CONOCOPHILLIPS

Fourth Quarter 2013

Water Technology & Projects: Partnering for growth Finding a way in Bohai Bay WATER

10 Conoco­Phillips water by Jan Hester, photography by Garth Hannum, Patrick Currey and Hall Puckett

ConocoPhillips’­ future depends on water. Without it there would be no oil and gas production. How the company uses its water resources will drive future profitability and its ability Lto produce energy in an environmentally responsible fashion. Water

“The Water Solutions group can be a vehicle to connect across the BUs and to help us improve production, lower costs and manage the risks associated with water use.” – Perry Berkenpas

“To be a great E&P company, we need future water management goals. The to be a great water company,” said Perry team will apply its expertise to support- Berkenpas, vice president, Global Pro- ing business units (BU) worldwide while duction Excellence. “For every barrel of advancing technical capabilities and oil we produce, we manage about three new technologies through research and barrels of water.” development. Samer Adham, manager, Water Solu- “We now have a strong group of experts tions, emphasizes the financial impact of who understand water use in our indus- water on Conoco­Phillips’ business. “If try,” said Dirk Faveere, manager, Engineer- we handle several ing & Technology-Facilities. “We also have Right: (from top) million barrels of Perry Berkenpas, laboratories with world-class capability water per day, our vice president, that can analyze and assess complex water- annual costs will Global Production related issues. The Water Solutions Scale Excellence; Samer be substantial. We Adham, manager, & Water Treatment group in Bartlesville, must get more effi- Water Solutions; Okla., and the Global Water Sustainability cient and effective at Karl Fennessey, Center (GWSC) in Doha, Qatar, will col- director, Water & managing water.” Biodiversity laborate to help BUs worldwide address As the world their water challenges.” population grows and the demand for Adham recently repatriated from Doha, energy increases, the corresponding where he was in charge of establishing greater demand for water will result in the GWSC. “In specialized labs at the higher costs, stricter regulation and more Bartlesville Technology Center, a team interest from stakeholders. of scientists, engineers and technicians Karl Fennessey, director, Water & Bio- use their analytical capability to address diversity, works to integrate water efforts water issues confronting business units across the company. “It’s important that around the globe. The Doha group we continue to improve how we manage will continue to conduct cutting-edge this critical resource. This year we have research and support regional clients updated the Conoco­Phillips Water Action such as QatarGas, but going forward Plan and put water projections into the they’ll be much more involved in long-range planning process for the first company projects and global BU time.” The action plan brings together support. The two teams will be the efforts from businesses and functions fully integrated and will work and sets prioritized goals related to water. together to accomplish the company’s water manage- Water Solutions ment goals.” The Water Solutions group was created The group is also building under the Global Production Excel- a tool kit of technologies lence (GPE) umbrella in 2013 to ensure to help the company deal the company has the technology and with the whole spectrum the technical capability needed to meet of handling and processing

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water. “We will look at our current business, technologies and capabilities,” Berkenpas said. “Then we’ll look at where the company will be in the future and determine what we’ll need to sup- port that business. The Water Solutions group can be a vehicle to 125,000 gallons for drilling and 6 million gallons Above: Mary connect across the BUs for fracturing. Things look very different in Niobr- Katebah, assistant engineer, GWSE and to help us improve ara in Colorado, where the average is 3.3 million Left: Dirk Faveere, production, lower costs gallons per well, 300,000 gallons for drilling and manager, Engineer- and manage the risks 3 million for fracturing. ing & Technology- associated with water The amount of produced water also fluctuates. Facilities use.” “For example, in the Eagle Ford only 10 percent The group also will of the water injected for hydraulic fractur- connect BUs with ing comes back as produced water,” said Greg expertise and solu- Leveille, technical program manager, Uncon- tions throughout the ventional Reservoirs. “In the Permian Basin that company. “For example, using water to cool amount is more than 80 percent. It all depends on heat exchangers has introduced problems in four the geology, and it impacts every aspect of our different countries,” said Berkenpas. “We need operations.” to connect the dots so that knowledge is shared Steve Jester, senior prin- more efficiently.” ciple environmental engi- neer, Lower 48, focuses on water basics It’s complicated issues related to hydraulic Fresh water is not salty. It can come “All water is not created equal,” said fracturing, including water from surface sources, rivers, lakes and Berkenpas. “Some water, such as the fresh and stakeholder engage- aquifers. water that people drink, is regarded differ- ment. “There’s a real Challenged water, also referred to ently from others.” external push for oil and as brackish, is nondrinkable. Unconventional reservoirs and oil sands gas producers to recycle Produced water refers to all water are major contributors to the company’s produced water,” Jester that is returned to the surface through a well goal of profitable organic growth, and said. “But it’s not that borehole during the extraction of oil and gas. effective water management in these simple. We’re working to It generally consists of water originally present areas will be critical. There is, however, make processes as efficient in the formation, water injected to maintain no template for confronting water as possible. When we’re reservoir pressure and chemicals used throughout the production cycle. challenges. looking at water manage- The amount of water required ment overall, we may find to drill a well varies widely from that sourcing challenged water can ultimately save region to region and even well to more fresh water than recycling produced water.” well. In the Eagle Ford Shale in Berkenpas notes that water also introduces a Texas, approximately 6.1 million complex set of problems, including corrosion, gallons are used per well, including scale, solids, films and biological substances. “It’s

