbl/hr trucking, sometimes up to 10 hours (including idling) can play an
enormous role in the cost of water. What are your views on the cost of water?

Estimated Production Costs

For an Floating Production, Storage and Offloading (FPSO) facility which produces around 250,000bbls oil per day, then the
daily operating costs can be estimated as follows (FPSO Facility cost $600,000,000/20 years of service * 365 days per year) +
an additional Daily Operational cost of $100,000/day for one water handling system.

This then equates to an estimated $184,200 of running costs per day for example a combined FPSO Facility and Water
treatment Chemicals. This is between $0.62 and $0.66 cost for water handling.

Note that the chemicals expenditure element is a tiny amount compared to the facility running cost. Upon closer inspection,
the chemicals cost is around 0.8% of the total cost for a Water Injection system.

Due to a lower water volume, the chemical treatment cost is slightly higher for the Produced Water treatment at 6.0%, based
on the produced water system cost.

All in all, there is a low cost for treatment of the water by chemical means. The real value is in the hydrocarbons. It is not
possible to run a facility without chemicals they are an important integral component of every system, which enables
onshore and offshore facilities to run efficiently and within an optimum space design.

Daily
Daily
Chemical Expected General
Treatment
Chemical Treatment Dosage Chemical Cost
Chemical
(ppm) Cost ($) $/bbl Water
Volume (L)
@ $4/L
Seawater Injection
300,000bbls/day
300,000
Filter Aid 2 95 382 0.001
Oxygen scavenger 2 95 382 0.001
Weekly Biocide (2-4hrs) 200 795 454 0.002
Scale inhibitor 2 95 382 0.001
Daily Manpower $ (4 Operators) 1,200 0.004
Facility Cost 184,200 0.614
Total Cost (Facility + Chem) 186,999 $ 0.62
Produced Water
10,000bbls/day
10,000
Water Clarifier 5 8 32 0.003
Weekly Biocide (2-4hrs) 200 53 212 0.021
Corrosion Inhibitor 20 32 127 0.013
Scale inhibitor 2 95 382 0.001
Daily Manpower $ (4 Operators) 1,200 0.004
Facility Cost 184,200 0.614
Total Cost (Facility + Chem) 1,952 $ 0.66
Table 1. Estimated Water Treatment Costs per Barrel Based on Seawater Injection
and Produced water Treatment on an FPSO.