frack flowback water opportunity across the eagle ford shale alex gupta, james lamb, zhengwang he...
TRANSCRIPT
![Page 1: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/1.jpg)
Frack Flowback Water Opportunity Across the Eagle Ford Shale
Alex Gupta, James Lamb, Zhengwang HeAdvised by Dr. Fred Beach and Professor John Butler
The University of Texas at Austin
May 1, 2015
![Page 2: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/2.jpg)
Introduction: Meet Team UT-Austin!
Alex Gupta, MBA CandidateB.S. Mechanical Engineering
7 years of natural gas pipeline experience
Zhengwang He, PhD CandidateB.S. Chemical Engineering
Specialize in Membrane Water Filtration
James Lamb, MBA CandidateB.S. Biomedical Engineering5 years of oil & gas field service experience
![Page 3: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/3.jpg)
Presentation Itinerary
1. Project Focus
2. Technologies Selected for Solution
3. Business Plan and Implementation
4. Financial Viability
![Page 4: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/4.jpg)
Eagle Ford Region Under High Water Stress
Freyman, Monika (2014) “Hydraulic fracturing & water stress: Water demand by numbers” A Ceres report.
![Page 5: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/5.jpg)
Eagle Ford Flowback Water Chemistry
• Oil and Grease, ~200 ppm
• Total Dissolved Solids (TDS), ~60,000 ppm
• Chemical Additives
• Naturally Occurring Inorganic and Organic Compounds
• Particulates
![Page 6: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/6.jpg)
Two-Stage Flowback Water Treatment System
1. Oil Skimmer removes up to 200 gallons/day
2. Membrane-based Filtration System– Meets reuse quality– Mobile & small footprint– 10,000 barrels/day capacity (315,000 gallons/day)
Omni Water Solutions http://www.omniwatersolutions.com/Abanaki http://www.abanaki.com/
![Page 7: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/7.jpg)
Treatment System Operations
King, George E (2015) “Fracturing flowback: Control analysis & benefits.”
15 to 20 Day Operation
![Page 8: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/8.jpg)
Operational Highlights (Per Well Pad)
• Processes 6.3 million gallons (67%) of flowback water
• Generates 5.4 million gallons of reusable water (i.e. enough to frack 1 well)
• Eliminates 2,330 standard truckloads
• Recovers 95 barrels of oil
![Page 9: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/9.jpg)
Solution: Turnkey Field Services Company• Provide all water handling services during high initial flowback
– Purification– Storage– Transportation– Reuse– Disposal
• Leverage multiple existing equipment vendors to package latest technology for client-specific needs
• 2 Revenue Streams:– Flowback Filtration Processing– Crude Oil Recovery
• Offers lower water handling costs to operators than traditional methods
![Page 10: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/10.jpg)
Traditional Well Pad Layout
EPA, Study of the potential impacts of hydraulic fracturing on drinking water resources. EPA 601/R-12/011, December 2012
![Page 11: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/11.jpg)
Well Pad Layout With Proposed Solution
EPA, Study of the potential impacts of hydraulic fracturing on drinking water resources. EPA 601/R-12/011, December 2012Omni Water Solutions http://www.omniwatersolutions.com
Wellhead
Water Buffer
Oil Skimmer
Membrane Filtration
Frac Tank
![Page 12: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/12.jpg)
Competitive Advantage
A turnkey service company is better positioned for long-term success compared to existing market players
![Page 13: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/13.jpg)
Environmental and Regulatory Considerations
• Business solution offers proactive response to fracking concerns and bans across the US
• Texas legislation is moving toward mandatory flowback reuse policies due to continued state water shortages
• Solution reduces resource loading on state permitting entities (TCEQ, RRC, GCD, TDLR)
![Page 14: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/14.jpg)
Cost Breakdown• Costs at current market price
• Charge 20% less than market price for services that are being provided– Complete disposal– Fresh water sourcing, treatment,
and one half of transport costs
• Operating margin of 42.8% to 63.5%
• Water savings of $9,300 to $31,000 per well
![Page 15: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/15.jpg)
Cost Scenarios
• High degree of uncertainty
• Adjust costs as a function of oil price
• Costs increase proportionally to oil price
• Simulate different scenarios
![Page 16: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/16.jpg)
Market Sizing
• Total market size proportional to oil price
• 1% initial market share
• 27% market growth
• Initial market size and market share growth independent of oil price
• market share ceiling of 10%
Nicot and Scanlon, 2012Sharr, April, 2014
![Page 17: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/17.jpg)
Simulation
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 $(10,000,000)
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
Project Cash Flow
Free Cash Flow Cumulative
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 170
50
100
150
200
250
Oil Price
Low SimulatedHigh Reference
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16-50000000
50000000
150000000
250000000
350000000
450000000
550000000
650000000
Total Market Size
Reference Simulated
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00
$10.00
Revenue vs. Cost
Revenue Per bbl Cost Per bbl
Initial Market Share
Market Share
Growth
![Page 18: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/18.jpg)
Results
• Mean NPV = $35,017,040• Range of $119,548 to
$61,575,785
• Mean IRR = 41.66%• Range of 4.93% to 82.38%
![Page 19: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/19.jpg)
Funding Options
• Recommended Sources– Angel Investors– Venture Capital– Commercial Bank Loans
• Compared to projects with similar IRR:– Lower risk– Longer payback
![Page 20: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/20.jpg)
Summary
• Service company model in Eagle Ford
• Noncommittal technology
• Fast, flexible, mobile, scalable
• Robust and profitable business
![Page 21: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/21.jpg)
Questions?
![Page 22: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/22.jpg)
Appendix
![Page 23: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/23.jpg)
Hydraulic Fracturing “Fracking” Overview
Picture adapted from EPA
Water Intensive Process
![Page 24: Frack Flowback Water Opportunity Across the Eagle Ford Shale Alex Gupta, James Lamb, Zhengwang He Advised by Dr. Fred Beach and Professor John Butler The](https://reader035.vdocument.in/reader035/viewer/2022081603/5697c00e1a28abf838cca25c/html5/thumbnails/24.jpg)
Fracking Water Cycle
EPA, Study of the potential impacts of hydraulic fracturing on drinking water resources. EPA 601/R-12/011, December 2012