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Water Solutions team members, photographed at the GWSC: (front, from left) Eman Al-Shamari, Vini Varghese, Kris Bansal, Mary Katebah, Ana Santos; (back, from left) Isik Turkmen, Nabin Uphadyay, Arnie Janson, Altaf Ahmed Hussein, Samer Adham, Joel Minier Matar and Samir Gharfeh.

Below: Greg Leveille, like taking medications,” said Berkenpas. “You Unconventional reservoirs technical program manager, have to consider the side effects.” and oil sands Unconventional Reservoirs According to Faveere, the challenges associated Companies that produce oil and gas are progres- Bottom: Steve Jester, senior sively using more unconventional methods, most principle environmental with water are diverse and highly specialized. “We engineer, Lower 48 could be working with a BU to help minimize of which require significant amounts of water. To their fresh water consumption. At the same time date, the industry has mostly conducted hydrau- they could also be dealing with scaling that’s a lic fracturing using potable water from surface byproduct of produced water. Simple or complex, sources, rivers, lakes and aquifers. our water professionals are available to strategize “It’s expensive to truck around fresh water, and and troubleshoot.” we’re sensitive about using a vital resource,” said Regulations add to the range of issues involved. Leveille. “We’re trying to utilize less fresh water For example, Australia doesn’t allow deep well by developing technologies that will allow us to reinjection, so producers are required to recycle use more challenged water, and we’re making and treat produced water. Also, Canada encour- good progress. In the Permian Basin pilot test ages producers to recycle 80 to 90 percent of fresh where we used 100 percent recycled produced water from aquifers. “We have to make sure we water, it cost less than if we’d used fresh water (see stay involved in the regulatory process,” Jester Success story: Permian Basin). That’s good for the said. “It’s important at both the state and federal environment, the company and the shareholders.” level for us to be able to comment on what works The situation is different in the Eagle Ford, and what doesn’t.” where wells produce almost water-free. “Our Ramesh Sharma, staff process engineer, Water options are to use challenged groundwater Solutions, admits that the challenges are compli- sources, and we’ve started to run some experi- cated. “Our mandate is to provide cost-effective ments around that,” Leveille said. “Reducing the solutions. We try to find technologies that reduce total volume of water used is also valuable, and in operating costs and don’t produce byproducts that Eagle Ford we’ve reduced water use by 45 percent are difficult to manage.” per well by optimizing hydraulic fracturing.”

