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think global.
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Public Policy and PR Impacts of Water Management DPEC Meeting
February 14, 2014
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End of Commercial Let’s talk about something else
The Bad News:
Oct. 3 - The $700 billion bailout bill for the US
financial system is signed by President George
W. Bush.
Oct . 6 - The Dow Jones industrial average falls
by as much as 800.06 points, its biggest
intraday drop on record; the Dow closed below
the 10,000 mark for the first time since October
26, 2004.
Oct. 24 - "Bloody Friday" saw many of the
world's stock exchanges experienced the worst
declines in their history, with drops of around
10% in most indices.
The Good News:
Petrohawk completes the first successful well in
the Eagle Ford Shale, the STS #241-1H
October 2008
The Next Four Years
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
1 2 3 4
US GDP Growth Rate:
Texas GDP GrowthRate:
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
1 2 3 4
US UnemploymentRate:
Texas UnemploymentRate:
2009 2010 2011 2012 2009 2010 2011 2012
US v TX GDP Growth US v Texas Unemployment
Note: From July 2009 through June 2011, Texas created 49% of US new jobs
Texas Daily Oil Production
Weekly US Crude Oil Production
Net Petroleum Imports: Share of US Consumption
In mid-2009, Texas produced < 20% of US total Crude
Today it produces > 35% of US Crude, and 30% of US Natural Gas
If Texas were a country, it would be the 9th-largest oil producing nation on earth
If Texas were a country, it would be the 3rd-largest natural gas producer on earth
48% of all US drilling rigs were in Texas in December
25% of all rigs on earth were in Texas
Texas Budget has moved from chronic structural deficits to
large ongoing surpluses
Fun Texas Factoids
Answer: Technology
Horizontal Drilling
Multi-stage frac jobs
Why has all this happened?
Thank you, George Mitchell
This all great stuff… But what are the constraints to growth?
• Traffic and road impacts • A qualified and trained workforce • Housing and other critical infrastructure
..and most importantly…
•Water
Some big shale plays underlie water-poor, arid regions
- Eagle Ford
- Bakken
- Permian Basin
- DJ Basin
Some of these same areas in long-term droughts
Industry operations are very visible – lines of big trucks rolling down highways, through small
towns
In many areas – especially new shale plays – industry is the “last user in”
Water – why the industry gets the blame
A Texan tragedy: ample oil, no water Fracking boom sucks away precious water from beneath the ground,
leaving cattle dead, farms bone-dry and people thirsty
30,000 Facebook shares
2,000 Tweets
Houston Chronicle Editorial
Dozens of Repetitions in Other Media Outlets
UK Guardian Article
Barnhardt is in the Middle of the West Texas desert – Water shortages there are an historic
way of life
Really did not run out of water – the pump broke, not once but twice
Texas is in the fifth year of what could ultimately become the Drought of Record, surpassing
the historic drought of the 1950s
West Texas is now more than a decade removed from the last flooding rains from a Tropical
Storm
Most producers in the area aren’t even taking their water from the shallow drinking water
aquifers
Texas Water Development Board admits that oil and gas accounts for only about 1% of the
state’s water usage
Best news: Barnhardt recent recipient of a $350k grant from Texas Dept. of Agriculture to
drill a new, deeper water well
Yet, the industry takes the full blame in this recent series of media articles
What’s the Truth?
The answer today is the same as it has been for the last 160+ years:
Technology
This must change, but how?
Shale plays: R&D Laboratories in the field for water treatment and recycling technologies:
- Fountain Quail
- PureStream
- Aquatech
- Energy Water Solutions
- many others…
Water Solutions – What’s happening
Disclosure Issue: Industry solved it by supporting legislation
Frac Water Issue: Industry is solving it by moving away from fresh water
This is critical because it takes the industry out of competition with drinking water and
agricultural uses
Once this is achieved, public concern will diminish rapidly
Water is an emotional issue – this takes the emotion out of the equation
Industry MUST get better at telling its own story, because
no one in the media is going to do it for them
Key to Winning the Future: Getting Off Fresh Water
2013 Legislative Session:
Lots of hearings, discussion around funding state water plan
Effort succeeded via one-time allocation of $2.2 billion from Rainy Day Fund – voters
approved via November ballot initiative
Plan focuses on new dams, surface reservoirs, municipal infrastructure, conservation
and recycling projects – all good stuff
Virtually no discussion around use of underground brackish water
Reality: Beneath the Texas surface lie v
irtually inexhaustible supplies of brackish water
Especially abundant in West Texas,
and along the Gulf Coast
Best Kept Secret in Texas: Brackish Water
Halliburton – H2OforwardSM – successful test
using frac fluids with water TDS of up to 285,000
ppm
Other service companies working on their own
proprietary technologies
Apache Corp. now using brackish/recycled water for
all fracs in one West TX production area
Energy Water Solutions/EP Energy
Recycling in Eagle Ford Shale
Propane Fracs
Butane Fracs
The Move is Already Underway
Halliburton’s Global Strategic Business Manager of Water Management
Solutions, refers to H2OForwardSM as “…a paradigm shift that negates the use
of fresh water and meets the supply chain needs of the customer.”
All designed to
reduce fresh water
use
Public Perception, largely impacted by media coverage, and largely based on emotion
rather than reality, matters.
It can impact your bottom line
It can impact your workers’ ability to get their jobs done
It can impact your company’s reputation
And it can threaten your license to operate
Bottom Line for the Industry:
THANK YOU.
About
David Blackmon
Managing Director, Energy and Natural Resources
Strategic Communications
1001 Fannin Street, Suite 1400 Houston, TX 77002
Tel: (832) 667.5158, Fax: (713) 353-5459
David Blackmon is a managing director in the FTI Consulting Strategic Communications practice and is based in Houston, Texas.
Throughout his 33-year career in the oil and natural gas industry, David has led industry-wide efforts to develop and implement
strategies to address key issues at the local, state and federal level.
Prior to joining FTI Consulting in 2012, David served for five years as Director of Government Affairs for EP Energy, LLC. Prior to joining
El Paso, David was Manager for Shell E&P North America's internal and external communications. Before Shell, he was at Burlington
Resources for 18 years where he became their Senior Manager of Corporate Affairs. He has also had previous stops at companies like
Tesoro Petroleum, Hughes Texas Petroleum Ltd, and Coastal States Oil and Gas Co.
From April 2010 through June 2012, David served as the Texas State Lead for America’s Natural Gas Alliance, where he played a key
role in the passage of two major pieces of legislation during the 2011 session of the Texas Legislature. He is past Chairman of
Department of Interior’s Royalty Policy Committee, and a long-time Vice Chair of IPAA’s Land and Royalty Committee. He chaired the
Access and Environmental Subcommittee for the National Petroleum Council’s 2003 North American Natural Gas Study, and served
as industry representative on two negotiated rule-making committees created through the Department of Interior. David has testified
before various congressional and legislative committees on topics such as oil and gas valuation for federal and Indian royalties,
producer obligations to fee royalty owners and on energy education.
David attended Texas A&I University and The University of Texas, earning a B.A. in accounting.
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