water for u.s. hydraulic fracturing: competitive strategies, solutions, & outlook, 2014-2020

ADVANCED WATER TREATMENT & DESALINATION GREENFIELD + WATER = BLUEFIELD

Source: Joshua Doubeck

MARKET'INSIGHT!

Water'for'U.S.'Hydraulic'Fracturing:'Compe''ve!Strategies,!Solu'ons,!&!Outlook,!2014;2020!!!November!2014!

ADVANCED WATER TREATMENT & DESALINATION

Water for U.S. Hydraulic Fracturing: Competitive Strategies, Solutions, & Outlook, 2014-2020 ! MARKET INSIGHT!

About This Market Insight

2

•  This Market Insight highlights the following: -  A 2014–2020 forecast of water management spending

by supply, transport, treatment, storage, and disposal at a play-by-play level.

-  Competitive analysis of water management and technology providers and their strategies to meet the growing demand for water and water treatment in unconventional oil & gas.

-  Federal and state-by-state analysis of 31 regulatory environments and emerging markets for water solutions.

-  In-depth analysis of water supply and treatment solution drivers and bottlenecks by U.S. shale play.

-  Analysis and profiles of 18 water management companies, 26 energy service providers, and 19 technology suppliers and their competitive positioning.

•  This report draws on Bluefield Research’s Advanced Water Treatment & Desalination Insight Service and its ongoing deliverables and research team.

Oil & Gas Service Providers

Pure Play Water Service Providers

Technology & Equipment Suppliers

•  Baker Hughes •  Basic Energy •  Cudd Energy Services •  FTS International •  Halliburton •  Key Energy Services •  Nabors Industries •  National Oilwell Varco •  Newalta Corporation •  Schlumberger •  Secure Energy Services •  Superior (Pumpco) •  Tervita Corporation •  Trican Well Services •  Weatherford

•  Advanced Waste Services

•  AES Water Solutions •  American Water •  Aqua America •  Aquatech •  Armada Water •  Bosque Systems •  BNN Energy •  Eureka Resources •  Fountain Quail (Aqua

Pure) •  Greenhunter •  Hydro Recovery •  Nuverra •  Oilfield Water Logistics •  Patriot Water Treatment •  Reserved

Environmental Services •  Rockwater Energy

Solutions •  Select Energy Services

•  212 Resources •  Altela •  BKT •  Ecologix •  Ecosphere •  Energy Water Solutions •  Evoqua •  Exterran •  Gasfrac •  GE Water & Process

Technologies •  Geopure •  Gradiant •  Oasys Water •  Omni Water Solutions •  Purestream Services •  STW Water & Process

Technologies •  Thermo Energy •  Veolia Water Solutions •  Water Rescue Services

Energy Companies

•  Antero Resources •  Apache Corporation •  Crestwood Midstream

Partners •  Devon Energy •  Fasken Oil Ranch •  New Frontier •  NGL Energy Partners •  Penn Virginia Resource

Partners •  Pioneer Natural

Resources •  SandRidge Energy •  Statoil

Market Insight Details

Geographical Coverage

Thirty-one US States, including Key Shale Plays •  Bakken •  Eagle Ford •  Haynesville •  Marcellus •  Niobrara •  Permian •  Utica

•  Ohio •  Oklahoma •  Pennsylvania •  South Dakota •  Texas •  West Virginia •  Others

•  California •  Colorado •  Florida •  Louisiana •  New Mexico •  North Dakota •  North Carolina



About This Market Insight

Water for U.S. Hydraulic Fracturing Market: Competitive Strategies, Solutions, & Outlook, 2014-2020 is an in-depth analysis of the rapidly changing U.S. landscape for fracking water solutions and business strategies. This Market Insight has been developed to support companies addressing the US fracking market with detailed data and market trend analysis.

•  Bluefield forecasts define market outlook to 2020. Bluefield’s in-depth forecasts build on the more than 14,000 newly fracked wells and 7 billion gallons of produced and flowback water in 2013 to develop basin-specific outlooks. Key forecast outputs include water demand, services revenues, and technology investment, including sensitivities to market drivers. A detailed research methodology and approach is provided to forecast data and analysis included with the report.

