VRGE Non-Hydraulic Fracturing Technology - Expansion Energy LLC - FINAL - NC - Oct 2013.29683744

2009 - Expansion Energy LLC
Expansion Energy LLC 2013 Expansion Energy LLC

VRGE
TM
Overview
Patented
Non-Hydraulic Fracturing Technology
for Unconventional Oil & Gas Production

October 2013
VRGE -- Non-Hydraulic Fracturing Technology 2
Shale Gas & Shale Oil Revolution
Technology-enabled, economic production of Shale Gas & Shale Oil has dramatically increased global
output & recoverable reserves
Especially in North America including Marcellus, Barnett, Haynesville, Fayetteville and other shale gas plays
Energy independence is now plausible for the U.S. 100+ year supply of Gas + increased Oil production
Other global shale gas regions will follow soonChina, Australia, Argentina, Brazil, South Africa, Poland, UK, etc.
Rapid expansion of Bakken Shale oil play made North Dakota the #2 oil-producing state in 2012
Eagle Ford (TX), Niobrara (CO, WY, NE) and other U.S. shale oil regions are also rapidly developing
Made possible by technological advances in hydraulic fracturing + horizontal/directional drilling
Source: US Dept. of Energy Energy Information Administration
North American Shale Oil & Shale Gas Plays Reliant on Fracking
Major Shale Gas Basins A Global Opportunity
Source: US Dept. of Energy Energy Information Administration
Technically recoverable shale gas reserves (32 countries) = 6,622 TCF
> 100 years of Supply
But Hydraulic Fracturing is Under Threat
from regulators, policy-makers, litigation, environmental groups and the public in the U.S.
Virtually continuous media scrutiny
Many believe chemicals & fluid additives used for hydraulic fracturing threaten groundwater & health
Concerns over water consumptionup to 5 million gallons per well
Scarcity of water in some regions is constraining the number of wells that can be drilled
Truck traffic & road wear (up to 500 water truck deliveries + > 200 wastewater truck trips per well)
Air emission concernssuch as VOCs, benzene, formaldehyde, NOx
France banned hydraulic fracturing before it even began; Spain and others also considering bans
Specific examples:
EPAs Pavilion, WY investigation + other studies to determine effects of hydraulic fracturing on groundwater
EPA is developing stricter standards that fracking wastewater must meet before going to a treatment plant
Environmentalists are pressuring EPA to regulate fracking water disposal wells as hazardous (Class I wells)
Disposal wells are now being blamed for small earthquakes in some regions (e.g., Ohio)
Congressional investigations into the effects of hydraulic fracturing fluids on groundwater
The FRAC Act introduced in Congress would require regulation of hydraulic fracturing under the fed SDWA
Many state legislatures & regulators are moving toward stricter regulations on hydraulic fracturing
New York, New Jersey & Maryland have de facto moratoriums on hydraulic fracturing due to potential risks
US Centers for Disease Control (CDC) is beginning to investigate toxicity of fracking chemicals
Hydraulic fracturing-related litigation is increasing

The Solution: VRGE
TM
A Non-Hydraulic Fracturing Technology
A unique, patented Expansion Energy technology (US Patent # 8,342,246)available for license
VRGE
TM
(pronounced VeRGE) = Vandors Refrigerated Gas Extraction technology
For extraction of Natural Gas (NG), NG Condensates & Crude Oil from shale, sandstone & other tight formations
A dry fracturing technology that replaces hydraulic fracturing
Requires no water and avoids the need to dispose of large volumes of fracking wastewater
Because no water is used, chemical/biocide/fluid additives used for hydraulic fracturing are avoided
Some of those chemicals are deemed harmful/hazardous by regulators, politicians, environmentalists & the public
VRGE relies on the utilization of deep refrigeration (cryogenics) + energy-efficient compression
Both are accomplished with a single (mobile) cryogenic plant located at the well sitesee Slide 11 - VX
TM
Cycle
The fracturing medium for VRGE is natural gas from nearby wells or from the targeted formation itself
The cryogenic (VX Cycle) plant + cryogenic pumps produce high-pressure CNG
The NG used by VRGE eventually resurfaces and can be sold to the market or used for further VRGE fracturing
Uses a proprietary, safe/benign, foam-based proppant delivery system
The cryogenic plant can remain on site to produce LNG fuel for drilling rigs, frac pumps, trucks, etc.
Refrigeration from the cryogenic plant can also be used to separate NGLs from the NG stream
On-site extraction of: propane / ethane / butane / isobutane / pentane
Pre-fracking stepsdrilling, perforation, etc.are the same as for hydraulically fractured wells
Fracturing Issues Avoided by Not Fracking with Water
Use of water is the root cause of hydraulic fracturings main drawbacks & public concerns
The main reason chemicals and fluid additives are used for hydraulic fracturing is to
counteract the negative effects of water, such as:
Swelling of the underground formation (e.g., shale)
Surface tension of waterwhich constrains the flow of oil & gas
Fluid viscosity issues
Disposal of contaminated wastewaterin underground wells or above-ground pits
Fracking chemicals/fluid additives cause concerns about groundwater quality & human health
Insufficient number of wastewater treatment plants equipped to treat fracking wastewater
Disposing large volumes of wastewater underground can cause geologic disturbances
Consumption of large volumes of watercausing concern for policy-makers & the public
Scarcity of water in some regions may limit the number of wells that can be drilled
The majority of fracking-related truck traffic is for water & wastewater transport
Highway safety concerns
Road wear / road re-construction costs
Eliminating the use of water avoids most of frackings political/regulatory threats.
How VRGE Works A Metacritical
TM
Technology
VRGE uses a dense, cryogenic non-liquid fluid phase of NG that Expansion Energy calls Metacritical
TM

