The cost of moving water is becoming a significant factor in the hydraulic fracturing economic equation, water experts said during a Tuesday morning breakfast at the IHS CERA Week energy conference.
“Transportation is a fundamental part of water management,” said Marcus Gay, research director for water information and insight at IHS, estimating that transportation accounts for about 80 percent of the water budget for a drilling project. “The cost of water transportation is a function of the distance traveled, fuel costs and labor costs.”
In hydraulic fracturing, millions of gallons of water are mixed with fine sand and chemicals and are injected underground at a high pressure into a well.
But product from the well also contains a large amount of water, which – like the water used fracturing fluid — must be transported or otherwise disposed of. It typically requires 1,900 truck trips to haul water to and from a well site, according to the Marcellus Accountability Project.
For every gallon of oil that a well produces, it produces three to five gallons of water, said Walter Dale, business manager for water solutions at Halliburton. Finding ways to clean up that water and reuse it solves two problems, Dale said.
“You not only eliminate a barrel of water that needs to be trucked in, but also a barrel of waste water that needs to trucked out,” Dale said.
Water service companies view the high cost of water transportation as an opportunity that creates a need for water pipeline infrastructure, which only now is beginning to develop in some major plays.
“The cost of water transportation is the overriding driver that gives a company like ours tremendous opportunity to minimize that cost by providing infrastructure,” said Johan ver Loren van Themaat, vice president at High Sierra Water Services.
Panelists agreed that reducing the amount of water used in fracturing and increasing the amount that can be reused are the keys to making the technology economic and more environmentally friendly. Industry is working on both strategies.
Little more than 20 percent of water used in hydraulic fracturing now comes from recycled or brackish water, according to the Texas Oil & Gas Association.
Dale said Halliburton is working to lower its demand for fresh water in hydraulic fracturing by 25 percent by 2014, while still improving the efficiency of its wells.
He said Halliburton is working on development projects that could eliminate the need for about 90 percent of the future demand for water disposal wells—the final destination for most oil field water now — but noted that there will always be some excess water produced by a well that will require disposal, which will bring associated costs with it.
“If you can take that water and make frac fluid, you can eliminate it,” Dale said. “But there is an economic aspect to that puzzle – what are we going to do with that water once the rigs – and the demand for it – are gone?”