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Left: David Brown, pro- gram manager, Oil Sands & Heavy Oil Success story: Below left: Kris Bansal, engineering fellow, Water Solutions Permian Basin Water is scarce in the Permian Basin of West Texas, where there is little rainfall, and energy companies compete with agriculture for fresh water. Ramesh Sharma, staff process David Brown, pro- engineer, Water Solutions, and a committed multidisciplinary gram manager, Oil Sands team from the Permian Basin BU headed by Austin Shields, & Heavy Oil, describes completions engineer, looked at ways to complete wells using the challenges of pro- challenged water. ducing from oil sands The team recently completed their first well using 100 per- at Surmont in Canada. cent treated, recycled produced water. “The demand for water “Produced water is a plentiful resource, especially in the for all operators means Permian, so it makes sense to use it instead of disposing of it,” that we have to pull Sharma said. “We’re getting experience under our belt. This more and more chal- was our third in a series of five wells. We worked up from using lenged makeup water 50 percent recycled water on the first and 75 percent on the from deeper under- second well. We’ll use 100 percent recycled water to complete ground. If we don’t the fourth and fifth wells. As of the end of October, we will have remove the minerals and used 90,000 barrels of treated, recycled produced water in organics from feedwater, 30 stages of hydraulic fracturing. we get fouling that requires us to shut boilers down periodically for cleaning. As well as causing down- time, this makes it difficult to meet the 90 percent produced water recycle goal.” Optimizing the water-handling process requires quick, effecting monitoring tools. “Those capabili- ties have not been in place for the types of water that we’re dealing with,” Berkenpas said. “We’re testing some new tools on that front to enable us to get online, real-time testing results. That way we can adjust processes along the way.” Online testing can speed up production processes, lower costs and help reduce environmental impact. One application at Surmont addresses the need for monitoring the silica management process to minimize boiler fouling. “We have developed two industry-leading online monitoring systems, with more on the horizon,” said Kris Bansal, engineering Austin Shields (left) and Ramesh Sharma fellow, Water Solutions. The online silica monitor, the first in the SAGD “It all started with our project and an idea,” said Sharma. industry, helps prevent boiler fouling. “With online “The project worked beautifully because the Permian team was monitoring we can see the precursors of events so supportive. We were incredibly fortunate to find a business before they cause major problems,” Brown said. partner with a problem and a commitment to solving it. Water “Then we can take steps to mitigate these issues and Solutions is an appropriate name for the group. This is what we reduce downtime.” do – come up with solutions for difficult problems.” Brown points out that when Surmont 2 comes

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Below: (from top) Dan Smallwood, manager, Gulf of Mexico Deepwater Water matters Asset Development; Cindy Smith, supervisor, for our future Water Solutions; Greg How Conoco­Phillips manages water is McLelland, staff scientist, a metaphor for sustainable development Water Solutions because it matters to people, the planet and profits. Communities naturally care about on line, the water treatment process will be more protecting potable sources to ensure efficient because of new technologies that have ample supplies of clean water, so they the potential to help the company more cost- ask about potential impacts from drilling effectively increase the percentage of recycled and hydraulic fracturing. This underscores water used, comply with regulatory guidelines and the link between environmental and social significantly reduce the environmental impact. impacts of water stewardship. There is also economic value to Deepwater responsible water use, with conservation In offshore operations, high equipment costs can and spill prevention measures effectively make a project uneconomical. To be successful in reducing financial and reputational risks this key area, Conoco­Phillips will have to embrace to the company. Specifically in Eagle Ford, optimizing hydraulic fracturing has new technologies with minimal footprint and reduced water use by 45 percent per well weight, two key things that add to the cost. – netting a measurable improvement to The company is currently undertaking con- the bottom line. ceptual studies to compare traditional water Respecting water resources offers management systems for both injected seawater great environmental, social and economic and produced water. One emerging technology is benefits. Conoco­Phillips takes this seri- subsea water injection, boosting water from the ously, with a comprehensive approach seabed instead of the surface. “This will depend and action plan to support the company’s on several factors, including how much water we sustainability. need to inject, the subsea architectural layout and our ability to process fluids to meet the specified water quality,” said Dan Smallwood, manager, Gulf of Mexico Deepwater Asset Development.

Supporting worldwide operations through collaboration and teamwork In Bartlesville, Cindy Smith, supervisor, Water Solutions, and her team help global business units address their water challenges. The group’s services include assessing, adjusting and adapting the analytical methods used in production and operations and identifying unknown debris and Preserving and Conserving Water fouling material. is one of the company’s four Global “If a BU finds new material in process equip- Onshore Well Management Principles. ment, pumps, strainers or filters, we get a call to More information about how the company identify it and come up with a strategy for getting manages water can be found in the Water rid of it,” said Smith. “Sometimes it’s not as easy section of the Sustainable Development as one might think. It may require various disci- Report on www.Conoco­Phillips.com. plines, skill sets, collaboration and out-of-the-box thinking to identify and mitigate an unknown.”

