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How the oil and gas industry is using technology to reduce water consumption

Senior Director, Energy and Natural Resources, FTI Consulting

Once considered hopelessly dependent on foreign imports, the United States has recently emerged as the world’s largest oil and gas producer. The “shale revolution”—made possible by technologies such as horizontal drilling and hydraulic fracturing (fracking)—has changed not only America’s energy landscape, but also the global energy market.

But in some regions, concerns about water use have accompanied the U.S. energy boom, for fracking can require millions of gallons of water per well. Though fracking in the U.S. represents only a fraction of a percent of nationwide water consumption, companies are actively developing and using new technologies to reduce water use—a story of success that has unfortunately not been told enough.

http://www.ibmbigdatahub.com/sites/default/files/blog_waterconsumption_blog.jpgFor example, Apache, a major operator in west Texas, is using brackish and recycled produced water for its drilling and fracking operations “without competing for scarce freshwater supplies.” According to Reuters, the company has recycled more than 1.2 million barrels of produced water. Apache sources some of its water from the Santa Rosa aquifer, whose waters are unsuitable for human consumption or agriculture.

Pioneer Natural Resources—another large operator in west Texas—is purchasing wastewater from the city of Odessa to use in its local oil and gas operations. The company’s contract with the city not only provides additional funding for public services, but also reduces the amount of water that must be pumped from underground. Anadarko has a similar agreement with the city of Aurora in Colorado.

This represents a rare win–win–win situation. Energy development has long been a cornerstone of the economy in these regions, and it supports many high-paying jobs. The abundant energy produced allows America to import less, and the use of nonpotable water means that local residents can worry a little less about the availability of underground drinking water.

In some cases, water recycling is not economically viable, but many companies for which that was true only a few short years are now industry leaders in this space. Technological innovations are allowing companies to increase water recycling and improve overall operations.

In 2013, oilfield services company Halliburton documented how a holistic approach to reusing produced water and flowback helped shave as much as $100,000 off the cost of each well for which it was used. The wells, which were in Eddy County, New Mexico, “have shown no loss of production,” the company says.

It costs Apache less than $0.30 to treat a barrel of water for reuse in west Texas. Traditionally, companies haul wastewater to separate injection sites. But it costs nearly ten times as much to truck that same barrel of wastewater for disposal. New technologies are helping oil and gas companies make processes more economical, environmentally friendly and safer.

Water costs can be a significant expense for oil and gas companies, sometimes totaling as much as 10 percent of each well’s capital budget, according to IHS CERA. More innovation means more water savings, which translates to lower costs and, ultimately, the capacity for even greater investment.

As the Wall Street Journal recently reported, “Some of the largest independent U.S. oil and gas companies are spending now to save money on water later.” Those investments, which can total in the hundreds of millions of dollars for some companies, are clearly paying off. It doesn’t take an economist to recognize a burgeoning market for technologies to reduce waste and improve efficiency in the oilfield—a market that’s only going to expand in the coming years.

A critic might suggest that these are merely anecdotes—perhaps high-profile exceptions to the rule. Wastewater disposal, after all, is still a common practice. But only a few years ago, many of these technologies and processes were nowhere to be seen. The challenge then was innovating and using technology to solve a complex environmental problem. Now technology is helping the oil and gas industry overcome many challenges to operate more efficiently and more safely.

Clearly, the oil and gas industry has accepted the challenge of leveraging new technology to improve operations. And the best news is that the innovation is only just beginning.