Metacritical
TM
NG (Meta-NG) is natural gas above its critical pressure & below its critical temperature
Metacritical
TM
natural gas is synonymous with cold compressed natural gas (CCNG
TM
)
Ideally, Meta-NG is produced at the well sitea balance of refrigeration & compression
Optimally, the Meta-NG plant is a VX
TM
Cycle LNG/CCNG plant (see Slide 11)
Natural gas is both the fracturing medium + part of a safe, proprietary proppant-delivery system
Little or no water is sent down-hole to the well bore
NG used to make the Meta-NG comes from the targeted formation itself or from a nearby well(s)
Meta-NG is nearly as dense as a liquidand thus can be pumped
like a liquid with relatively little energy
Extracted oil, NG and/or NG condensates evacuate the well bore
the same way they exit a hydraulically fractured well
After initial fracturing, the on-site VX
TM
Cycle plant can either be
moved to a new well or can remain at the original well site to:
Produce truckable LNG (e.g., from stranded wells) or cold, dense NG (to
increase pipeline take-away capacity)
Extract NGLs from the NG stream
Knock out CO2, N2 and water from the NG streamNG clean-up
VRGE Process Schematic

Oil- and/or Gas-Bearing
Formatione.g., shale
(~5,000-10,000 ft. sub-surface)
NG pipeline to market
LNG/CCNG
Storage Tank
(can be mobile)
Truck delivery of LNG
and/or Oil to market
Proppant
Storage
CCNG Plant e.g., VX Cycle
(skid- or trailer-mounted)
Cryogenic
CCNG Pump
Proppant Hopper/Blender
(skid- or trailer-mounted)
Heat Exchanger
(waste heat from
CCNG plant)
H
i
g
h
-
P
r
e
s
s
u
r
e

C
N
G

+

F
o
a
m

+

P
r
o
p
p
a
n
t

Extracted Oil and/or Gas
Environmentally
Benign Foaming
Fluid
Flow Chart of VRGE Process Steps Part 1
Produce CCNG
TM
at well site
Pressurized cryogenic NG
(using a VX
TM
Cycle LNG plant)
Mix

Natural Gas
(from a nearby
well or targeted
formation)
Mix

Safe/Benign
Non-Aqueous
(or Water-Based)
Liquid

Proppant
Pump CCNG to
high pressure with
cryogenic liquid pump(s)
OPTIONAL
Warm with waste heat
from the Prime Mover
of the LNG/CCNG plant
Liquid +
proppant is
energized
by CNG
Produce low-pressure
cryogenic NG at well site
(using a VX
TM
Cycle LNG plant)
To Part 2
On-site
LNG plant
(VX
TM
Cycle)
Separation
Foam is sent down-hole to
Fracture the formation
+
Deliver proppant
Produced hydrocarbons
(Oil, Gas, Condensates)
Return of energized foam
ingredients ,
+
Produced water
To market
Return / Re-use
From Part 1:
High-Pressure,
Proppant-
Carrying Foam
Key
= Natural Gas
= Non-Aqueous (or Water-Based)
Liquid/Vapor
= Produced Water