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Left: Karsten Sjursaether, scale field specialist, Water Solutions Far left: Doha skyline

Greg McLelland, staff scientist, wants the future treatment strategy. You can waste a lot of business units to know that the group is open for money if you haven’t optimized your chemical business. “We’re a service organization, not just programs. We now have a template we can share a research and development group. If you have a with other BUs.” water problem, we’re here to help.” The group is focused on sharing solutions When addressing BU-specific operations and across the company. “In Bohai Bay, there were production issues, the group functions as a neu- issues with naphthenic acids, something they tral third party, performing only technical analy- were unfamiliar with,” said Baugh. “We character- ses. “The BU might inform us that their inhibitors ized them, determined what caused the problem aren’t working properly, that they have scaling and designed a mitigation strategy. We’re now or flow assurance issues,” said Smith. “One size seeing naphthenic acids pop up in other produc- doesn’t fit all. We address the problem from a holistic perspective, from all scientific angles.” Principal Scientist Tom Baugh focuses on scale, as well as consulting for the corrosion group on water chemistry. Baugh and his team recently completed a project for the Alaska and Norway BUs to identify the best scale inhibitors for various conditions. “One inhibitor might be excellent at addressing scale but less compatible than other products with corrosion inhibitors,” Baugh said. “After getting input from everybody on the team, we make technical recommenda- tions to the BU.” Scale Field Specialist Karsten Sjursaether emphasized the importance of this recent project. “It will have a huge impact on our

tion areas, so we can apply what we’ve learned in China to those BUs. We’re always pleased when Above: Tom Baugh, we can add value for Conoco­Phillips by sharing principal scientist, Water Solutions information that way.” Left: In the Doha labs: Sjursaether also heads up the Global Chemical Isik Turkmen, scientist, Network, the company’s first Network of Excel- Water Solutions, and Joel lence (NoE), and believes one of the group’s key Matier Matar, engineer, strengths is troubleshooting to address ongoing Water Solutions issues and sharing that knowledge. “We’re doing ongoing work to combat, prevent and improve scale management,” Sjursaether said. “Along the way we see similarities between issues and

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Corporate HSE expands water metrics In conjunction with the Water Issues Work- ing Group, the Environmental Assurance and solutions. We want to Performance Assurance groups are working to has a chance to form. If take advantage of oppor- expand water metrics tracked by the company, scale is forming deep in tunities to share what including sources and uses, discharge and the well bore, the only we’ve learned from one disposal and recycling and reuse. The data way to get it into solution BU with another without collected will help contribute to improved water is to place the inhibitor having to reinvent the management and supports the Corporate Water into the reservoir and Strategy and Action Plan. wheel. It’s also important adsorb it into the rock “Before 2013, we only reported total fresh to have the right pro- water use and total discharged,” said Jennifer surface. Then the scale cesses in place so you can Barringer, manager, Environmental Assurance. inhibitor dissolves into make the right decisions “The new requirements will give the company the water stream and in a timely fashion.” a more complete picture of how this important guards against scaling up McLelland and his team resource is handled and where we may need to the well head.” are currently involved in improvements. It will also help keep us aligned McLelland and his two key areas. The first is with our peers in the industry.” team also support the scale inhibitor evaluation New data collection requirements apply only Alaska and Norway BUs using core flow equip- to operated assets. Data will be collected in to determine the viability 2013, with an initial roll-up in 2014. ment to simulate an of a chemically enhanced Above: Exterior, inhibitor squeeze into the oil recovery (CEOR) Qatar Science and reservoir, a common scale project. “The reser- Technology Park control technique. During production, the inhibitor voir group is evaluating the technical merits and Below right: Interior, dissolves into the brine and prevents scaling. economics,” said McLelland. “If it were successful, Doha’s Museum of “We’ve been doing work for Kuparuk and Alpine we’d have the potential to recover an additional Islamic Art in Alaska, where they do a lot of scale inhibitor 800 million barrels from Kuparuk over the life of squeezes,” McLelland said. “The challenge is to get the project. We’re in the early stages, so there are the inhibitor into the water stream before the scale still a lot of challenges to be met.”

