We have recently implemented a new business strategy of focusing on the water resource management business as it relates to the oil and gas industry. It is our intention to develop water solutions needed for shale or “unconventional” oil and gas exploration, which will likely include salt water disposal wells, water purification facilities, trucks, environmental clean-up and rental equipment. Recent improvements in drilling and completion technologies have unlocked large reserves of hydrocarbons in multiple “unconventional” resource plays in North America. These new drilling methods often involve a procedure called hydraulic fracturing, which involves the injection of large amounts of water, sand and chemicals under high pressure into rock formations to stimulate production. Some portion of this water returns to the surface as a by-product or waste stream. In addition, oil and natural gas wells also generate produced water which is water from underground formations that is brought to the surface during the normal course of oil or gas production operations. Since this water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons.
We have indentified water reuse and water management in the oil and natural gas industry as a significant growth opportunity and are currently exploring various alternatives to develop this segment of our future operations through existing relationships, joint ventures, targeted acquisitions and development of water management technologies.
As part of this new strategic initiative, we have recently entered into definitive agreements to acquire or lease acreage in the Marcellus and Eagle Ford Shale areas with the intention of developing commercial water service facilities on such properties. In addition, we have secured an order to deploy an above ground temporary water storage system in the Marcellus Shale and have entered into a definitive agreement to install and operate an onsite semi-portable water treatment facility in the area. We are also evaluating alternatives to acquire or license the technology to treat water used in hydraulic fracturing.