Kaizen Fluid systems

Box 1024,

Grande Prairie, AB

Canada, T8V 4B5

Our World of Water

Introduction:

Kaizen Fluid Systems Inc. is a Canadian corporation, Kaizen Fluid systems LLC, a US corporation, both formed to market and operate

technologies developed by Aquex Technologies Ltd. Aquex owns and controls the rights for several technologies and also possesses

exclusive distribution and manufacturing rights for others. These technologies combined with other off the shelf equipment has been

combined to form an advanced water purification system designed for the oil and gas industry.

The systems are fully scalable and have the capability of purifying virtually any discharge stream of frac fluid or produced water as

generated within the oil and gas industry.

Certain components or whole systems are suitable for deployment depending on the needs of any particular operation. We can

precondition water before, after and during frac operations or process a fixed volume of produced water at any site and make it suitable

for it’s designated use. The electromechanical process typically reconfigures undesirable compounds into useful products and generates

no toxic waste stream.

The Process

By combining the various technologies controlled by Aquex Technologies Ltd., and licensed to Kaizen fluid Systems, we have created one

of the most advanced systems for the cleaning of any contaminated water. We are successful in extracting virtually all chemicals, silts,

clays, chlorides, bacteria, fungus, parasites, NORM and other contaminants from any water source and returning pure clear water and

other useful products. The process is classed as electromechanical and in most cases converts the extracted solids, liquids or gasses into

useful commodities thus virtually eliminating the need for any type of disposal. This is a specific system for the oil & gas frac flow-back

and produced water problems.

We have confidence in our equipment reliability as the equipment and technologies were designed for specific applications in other

industries not associated with what their new roles are in our processes, or were used as standalone pieces of equipment for long periods

of time. By combining, modifying and designing the new integration systems, a world class treatment process that is very successful at

water/solids separation, and the breakdown and conversion of toxic compounds found or suspended in water into useful products in a

continuous flow throughput is available to the oil and gas industry.

Our process has the capacity to handle any volume by simply using larger and smaller treatment trains used in tandem so the desired

throughput is attained. The concentration of the contaminants will affect the speed at which any specific treatment train can process;

however there is no limitation on the toxicity or TDS concentration with the process. This is a unique feature as all other systems are

restricted in most cases by TDS levels. We have successfully treated waters with TDS of over 330,000 ppm and returned water with a TDS

of below 200 ppm (Canadian and US drinking water standard is 500 ppm), chemicals and metals in concentrations at a fraction of those

permitted for potable water, pure chlorides suitable for commercial use and pure brine water for reuse in the industry.

The Products we Process

Fracking Fluid

Fracking Fluid is a mixture of water, sand, and chemicals that are injected deep below the surface to fracture the rock and liberate the

natural gas. A typical fracking operation uses between 1 and 8 million gallons of water. In an average 4 million gallon injection, typically

20,000 gallons of chemical are used. The water must be of good quality to work with these chemicals.

The current cost of procuring fresh water for a frac varies from area to area and of coarse the distance the water needs to be transported.

In North Dakota various oil companies have stated their costs at location vary between $4.50 and $8.25 per barrel of water with storage,

heating and chemicals yet to be added.

Flowback Water

After water is introduced in the fracking stage, a portion of that is returned to the surface over the next days and weeks. The volume of

flow-back water can range from as little as 10% to as much as 90%. Initially, its composition resembles that of the injected fracking

fluids, but as its residence time increases, its chemistry transitions to the composition of formation water naturally within the shale. Once

this change occurs, this water is called produced water.

The current cost for disposal of flow-back and produced water in North Dakota, as publicly reported by several oil companies, varies

between $4.75 and $19.00 per barrel of water (most common figures are $5.25 to $6.50). This cost includes transportation and injection

costs but excludes storage and other variables.

Produced Water

Produced water is water trapped in underground formations that is brought to the surface along with the oil and gas. Because the water

has been in contact with the hydrocarbon-bearing formation for centuries, it contains some of the chemical characteristics of the

formation and the hydrocarbon itself. It may include water from the reservoir, water injected into the formations, and any chemicals

added during the production and treatment process. Produced water is also called “brine” and “formation water”. The major

constituents of concern in produced water are:

•Salt Content (salinity, total dissolved solids up to 330,000 ppm , electrical conductivity)

•Oil & grease (this is a measure of the organic chemical compounds)

•Various natural inorganic and organic compounds or chemical additives used in drilling and operating the well

•Naturally occurring radioactive materials (NORM)

Produced water is not a single commodity. The physical and chemical properties of produced water vary considerably depending on the

geographic location of the field, the geological host formation, and the type of hydrocarbon product being produced. Produced water

properties and volume can ever vary throughout the lifetime of the reservoir. This explains the need for our Mobile Site Evaluation Unit,

which we use to evaluate and understand the characteristics of any given site.

