JurisdictionUnited States
Development Issues in the Major Shale Plays
(Dec 2010)


R. Timothy Weston
K&L Gates LLP
Harrisburg, Pennsylvania

R. TIMOTHY WESTON is a partner in the Harrisburg, Pennsylvania office of K&L Gates LLP, and co-practice group coordinator of K&L Gates' global Energy and Utilities Practice Group. With more than 38 years of experience in environmental and natural resources counseling and litigation, energy development, administrative and legislative issues, his practice includes representation of diverse interests, including both private enterprise and public agencies, in project development, natural resource management and regulatory matters. Mr. Weston is 1972 cum laude graduate of Harvard Law School, and earned his B.A. in mathematics with high honors from the University of California at Santa Barbara in 1969. Mr. Weston served for eight years as an Assistant Attorney General in the Pennsylvania Department of Environmental Resources. From 1979 to 1987, Mr. Weston served as Associate Deputy Secretary for Resources Management in the Pennsylvania Department of Environmental Resources, overseeing a wide range of engineering projects, land management functions, and regulatory programs affecting water and related resources. During this same period, he served as Pennsylvania's Commissioner on the Delaware and Susquehanna River Basin Commissions, and served various terms as Chair of both DRBC and SRBC. He was a member of the U.S. delegation to the International Joint Commission's Diversions and Consumptive Uses Study Board, and was one of the principal negotiators and authors of the Great Lakes Charter. He served on the American Society of Civil Engineers work group that prepared the Regulated Riparian States Model Water Code. A nationally recognized practitioner in the field of water law and natural resources management, Mr. Weston was honored with listings in Chambers USA America's Leading Lawyers for Business, Best Lawyers in America, and Super Lawyers. As part of K&L Gates' Appalachian Basin oil and gas team, Mr. Weston has been active practitioner in the area of environmental and natural resource issues associated with development of the Marcellus Shale gas plan, representing the both individual companies and the major coalition of entities involved in exploration and development of Marcellus Shale across the basin. He has published various articles in the environmental and natural resource law field.

This article is for informational purposes only and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.

This paper represents an updated edition of Water Supply and Wastewater Challenges in Marcellus Shale Development, which was originally published in 30 Energy & Mineral Law Institute Ch. 15 (2009), which is reprinted by permission from the Energy & Mineral Law Foundation.

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Table of Contents

1. Introduction to the Water Supply, Water Resource Impact and Wastewater Challenge

2. The Water Resource Challenge in Perspective

3. Water Rights and Water Withdrawal Regulation

3.1 Overview - What Is the Meaning of Water Rights?

3.2 "Water Rights" Granted Under Mineral Leases

3.3 Basis of "Water Rights" Under State Law -- Common Law and Regulatory Programs

3.4 Common Law Principles Applicable to Water Withdrawals

(a) Classifications of Water
(b) Riparian Rights in Surface Streams, Lakes and Subterranean Streams
(c) Common Law Rights in Percolating Groundwater
(d) The Restatement Rules for Surface Water and Groundwater
(e) Interaction Between Surface and Ground Water

3.5 Regulated Riparian Regimes

(a) Kentucky
(b) New York
(c) Ohio
(d) Pennsylvania
(e) Virginia
(f) West Virginia
(g) The Delaware River Basin Commission
(h) Susquehanna River Basin Commission
(i) Great Lakes - St. Lawrence River Basin Water Resources Compact

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4. Protection of Water Supplies

4.1 Regulation of the Fracing Process and the Proposed FRAC Act

4.2 Liability of Gas Well Operators for Impacts on Other Water Users

(a) Liability for Impacts Caused by Water Supply Development
(b) Liability for Impacts Caused by Gas Well Development and Operation

5. The Flowback / Wastewater Challenge

5.1 Scope of the Challenge

5.2 Overview of Wastewater Management Issues

5.3 Requirements for Characterizing Flowback Wastewater

5.4 Assuring Delivery to Appropriate Facilities

5.5 Treatment, Reuse and Disposal Technology Choices

(a) Natural pond evaporation
(b) Direct reuse for drilling and fracing
(c) Underground injection of flowback & production brines
(d) Conventional treatment technologies
(e) TDS reduction via reverse osmosis
(f) TDS reduction via evaporation
(g) TDS reduction via crystallization
(h) Key regulatory questions affecting selection

