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Hall murrayaapgdeg savingmoneyconservingfreshwater

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Water Use and Development of the Eagle Ford Shale

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Hall murrayaapgdeg savingmoneyconservingfreshwater

  1. 1. Doug Hall, W D Hall Company AndGene Murray, W&M Environmental Group W D Hall Company Austin, Texas 1
  2. 2. W D Hall Company Austin, Texas 2
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  4. 4. Drought spurring 2011fracking concerns (San Antonio Express-News, 2011) Oil’s GrowingWater availability, not Thirst for contamination, Water (WSJ Dec 6, 2011) worries residents above Eagle Ford Shale (CC Caller, 2011) Karnes County drought nearing most severe stage (mySouTex.com 2011) W D Hall Company Austin, Texas 4
  5. 5. 2012 Growing water needs pit agriculture against recreation Houston Chron. July 16, 2012Water use for hydraulic fracturing in Texas2008 = 36,000 ac/ft; 2011 = 81,500 ac/ft125% increase (TX Oil & Gas Assoc., 2012) Boom Promises 20,000 New Jobs but Shortages Too KATE GALBRAITH (July 14, 2012, Texas Tribune) W D Hall Company Austin, Texas 5
  6. 6. 2013 Collaborative conservation key to ensuring adequate resources (Andrew Sansom, Feb 2, 2013) Drought puts drain onEagle Ford Shale Going Full Speed Ahead (CC Caller, Feb 7, 2013) water supplies for power plants (Houston Chronicle, Feb 6, 2013) Texas study finds increase in use of water used for fracking (Texas Tribune, Jan 15, 2013 For Texas Legislature, what a difference no rain Texas Legislature: Group pursues reuse makes (StateImpact, Feb 5, 2013) of water from fracking (San Angelo Stand Times, Feb 16, 2013) W D Hall Company Austin, Texas 6
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  10. 10. How will we know?Who will decide?Collaboration! ……….. And Planning W D Hall Company Austin, Texas 10
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  16. 16. Is There Enough Water to Expand Development of the Eagle Ford Shale? And the answers are: Water Yes – required volumes exist in the region Fresh groundwater No  supply concerns where drilling intensity is high in rural counties.  fresh groundwater may not always be where it is needed W D Hall Company Austin, Texas 16
  17. 17. Who directly impacts the availability of groundwater for E&P operations? Land Owners Groundwater Conservation Districts (GCDs) Railroad Commission W D Hall Company Austin, Texas 17
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  19. 19.  The water Sheriff is the General Manager of the local Groundwater Conservation District  And the District Board of Directors A water well used solely to supply water to a drilling rig for oil and gas is exempt from obtaining a drilling permit from the GCD Big question – Is a frac water supply well exempt? W D Hall Company Austin, Texas 19
  20. 20. What are they? Desired future conditions are the desired, quantified condition of groundwater resources such as: water levels water quality spring flows, or Volumesfor a specified aquifer within a management areaat a specified time or times in the future. W D Hall Company Austin, Texas 20
  21. 21. Fresh Groundwater Conservation Ideas W D Hall Company Austin, Texas 21
  22. 22. Options Onsite treatment for reuse/recycling of flowback and produced water Use of alternate water supplies Non-water hydraulic fracturing options Opportunities to be smart, cost effective and develop good relationships with local communities W D Hall Company Austin, Texas 22
  23. 23. Onsite treatment for reuse/ recycling of flowback and produced water Railroad Commission has permitted a number of Mobile Produced Water Treatment Companies for work in the Eagle Ford  Treatment choices  For reuse (clean brine/TSS removal (some blending with fresh groundwater) – reuse in fracs  For recycling (clean water/TSS and TDS removal); sold for other uses? W D Hall Company Austin, Texas 23
  24. 24. Onsite treatment for reuse/ recycling of flowback and produced water General water management expenses for E&P operations  Clean water supply acquisition costs  Water supply transport cost  Pipeline costs  Vacuum trucks to remove waste water  Trucks cost to transport produced water to SWD well  SWD well fees E&P operators are paying $3-$8/bbl to convert produced water to clean water + acquisition, storage and transportation costs W D Hall Company Austin, Texas 24
