Water needs to keep looking beyond the horizon, says Amanda Brock.
Water industry players are eternal optimists with short memories. Looking at the global macroeconomics of water scarcity and infrastructure needs, who can blame us? Any logical person would conclude that there is big money to be made and invested. Consider California – one would assume that opportunities abound for smart water companies and investors. However, while there is growth in certain niche segments, there remain few viable options for the private sector to develop and fund long-term sustainable solutions. Water is not always about logic.
The American Water Works Association just published its 2015 Annual State of the Water Industry Report, which again concludes that infrastructure challenges top the list of concerns, and questions how to finance critical infrastructure. AWWA estimates $1 trillion is needed in investment to replace and expand US water and wastewater infrastructure. The reality, however, is that the municipal market has not developed as hoped, and continues to disappoint private sector investors. While the lack of opportunities has driven certain players to exit the market, the sheer magnitude of investment required is so tantalising that they are quickly replaced by fresh players keen to crack the code.
With the hurdles facing the growth of the municipal sector, many hoped that the “next big thing” in water would be water treatment in the unconventional oil and gas sector. But as rapidly as the market grew, it then contracted. Many water and oil field service companies which made significant investments in the sector are scrambling to redefine their focus. While the energy industry is used to dramatic boom and bust cycles, water players are not, and this sort of volatility has hit them particularly hard.
To compound the problem, the US Environmental Protection Agency has now published its long-awaited draft report on the impact of hydraulic fracturing, concluding that frac’ing has not led to widespread systemic impacts on drinking water sources. This result will further delay investment in water treatment in the unconventional energy sector. Only those companies with strong balance sheets, well-defined channels to market and a diverse product and client base, or those with proven, commercialised technologies that lower costs, will survive in the longer term.
So what now? We do what we always do: try to ignore the disappointments and look for the “next big thing” to get excited about.
Players are now rushing to position themselves in the growing industrial and power sectors, fuelled by the availability of cheap energy. Power utilities now see themselves as the next big water players, capable of taking advantage of their access to the retail market, their own water needs, their ability to co-locate power, water treatment facilities and desalination plants and, most promisingly, delivering behind-the-fence, multi-commodity services to industrial clients. Allete, a Minnesota- based power utility, recently bought U.S. Water Services, an integrated industrial water management company, in order to gain access to the industrial sector, and more M&A activity is predicted.
Desalination is all the buzz in Texas, and companies are arriving in droves touting their references and establishing offices. Curiously, European players are looking to expand into the US and Mexico, while US players are looking to expand globally. Meanwhile, all is not lost in the oil and gas water treatment sector. There is continued growth in water treatment for enhanced oil recovery, smart water injection and produced water treatment, recycling, and waste minimisation, while a mid-stream sector is beginning to emerge.
Overall, we should be cautious and consider the implications of the markets that have not developed as anticipated, and consider lessons learned. Making money and succeeding in the water sector is hard. But what makes us unique in water is the very fact that we have short memories and are always looking forward. As eternal optimists, we remain convinced that we will always be the ones to find the “next big thing.”]]>
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“We are excited to deliver this state-of-the-art, proven technology to the oil & gas industry. MDA is a superior technology compared to conventional vacuum towers and can be used in multiple applications including deaerating produced water,” said Amanda Brock, CEO of Water Standard.
Lisa Henthorne, Water Standard’s Chief Technology Officer, explains, “The MDA pilot unit produced approximately 5,000 barrels per day of deaerated seawater and operated without chemical oxygen scavenging, scaling or fouling of the membranes for an extended period. The pilot evaluated operating and design parameters such as seawater flow rate, level of pre-filtration, and nitrogen sweep rate. Throughout pilot testing, the MDA unit consistently achieved less than 10 parts per billion (ppb) of dissolved oxygen in the treated water without chemical addition. This compares very favorably to vacuum towers, which normally achieve 50-100 ppb and require additional oxygen scavenging chemicals.”
“When water is viewed holistically across the entire water cycle in the oilfield, the inherent benefit and value of the resource becomes more apparent. Water Standard is focused on maximizing this benefit to the O&G Operator. Costs across the entire water treatment spectrum can be significantly lowered and the opportunities to effectively target specific problems are dramatically enhanced,” Henthorne says. Water Standard is also very focused on reducing footprint and weight of overall water treatment process facilities and can deliver flexible, compact membrane systems for filtration, sulphate removal, low salinity treatment, and deaeration through its C-H2Ocean Spectrum™ technology suite of products.
For more information on Water Standard’s compact membrane deaeration product line please visit http://waterstandard.com/products/, call 713-400-4777, or email firstname.lastname@example.org.
ABOUT WATER STANDARD
Water Standard is a global water treatment specialist and recognized leader in delivering innovative desalination, water-based enhanced oil recovery and produced water solutions to the onshore and offshore oil & gas industry. The company uses proprietary designs and processes employing proven technologies incorporated into mobile offshore facilities or modular onshore customized water treatment systems. Water Standard offers flexible contract options for products and services ranging from specialized engineering and design to turn-key and fully outsourced solutions.
