Chris Sutton – Partner, Clover Global Solutions, LP
Hydraulic fracturing, or fracking has helped spark U.S. oil and gas output in the past five years, but the practice also uses massive amounts of fresh water. Millions of gallons of water are needed to frack just one well. A lack of water can easily hinder fracking, which would in turn slow oil and gas output.
To ensure a continuous water supply for fracking, some drillers – especially drillers in parts of the country affected by droughts and water shortages — are exploring the use of recycled water. Drought has become an issue in Texas over the last few years, and although the recycling practices are slow to catch on there, some of these new methods are proving to be very beneficial.
The Apache Solution
Apache Corporation has more wells in the Permian Basin of West Texas than any other drilling company. In fact, in the Permian Basin’s Wolfcamp shale play, Apache is a water recycling pioneer. The production manager for Apache says that the company recycles 100% of “produced” water, a byproduct of oil and natural gas drilling. Moreover, the company recycles “flowback” water, the water that is pushed out of the well during the fracking process.
In addition to the recycled, produced and flowback water, Apache uses brackish water from the Santa Rosa aquifer, and has completely eliminated the need for a fresh water supply from at least one of its oil wells in Wolfcamp.
Apache treats produced and flowback water with chemicals to remove bacteria and unwanted minerals such as iron. Once treated, the water is stored above ground and piped to a well to use in fracking. Recycling has turned out to be an economical solution for Apache: treating flowback water costs an average of 29 cents a barrel. If the flowback water isn’t recycled, Apache has to pay $2.50 per barrel for a third-party company to dispose of it.
Slowly Catching On
Despite Apache’s successes with reusing water, recycling has been slow to catch on in most of Texas. Although a recent drought caused a shortage of water, in general, fresh groundwater is low cost and plentiful. Furthermore, waste disposal is relatively easy in Texas compared to other states. For example, in the Marcellus shale play in Pennsylvania, operators must drive their waste to Ohio because the geography around the play doesn’t allow for disposal wells.
Although slowly, water recycling is catching on in the Lone Star State and Apache isn’t the only company to reuse fracking water. For example, Fasken Oil and Ranch, operating near Midland, recycles close to half of the water it uses for fracking. However, unlike Apache, which has saved money by recycling, Fasken says that recycling is actually adding to their cost—about $70,000 for each hydraulic fracture. In this specific case, recycling is costly for Fasken because access to fresh groundwater from the 165,000 acres owned by the company bears almost no cost.
Permit applications show further evidence that water recycling is catching on in Texas: Applications for oil field water recycling have gone up from just one or two per year to 9 so far in 2013, and 13 last year. However, there may be more even more recycling going on because the state does not require “mobile recyclers,” which recycle water on or near a fracking site, to get permits.
Conclusion: The Future of Water Recycling
Although water recycling hasn’t eliminated the demand for fresh water in fracking, there has been a shift in attitudes in recent years. Because of factors like droughts and community concern over water usage, companies are beginning to see produced water as an asset instead of waste that needs to be disposed of. If water recycling becomes fully adopted by oil and gas companies, then it’s likely that more money will go into future development. The possibilities go beyond fracking, too – water is already used for other purposes, such as cooling water in power plants. If water recyclers can get water clean enough that it can be used for drinking and household purposes, we could see considerable value.
A few questions come to mind for the reader:
- What do you think is stopping other operators from recycling their produced water?
- Is it too late to apply solutions with fracking’s water problems or getting a justified ROI on a fracking water recycling program?
- Do you think that there are some parts of U.S. shale play where recycling won’t work?
- What are other uses for produced water?
Chris Sutton has a sound foundation in the energy sector contracting from both Client and Contractor sides with specific expertise in building alliances to facilitate service capabilities. To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com.