•  Highlighting shifting business strategies in a changing landscape. From equipment suppliers-to-water service providers, companies are addressing the industry’s water challenges with innovative technology and business solutions. Oil & gas players, pure-play water service companies, and technology providers across the value chain are refining their business strategies to capitalize on the scaling market. Bluefield profiles company strategies with value chain analysis, M&A and partnership impacts, regional focus, and technology strategies.

•  Unlocking greenfield opportunities in fracking. Bluefield highlights the emerging shifts by basin that it expects to shape business models and market growth going forward. The deep-dive analysis of regulatory policies across 31 states, disposal infrastructure, water availability, and has been developed to support companies as they navigate a highly fragmented landscape.


Water for U.S. Hydraulic Fracturing: Competitive Strategies, Solutions, & Outlook, 2014-2020 !MARKET INSIGHT!

Wastewater Disposal Methods

2010-H2 2011-H1 2011-H2 2012-H1 2012-H2 2013-H1 2013-H2 2014-H1

Other 41,055 70,823 3,405 26,338 44,272 4,294 20,494 18,697

Residual Waste Facility - - - - - - 576,218 534,043

Injection Well Disposal 55,471 82,473 271,575 164,754 404,170 221,257 282,365 242,485

Centralized Treatment Plant 561,454 571,386 424,965 262,293 474,417 364,003 10,053 2,174

Wastewater Reuse 205,126 789,965 961,496 1,455,323 1,748,529 1,640,098 1,664,663 1,731,502

Estimated Wastewater Treatment &

Transport Services(US$ million) 2.9 13.5 14.5 16.9 23.4 19.7 22.6 22.4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Oil & gas well operators and water service providers have increased wastewater reuse

applications to represent 68% of the 2.6 million m3 generated in the first-half of 2014.

•  Since 2011, wastewater reuse for fracking activities

has increased 119% by volume. Currently reuse

represents 68% of disposal methods in the state.

•  The Pennsylvania Department of Environmental

Protection (PADEP) has proven to be effective in

driving reuse. In 2010 the regulatory agency

prohibited discharge of high total dissolved solids

(>500 mg/l) from unconventional gas operations.

•  Additionally, in 2011 PADEP disallowed the use of

publicly owned treatment facilities for disposal. As a

result, centralized treatment has fallen from 562,454

m3/d in 2010-H2 to 2,174 m3/d in first-half 2014.

•  Injection well disposal has scaled since 2010-H2, with

a significant increase to 404,170 m3/d. The increased

is also driven by the PADEP regulation changes.

•  Excluding water supply, wastewater treatment and

transport services have continued to rise with the

industry’s expansion from approximately US$2.9

million in the first-half of 2011 to US$22.4 in 2014.

Analysis Wastewater Disposal Methods by Percent of Cubic Meter Volume (M3)

Source: PADEP, Bluefield Research

Cubic Meters (m3)


Water&Solu+ons&for&U.S.&Fracking:&Compe&&ve(Strategies,(Costs,(and(Forecasts,(201492020 ( (((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((MARKET(INSIGHT(Pure-Play Water Service Providers Positioning for Growth

Delivery Collection Treatment Recycling Disposal GreenHunter Resources

Select Energy Services

2013 Revenues

US$25.7M

US$800M (Est.)

US$525M

Select Energy Services

Marcellus, Utica

Permian, Marcellus, Bakken

Haynesville, Eagle Ford Marcellus, Bakken

Basins

Fountain Quail US$6.1M Marcellus, Barnett, Eagle Ford

Rockwater Energy Solutions US$1.3B (Est.)

Marcellus, Barnett, Eagle Ford, and others Bosque Systems Privately Held

Barnett Shale, Eagle Ford, Fayetteville. Bakken, Permian, Woodford

•  GreenHunter has refocused its activities in the Marcellus basin to capitalize on the higher cost of water management,

including transport and disposal. Its proposed and alternative strategy to barge wastewater to treatment facilites is still

pending US Coast Guard approval. •  In 2013, Baker Hughes launched its H2pro water treatment technology solution in the Permian Basin and Halliburton–

through a partnership with Select Energy− is deploying its H2OForward treatment technology in the Bakken and Permian

Basins. •  Other diversified companies Key Energy Services and Basic Energy Services represent significant challenges to the pure

plays with their substantial resources.

