Challenges of managing produced water in the face of rising transport costs, freshwater shortages, and constraints on disposal are giving rise to innovation and change in produced water management practices. In this final article in our series on water, we’ll look at produced water management strategies, current trends for water management, and new business opportunities created by the increasingly complicated relationship between oil and water.
As we discussed in last month’s article, the cost of sourcing and managing water are on the rise as curtailments of water disposal by injection are now a reality in Oklahoma. In truth, operators in the U.S.’s most active unconventional shale plays can’t escape a water management dilemma without changes in practice. Here’s why:
- Unlike conventional well drilling, water can’t be reinjected into the producing formation for waterflooding or enhanced oil recovery (EOR).
- Tighter well concentrations, especially where multi-well pad development is taking place, converges water volumes, and, in turn, increases demand for local disposal wells.
- Water production is concentrated not just in space, but also in time. Much of the water a well will produce during its lifetime is generated in its first year of production adding to high demand for water services which may just be ramping up in areas of rapidly expanding development.
- Lack of stationary oilfield water infrastructure due to the nomadic nature of early shale development.
So, the choices come down to trucking versus pipeline for transporting water and injection or recycle/reuse for managing produced water. But, there’s yet another variable in this most vexing of circumstances – oil price. The volumes of water to manage correlates with the price of oil. Higher WTI prices, say north of $70/bbl, results in a proliferation of drilling and water volumes to source and manage. It also results in the amplified need for trucks, tanks, disposal wells, equipment, and facilities. With oil prices currently hovering around the $50 mark, an operator could spend as much as 50% of a well’s operational expense with traditional produced water management practices. Operators will have to take a longer-term view and adopt strategies to effectively manage produced water such as investing in pipeline networks, treatment, and recycling facilities and relying less on the trucking of water. Recent evidence shows that many operators in Oklahoma have already begun making this change, with some companies further down the road than others. But, it all comes back to money. With costs still a primary consideration, many operators on holding back on significant investments in water infrastructure while searching for the right mix of technology and facilities to fit their needs.
Attacking the issue from many vantage points: Current trends for managing produced water analysis by Oklahoma state’s Produced Water Working Group (PWWG) showed the most viable, near-term option for produced water management is reuse by the oil and gas industry itself. Many other experts, service companies, and entrepreneurs agree. New methods, infrastructure, technologies, and innovations are emerging and deployed into practice not just in our state but throughout the active shale regions of the U.S. There several different vantage points from which operators study and improve their current produced water management practices. Some companies, such as Newfield, see improvements in their water management as a necessary economic choice as well as a competitive advantage. A recent example of this is their newly constructed Barton Recycling center in Kingfisher County. The company invested nearly $40 million for the facility, pipelines, and equipment that will reduce Newfield’s dependency on freshwater while saving on expensive trucking operations transporting water where needed in the STACK. The company estimates the Barton facility will remove 250 trucks each carrying as much as 120bbl per day from local roadways. Devon Energy worked with the Oklahoma Corporation Commission on a 500,000-barrel water reuse and storage facility for its Cana-Woodford produced water. Devon employs a pipeline network that moves water from production sites to the re-use facility as well as supplies treated water for completions. The overall system dramatically reduces Devon’s need for fresh water while lessening its dependence on trucks to move water.
Reed Durfey, a water and technical services manager with Newfield, stands in front of the containment pond at the Barton facility. StateImpact Oklahoma 2017
Other operators who are rethinking their water management strategies are looking for ways to minimize expensive investments in facilities, infrastructure, and equipment. A viable solution for some will be participation in shared water management resources such as water utilities and centralized treatment facilities that are either privately or commercially owned and operated. One example of this is in the Permian where Encana recently sold its water management assets to a service company who will take over management of the infrastructure while opening it up to use by multiple operators in the area. Along these lines is the emergence of a new type of service industry- midstream water management. These companies may be traditional midstream energy providers or private equity-back companies getting into the business of moving water. There are also firms focused on macro-level water information management systems, consolidating data, creating information products, and providing logistics, forecasting, etc. Regardless of their origin and specialty, these new firms are finding their place in the market, especially where the use of disposal sites are curtailed and the need for water logistics and management are great.
Another management strategy plays to the concentrated need for water resources multi-well pad drilling and fracking operations create. Many operators now own pipes and equipment to move water efficiently between pits, wells, and recycling facilities reducing trucking costs, risk, and road wear. Pipes, pumps, etc. can be moved and connected forming custom management systems for the need at hand. In the example below, the operator has “chained” various water facilities together providing 800,000 barrels of fresh and recycled water for a 2-well completion.
On the water treatment and reuse front, there appears to be a small increase in the number of operators treating water for reuse in place of fresh water. Bluefield Research predicts a 10% rise (up from 6% presently) in the amount of produced water being treated and reused by 2026. There also appears to be consideration of reusing produced water from multiple sources provided it meets recently defined quality standards. Numerous methods and technologies for filtration, separation, treatment, and recycling are entering or exist in the marketplace and used by various operators. There are also products aimed at addressing the root of the problem by reducing the amount of produced water altogether. Proppants using a resin chemistry that reduces the production of formation water compared to traditional proppants while maintaining oil and gas production. According to the manufacturer, the proppant increases the profitability of the well by reducing wastewater storage and disposal costs. The proppant also increases hydrocarbon production according to a case study conducted in Oklahoma.
Recycling/reuse of produced water – Will it be enough?
Some industry experts have stated that if every shale well in the US were hydraulically fractured with recycled produced water, it would account for only a single-digit fraction of the total volume of water generated each day. Through its research, Oklahoma’s Produced Water Working Group (PWWG) heightens concern over this observation by raising the problem of large volumes of produced water combined with declining injection capacity and few readily available alternatives for reuse by non-oil and gas entities. While it’s true that recycling, reuse and “upsized” completions require large quantities of water per well (some estimates are as high as 2 million barrels per well), will it be enough to balance the produced water equation?I hope you’ve found this series on Water interesting and informative. Please feel free to reach out to me with your questions and comments. I am available at jparker@tellusgeospatial.com.
Sources: American Oil & Gas Reporter
Bluefield Research
Enid News
Exploration & Production Magazine
EOS Data Analytics
Journal of Petroleum Technology
Oklahoma Water Resources Board
State Impact Oklahoma
Julie Parker has a decade of experience serving the Energy industry where she became an expert in the integration and application of geospatial technologies to exploration and production projects and workflows. Ms. Parker entered the industry in 2006 when she became the first GIS Director for Chesapeake Energy, a large independent producer of natural gas headquartered in Oklahoma City, Oklahoma with operations throughout the U.S. During her tenure at Chesapeake, Ms. Parker built and lead a robust, cross-functional GIS department that gained a reputation for developing and deploying leading edge solutions for nearly all areas of the company.