How much Produced Water is Generated?

Produced water is by far the largest volume byproduct or waste stream associated with oil and gas exploration and production.

•Approximately 24 billion bbl (barrels; 1 bbl=42 US gallons) of produced water are generated each year in the United States from nearly

a million wells.

•More that 77 billion bbl of produced water are generated each year at thousands of wells world wide, a number that grows as the

producing wells age and new wells are drilled.

Early in the life of an oil well, the oil production is high and water production is low. Over time the oil production decreases and the water

production increases. Another way of looking at this is to examine the ratio of water-to-oil.

•Estimates are that for every barrel of oil recovered 5 to 8 barrels of water are produced, because many U.S. fields are mature and past

their peak production (Clark and Veil 2009). The ratio is even higher in some locations.

•Many older wells have ratio>50:1.

Oil & Water

According to the U.S. Department of Energy, U.S.,

oil production generates an average of 7.4 barrels of

water for each barrel of oil produced. The

handling and disposal of this water is the single greatest

environmental impediment to oil production.

KAIZEN FLUID SYSTEMS™ delivers a breakthrough,

multi-stage, proprietary solution to mechanically clean,

desalinate and purify all flowback waters from frac

operations and production.

We handle the most difficult of waters (including high

concentrations of solids and heavy salt up to 330,000 ppm) at flow rates exceeding 5,000 gallons per minute.

KAIZEN Fluid Systems™

Proven, Commercialized Technology – Advanced Design

The Results

As much as 70% returned as clean reusable water

Ecologically friendly sludge

Salt that is clean enough to be a product instead of a problem

Clean 10lb Brine

Water Treatment Service

KAIZEN Fluid Systems™

The core processes utilized in the

KAIZEN FLUID SYSTEMS™ are:

Rapid sedimentation

Coagulation

Secondary separation of coagulated wastes

Clarification of waste streams and sludge

Chloride extraction

Sludge thickening

Sludge removal and disposal

KAIZEN Fluid Systems™

WHAT OUR TECHNOLOGY IS CAPABLE OF:

1. Rapidly separating solids from liquids

2. Coagulating colloidal and ionic particles

3. > 99% reduction in TSS

4. > 99% reduction in TDS

5. > 99.99% removal of all bacteria

6. > 99% removal of organics

7. > 99% removal of silica

8. > 99% Removal of heavy metals including:ZINC LEAD NICKEL VANADIUM MERCURY MANGANESE IRON BARIUM ARSENIC

9. Neutralization & removal of most N.O.R.M.

>80% URANIUM >80% RADIUM

10. >99% removal of calcium

KAIZEN Fluid Systems™

WHAT OUR TECHNOLOGY IS CAPABLE OF, Cont’d:

11. >99% removal of phosphates

12. >99% removal of sulfates

13. Removal of free oil

14. Removal of emulsified oils

15. Removal of dissolved hydrocarbons (Organic acids, Polycyclic aromatic hydrocarbons

(PAHs), Phenols and volatiles)

16. Removal of BTEX (Benzene, toluene, ethylbenzene and xylene, commonly called volatile

aromatic hydrocarbons which are present with petroleum production)

17. Removal of biocides

18. Removal and disposal of all sludge

KAIZENWater Treatment Service

Advantages to the

KAIZEN FLUID SYSTEMS™

Water Treatment Service

Savings – Transportation cost incurred when using salt water disposal wells

Savings – Salt water disposal fees

Savings – Water costs while hedging on regulatory threats and fresh-water

bottle necks

Higher Raw-Water Quality – Lessening the demand for chelators and biocides

prior to downhole injection

Environmental Liabilities Mitigated – Hydrocarbons and most other chemical

additives destroyed, sequestered or recovered, including most N.O.R.M. – resulting

in the ability to reuse water, with lower cost and exposure

KAIZEN Fluid Systems™

KAIZENWater Treatment Service

Advantages to the

KAIZEN FLUID SYSTEMS™

Water Treatment Service, Continued

Versatility – Treatment is effective even with very high salt content waters

with TDS of over 300,000 ppm

Flexibility – Treatment can be located on-site in the form of a permanent plant or

configured as a mobile plant that can be moved from one location to

the next

Reliability – Proven suite of technologies, some that have been in commercial use

over 30 years

Goodwill – Delivering a net gain of water to the region over the life of the well:

providing a “Positive Water Footprint”

KAIZENWater Treatment Service

KAIZEN Fluid Systems™

Kaizen fluid systems inc.

A.L. Sandy McDonald

Box 1024

Grande Prairie, Alberta

Canada T8V 4B5

Phone 1-780-831-0323

E-Mail sandy@renegadedevelopment.ca

Norm Gosa

111 Settlers Trace Blvd. #1222

Lafayette, LA, USA, 70508

Phone 1-214-850-8272

E-Mail normg@kaizenfluidsystems.com