A host of pure-play companies are navigating the fragmented market through partnership and geographic growth strategies to carve-out longer-term growth positions

3



Table of Contents & List of Exhibits

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TABLE OF CONTENTS Section 1 – Executive Summary Section 2 – Market Drivers & Landscape 10  Summary 11  Mapping the U.S. Shale Basins and Plays 12  Key U.S. Unconventional Oil & Gas Plays 13  Unconventional Oil & Gas Production 14  Natural Gas and Crude Oil Price Trends 15  Monthly U.S. Rig Count by Type 16  Hydraulically Fractured Wells by State 17  Basin Water Stress & Water Footprint 18  Federal Policy Landscape 19  State and Local Policy Overview 20  State Policy Overview Metrics – Alabama to Nebraska 21  State Policy Overview Metrics – New Jersey to Wyoming 22  Water Treatment & Reuse Market Maturity 23  Pennsylvania Highlights Regulatory & Economic Impacts on Reuse Section 3 – Hydraulic Fracturing Across the Water Supply Chain 25  Summary 26  Hydraulic Fracturing Water Supply Chain 27  Water Supply Chain Bottlenecks and Drivers for Reuse 28  Water Management Spending by Play 29  Salt Water Disposal Wells by State 30  Shifting Water Roles of Oil & Gas Players 31  Alternative Water Proposals Section 4 – Hydraulic Fracturing Water Treatment Solutions 33  Summary 34  Water Treatment Technology Solutions 35  Potential Technology Solutions 36  Water Technology Provider Positioning Section 5 – Water Service Provider Competitive Landscape 38  Summary 39  Unconventional Oil & Gas Opportunities 40  Water Management & Services Value Chain 41  Competitive Benchmarks and Positioning 42  Pure-play Water Service Provider Positioning for Growth 43  Pennsylvania Utilities Position in Local Market 44  Water-related M&A Activity in Hydraulic Fracturing

Water for U.S. Hydraulic Fracturing: Competitive Strategies, Solutions, & Outlook, 2014-2020 is part of Bluefield’s Advanced Water Treatment & Desalination Insight Service. Advanced Water Treatment & Desalination Insight Service provides clients with a steady stream of in-depth analyses of evolving water treatment markets, company strategies, demand shifts, and the underlying drivers for greenfield opportunities. Learn more at www.bluefieldresearch.com.

Section 6 – Market Forecasts 46  Market Forecasts Summary 47  Annual Water Demand by Volume 48  Hydraulic Fracturing Water Services Forecast 49  Hydraulic Fracturing Water Forecast by Volume 50  Hydraulic Fracturing Water Treatment Services Forecast 51  Forecast Methodology 52  Forecast Methodology: Key Inputs Section 7 – International Market Landscape 54  Summary 55  International Markets by Recoverable Reserves 56  The United Kingdom Emerges Among European Doubts 57  A Global Perspective on Hydraulic Fracturing Opportunities 58  Global Competitive Landscape Section 8 – Key Hydraulic Fracturing Play Profiles 60  Bakken 61  Denver-Julesburg Niobara 62  Eagle Ford 63  Haynesville Section 9 – Key Water Service Provider Profiles 68  Advanced Water Services 69  AES Water Solutions 70  American Water 71  Aqua America 72  Aquatech International 73  Armada Water Ltd. 74  Bosque Systems 75  BNN Energy (Tallgrass Energy Partners) 76  Eureka Resources 77  Fountain Quail (Aqua Pure) 78  GreenHunter Resources

64  Marcellus 65  Permian 66  Utica

79  Hydro Recovery 80  Layne Christensen 81  Nuverra Environmental Solutions 82  Oilfield Water Logistics 83  Reserved Environmental Services 84  Patrioit Water Treatment 85  Rockwater Energy Solutions 86  Select Energy Services 87  SandRidge Energy 88  Terraqua Resource Management



Table of Contents & List of Exhibits (continued)

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TABLE OF CONTENTS (continued) Section 10 – Key Energy Company & Service Provider Profiles 90 Baker Hughes 91  Basic Energy Services 92  C&J Energy Services (Nabors) 93  Cudd Energy Services (RPC) 94  FTS International 95  Key Energy Services 96  Halliburton Co. 97  National Oillwell Varco Section 11 – Key Technology Provider Profiles 107  212 Resources 107 Altela 107  Aquatech 107 BKT 108  Ecologix 108 Ecosphere 108  Energy Water Solutions 108 Evoqua 108  Exterran Holdings 108 GE Power & Water