For more information visit: www.waterstandard.com.]]>
The International Monetary Fund in its October World Economic Outlook Report downgraded its growth forecast for the global economy for 2014 and 2015, citing an increase of risks, stagnation, low potential growth in advanced economies and a decline in potential growth in emerging markets. This report did not fully anticipate the impact of the recent rapid decline in oil prices, which have plummeted by more than 26% from a high in June. The International Energy Agency (IEA) followed this negative trend, and this month slashed its forecast for oil demand by 22%, citing the weakest growth in five years, while describing this drop in demand as “nothing short of staggering”. At the same time, the IEA highlighted the growing global glut of oil, fuelled largely by the unprecedented growth of US shale production.
Now Saudi Arabia has weighed in, and made it very clear that in order to maintain its market share, it is prepared to lower prices for a year or two, and will not support higher prices with unilateral cuts in production. Other OPEC and non-OPEC nations are following suit in a move analysts say will curb new investments in the US and global shales, and ultra-deepwater projects. Oil prices then suffered the single largest drop in price in over three years on 14 October, rattling global stock markets, with many assuming the worst is yet to come. In a 2013 article in the Telegraph, oil was referred to as both the lifeblood and poison of the global economy, with the unerring ability to play havoc, and that is exactly what oil prices are doing. What, then, does this all mean for the oil and gas water treatment sector?
Over the last few years, as opportunities for real growth in the global municipal water sector remained tepid, the upstream energy sector emerged as a promising new market, and water players rushed in to compete for market share. Among the larger companies, Veolia and Siemens are now firmly entrenched, with GE and Suez Environnement late to the game, but charting an aggressive course to succeed. Numerous smaller companies have also staked their future in the onshore shale markets. However, given the oversupply of hydrocarbons, there will be a fundamental slowdown in the upstream sector as costs are examined, projects delayed or even cancelled, and many shale development opportunities will be reconsidered and possibly shelved until prices and demand rise again. While there is no need to panic, the cyclical upstream water treatment market is not for the faint-hearted.]]>
Compact Water Handling WS_Upstream Technology Mag
The event starts with a keynote presentation by David Porter, Commissioner of the Texas Railroad Commission and features a panel of experts from the Texas oil, gas, and water treatment industries.
Learn more about the Atlantic Council and this important issue by visiting www.atlanticcouncil.org]]>
First a little history is needed here. Dick Cheney, who had previously headed the giant oil field service company Halliburton, is viewed as leading the charge under the Energy Policy Act of 2005 to exclude hydraulic fracturing from the Safe Drinking Water Act except where diesel fuels are concerned. The US Congress at the time also gave the oil and gas industry other exemptions from environmental regulations, including the Clean Water Act (CWA). These exemptions are sometimes referred to as the ‘Halliburton loopholes’. There is momentum building to find ways to eliminate or undermine these existing loopholes and the EPA is central to this effort.
While the EPA continues to delay its much-anticipated report on the impact of hydraulic fracturing on drinking water resources, it recently issued a series of reports and proposed rules relating to water use and the discharge of wastewater in energy production. These regulations and proposals, while designed to eliminate uncertainty, muddy the waters.
The EPA, for example, has now released proposed rules to clarify what US waters are covered by the CWA. One of the main goals of the revisions is to identify water bodies which have a significant “nexus” to waters currently covered by the CWA and to then evaluate these other waters on a case-by-case basis. The inherent uncertainty of what new waters are now covered has many accusing the EPA of dramatically expanding federal authority over state and private water rights. These rules, if promulgated, will have a definite impact on how energy companies will source surface water and site their production facilities.
The EPA has also released two reports on waste generated by oil and gas production and concludes that the federal government should encourage the development of additional and improved best practices. Produced water is the largest oil and gas production waste stream with more than 21 billion barrels generated annually in the US. However, waste from oil and gas operations falls under one of the loopholes and is currently largely exempt from federal waste regulations. This will change at some point and any changes will directly impact the treatment and disposal of produced water.
The emphasis for oil and gas operators has to be improved self-sufficiency, while efficiently managing the water life cycle using primarily either brackish water for as long as it is not further regulated, or recycled produced water. The opportunity for water companies will be in developing solutions for sourcing, managing, treating, recycling and minimising the disposal of the huge volumes of brackish and produced water needed, as cost effectively as possible.
The EPA’s website identifies all of its areas of concern such as the impact of hydraulic fracturing on drinking water, ensuring the safe disposal of related wastes, underground injection of waste disposal fluids, and use of surface ponds. The EPA concludes that recycling has “the potential to reduce discharges…minimise underground injection of wastewater and conserve water resources”. That’s about as certain as the EPA is going to get right now, but provides guidance the water industry should consider.]]>