Corporate Presentation and Overview - July 2019 ‘Connate Water - water trapped in the pores of sedimentary rock during deposition’
OVERVIEW Our Story - Company Profile I. Connate Water Solutions Services II. Industry Water Trends III. Basic Hydrogeology & Regulations– IV. TDLs vs. Term Licensing Connate Water Internal Test Hole Projects : V. East Duvernay VI. Positive Catalysts for 2019
OUR STORY - COMPANY PROFILE Founded: 2016 • Specialty : Hydraulic Fracturing Groundwater • Sourcing and Licensing (>3,650 m 3 /year – P.Geo. Required ) • Markets : Licensed in Alberta, BC, SK & ON • Obtained 150+ Approved Groundwater Temporary • Diversion Licenses (TDLs) Solid Client Base – Over 15 Deep Basin Operators • 2016 2017 2018 ( E st vs. Actual ) Connate Water Revenue Millions of dollars saved utilizing Groundwater •
FOUR CORE SERVICES Aquifer Testing & Water Supply Well Specialized Hydrogeological Logging and Supervision Equipment Rentals Corporate Water Management & Water Act Licensing and Prospect Reporting Generation
INDUSTRY WATER TRENDS 2017 ALBERTA - H 2 O MARKET HYDRAULIC FRACTURING- WATER USE INTENSITY INCREASED BY >250% From 2013 – 2017 AER, 2018
Hydraulic Fracturing – Temporary Diversion Licensing (TDL) and Term Licensing
BASIC HYDROGEOLOGY – PASKAPOO FM In Alberta, the Water Act defines saline groundwater as any water with a Total Dissolved Solids (TDS) concentration of 4,000 mg/L or greater . [1] < 4,000 mg/L = Fresh or Non-Saline Water Paskapoo Formation (~$ 60 k / Well) > 4,000 mg/L = Saline Water (ex. Belly River Formation ) (~ $1M + / Well)
BASIC HYDROGEOLOGY – PASKAPOO FM The Paskapoo consists of a succession of interbedded sandstones, siltstones, mudstones with thin coal beds. ( Bedrock Aquifers ) Depositional Environment = Alluvial and Fluvial-Lacustrine (Channel Deposition) capped by Quaternary Deposits (Till) Regional yield values for the Paskapoo range from 150 to 720+ m 3 /day as a result of fracture based flow ( Secondary porosity - Fracturing )
GROUNDWATER (GW) – HYDRAULIC FRACTURING SUPPLY Cost effective Reduced surface water usage Safety Company Controlled Infrastructure
PROCESS AND TIMELINE – GROUNDWATER TDLs FOR HYDRAULIC FRACTURING Step #1: Planning of Target Aquifer and Planned Total Depth (Ex. 150 metres). (1 week) Step #2: Drilling and Installation of the Water Supply Well and Observation Well (~3 days) EMPTY PIT – USE GROUND WELLS Step #3: Development & Step-Testing (1 day) Step #4: Constant Rate Aquifer Testing (length dependent on rate required) (1 week) Step #5: Data Analysis, Reporting and Submission to the AER (4 weeks) Average project duration around 6 – 8 weeks
TEMPORARY DIVERSION LICENSES vs. TERM LICENSES A Temporary Diversion Licence (TDL) allows for the diversion of water for a period of up to one year for hydraulic fracturing usage. One renewal will be granted and operators have up to two years to use TDLs until a Term-Licence must be in-place for continued usage. No priority of water use is granted with a TDL, however, it is with a Term Licence First in Time, First in Right ( FITFIR ) – A TERM LICENCE is the END GOAL
2019 STRATEGY - INTEGRATED FLUID SOLUTIONS & OPTIMIZE WATER EX. SECURE ENERGY SERVICES, TERVITA ETC. Secure Energy Services Corporate Presentation- June 2018
Analysis Location, Demand, Operator Activity, etc. Industrial and Municipal 1. Design Wastewater Surface Water Options Groundwater Options: Fresh aquifers (<4,000 mg/L TDS ) 8. Water 2. Sourcing Deep Saline aquifers (> 4,000 mg/L TDS ) Treatment Fully Integrated Water Management Blending Multiple Sources Existing Production, EOR 7. Produced 3. Blending Water LINK TO Formation Water Flowback (~10 – 25%) Biocides, Corrosion Inhibitors, 4. Chemical ARTICLE 6. Frac Water Formation Loss (~75 – 90%) Scale Inhibitors, etc. Treatment 5. Midstream Transportation www.connatewater.ca
Connate Water: East Duvernay and Kakwa Internal Aquifer Mapping Connate Water has anticipated the rapid growth of industry well completion needs in the East Duvernay Shale play and is well positioned to deliver practical industry leading water solutions to operators in the area.
EAST DUVERNAY WATER MANAGEMENT – THE OPPORTUNITY IN H 2 0
SCALE OF EAST DUVERNAY OPPORTUNITY In Terms of Operating in the East Duvernay. Potential Challenges and Opportunities include: 1. Population 2. Lack of Stable Water Supply Density/Stakeholders for Completions (Ex. Ex. Agricultural Users Groundwater)
SCALE OF EAST DUVERNAY WATER OPPORTUNITY No Large Water Storage or Central Water Hub Has Been Press Released Yet High Intensity Fracs and Large Water Volumes (40,000 - 60,000 m³). Shallower than the West Duvernay (2,000 - 2,300 m TVD)
East Duvernay – Freehold Lease Still In Place – Drilled in March 2018
CASE STUDY – ROCKY MOUNTAIN HOUSE AREA Three Confined Paskapoo Water Supply Wells Drilled Licensed Groundwater Yield from All Three Wells = 1,200 + m 3 /day Budgeted Water Cost = $30+ m 3 Final Water Cost per m 3 = <$ 2 per m 3 Total Allocation = 4 00 ,000 m 3 - Excess
POSITIVE CATALYSTS – CWS 2019 - 2020 April 2019 - Opened Connate Water LLC Office to Service the Eagleford & Permian Basin (San Antonio , TX ) Start Process for Next Test Hole Program in Alberta & Texas Industry Turn-Around with upcoming Elections (Provincial & Federal)
WHAT IS YOUR WATER STRATEGY? For More Information Contact Us: Geoff Kovacik M.Sc. P.Geo. Email: geoff@connatewater.ca 204 – 1001 1 St Street SE Calgary, AB T2G-5G3 18911 Hardy Oak Blvd San Antonio, TX 78258
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