Effective Water Management Strategies For Sustainable Growth Karthik Viswanathan 8/22/14
Devon History • Founded as a private company in 1971 • Became a public company in 1988 • Currently listed on the New York Stock Exchange under the ticker symbol DVN • Has grown from 185 employees in 1981 to about 5,500 employees today • Established a portfolio to provide stable production and a solid platform for future growth NYSE: DVN www.devonenergy.com page 2
Devon Today Sharpening The Focus Devon’s Core & Emerging Assets • Proved reserves: 2.6 billion BOE (1) • Q1 2014 net production: 563 MBOED (1) Heavy Oil Core — Oil & NGLs >50% of production mix Emerging — Expect multi-year oil growth >20% • Deep inventory of oil opportunities Rockies Oil — Top-tier Eagle Ford development — Strong Permian Basin position — World-class SAGD oil projects Anadarko Basin Mississippian- — Upside potential in emerging plays Woodford Barnett Shale • Midstream business valued at >$7.5 billion Permian Basin Eagle Ford • Enterprise Value: ≈ $40 billion Slide 3 (1) Excludes non-core assets identified for monetization.
Water sustainability principles Devon is committed to the principles of conservation and re-use of water where feasible through the following: • Educating and working closely with governmental authorities and members of the public concerning water usage needs and the necessity of water management • Identifying usage needs, determining resource availability and monitoring water use • Applying conservation practices and identifying opportunities to improve water use efficiency • Employing economically and operationally feasible alternatives to fresh water usage • Advocating for appropriate regulations on water use and re-use • Continuing to employ prudent operating practices to ensure the protection of surface and groundwater • Planning for operations to continue if water availability becomes constrained
Water management in Oklahoma A state-industry partnership Cana-Woodford shale play • Exceptional quality of flowback and produced water allows for reuse • Existing state rules limited water pits to 50,000 barrels • Worked with regulators to allow 500,000-barrel pond • More than 6 million barrels (250 million gallons) reused through summer of 2013
Barnett Shale water recycling • Process started in 2005 • 22,500 barrels per day at peak • More than 500 million gallons of distilled water generated • 100+ wells fractured with recycled water • Received IOGCC Chairman ’ s Stewardship Award in 2008
Water Management Initiative – Case Study Effective Reuse of Produced Water San Angelo, TX
Background SAN ANGELO OVERVIEW OVERVIEW § The field unit relies entirely on use of brackish water and recycled water for its frac needs § The use is split 70-30(Brackish- Reuse) between the two water sources § There are around 140 (brackish) water wells that have been drilled to support drilling needs § There are a few challenges that needed to be overcome due to the activity levels in the area ASSET DESCRIPTION KEY CONSIDERATIONS § Currently ~ 400 producing wells (~150 in El Dorado) § Current operated gross production: ~ 12500 BOPD Most of the acreage is in ULS (University land) § ~ 63.0 MMCFD The area is spread out (150,000 Acres) § • Target reservoir: Woflcamp Shale Water Quality issues § • Depth: 6300 ’ TVD • 7500 ’ Laterals • Type of frac: Slickwater NYSE: DVN www.devonenergy.com page 8
Problem Statement San Angelo and its § surrounding areas have constantly been on drought watch The level of activity in § the area required approximately 21 MMBBLs of water for 2014 The amount of water § produced needed to be disposed was close to 9 MMBBLs
Analysis of the Problem High water demand for fracing required a unique solution The stakeholders and restrictions due to ULS acerage mandated use of alternate sources (No fresh water use period!) Areas like Bernhardt, TX and Mertzon, TX rely heavily on water wells for their community needs The area is so spread out that any central processing would increase our costs significantly Our sustainability The water quality needs were to be kept in mind when solving this principles and community focus problem required us to High TDS and TSS content of the produced water were key think out of the box to solve the considerations when designing solutions problem No infrastructure to handle huge volumes meant high trucking/ hauling bills Disposal (SWD) options needed to be explored to manage the produced water
Solution Multiple options were analyzed • The problem was broken down into smaller manageable chunks and detailed analysis was conducted Managing produced water • 3 SWD’s were drilled to the Ellenberger to manage interim volumes • High level of activity and the speed with which wells were coming online needed a quick solution to the issue Fresh water needs • Partnered with Reccycling experts to come up with solution • The solution required both parties to work together to ensure success of the project • Custom built solution wherein Water was treated and redirected using pipes to point of need
Issues Due to the uniqueness of the solution multiple issues were identified and are being worked on Some of the issues are: • Lack of infrastructure meant high hauling charges (Below ground pipelines being considered and built) • Logistics of getting produced water over to the recycle facilities of Bosque • Storage of produced water as well as water for completions needs poses its own challenges • Managing drill rig schedule changes
Where do we stand now? Currently recycle 75% of the produced water in the San Angelo area Close to 21 MMBBls of water is projected to be used in 2014 30% of the above will come through the recycling facilities 70% will be supported by brackish water wells that have been drilled into the Santa Rosa All the water wells have been fit with SCADA packs to monitor production Drill schedules are constantly being Pipelines construction and monitoring are being worked on in the near horizon We are proud of the fact that we have totally eliminated our reliance on fresh water in the area!!
ACTIVITIES IN OKLAHOMA NYSE: DVN www.devonenergy.com page 14
Fluid Handling page 15
Water Analysis Mulhall ¡Water ¡Analysis 3/20/2014 Analyte Result Unit Anions Chloride 120,000 mg/L Barium 5.1 mg/L Boron 10.6 mg/L Calcium 6,300 mg/L Metals Iron 21.5 mg/L Magnesium 1,940 mg/L Sodium 1,640 mg/L Calcium ¡hardness 15,700 mg/L Magnesium ¡Hardness 7,970 mg/L Hardness 23,700 mg/L TDS 205,000 mg/L TSS 159 mg/L Chemical ¡Ox ¡Demand 1,460 mg/L TOC 34.2 mg/L pH 6.21 page 16
April 2014- Conceptual Pipeline Map NYSE: DVN www.devonenergy.com page 17
Overview • 37 SWDs tied into Integrated Facilities • April 2014: Moving ~315,000 BBLD • Completed Pipeline to date: 203 miles • Projected 2014 pipeline: 65 miles • Pipeline MAOP: 200 psi • Average pipeline size: 10 ” SDR 7 NYSE: DVN www.devonenergy.com page 18
Challenges Declining injection rates/ non-uniform injection zone • Pump performance • Line pressure • Inadequate retention time for oil carryover • Measurement • Leak Detection and Prevention • NYSE: DVN www.devonenergy.com page 19
Questions
Water Quality in the Area
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