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Unconventional Shale: The Future of Water Management in the Most Talked about U.S. Industry

Unconventional Shale: The Future of Water Management in the Most Talked about U.S. Industry






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    Unconventional Shale: The Future of Water Management in the Most Talked about U.S. Industry Unconventional Shale: The Future of Water Management in the Most Talked about U.S. Industry Presentation Transcript

    • Unconventional Shale: The Future of WaterUnconventional Shale: The Future of WaterManagement in the Most Talked about U.S.Management in the Most Talked about U.S.IndustryIndustryWhat andWhat and where are the growth opportunities for water treatment in thewhere are the growth opportunities for water treatment in theoil and gas shale basins?oil and gas shale basins?Ankur Jajoo, Industry AnalystAnkur Jajoo, Industry AnalystEnergy & EnvironmentApril 18th 2013© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
    • Ankur JajooFunctional ExpertiseExperience in market research and growth consulting with particular expertise in:- Market based competitive strategies (Oil and Gas E&P, Sewage Sludge)- New market explorations within market verticals- Return on Investment (ROI) models and assessment of emerging and disruptive technology trends.- Analysis of production and consumption behavior within wastewater treatments and specialty chemical treatments withindifferent market verticals using statistical benefit-cost analysis, and other strategic models for use in syndicated researchand custom business consulting projects.Industry Expertise- Environmental Market– Water and Wastewater Treatment in Oil and (Shale) Gas, Petrochemicals, Food and Beverage,Drinking Water, and Municipal markets. Air Pollution Control Technologies in Oil and Gas and also Energy and PowerIndustry.- Building Technologies-Datacenters, Air Conditioning and Lighting- Chemicals & Materials – Thermal Printing & Waxes- Industrial Automation & Process Control - Industrial AC/DC Drives2Ankur JajooIndustry AnalystFrost & SullivanNorth AmericaSan Antonio, TexasWhat I bring to the Team- Best Practices from other industries on how to develop winning strategies to penetrate new clients.- Experience in covering a broad range of sectors, leveraging long-standing working relationships with leading industryparticipants’ CEO’s and senior executives in:Environmental Technologies, Oil and Gas E&P, Chemicals & Materials, Industrial Automation & Process Control,Security & Defense- Global perspective on purchasing requirements and procurement process across multiple vertical markets- Critical thinker that solves complex business challenges- A proven leader that can work with various stake-holders to execute strategic initiatives and successful projectmanagement on global projectsCareer Highlights- Worked directly with major chemical , energy and environmental companies, 212 Resources, TSK Water, PentairFiltration, Toray Industries, Phillps, GE Oil and Gas, Brady Corp, Bunge, Synagro ,ThermoEnergy, Baker Corporation.- Published articles on Environmental Leader, Oil & Gas Online, San Antonio Business Journal, Bloomberg, WaterOnline, Down To Earth.Education- Business Management Studies from University of Bradford, England
    • Focus Points• Water Treatment and Management Trends• Future of Water Treatment Companies• Drilling Activity Trends3• Key Shale Play Activity• Conclusion
    • Why Water Management Development Is Important inUnconventional Shale Play?• Future energy industry which will affect the long term source ofpower generation affecting all industries – multiplier effect.• Importance of fresh water consumption and management forhydraulic fracturing – the scarcity and value of water usage.4• Key Market Challenges – Low natural gas prices, watercontamination, permit approvals, competitive disposal methods• Potential $ Billion market opportunity for the industry supply chain• Constant changing market dynamics and learning is a must.
    • Water Treatment and Management Trends
    • Water Treatment Current and Future DriversKey Industry Drivers: Water Management in United States Shale Basins6Water managementchallengesEvolvingdevelopment oftechnologies.Disposallimitations andfresh waterusage limitedSource: Frost & Sullivan analysis.
    • Water Treatment Current and Future RestraintsKey Industry Restraints: Water Management in United States Shale BasinsEnvironmentalchallenges andpolitical challengesHigher levels of1) Dry gas market haslimited drilling activity andneed for water treatment.2) Service companiesbuilding their owntechnology portfolios7Higher levels ofTDS which can bereusedEach shale basin,each well producesvarying levels ofwaterSource: Frost & Sullivan analysis.
    • Future Market Trends
