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MCA Petroleum Corp., San Marcos & Flatonia, Texas

Mike Shellman, 53 years of oilfield experience; SPE, AAPG and STGS Catherine Shellman, Aquatic Assessment and Toxicology

Sellers Lease Service, Inc., Flatonia, Texas Bobby Sellers,

35 years of oil and natural gas production management experience & produced water management

Consultants

Pat Behling, P.E. Pastor, Behling & Wheeler

Jim Horne, Senior Scientist,

Atkins North America

Dwight Cassell, P.G. Consulting Geologist; MCA Dick Sorrell, V.P. of Partnership Relations; MCA

TXG330000 General Permit

Current permit issued in 2012
Regulates discharges from Coastal and Stripper Subcategories

Stripper Well Definition (40 CFR 435.60)

Onshore, Produce <10 barrels Crude Oil per Day

Inland Stripper Well Operators Regulated under TXG330000 General Permit

MCA and SLS (98 wells) Approx. 15 Other Operators (Approx. 29 wells)

All affected inland stripper wells are located east of 98th Meridian (within 100 miles)

Abundant, Clean Surface Water for Texas

Consistent, homogenous reservoirs with similar formation and water characteristics long region strike. Alkalinity and conductivity values for the Carrizo Wilcox and Bartosh formations are much lower than Reklaw and help explain ion composition imbalances

Since 1943 over 21,000,000 barrels of crude oil have been produced from shallow Reklaw, Carrizo-Wilcox and Bartosh oil wells in Fayette, Gonzales, Bastrop and Milam Counties in Central Texas. Today, nearly 300 BOPD is still being produced from freshwater reservoirs in these four counties.

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Type Logs; Fayette County

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Water becomes enriched in sodium and depleted in calcium with depth (BEG Report, 1988) Greater than 1500 feet deep low calcium, high sodium, high alkalinity (BEG Report, 1988) Ion composition of water varies with depth and specific formations; shallower sands have higher alkalinity values

Migrating clays present (Davies Report, 1984) Kaolinite, illite and chlorite Typically <0.5 micron (not visible to naked eye) Detached from quartz matrix and move with groundwater Extracted along with oil and groundwater

Discharged since mid-1940s with NO Environmental Harm !! Not produced from groundwater sources fit for humans 50 barrels of water generated per barrel of oil More than 400 Million gallons discharged each year to Texas surface waters TDS < 1,000 mg/L typical < 5 ppm oil in water concentrations Critical source of water supply in drought conditions A horrible waste of a valuable natural resource to re-inject below ground into brackish formations.

Discharged to dry creeks ( Water in those creeks is 100% effluent 8-9 months each year)
Only water available in area for livestock, wildlife and aquatic life Produced water discharged since the mid-1940s without adverse environmental impacts More than 250 comments submitted to EPA in support of discharges and their importance to surface water and local economies

Ecological Impact Study (LWM, 2014) Produced water is essential to ecosystems

Ephemeral drainages are transformed to

perennial creeks with high quality, riparian habitat and abundant/diverse wildlife Elimination of discharges would Kill riparian vegetation, affecting bank stability and increasing sediment erosion during storms Remove habitat for wildlife, some of which are federal/state designated species of concern Reduce current high level of avian diversity Be catastrophic to current fish, reptile and amphibian populations!!

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Economic Impacts
Oil production will cease without discharges! Operators are small businesses. Operations support numerous other small businesses

and royalty owners. Over 800 people are directly affected by these fresh, produced water discharges. Hundreds of thousands of tax dollars to state, local governments and school districts.

Photograph by Dave Wilson

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Permits Issued by both TRC and EPA

TRC- Individual permits under

Statewide Rule 8
EPA NPDES General Permit

TXG330000

First issued in 1995, Re-issued in 2012 Flow: Monitor monthly TDS: Monitor annually

Limit: 3,000 mg/L Limit: 25 mg/L avg, 35 mg/L max Marine organisms (mysid shrimp and inland silverside minnows) 100 percent effluent, LC50 Discharge terminated after one failed WET test resumed only after two passing WET tests

Oil in water concentrations (OIW) monitored monthly

Acute 24-hr WET Test annually

TDS Limit
All discharges less than 3,000 mg/L

OIW Limit
All discharges less than 25 mg/L avg, 35 mg/L max

Marine WET Testing

All discharges pass acute 24-hr marine WET tests

at 100 percent effluent

Typically 100% survival for mysid shrimp and inland

silverside minnows

Proposed modifications published in December 2, 2013 Federal Register Permit Coverage (adds inland dischargers) Bacteria Limits (applies to sanitary wastewater discharges only) Acute 48-hr WET Test annually Fresh water organisms (water fleas and fathead minnows)

