Source: Houston Chronicle, May 28,2012
Posted on: http://enr.construction.com
By: Jennifer A. Dlouhy
The oil and gas drilling boom that has sent thousands of workers and rigs into North Dakota, Pennsylvania, Arkansas and Texas now is spurring another gold rush, as companies jockey to clean up the briny, metal-laden water that pours out of wells nationwide.
The potential prize is huge, because the hydraulic fracturing process that is key to unlocking new oil and natural gas reserves involves blasting millions of gallons of water, along with sand and chemicals, deep underground to break up dense rock formations and unlock the hydrocarbons trapped inside.
Mounting concerns about the high water demands of fracturing in arid regions and the risks of earthquakes tied to underground injection wells used to dispose of wastewater from the work are driving energy producers to reuse more of the fluids.
This has prompted a scramble among recycling companies to gain a foothold in the new market. They’re pushing various technologies for removing contaminants from water before it is pumped into the ground at wells and clean it up after the jobs are done.
About a third of the water used in fracturing emerges as flowback before a well starts producing, and more comes later from the formation itself as what the industry calls “produced water.” Although smaller in quantity, it tends to be dirtier than flowback.
“This is a billion-dollar game of musical chairs,” said Todd Asmuth, CEO of Madison, Wis.-based AquaMost, one of the companies pioneering technology for stripping contaminants out of water that emerges from fractured wells. “There’s a lot of players out there with technology solutions, and the producers want to have a couple of solutions in hand. But the music is still going on. At some point the music is going to stop and there’s going to be a lot fewer players out there, and it’s a question of who is linked up with the right producers and what the regulatory changes are.”
Brent Giles, a senior analyst with Lux Research who has studied the exploding market for treating fracturing water, says it has been “inspired as much by headlines as gas industry needs.” He predicts “a feeding frenzy that will leave plenty of casualties.”
Change in direction
The push for water recycling marks a change for many oil and gas producers. They historically have disposed of wastewater from hydraulic fracturing by trucking it to municipal treatment facilities or injecting it into deep storage wells.
Both practices have come under fire.
The Environmental Protection Agency is writing standards for drilling wastewater disposal amid concerns that some treatment plants can’t strip out pollutants such as naturally occurring radium, bromide and other toxic or radioactive substances before discharging the water into rivers.
And federal scientists have determined that a rise in mostly small earthquakes nationwide may be tied to the disposal of drilling wastewater through deep-well injection.
Energy producers say recycling water makes sense — especially for drilling in arid regions like Utah and the Eagle Ford formation in South Texas, where a drought last year shut down production. By reusing water in multiple wells, oil and gas producers don’t have to pull fresh water out of the drinking supply.
Houston-based Newfield Exploration Co. has hired two companies to treat wastewater from its hydraulic fracturing operations.
One of the firms, Stuart, Fla.-based EcoSphere Technologies, is using electrochemistry to destroy microorganisms in the water at Newfield’s wells. EcoSphere uses mobile equipment to create ozone by passing oxygen across an electric field; the resulting ozone is then converted into hydroxyl radicals that decompose contaminants.
Electrical approach
Newfield’s other contractor, Environmentally Clean Systems, a joint venture of Dickinson-based MPR Services and Salt Lake City-based Jet Oil Solutions, uses its plant in Utah to treat water from Newfield’s wells in the Uinta Basin. The Environmentally Clean Systems process, known as electrocoagulation, involves passing water through tanks containing electrified plates to form ions that attach themselves to contaminants, making larger bundles that can be screened out.
In many areas, treating and recycling fracturing water makes economic and environmental sense, said Lloyd Hetrick, Newfield’s technical adviser on water.
“If you do your water business right, it can be part of your profit and part of your stewardship program — and they coincide,” Hetrick said.
Treating wastewater can make good financial sense when wells are clustered near each other and the water can be reused quickly at nearby fracturing sites, Hetrick said. But when new wells are isolated — and other disposal options are readily available — it still may cost less to truck the water to injection wells and deposit it deep underground.
The economics of water recycling is pegged to the price of natural gas. With the price now hovering at multiyear lows, some producers shave costs by treating and reusing water instead of acquiring new water and adding pricey chemicals to thwart scaling and microbial buildup that can plug wells.
Other pressures
Environmental concerns and political pressure also are driving demand.
“If you can find a solution where you can save money off a current process and know you’re likely to be in compliance with future environmental regulations, that provides you with a sense of one less risk in your business,” Aquamost’s Asmuth said.
Recycling also combats concerns about scarce water.
“Most operators realize there’s a long-term issue to address, which is how are they going to source water for their fracs long-term,” said Robbie Cathey, president of EcoSphere Technologies subsidiary EcoSphere Energy Services. “Reuse is a solution to that problem. If they can do it cheaper, that’s an added benefit.”
Odd alliances
The focus on water is making some strange bedfellows in the oil patch. EcoSphere Technologies President Charles Vinick, a self-proclaimed environmentalist, said some of his employees might be more comfortable in flip-flops than the steel-toe boots common at work sites.
But such partnerships may become more common, said Giles, the Lux Research analyst. Wastewater companies that see a limited chance to increase business with municipal and industrial clients are lured to the huge potential of treating waste from the booming drilling industry.
“This is so attractive because the money relative to the volumes of water is so high,” he said.
Going waterless?
But he cautioned there are no guarantees of growth. The potential prize could disappear if low- or zero-water methods to fracture dense rock formations take hold.
Several companies are exploring alternatives using propane to break up the underground rock. If you remove water from the process altogether, Giles noted, there’s nothing left to treat.