DWU_GasWellDrilling_092011

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Dallas Water Utilities and Gas

Well Drilling

City of Dallas Gas Drilling Task Force

September 20, 2011


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Outline

Background

Water RelatedConsiderations forGas Drilling

Summary

Appendix

Drought Information Water Conservation

Strategies


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Background


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Changes in Water Utilities Operation

1850s-1950 1950 to 2010 2010 to 2060

- Population grew from 430 to

400,000 in 100 yrs

- Service population grew from

400,000 to 2.4 million in 60 yrs

- Service population to grow

to over 4.5 million

- Surface water and wells used

for water supply

- Only surface water used for

water supply

- Increased reliance on

conservation/reuse

- 2 small lakes (Lake Dallas

and White Rock Lake)

- 7 lakes for water supply;

6 connected, 1 currently

unconnected

- 9 lakes minimum used for

water supply

- Declining block rate used - Aggressive water conservation

measures implemented

- Increasing block rate used

- Increasing block rate used


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DALLAS WATER SERVICE AREA


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Dallas Water Utilities is funded fromwater and wastewater revenuesand receives no tax dollars Approximately 1,500

employees Population served (treated

water) 1.2 million - City of Dallas 1.1 million wholesale customer

cities 699 square mile service area 306,000 retail customer

accounts 5,130 miles of water mains 4,340 miles of wastewater

mains 3 water treatment plants 2 wastewater treatment plants Wholesale customers

23 treated water 3 untreated water 11 wastewater

City of Dallas Water Utilities Fact Sheet


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Dallas: A Regional Water Supplier for

Over 75 Years Under the Texas Constitution and State law, all surface water is owned by

the State of Texas Dallas has been granted extensive water rights by the State in return for its

promise to serve a defined area approved by Council and included in theState water plan which includes customer cities

The addition of a new water source generally takes years to complete Dallas plan is to have enough reservoir firm yield to meet water demands

equivalent to the 1950s drought of record Dallas ranking for planned new water supply sources has been based on: Costs capital construction and power Efficiency Environmental impact

Likelihood for development Water located closer to the City is generally less expensive

Lower infrastructure costs due to shorter pipelines Lower pumping (energy) costs a recurring, annual expense

Working with other area water providers to achieve greater economies of

scale and thus reduce costs


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Water Related Considerationsfor Gas Drilling


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Barnett Shale inthe City of Dallas


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What Has Been Our Experience? Last five years +/- we have provided untreated (raw)

water from either Lake Lewisville or Lake Grapevine

for use by gas drillers via raw water contracts Water rights allows for the use and sale of water for

these industrial/manufacturing purposes The business of gas drilling has been viewed as

another industrial use similar to construction ormanufacturing To date no treated water retail accounts exist for gas

drilling purposes If one of Dallas customer cities, for example, Grand

Prairie, DFW or City of Irving has drilling within theircity, they could be using treated water purchasedfrom DWU this is purely within their control


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General Terms for Untreated Water

Contracts Water is to be taken from one of Dallas lakes Timeframe is specified, generally 1-3 years with renewal

terms Specifies a minimum and maximum amount of water that can

be used (take or pay contract terms) Purchaser is billed on the minimum amount

Reports are required monthly for water used Charged the Interruptible Water Rate $0.2277 per 1000

gallons Interruptible means the supply of untreated water may be totally

discontinued for indefinite periods of time due to the need to conserve

or have the untreated water available for municipal use Example of a previous contract with drillers:

1-year contract with Encana Contract approved by Council effective May 12, 2005

Water taken from Lake Grapevine Amount of water was a min of approx 27MG to max of 54MG


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Treated Water Use Water used for fracking inside Dallas would

likely require a fire hydrant meter, similar to useon a construction site

A usage charge for water would be billed at the

general service rate (per 1,000 gals): Monthly customer charge $55.68

Up to 10,000 gallons $2.14

Above 10,000 gallons $2.61

Assuming a 1-year contract, cost would be

approximately $14,000 per well


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Existing Water Contract for Gas Drilling

Current contract with Carrizo Oil and Gas, Inc. Water may be taken from either Lake Ray