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Left: Samir Gharfeh, GWSC principal scientist Far left: In the Bartlesville labs: Paul Schmidt, se- nior associate technician, Water Solutions, and Ying Xu, senior scientist, Water Solutions

A center of water excellence and it was a great opportunity for us to learn in the desert together in a unique environment.” The GWSC continues to provide specialized technical support On a sprawling, science fiction-modern campus to QatarGas and other local governmental orga- at Doha’s Qatar Science & Technology Park, sci- nizations pertaining to water sustainability, all in entists at Conoco­Phillips’ GWSC are conducting support of Qatar National Vision 2030 and other groundbreaking research that will help business related national development strategies. units worldwide address location-specific water The GWSC team’s ultimate issues associated with oil and gas production. The goal is to use the knowledge GWSC uses its state-of-the-art analytical capa- they capture in Doha to bilities to advance the science around produced support worldwide strategic How important water treatment, seawater desalination and water projects. “Along with our reuse and recycling. advanced lab equipment, we is water to Qatar, a nation that relies on desalinated sea have the expertise to utilize water for 99 percent of its fresh water supply, is Conoco­Phillips? and apply technology,” said a fitting location for the facility. “Water is some- For every 1 barrel of oil production Principal Scientist Samir thing precious,” said Eman Al Shamari, assistant the company: Gharfeh. “We have expertise scientist, GWSC. “Here in Qatar everything • Produces 1.25 barrels of oil that can help Conoco­Phillips depends on water.” equivalent (BOE) of gas. beyond just this region.” Since its inauguration in 2010, the GWSC has • Produces 2 barrels of water. staffed up and is now focused on fully integrating Advancing technology • Sources 1.25 barrels of water and collaborating with the Bartlesville and Hous- As the company moves (approx. 0.2 barrels fresh). ton Water Solutions teams. With their proximity to forward it must find cost- • Treats 3.25 barrels of water. business units in Asia and the Middle East, the team effective ways to reduce fresh - Discharges 0.5. is perfectly positioned to spread its wings. In addi- water use and lower the - Disposes 0.25. tion, the group educates the public and promotes cost and impact of sourcing, - Injects 2.5. water conservation through its visitor center. transporting, treating and The newly established GWSC cut its teeth These are approximate gross numbers disposing of water. To meet for Conoco­Phillips-operated assets. by providing analytical support and treatment these goals, the Water Solu- testing for the startup of the QatarGas 3 lique- tions group is developing a fied natural gas (LNG) megatrain. The company portfolio of technologies to assist business units in had no labs ready at the time, so they asked the addressing their specific issues. GWSC to provide daily analyses of their injecting chemicals. “The startup was flawless, and it was Reverse osmosis an excellent opportunity for us to initiate the lab Widely regarded as the most energy efficient equipment and demonstrate value for Conoco­ method of desalinating feedwaters, reverse osmo- Phillips,” Adham said. “QatarGas had two major sis uses a semipermeable membrane and high- goals: to remove field chemicals before injection pressure pumps to separate feedwater containing and to recycle 50 percent of produced water. We dissolved minerals and other contaminants into were successful in evaluating several methods to two streams – brine (reject) and purified water remove field chemicals and treat produced water, (permeate).