5.6 Regulatory Drivers to Technology Selection - Impending Restrictions on Surface Water Discharges

(a) Overview
(b) The PA TDS Strategy and Pending Regulations

6. Legal and Regulatory Issues in Implementing Treatment and Disposal Facilities

6.1 Treatment Facility Siting

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(a) Zoning and land development regulations
(b) State siting restrictions for certain treatment facilities

6.2 NPDES Permit Issues

(a) Establishing effluent limits
(b) Special protection waters
(c) Impaired waters

6.3 Water Quality Construction Permits for Wastewater Facilities

(a) Pennsylvania
(b) Ohio
(c) Delaware River Basin Commission

6.4 Air Emission Issues for Water Treatment Facilities

(a) What counts as a "source" in defining "major source"
(b) Potentially applicable air emission regulations

6.5 Underground Injection of Wastewater or Treatment Residuals

(a) Acquiring Rights to Allow Underground Injection
(b) Federal Safe Drinking Water Act - Underground Injection Control ("UIC") Program
(c) Pennsylvania
(d) Ohio
(e) West Virginia
(f) New York
(g) DRBC

6.6 Residuals Management & Disposition

(a) What are the treatment residuals?
(b) Categorization of residuals

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(c) State regulation of residual or industrial waste or beneficial reuse of residuals

6.7 Implementing Wastewater Projects - Transactional Issues

7. Summarizing Key Challenges to Wastewater Management

8. Final Words

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1. Introduction to the Water Supply, Water Resource Impact and Wastewater Challenge

Shale formation development across varying regions of the United States presents both water supply and wastewater challenges of considerable dimensions, whose scope and intensity may depend upon the region involved and competition for associated water resources. This paper focuses on one of those regions - the Appalachian Basin and the current challenges confronting those exploring and developing the Marcellus Shale. Many of the issues discussed, however, will resonate in other parts of the country and similar unconventional development of shale formations wherever they occur.

Development of the extensive natural gas reserves contained in the Marcellus Shale deposits promises to be one of the most important opportunities for the United States for the next several decades. At the same time, exploitation of this gas resource poses interesting water supply, water resource impact, and wastewater challenges which the oil and gas industry has rarely faced before in the Appalachian Basin or elsewhere in the country.

While some traditional oil and gas development has utilized, to a modest extent, water supplies in the drilling and fracing processes, Marcellus Shale exploitation involves orders of magnitude greater water resource requirements. Horizontal drilling techniques, coupled with hydraulic fracturing of deep horizontal extensions, entails water use multiple times greater than traditional wells.

Based on experience in the Barnett Shale and developing experience in the Marcellus Shale play, approximately one to five million gallons of water are required for fracing each gas well, with slickwater frac techniques utilizing as much as 500,000 to 1,000,000 gallons of fluid in each of multiple stages. Over the past year, recycling of flowback water has shown considerable promise in terms of reducing disposal requirements, thereby reducing somewhat the draft on freshwater supplies. But the technology allowing for large-scale reuse of water has encountered some technical and logistical limitations, and it is clear that substantial volumes of fresh water will continue to be required. Thus, the challenge will be to secure adequate and reliable sources of water with appropriate quality characteristics in reasonable proximity to proposed well sites to meet the gas well development requirements.

Whether or not warranted, the fracture stipulation process itself has raised concerns regarding the potential impacts to public and private water supplies. Although the fracing process has enjoyed exemptions from underground injection control regulation, environmental and citizen organizations have posed repeated questions regarding disclosure of chemicals used in the process, leading to proposals for repeal or replacement of the current exemption with some form of fracing process regulation at the federal and/or state level.

At the same time, the fracture stimulation of Marcellus and other shale wells results in substantial volumes of flowback wastewaters containing high salt contents and

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other constituents of potential concern. Of the volumes pumped downhole for fracing, a portion (ranging from 25-50%) emerges from the well over time as flowback water, followed by additional production brines. Efforts to obtain representative characterization of Marcellus Shale flowback and produced waters are continuing, and it...

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