100 percent effluent, LC50

Discharge terminated after one failed WET test resumed only after two passing WET tests

Numerous tests, evaluations, studies, legal interpretations, report preparation, meetings, consulting fees, and TREs at many discharge facilities over past 18 months resulted in over $389,000 of costs to MCA and SLS Tests performed on produced water samples collected from End of pipe Downstream in receiving creeks End of pipe with additional treatment using organic clay and activated carbon filtration (OIW concentrations were nondetectable) Toxicity Identification Evaluations (TIEs) performed on several discharge facilities consistently point to natural carbonate and non-carbonate alkalinity in the water that causes ion composition imbalances. TDS related toxicity in WET tests is recognized by the scientific and regulatory community.

All samples consistently passed acute 48-hr tests using fathead minnows Samples collected downstream in creeks consistently passed acute 48-hr tests using water fleas

End of pipe samples routinely exhibited mortality to water fleas during acute 24-hr and 48-hr tests
Treatment with organic clay and activated carbon filtration did not reduce water flea mortality in end of pipe samples

Removal of metals, organic compounds, etc. during TIEs did not reduce water flea mortality Mortality to water fleas demonstrated using mock effluent created from distilled water that approximated ionic composition of produced water Water flea mortality in produced water samples often due to accumulation of extremely fine (approx. 1 micron or less) formation solids (migrating clays) in flea digestive tracts causing ion charge irregularities. Ion composition imbalances come into equilibrium downstream and WET tests meet standards in Texas surface water.
Daphnia pulex

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Clay is a natural element of the earth. Charge of the clay particulate causes ion irregularities.

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There are no classic chemical related toxins in the water! Mortality to water fleas in end of pipe samples is not associated with crude oil or chemicals used in oil production separation process Mortality to water fleas in end of pipe samples is due to natural characteristics of groundwater. Ion imbalances and presence of non-carbonate ions Extremely fine formation solids (migrating clays) are a natural part of the earths makeup Discharged produced water meets WET standards downstream of end of pipe.

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Daphnia Need Not Always Be the Standard

Zooplankton Invertebrates Actually IN Produced Water Discharges

OPTION 1 Keep acute 24-hr marine WET testing requirements in current permit
Passing marine WET testing confirms that the produced

water does not contain toxic levels of crude oil or oil production chemicals
TDS Limit of 3,000 mg/L ensures that no discharges of

highly saline produced water occur

OPTION 2 Exempt permit applicants and permit holders from toxicity testing if WET test mortality is due to natural inorganic constituents in source water
Consistent with the TSWQS (30 TAC 307.4(a) and 30 TAC

307.6(e)(2)(B))
Consistent with TDS exemption described in EPA General

Permit TXG260000 (Offshore Subcategory)

OPTION 3 Allow fresh water WET testing to be performed on samples collected in receiving creeks downstream of discharge pipes where water becomes Texas surface water.
Evaluates ecological exposure of produced water to the

actual ecosystem of the receiving area and is representative of the true health of the aquatic ecosystem.

OPTION 4 Allow fresh water WET testing using any of the following adjustments to the WET testing protocol (consistent with EPA Guidance)
Ion-adjustment protocol Alternative invertebrate species in place of water flea Single species testing using fathead minnow only

Change Definition of WET Test Failure Instead of discharge termination after only one WET test failure as in the current permit, define a WET test failure as one failed WET test followed by two failed confirmation tests within 60 days of the first failed test.
Prevents false test failures due to possible qualative

laboratory/testing errors
Consistent with TSWQS and WET Implementation Guidance

Compliance Schedule In the event of persistent WET test failures, establish a compliance schedule of up to three years to perform a TIE/TRE to implement mortality controls
Allows continued discharge until reason for organism

mortality is controlled or compliance period has elapsed

Consistent with TSWQS and Guidance

Work with EPA to develop permitting approach for produced water that is Effective at protecting the environment Contains requirements that are consistently achievable and economically attainable Allows continued use of this valuable fresh water resource Coordinate findings with TRC to ensure discharge permit consistency Postpone issuance of Final TXG330000 Permit until all issues have been addressed