In light of the current downturn in oil prices, the Oil & Gas industry is increasingly looking for innovation to enhance operational efficiency measures that have already been exhausted. One piece of the value chain of particular interest to many is Water Management.
Water Management costs are up to 1/2 of well Operating Expenditures and 1/3 of well Capital Expenditures, making it one of the primary targets for cost management in the oilfield.
Where is the largest prize?
Almost half the cost of water relates to transport, which is still dominated by hauling trucks that are difficult to replace given distributed nature of water sources, oil and gas wells and disposal facilities. Various operators are starting to tackle this challenge in different ways:
1) Use the haulers more efficiently through better planning/scheduling, field ticketing and integration with payment systems. Does the marketplace model work here, or is local optimization an unsolvable O&G problem
2) Reduce the need for transport through recycling/reuse and by building storage infrastructure at site to create time overlap between water needs and supply. With reduced quality standards for frac water, will this trend expand in all key plays?
3) Replace hauling through midstream alternatives such as flat hoses for temporary needs during fracking or pipelines for long term needs for managing produced water. There is over a $1 billion of capital chasing midstream business models. How fast will this play out and who will benefit?
Explore new solutions in this space at Darcy water forum.