LIST OF EXHIBITS Section 2 – Market Drivers & Landscape 11  U.S. Lower 48 States Shale Plays & Basins 12  Average Water Demand per Well 12 Fossil Fuel Mix by Key Play 13  Total Gas Production by Play 13 Total Oil Production by Play 14 Natural Gas Futures Contracts, 2000–2014 14 Crude Oil Futures Contracts, Cushing, Oklahoma, 2000–2014 15 Drill Rig Deployment by Type 15 Average Monthly Rig Count in Key U.S. Shale Plays 16 Installed Well Capacity by State, 2005–2013 17 Water Stress & Reuse by Play 17 Water Supplies and Wastewater by Play 18 Federal Policies & Exemptions 18 Proposed Federal Regulation 19  State Policy Mechanisms 22  Hydraulic Fracturing Market Maturity Curve by Play 23  Pennsylvania Disposal Methods by Volume

98 Newalta Corporation 99  NGL Energy Partners 100  Schlumberger Ltd. 101  Secure Energy Services 102  Superior Energy Services (Pumpco) 103  Tervita Corporation 104  Trican Well Service, Ltd. 105  Weatherford International Services

109 Gasfrac 109  GeoPure HydroTEchnologies 109 Gradiant Corp. 109 Oasys Water 109 Omni Water Solutions 110 OriginOil 110 Purestream Services 110 ThermoEnergy 110 Veolia Water 110 Water Rescue Services

LIST OF EXHIBITS (continued) Section 3 – Hydraulic Fracturing Across the Water Supply Chain 26  Spending on Water Across the Supply Chain 27  Supply Chain Pressure Points 27  Water Management Spending Flow Chart 28  Water Management Spending Ranges by Play 29  Total Number of U.S. Class II SWD Injection Wells 29  Active Class II SWD Disposal Wells 29 Defining Class II Injection Wells 30  Water Recycling and Pipeline Activities 31  GreenHunter Assets and Proposed Barging Plans Section 4 – Hydraulic Fracturing Water Treatment Solutions 34  Technology Cost & TDS by Play 35  Technology Profiles 36  Technology Suppliers and Technology Offerings Section 5 – Water Service Provider Competitive Landscape 39  Unconventional Oil & Gas Business Models and Strategies 40  Value Chain Positioning by Company 41  Water Service Provider Geographic Presence and Integration 42  Pure-play Water Service Provider Positioning 43  Pennsylvania Produced Wastewater by County, 2010–2014 43  Aqua America Pipeline Details 44  Select Water-related M&A Deals by Company Section 6 – Market Forecasts 47  Annual Water Demand by Play 48  Water Management & Services Spending by Activity, 2014–2020 49  Annual Produced Water & Treatment Ratio (%), 2014–2020 49  Water Treatment Forecast by Volume, 2014–2020 50  Water Treatment Spending by Play, 2014–2020 51  Forecast Methodology Table 52  Data Inputs for Forecasts Section 7 – International Market Landscape 55  Recoverable Shale Gas Reserves 55 Recoverable Shale Oil Reserves 56  UK Shale Reserves & Utility Map 56 Europe Shale Reserves 57  International Market Background 58  Water Service Providers International Footprint



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Water for U.S. Hydraulic Fracturing: Competitive Strategies, Solutions, & Outlook, 2014-2020 Publication Date: November 2014

This Market Insight highlights the following:

•  A 2014–2020 forecast of water management spending by supply, transport, treatment, storage, and disposal at a play-by-play level.

•  Competitive analysis of water management and technology providers and their strategies to meet the growing demand for water and water treatment in unconventional oil & gas.

•  Federal and state-by-state analysis of 31 regulatory environments and emerging markets for water solutions.

•  In-depth analysis of water supply and treatment solution drivers and bottlenecks by U.S. shale play.

•  Analysis and profiles of 18 water management companies, 26 energy service providers, and 19 technology suppliers and their competitive positioning.

Complete the order form to the right and fax or email a scanned copy to Bluefield Research at +1 617 249 2082, or [email protected].

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US$2500

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