  25. 25. Onsite treatment for reuse/ recycling of flowback and produced water Pros  Lower water acquisition costs  Reduced disposal costs  Reduced use of fresh water  Reduced environmental impact from transport and disposal  Fewer truck trips  Former waste stream becomes part of supply chain  Adding water to the hydrologic system! Cons  COST - If fresh groundwater is abundant and locally available from water wells, treatment and reuse / recycling is not usually economical  Increased environmental risks from additional site treatment operations W D Hall Company Austin, Texas 25
  26. 26. Use of alternate water supplies From municipal wastewater system to industry – Crystal City, Pleasanton, Kenedy, Poth, From industrial wastewater systems to other industry users – San Miguel Electric Coop, Gonzalez Southern ClayBefore either municipal and industrial wastewaters are used for hydraulic fracturing,the transaction will need authorization from TCEQ. Brackish groundwater – Is being used!  Brackish groundwater has 1000 to 10,000 mg/l TDS.  Both brackish and saline water (> 10,000 mg/l TDS) can be used for hydraulic fracturing.  Brackish groundwater is plentiful in many parts of Texas. W D Hall Company Austin, Texas 26
  27. 27. $1/bbl/hrW D Hall Company Austin, Texas 27
  28. 28. Non-water hydraulic fracturing options Providers and users in the Eagle Ford  GasFrac Energy Services, Inc. – uses liquefied petroleum gas (LPG) instead of water  Chimera Energy – exothermic reactions instead of water, metal oxides create heat that expands and cracks the shale  Baker Hughes – VaporFrac uses CO2 or nitrogen instead of water  eCORP Stimulation Technologies - uses propane (Frio County)  Users - Blackbrush Oil & Gas and Jadela Oil Pros – water conservation; reduce costs for water wells; more compatible with formation’s gas; quicker completions with no flowback water; wells can be placed into production faster; fewer additives required; reduced formation damage; cost saving where water isn’t available; helps lift reservoir fluids; no clay swelling; allows more gas to escape. Cons – LPG cost – 50% premium over traditional fracking companies;; Safety compared to water fracs? Potential for the propane to ignite; TBD. Closed pressurized (nitrogen) system, hot zone; smaller jobs than water fracs; open hole vs plug and perf; logistics of NGL delivery; fluid availability. Slow to catch on for some reason? W D Hall Company Austin, Texas 28
  29. 29. Something Else to Consider… W D Hall Company Austin, Texas 29
  30. 30. $$$$$-Saving and Revenue Generating Water Management Ideas Operate centralized treatment facilitiesfor produced water from multiple operators and leases which can be sold for a variety of beneficial uses W D Hall Company Austin, Texas 30
  31. 31. Yes if: There are sufficient quantities and appropriate locations of produced water that are available to treat These quantities are available for greater than 5 years Local fresh water costs increase and available supply decreases The facility operation costs are predictable and controlled The facility stays flexible with cost-effective treatment technology The costs to transport water for re-sale are reasonable The facility has the right to re-sell the treated/recycled water The commercial facility saves $$$$ for E&P operators Operator obtains regulatory and community approval and more! W D Hall Company Austin, Texas 31
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  33. 33.  Water for hydraulic fracturing used in Region L counties  In 2011- 17,500 ac/ft or 136 million bbls (Nicot, 2012, Table 15) Salt water injected/ disposed of in non-productive zones in Region L counties  In 2011 – 70,417 ac/ft or 546 million bbls (W-14 data from existing wells in Railroad Commission files) The potential exists for use of produced water in Region L to fulfill needs of most hydraulic fracturing operations in Region L W D Hall Company Austin, Texas 33
  34. 34. What Does a Stationary, Commercial Produced WaterReuse/Recycling Facility Look Like? W D Hall Company Austin, Texas 34
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  36. 36. High Sierra’s Pinedale Anticline facility in Wyoming treats 60,000 bpd of frac waterW D Hall Company Austin, Texas 36
  37. 37. Red Desert Reclamation, Wyoming20,000 bpd of produced and flowback water W D Hall Company Austin, Texas 37
