STW's business proposition is to provide comprehensive, necessary water treatment solutions. STW offers a broad array of technical solutions coupled with a service suite and financial structuring options that provide our customers with the ability to obtain a turnkey solution to their wastewater disposal challenges.
Oil and Gas Producers
STW is already well known to most of the oil & natural gas producers. STW personnel have developed many, and in some cases, long-standing relationships with key personnel responsible for well completion and remedial operations at each producer. STW monitors production plans at the producer level, the acreage acquisitions at the shale plays and trends that relate to the demand for water reclamation by region. In addition, the Company maintains detailed databases that monitor drilling permits, rig counts and other key statistics that forecast gas production rates by geography. These activities allow the Company to anticipate demand for its services and to prioritize its sales calling effort on those producers for whom fresh water supply is an issue or where shale water disposal pose the greatest challenges.
STW will locate mobile evaporation equipment at the well site. The flowback water will be processed and the distilled water generated will be placed into the fracture water pit. The residual brine from the evaporation process will be trucked to an approved disposal facility or taken to a STW central crystallizer. The crystallizer will provide additional fresh water that could be trucked (2 way freight) back to the fracture pit. About 98% of the available water from the residual brine or the high TDS produced water would be recovered. Additional bi-products of sodium chloride for use in Highway deicing and a solution of calcium chloride are being investigated.
Acid Mine Drainage
An additional source of revenues in the Appalachian Mountains is to reclaim Acid Mine Drainage. This is contaminated water drainage from old abandoned coal mines, which are essentially the state's responsibility. The reclaimed water may be used in the fracturing process. STW is working with the Pennsylvania Department of Environmental Protection (DEP) on using mobile units for the treatment of AMD. These units can process 360,000 gallons per day and will initially be used in locations in close proximity to producers' wells.
Brackish Water
STW is targeting private companies and municipalities that own brackish water reservoirs in Texas and Colorado. The Company is in discussions with a large privately owned landfill that has plans to reclaim brackish water contained in a reservoir on their property. One test well flowed at a rate of 1,000,000 gallons per day with water quality under 15,000 mg/l. This can easily be reclaimed through the use of a double pass membrane or potentially even thermal technologies to provide potable water for human and agricultural uses. The residual high TDS brine would be disposed of in salt water disposal wells. The proposed facility has the potential to provide several million gallons for fresh water for municipal usage.
Joint Venturing
To expand its footprint rapidly, STW will use joint ventures with equipment manufacturers, oil field services companies, oil and gas producers and other water reclamation companies. The Company has established a joint venture with Aqua Verde LLC which has water reclamation contracts with certain producers in the Denver-Julesburg basin. STW contributes equipment and Aqua Verde contributes contracts to the joint venture.
Competition
In the oil and gas industry, current fracturing and produced water disposal methods – deep injection wells and surface water disposal – represent the Company's greatest source of competition. Manufacturer's marketing directly to producers and other water reclamation service companies are also competitors to STW.
Brine Discharge / Deep Injection Wells
In many gas shale fields, disposal through a deep injection well offers a cost-effective (though environmentally questionable) alternative to water reclamation. If suitable geology exists, high TDS flowback waters can be disposed by injection into a deep discharge brine well. There are operative brine discharge wells in each of the major shale plays, particularly in the Barnett shale play in Texas where many empty oil wells are converted for brine discharge use. There are over 53,000 brine disposal wells in the state of Texas. There are only eight such discharge wells in the state of Pennsylvania. Management believes these are presently operating at close to capacity.
Surface Water Disposal
Similarly, surface water disposal facilities (rivers, streams, drainage creeks, and surface evaporation pits) offer a competitive alternative to water reclamation. At river discharge facilities, flowback and produced waters are treated to remove naturally occurring radioactive materials, some suspended solids and well completion chemicals before discharge. Dissolved salts are not removed and therefore are added to surface water systems where they degrade water quality, pollute the environment and disrupt wildlife habits. Many states have taken action to reduce or eliminate altogether the availability of surface water disposal for gas well wastewater streams.
In the Marcellus shale, there are several treatment facilities that remove only the oil and heavy metals, then discharge the water to certain rivers (where permitted), and range in size from 20,000 to 200,000 gallons per day. The treatment does not remove salts, so the waters that are being discharged into the river system retain high TDS contamination levels. In April of 2009, the Pennsylvania DEP regulated this type of treatment by limiting it to existing permitted facilities only through Jan. 2011, at which time treatment to remove the TDS (salts) will have to be implemented.