Dispose
Methane
+
NGLs
NGLs
LNG/CNG
The process (Parts 1 & 2) is repeated for each
stage of fracking to be completed per well
(similar to stages of hydraulic fracturing)
Flow Chart of VRGE Process Steps Part 2
VRGE Process Steps
1. Natural gas is supplied from a nearby well(s) or from the targeted formation itself
2. NG is converted to CCNG
TM
(Meta-NG) by an on-site cryogenic plantsuch as a VX
TM
Cycle LNG plant
3. The CCNG is pumped to high pressure with a cryogenic pump(s)
4. As the high-pressure CCNG warms, it becomes high-pressure CNG
5. Warming of the high-pressure CCNG (to CNG) can be accelerated by waste heat from the CCNG plant
6. The high-pressure CNG is then blended with a proprietary, safe/benign, proppant-carrying foam
7. The energized warm, high-pressure CNG+foam+proppant is sent down-hole to the well bore
8. The high-pressure CNG+foam creates, extends and holds open fissures in the underground
formation, and also carries proppant into those fissures
9. Pressure is then reduced, leaving proppant to hold open the fissures, thus liberating oil and/or NG
Optional Bonus Feature Thermal Shock
The CNG+foam+proppant can be sent down-hole cold (e.g., -20 F) to shock the warm formation,
making it brittle and creating/extending fissures
The process is repeated for each stage of fracking to be completed per well
(similar to stages of hydraulic fracturing)
Hydraulic Fracturing CO2 Nitrogen Gelled VRGE
(Water + Chemicals) Foam Foam Propane (CCNG Foam)
Requires "Importing" Fracturing Fluids to Well Site Yes Yes Yes Yes No
Significant Truck Traffic/Costs Yes Yes Yes Yes No
Cost for Fracturing Fluid $ $$ $$ $$$ $
Water Consumption High Medium Medium None None
Requires Waste Fluid Disposal High Medium Medium Medium None
Viable Where Water is Scarce No Somewhat Somewhat Yes Yes
Liquid Used for Foaming N/A Water Water Gel
Safe, Non-Aqueous
Liquid (or Water)
Recycling of Foaming Liquid N/A No No N/A Yes
"Contamination" of Produced Hydrocarbons Yes Yes Yes Yes No
Requires Chemicals to Mitigate Effects of Water Yes Yes Yes No No
Viscosity Control Chemicals Chemicals Chemicals Chemicals
Temperature &
Physical State
On-Site LNG Production + Separation of NGLs No No No No Yes
Requires Pipeline to Get Natural Gas to Market Yes Yes Yes Yes No
VRGE vs. Other Fracturing Technologies
Optimal Technology Combination: VRGE
TM
+ VX
TM
Cycle
Two Expansion Energy technologiesVRGE + VX Cycleare highly complementary
The VX Cycle is an ultra-small-scale LNG/CCNG production plantas low as 6,000 gal/day
VX is the best choice for cost-effectively producing LNG/CCNG on-site at small-scale
All VX Cycle plants up to 100,000 GPD are manufactured by Dresser-Rand Co. (Houston, TX)
The VX Cycle is:
Energy-efficient70% to 85% NG conversion efficiency
Compact and mobilecan be skid-mounted, truck/trailer-mounted or containerized
Affordably priced
Low-cost to operate
Able to be fully automatedfor off-site control
Manufactured using only off-the-shelf components
Durable and long-lasting, with few moving parts ( > 20 years useful lifetime)
Provides refrigeration for extraction of NGLs propane/ethane/butane/isobutane/pentane
VX produces dense LNG/CCNG that can be stored in on-site tanks
LNG can be trucked to nearby pipelines, then re-gasified
Can provide LNG fuel for nearby drilling rigs, frac spreads, trucks and construction equipment
VX boosts pipeline capacity by providing a more dense (colder) NG product
VRGEs Environmental & Safety Advantages
Eliminates the use of watera precious resource that is scarce in many regions
Lack of water has constrained oil & gas production/drilling in certain regions
Needs no chemical additives or biocides to counteract the effects of water
Reduces threats to groundwater / public health / worker health
No contaminated fracking waste streams
Only normal produced water from the underground formation needs disposal
Eliminates the need for transport/treatment/disposal of fracking wastewater & chemicals
Eliminates trucked water deliveries and reduces number of compression trucks/trailers
Reduced fuel consumption
Reduced diesel exhaust (from truck engines & diesel compressors)
Reduced road dustan air quality/emissions issue
Reduced truck traffic = improved highway safety (a major concern in producing regions)
Smaller well sites & well pads
Reduced noise levels
VRGEs on-site LNG/CCNG plant allows capture & sale of associated gas (instead of flaring)
More energy-efficient & resource-efficient than hydraulic fracturing.
VRGE greatly reduces political & regulatory threats.

