Read Amanda Brock’s GWI Column “The Texas water rush”
The Texas water rush
Despite the energy price turmoil, frac’ing is here to stay – and so are the opportunities for water treatment, says Amanda Brock.
Much has been written about the ‘water-energy nexus’ since this ubiquitous phrase was first coined. And even more has been written recently regarding water use in hydraulic fracturing in oil and gas production. But there has never been such a dramatic example of the interdependence of water and energy than the current frac’ing boom in a dry expanse of West Texas and New Mexico known as the Permian Basin. This area is one of the most prolific oil- and gas- producing basins in the world, changing the outlook for global energy production. As the energy sector recovers and production is once again on the rise, the focus has shifted to water as a potentially limiting factor which could act as a bottleneck to production. For companies associated with the water industry, that means opportunity.
Water is a primary element in frac’ing, which is a method for producing oil and gas where highly pressurized water and sand are injected into a well, creating tiny fractures that allow more oil and gas to be released from the shale rock. The sand props open the cracks and water delivers the sand in the formation. As frac’ing in the Permian has exploded, water has become the headline event. To put this in perspective, the number of rigs drilling in the Permian has increased from 146 to 361 since June 2016. Permian oil production is projected to be a record 2.49 million barrels in June 2017. To achieve that production level, it takes on average an estimated 300,000 barrels or more of water to frac’ a typical single well. Since 2013, water use per well is in the Permian is up 434%, and we now see the rise of mega-fracs using over 42 million barrels of water. All of this water demand is occurring in a region that receives annual rainfall of about 14 inches a year.
Issues related to water intensity have dramatically increased three interconnected factors: demand for source water to frac’; produced water volumes; and the need to dispose of produced water. On the demand side, Qingming Yang, COO of Approach Resources, estimates that at least 20 billion barrels of water will be needed to develop the remaining Permian resources. This is an enormous quantity of water that will have to come primarily from groundwater resources that are increasingly stressed. On the produced water side, Laura Capper, president of CAP Resources, estimates that roughly 4 billion barrels of water are produced from oil & gas production and extraction in the Permian every year. Again, that number is increasing in the Permian, with an average of 6.5 barrels of water produced for each barrel of oil. This vast volume of water has to go somewhere, and today, the majority of produced water volumes are disposed of into Glass II salt water disposal wells.
It’s hard to grasp the sheer enormity of these volumes and the challenges they post, particularly when you realize the Permian is only one of many oil- and gas-producing basins in the US. Research from Barclays estimates that 30% of a well’s capex is water-related, and 40-50% of opex comes from produced water management and disposal. Water costs for frac’ing in the Permian, excluding transportation costs, generally range from $1.00 to $3.00 per barrel. Operators are now facing enormous challenges related to balancing the availability of fresh water needed for frac’ing with the cost of effectively disposing of the resulting produced water. As a consequence, the opportunity to treat and recycle produced water is now gaining momentum, and Barclays estimates that reusing produced water in frac’ing could lower water costs by 45%. Not only can an operator reduce costs by recycling, but also cut water acquisition volumes, and improve sustainability.
Frac’ing is not going away, and operators have yet to solve the looming water dilemma. Therein lies the opportunity for water treatment providers. Recycling produced water for frac’ing can eliminate bottlenecks and provide operators with the secure supply of water they need to produce oil and gas, while lowering costs and minimizing disposal volumes. It’s a win for everyone, including the environment. In the Permian and beyond, the prize is too big not to get recycling right!