Best Practices for Oil, Gas Water Management Still Evolving

Best practices for water management in unconventional oil and gas exploration and production (E&P) are still evolving, with project economics as the determining factor in which water management solution a producer elects to pursue, said industry officials at the IHS CERAWeek conference Tuesday in Houston.

Recent growth in unconventional E&P activity has increased the amount of water used by the oil and gas industry in its operations, with companies addressing issues of cost in transporting water to drilling sites, whether to treat or dispose of water, and growing environmental concerns over the amount of water use and impact of hydraulic fracturing on water supply in shale regions.

The birth of the shale boom also resulted in the birth of the water management industry for oil and gas. And panelists say they are seeing oil and gas producers willing to pay for environmentally friendly solutions as a means of ensuring they can keep their social license to operate.

The hyper-regional complexity of water resources makes defining industry best practices hard to define broadly; instead, industry best practices are being identified on a well-by-well basis, IHS Senior Principal Research Marcus Gay said.

Gay compared the oil and gas industry's efforts to manage water usage in shale activity to a teeter-totter, with social license to operate and economic performance on each end and transportation linking the two.

Project economics, particularly the transportation costs for fluids, pose the biggest challenge for water recycling, said Gay.

The industry is still learning lessons in best practices for water management, Gay commented, citing an example of an Eagle Ford shale play operator that sought to manage its water usage by cutting the supply it was using in its operations. As a result, the company saw lower expected ultimate recovery on its Eagle Ford wells.

High Sierra Water Services has taken different approaches to water management based on its customers needs, said Johan P. ver Loren van Themaat. In Wyoming, the company has worked with a customer to recycle water from oil and gas operations, which is either sent back to the field or to the Colorado River. This approach was taken because of a lack of low-cost disposal options in the area, and is the only place where High Sierra is doing a pure reuse of water.

In the DJ Basin, one of High Sierra's clients has pursued a traditional disposal operation for its water. In the Marcellus play, a new model water disposal plant is an option being studied for water management. While the industry gravitates to water reuse, a place for water recycling does exist; however, a number of factors must be considered, including project economics, water quality, and availability of fresh water, Themaat noted.

With transportation costs comprising 60 percent to 80 percent of project costs, some companies are looking at recycling water, while others are using semi-permanent piping as a solution for transportation. However, solutions such as recycling are only part of the economic puzzle, and will not eliminate the need for disposal wells.

Development of new technologies is also key to allowing the oil and gas industry to better manage its water usage. Halliburton is seeking to lower freshwater demand by 25 percent in 2014 and increase the percentage of produced water being reused in frac fluids, said Walter Dale, strategic business manager for water solutions at Halliburton.

The company's CleanStream and other technology developments will allow for reduced freshwater demand while providing a return on investment for producers representing a "paradigm shift" in the industry, Dale commented. The company's H20 Forward service allows customers to recycle waste streams of produced water for use in well completions. Halliburton announced commercialization of this service Tuesday.

In addition to best practices, water management companies must also decide what strategy should be used once drilling stops. Water is produced through the entire life cycle of the well, and as fields mature, the water management strategy for those fields' changes as well, said Dale.

As shale exploration ramps up internationally, oil and gas companies are starting to adopt a water management philosophy even before drilling begins in regions such as Poland and Kurdistan to keep local residents happy in the former and to manage water resources in an area where agriculture plays a significant role in the local economy, said Kevin Molloy, vice president and oil and gas sector leader at CDM Smith.

The increase in water regulations state by state has made keeping up with the regulatory changes a full time job in itself, said Gay. While the regulations may have slowed work down, they may also help the industry by removing rogue operators from the landscape, Themaat commented. To avoid a black eye on the industry, the water management industry must operate responsibly and not outsource operations.


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