Water

Water management has always been an important activity in the development and production of oil/gas resources. Moderate volumes of water are required as an input for multiple activities in conventional oil/gas development. Additionally, water is produced by all oil/gas wells, ranging from minimal volumes early in the life of a well to large volumes late in the life of a well. However, water’s importance has increased dramatically with emergence of wide-scale development of shale resources for oil and gas production.

The innovation that has been most critical in making the development of shale resources economically viable, multi-stage hydraulic fracturing (“fracing”), has also dramatically changed water needs. Fracing requires large volumes of water as an input into the well (volumes vary, but typical jobs are often in the 10,000-200,000 barrel range). Roughly 10-40% of the water pumped into the well during hydraulic fracturing returns to the surface (“flowback water”) in the first 30-60 days of the life of the well. In order to maintain production rates over the life of a well, it is common practice to refrac wells one or more times, typically at 3- to 5-year intervals. Finally, a larger number of wells must be drilled to effectively drain a shale field than a conventional oil/gas field. All of these factors amount to a massive volume of water that must be managed over the life of a shale field, significantly more than is typical in the development and production of a conventional field.

Managing all of the water going into and flowing out of a shale well is complex and costly. Water used for hydraulic fracturing must be sourced, transported, and stored, often with many intermediate steps in between. The water coming out of the shale well (both high volume flowback water and lower volume produced water, collectively referred to as “effluent”) must be stored, transported, and either disposed via injection well or treated for reuse or surface discharge. Additionally, the water coming out of a well varies widely in quality, but none can be considered clean without significant treatment to remove salt, hydrocarbons, bacteria, and other minerals. The problem of how to manage water in the context of shale development and production can most aptly be referred to as a “logistical nightmare.”

The figure below provides an overview of the segments in the water lifecycle in the development and production of shale resources, along with the most common approaches to managing water in each segment.

Given the complexity of managing water in the oilfield and the wide variety of activities required, there are many types of firms that supply the products and services that E&Ps need to properly manage and dispose of oilfield-related water.  The figure below provides an overview of the primary oilfield water supply market segments.

Water management in the oilfield is an evolving practice.  The advent of multi-stage fracturing has significantly changed the nature of oilfield water management adding a new level of complexity.  As a result, E&Ps are beginning to think differently about water and pursue more sustainable practices that include optimized consumption and treatment/recycling.

While there have been some issues in places like Pennsylvania (i.e. the Marcellus play) related to oilfield water management, these problems have largely been related to surface storage, handling, and treatment of water, as opposed to downhole contamination resulting from hydraulic fracturing.

The silver lining from the water issues in the Marcellus related to shale development activity is that Pennsylvania is now ground zero for water treatment innovation.  The water space has seen a surge of creativity and an explosion of new technology over the last few years, directly driven by oilfield demand for better treatment technologies.  As these new oilfield water treatment solutions mature, they will eventually make their way back into the general water supply market, improving the economics of water treatment and the quality of water supply around the world.

For a deeper understanding of the cost implications of various water management scenarios and our water cost modeling tool, download our paper which is published in the International Association for Energy Economics, First Quarter 2012 publication…

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