VRGEs Economic Advantages
Greater oil & gas production (See next slide.)
Lower well costs vs. hydraulic fracturing many fewer trucks/deliveries + less equipment
Eliminates costs for water consumption & transport
Eliminates costs for transport, treatment & disposal of fracturing wastewater
Eliminates the need for new (or upgraded) wastewater treatment plants
Reduces the need for new disposal wells
Substantially reduces costs for chemical/fluid additives & biocides
Reduced truck traffic = less need for road repairs/expansionsa key issue in oil & gas basins
Smaller well sites & well padsreduces well construction costs
VRGEs on-site CCNG plant can produce LNGfor additional revenues
VRGEs on-site CCNG plant can separate NGLs from the NG streamfor additional revenues
VRGEs on-site CCNG plant can be used for re-fracs (re-completions)
Far less energy is consumed for VRGE vs. hydraulic fracturing = lower energy costs
The NG used by VRGE for fracturing eventually resurfaces and is sold to the market
VRGEs capital costs & operating costs are far lower than hydraulic fracturings costs.

VRGEs Well Performance & Efficacy Advantages
Oil-bearing & gas-bearing formations do not like water (from hydraulic fracturing)
Water causes swelling of shales + creates surface tension that restricts the flow of oil & gas
Chemicals/fluids are used in hydraulic fracturing to reduce swelling + weaken surface tension
VRGE avoids this drawback by eliminating the use of water
Greater oil & gas productione.g., from use of gas-energized fracturing fluid
Wells fracked with CO2- or N2-energized foams perform better than hydraulically fractured wells
Higher production + shallower decline curves
Can also reduce the amount of proppant and pressure required for fracturing
VRGEs CNG-energized system provides similar benefitswhile avoiding the costly importing
of fluids (CO2, N2, etc.) to the well site
VRGE-produced oil & gas is not contaminated with nitrogen, CO2 or chemicals
Optional thermal shock (subjecting the formation to cold temp.) can create more fissures
VRGE allows stranded NG wells to be viableby providing a truckable LNG product
VRGEs cold (dense) gaseous NG increases pipeline take-away capacity (in BTU terms)
VRGE increases the effectiveness of fracturing and production.

VRGEs Addressable Market
Total global fracking market is currently ~ $20 billion/year
Includes fracturing only (not drilling, site construction, etc.)
U.S. is ~ 80% of current fracking marketboth in terms of $ and # of frac jobs
Nearly 120,000 frac jobs per year in the U.S.
U.S. and global markets continue to grow
U.S. will rely heavily on fracking in order to maintain/grow oil & gas production
Revenue potential from VRGE is in the billions of $
Source: EnergyTribune.com, Michael Economides
Targeted VRGE Users/Licensees: Fracturing Services Companies
A somewhat consolidated industry
The 3 largest fracturing services companies have ~ 65% combined global market share
Halliburton / Schlumberger / Baker Hughes
Next 3 largest have ~ 15% combined global market share
Weatherford / Frac Tech / Trican
Several dozen smaller companies make up the remaining ~ 20% global market share
Source: EnergyTribune.com, Michael Economides
Seeking Industry Partners for VRGE
Expansion Energy is seeking industry partners to license, co-market & demonstrate the
VRGE technology, including:
Oil & Gas Producers
Fracturing/Completion Services Companies
Manufacturers of Oil & Gas Production Equipment
Interested parties are invited to contact us for further discussion.

Contact Information
David Vandor, CTO, Co-Founder & Managing Director
Tel.: 914-631-3197
Email: dvandor@expansion-energy.com

Jeremy Dockter, Co-Founder & Managing Director
Tel.: 917-653-5418
Email: jdockter@expansion-energy.com

VRGE Non-Hydraulic Fracturing Technology - Expansion Energy LLC - FINAL - NC - Oct 2013.29683744

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VRGE Non-Hydraulic Fracturing Technology - Expansion Energy LLC - FINAL - NC - Oct 2013.29683744

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2009 - Expansion Energy LLC

Expansion Energy LLC 2013 Expansion Energy LLC

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