If purely driven by economics, water management in North American Shale will continue to be dominated by sourcing fresh or brackish water and injecting produced or flow-back water in disposal wells.
Given transport is the most expensive part of water management (see previous post), many operators have been recycling the produced and flow back water to avoid hauling source water and disposal water. This is – in large part – also due to the reduced water quality requirements for frac water.
The need for water treatment will change by 3 drivers:
- Physical availability of source water or disposal sites: Marcellus players for example, have long suffered from limited disposal wells due to the region’s geological construct, and have found ways to minimize water volumes at the wellhead and/or use centralized plants to avoid transport to far off disposal sites.
- Self discipline of the operators: The move to [economically] use more brackish groundwater in Texas has been well documented and will presumably increase as a percentage of total water consumption for frac’ing, thereby reducing the industry’s footprint in such drought stricken regions, and leaving more fresh water for farming or drinking purposes. One need not look far to find examples of this (see Apache and Pioneer).
- Regulatory pressure: While water continues to be a nearly free commodity, regulations have started to – and are expected to continue to – increase the effective or implied cost of water to operators. Disposal volumes in Oklahoma are already under intense scrutiny, giving rise to additional curtailments due to seismicity concerns. In high water cut plays like Oklahoma, the impact of these regulations could be significant. a single dollar cost increase in disposal of a barrel of water could result in $10 dollar increase in cost of producing a barrel of oil, rendering many wells uneconomical.
Technology could help in each of the above areas. Explore new solutions in this space at the Darcy Water Forum.