    • Present Current and Future Key Trends: 2013-2018Current:1. Wet gas/ liquid rich plays is where current drilling activity lies.2. Best economic use of water management services.3. Growth opportunities in shale basins will be with liquid oils.9Future:1. Stronger opportunity of M&A’s or JV’s for technology manufacturers.2. Infrastructure development to recover by-product gases.3. Average cost of drilling a well is dropping through advancedtechniques water management costs need to drop.Source: Frost & Sullivan analysis.
    • Key Future Technology Trends and Solutions• Frac fluids using less fresh water• Lowest capital and operating costs• No perfect solution or technology10Find most cost effective and practical solution, that meets statelevel compliance, recovery and use as by-product or.......Fracking without water ??? WATERExpensive, but possible for the market in the long termSource: Frost & Sullivan analysis.
    • Drilling Activity Trends&Future of Water Treatment Companies
    • Oil or Gas?• Research suggests the short term future lies in liquid oils and wetgas.Liquid Oil Wet Gas Dry Gas• Bakken Shale• Eagle Ford• Cana-Woodford• Marcellus Shale(South-westPennsylvania)• Marcellus Shale(North-east andWest Virginia)Key Shale Basins Targeted for Drilling OpportunityKey Shale Basins Targeted for Drilling Opportunity12• Drilling economics affect profit marginsSource: Frost & Sullivan analysis.• Cana-Woodford• Permian Basin• Utica Shale• Niobrara ShalePennsylvania)• Utica Shale• Bakken Shale• Eagle Ford• Permian BasinWest Virginia)• Woodford• Haynesville• Fayetteville• Barnett ShaleImpact WaterManagement
    • Oil or Gas Drilling Rigs?• Shale Gas “boom” is easing up due to low profitability.March 2012 March 2013 % Changefrom 2012Oil Rigs 1,293 1,333 + 3.1%Active Rigs in the United States as of March 2013Active Rigs in the United States as of March 201313• Oil producing fields or wet gas plays is where activity is.Source: Frost & Sullivan analysis.NaturalGasRigs691 420 - 39.2%Data Source Statistics : EIA 2013.
    • Shale Basins Challenges and Opportunity• Marcellus and Utica Shale:• Ohio EPA and Ohio DNR are identifying treatment technologies.• Liquid oil in Utica and wet gas in Marcellus• Bakken Shale:• Liquid play – oil and gas. Produces by-product gas which is flared14• Texas State (Eagle Ford, Barnett Shale, Permian Basin):• Liquid play – oil and gas.• Salt water disposal wells• Rail road Commission removed need for drilling permits.• Cana-Woodford (Western Oklahoma):• Liquid play – high grade crude and economic drilling Source: Frost & Sullivan analysis.
    • E&P Drilling Activity Growth Opportunity• Antero Resources• 84,000 acres in Marcellus, 73,000 acres in Utica• $1.65 billion budget for wet gas exploration• EOG Resources• Liquid play – capital investments into oil weighted plays• Eagle Ford and Bakken Shale Marcellus and Barnett15• Eagle Ford and Bakken Shale Marcellus and Barnett• Range Resources• Liquid play – Permian Basin, Wet gas – Marcellus Shale• 75% capital budget in Marcellus play• Marathon Oil• Liquid play – Eagle Ford (long-term), 410,000 acres in Bakken ShaleSource: Frost & Sullivan analysis.
    • Future of Shale Water Technology Market?• Service companies developing own portfolio or frac techniques usingless water.• Bottom line revenue – How far will manufacturers go to make $$$ ?• Licensing, Joint Ventures, Merger & Acquisitions, Partnerships alikely probability or possibility.16likely probability or possibility.• Technology offering not enough.• Additional services are required to excel and stand out• Focus on shale basins that warrant water treatment• Variance of water levels produced from each basin is challenging andalso the range of practical, economic solutions. OR – adapt to all playsSource: Frost & Sullivan analysis.
    • Conclusion
    • Conclusion Slide: Key Take-aways• No one-stop perfect solution for all basins due to watervariance from each well.• Dry gas is a long term opportunity. Focus is on oil and LNG• Water free fracking – game changer?18• Water free fracking – game changer?• Service companies are constantly striving to find methods ofrequiring less water treatment or frack with less water.• Industry is still evolving to understand the appropriatesolutions.Source: Frost & Sullivan analysis.
    • Next StepsDevelop Your Visionary and Innovative SkillsGrowth Partnership Service Share your growth thought leadership and ideas orjoin our GIL Global Community19Join our GIL Community NewsletterKeep abreast of innovative growth opportunities
    • Your Feedback is Important to UsGrowth Forecasts?Competitive Structure?What would you like to see from Frost & Sullivan?20Emerging Trends?Strategic Recommendations?Other?Please inform us by “Rating” this presentation.
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    • For Additional InformationBritni MyersCorporate CommunicationsEnergy & Environment(210) 477-8481Britni.myers@frost.comAnkur JajooIndustry AnalystEnergy & Environment(210) 247-2423ajajoo@frost.com22Roberta GamblePartnerEnergy & Environment(650) 475-4522rgamble@frost.comNils FrenkelSales DirectorEnergy & Environment(210) 247-2451nfrenkel@frost.com