Roberts or Lake Lewisville Term is for 3 years, with one renewal Minimum amount of water is 20M gallons, with

a maximum of 80M gallons Water may not be sold, assigned or transferred Contract may be terminated for:

Non-payment of charges Pumping logs are not adequately maintained Water is taken in excess of maximum amount Noncompliance with any other contractual condition


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Considerations Related to DWU Water used for drilling

Type untreated, potable or reuse Costs currently set by ordinance

Rates based on costs of service do not haverates set for how customer uses the water

Availability location and volume are

potential issues


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Considerations Related to DWU

Wastewater Quality Liquid waste disposal

DWU is required by EPA to meet strictpretreatment standards for its waste watersystem

Current knowledge is liquids cannot meetstandard and are disposed of in deep

injection wells DWU does not permit the discharge of this

waste into its system


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Considerations Related to DWU Lake

Sites Containment would need to be made to

maintain water quality in our lakes The Corps of Engineers is considering

requesting a 3,000 foot setback from anydam site related to drilling


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Water Used forPhase Gallons PercentDrilling one well (one-time) 336,000 5.95%

Fracking one well (one-time) 4,500,000 79.65%

Annual landscape and maintenance 813,735 14.40%

Total water used 5,649,735 100.00%Life of the Pad (assuming 10 wells and a 30-year life)

Phase Gallons Percent

Drilling 3,360,000 4.62%Fracking 45,000,000 61.84%

Landscape and Maintenance 24,412,050 33.55%

Total water used 72,772,050 100.00%


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DWU Non-Residential Retail Customer

Comparison For FY10, non-residential retail customers

used 39,800 million gallons This represents about 33% of the total water sales

for the year FY 2010

Using data from previous slide, over the 30year life for 10 wells:

Water use would be approximately 2.4 million

gallons annually per pad site Water usage would represent less than 0.006

percent of total annual water sales


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Summary


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Summary

Based on information we have to date,

water associated with drilling wouldhave minimal impact on Dallas overallwater use

Proper disposal of waste water isimportant

Safeguard of pad sites near lakes isnecessary to protect water supply

resources


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Appendix


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Drought Information


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Drought Contingency

Drought

Stage

Supply

Capacity% full -

(% depleted)

System Capacity

% of deliverycapacity forconsecutive days

1 65% - (35%) 85% for 4 days

2 55% - (45%) 90% for 3 days

3 45% - (55%) 95% for 2 days

4 30% - (70%) 98% for 1 day

Drought Contingency PlanUpdated June 2010

Drought Triggers are based on

either supply capacity, systemcapacity or contaminationissues.

Dallas current connectedsupply is 79% full (21%depleted)


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Dallas Water Utilities SystemDaily Water Consumption (FY11 Budget and Actuals)

200.0

300.0

400.0

500.0

600.0

700.0

1-Oct

16-Oct

31-Oct

15-Nov

30-Nov

15-Dec

30-Dec

14-Jan

29-Jan

13-Feb

28-Feb

15-Mar

30-Mar

14-Apr

29-Apr

14-May

29-May

13-Jun

28-Jun

13-Jul

28-Jul

12-Aug

27-Aug

11-Sep

26-Sep

MILLION

GALLONS

5 Year Avg FY11 Budget

FY10/11


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Down 3.9 ft.13% Depleted




Down 3.6 ft.

16% Depleted

Data as of 9/12/11



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Water ConservationStrategies


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Dallas Water Conservation Ordinance

Council adopted stricter conservationmeasures in 2001

Added 4th tier water rate for usage

over 15,000 gallons Passed an ordinance regulating

lawn and landscape irrigation:

Avoiding water runoff andwaste

Maintaining sprinkler systems Summer daytime watering

restrictions from June 1 toSeptember 30 annually

No watering during any form

of precipitation Installation of rain and freeze

sensors by 2005

In 2007, the City extended the time ofday watering restriction to April 1

through October 31


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Dallas GPCD Trends

Over 120 billion gallons saved since 2001

Documents

DWU_GasWellDrilling_092011