Shale drilling could be more profitable and more environmentally friendly if companies were willing to put up with an ugly concept: Working with the competition.
Although other concerns remain in cutting down environmental impacts and lowering costs for oil and gas producers – like reducing water use – teamwork could provide major benefits, according to a report from Dublin-based global consulting firm Accenture.
A major problem in shale drilling basins in the United States revolves around companies establishing their own systems and networks of equipment, trucks and machinery, when some of the materials could be shared, resulting in saved costs, said Melissa Stark, executive director of clean energy for Accenture’s energy group and the author of the report.
“More often than not you see parallel infrastructures in the same basin because oil and gas companies really don’t want to share anything,” Stark said. “But we do believe that it’s still worth making a case for (collaboration).”
The report focused on lessons learned from shale development in the United States that could be applied as fracking in shale plays spreads to other parts of the globe. Accenture examined the possibilities for shale development in China, Poland, Argentina and South Africa.
But it also explored some of the failings and opportunities in U.S. shale plays.
A lack of collaboration in developing and serving operations in a remote area can create added costs for each company because of duplicative services, like ample water trucks, Stark said. It can also result in redundant and ineffective infrastructure, like poorly planned roads, she said.
The opportunity to save money by working together has inspired a proposal in Pennsylvania to establish a regional crystallizer facility. The joint effort would provide water treatment options for a companies, according to the report
Similar joint investments in roads, storage facilities or other infrastructure could cut costs and environmental impacts in newly developing basins, although those steps would likely be most effective overseas, where little shale drilling efforts exist, Stark said.
That sort of approach to developing a new shale basin would be similar to urban planning, coordinating shared resources and facilities in a way that would minimize waste and environmental impacts, she said.
The most substantial opportunity to work together in the United States involves coordinated logistics, Stark said. Currently, competitive operations can jam up roads and disrupt other work.
Parallel drilling efforts can also cause increased stress on environments and communities that have to deal with more traffic, noise and pollution, she said.
“You have one truck that’s idling because a driver has been unable to contact his drilling pad and the drilling pad hasn’t been able to tell him there’s a delay in the schedule, whereas another one is waiting for their water and they’re stuck,” Stark said. “There must be a way to optimize the logistics of this much more, particularly because you have large logistics companies like the DHLs and the FedExes that have made logistics a science.”
Better usage of equipment, storage tanks and roads could lead to improvements in water use, resulting in lower costs and environmental strain, according to the report.
“The reason for a lot of that congestion is the volume of water movement,” Stark said.
Water transportation alone can account for as much as 40 percent of hydraulic fracturing costs and up to 20 percent of the cost of a completed well, according to Accenture. Trucks moving water make up 60 to 85 percent of oil field related traffic in shale plays, according to the report.
While reducing overall water use will play a role in cutting expenses and environmental effects, recycling water is currently the most effective way to slash water use quickly, Stark said.
Treating and reusing water used to hydraulically fracture a well would result in fewer trucks having to move water to drilling pads.