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Membrane distillation This hybrid desalination process uses a tempera- ture difference across a membrane as the driving force to produce high-quality distilled water from seawater or high-salinity brines. The process oper- ates at ambient pressure and can use low-grade waste heat as the key energy source. “You can extract fresh water vapor from a salt said. “Water treatment at Surmont in Canada’s water stream,” said Adham. “Reverse osmosis is oil sands is highly challenging. We’re able to the most common technology for desalinating manage that water as effectively as, if not bet- with a membrane, but the salinity is a limitation. ter than, some of the other producers. In Doha Membrane distillation has an advantage over we’ve been able to apply membrane bioreactors reverse osmosis because the process is not affected to waters that are less challenged than at Sur- by the salt content. mont. We will continue to evaluate the feasibility “Membrane distillation is an emerging technol- of using membrane bioreactors to remove organ- Above: Arnie Janson, ogy that could be applied to treating produced principal engineer, ics from produced water such as waters for recycle or reuse. GWSC Surmont’s.” Through field trials in Qatar we Above right: Eman Al Shamari, assistant know that it works on concen- Forward osmosis scientist, GWSC, and trated sea water from a desalina- Water in the Water Solutions scientists are just Ana Santos, engineer, tion plant. We’re testing in the beginning to research forward GWSC industry field to benchmark the two side- osmosis, another emerging tech- by-side technologies. Hopefully • Source. nology that uses a semipermeable the knowledge we capture can be • Gather. membrane and a high osmotic adapted and applied to purify- • Produce. pressure draw solution to concen- ing and desalinating produced • Separate. trate organics in feedwater. In the water.” • Transport. GWSC research, the feedwater is • Treat. produced water from Qatari gas Membrane bioreactors fields. In produced water there are two • Discharge. categories of chemicals: inorgan- • Dispose. Ceramic membranes ics and soluble organics. While • Inject. Another process being tested as membrane distillation and reverse part of global engineering sup- osmosis can remove inorganics port is the application of ceramic from produced water, biotreatment is the most membranes for produced water treatment. “We effective way to remove organics. This technol- put commercially available ceramic membranes ogy is well established in industrial water treat- into a vessel, and clean filtered water comes out ment. Sewage treatment facilities worldwide use the side,” said GWSC Principal Engineer Arnie microbes to remove organics from water. Janson. “Ceramic membranes can cost-effectively “One promising new technology combines remove suspended particulates from a variety biotreatment with membrane filtration,” Adham of feedstreams, either as primary filters or as

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polishing filters. It’s an established technology Looking to the future Above: Altaf Ahmed Hussain, engineer, that we’re applying to produced water treatment The future looks bright for Water Solutions, with GWSC because membranes are robust and can operate at a seemingly endless supply of interesting projects Above left: Spice high temperatures.” coming down the pike. “It’s a good place to be market in Doha right now with so many new things going on,” Assessing risk said Karsten Sjursaether. “We’re at an interesting Fennessey says that early efforts on water man- turning point with many of the BUs. We expect agement in Conoco­Phillips were led by small new regulations and stakeholder expectations to pockets of interested participants who believed continue to play a significant role in the future, the situation could be improved through increased and we’ll work hard to be ready to take on those collaboration. “As our experience has grown, this future challenges.” informal group has evolved into the Water Issues Adham outlines the Water Solutions group’s Working Group, a team with the expertise to 2014 objectives. “We realize that the water issue develop corporate action plans on water.” is complex, diverse and field-specific. Next year The company has made real progress in the we will complete due diligence on attractive area of assessments and data collection. “When prospects to help us identify and prioritize our we looked at the data we need to gather in order best opportunities. We will also focus on develop- to understand our footprint and opportunities, ing a deeper understanding of how water impacts we recognized that a common set of tools was Conoco­Phillips’ business – its value, volume and not available in the industry,” Fennessey said. costs associated with production in the future.” He and his team worked with the International The group will also continue to expand the water Petroleum Industry Environmental Conservation technology toolkit by building internal capabili- Association (IPIECA) and Global Environmen- ties and exploring commercial or new technolo- tal Management Initiative (GEMI) to develop gies available in the marketplace. standardized tools for the industry to assess water Janson wants Conoco­Phillips BU staff around risk locally and globally. the globe to think of Water Solutions when they The IPIECA tool examines the entire portfo- have a water problem. “Our biggest challenge is to lio of assets with respect to water scarcity. The understand the unique nature of each issue. People GEMI tool is for local application and can be used think there is a magic bullet, but in reality it’s just to assess risk exposures and track action plans for plain hard work – testing, learning, retesting and mitigation. Both tools are now being integrated finally coming up with a solution. But it’s exciting into the company’s routine risk assessment and satisfying to know we’re helping to solve water processes. problems around the globe.” ■

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