  38. 38.  Location – close to produced water generators (> 100 wells) from multiple E&P operators and treated water users (within approx. 25 – 50 mile radius) Size – 100 to 300 acres; security fencing Lined ponds and tanks for water storage (500,000 bbls or more); berms for water control Facilities and Equipment – truck loading/ unloading and washing, treatment equipment (able to treat at least 30,000 to 50,000 bpd), office and laboratory, maintenance shop, living accommodations, communication towers, water pumps and pipelines, chemical storage sheds, fresh water well, brackish water well, and SWD well? And a waste storage area. Smart logistical management and process monitoring (software): in-out water volumes, inventory, lab analysis and results, storage and transport/ distribution services; equipment performance Reliable communications and reporting for business, technical, and regulatory needs W D Hall Company Austin, Texas 38
  39. 39. STW Resources to build twofacilities to treat producedwater in Texas, US(Water-Technology.net - February 6. 2013)One facility to be located in Upton County in West Texas and the secondwill be in the Eagle Ford in South Texas Polk Breaks Ground at Recycling Facility in Eagle Ford (Rigzone, Feb 14, 2013) This commercial, stationary recycling facility owned by Polk Operating, LLC will remediate oil-based drilling fluid and cuttings. The 200 acre site will also include a full-service salt water disposal facility and recycling of produced water. W D Hall Company Austin, Texas 39
  40. 40.  Better pricing from economies of scale of a large, off-lease facility Reduce the time E&P companies need to be concerned about treatment of flowback and produced water on their sites Less onsite water handling and storage costs; reduced labor costs More economical and flexible treatment options at the commercial site Fewer concerns with spill and leakage control on the well site Lower SWD well disposal volumes and costs Remediation costs – prevent or minimize costs for spills/leaks Possibility for dependable/reliable access to predictable quality of water for hydraulic fracturing W D Hall Company Austin, Texas 40
  41. 41. “The results of our economic analysis show that, over the long-term, the large volumes of water managed in the development andproduction of shale resources justify investments in watertreatment infrastructure.”“Lifecycle water management in the development and production ofshale resources presents a significant opportunity for costsavings.” Water Management Economics in the Development and Production of Shale Resources, International Association of Energy Economics, 2012, Christopher J Robart, Pac West Consulting Partners, Houston, TX. W D Hall Company Austin, Texas 41
  42. 42.  Approval of stationary, commercial water recycling facilities  Complete the RRC permit application (New in 2013)  What about the issue of air emissions? Communicate with TCEQ W D Hall Company Austin, Texas 42
  43. 43. Is Produced Water a Reliable Revenue Source for Commercial Treatment Facility Owners? What needs to happen? Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases  Looks promising in proposed regs W D Hall Company Austin, Texas 43
  44. 44.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility  Appears the RRC will look to the owner of the commercial facility for liability responsibilities  Still not sure who has the right to sell water W D Hall Company Austin, Texas 44
  45. 45.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility Agreement on analytical measurements and procedures required to document the quality of water when it leaves the recycling facility  How clean is clean? How clean does it need to be for intended uses? And how do you know?  TBD W D Hall Company Austin, Texas 45
  46. 46.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility Agreement on analytical measurements and procedures required to document the quality of water when it leaves the recycling facility Decide if owners of the commercial recycling facility can sell water to users other than oil and gas E&P operations  Depends on the intended usage W D Hall Company Austin, Texas 46
  47. 47.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility Agreement on analytical measurements and procedures required to document the quality of water when it leaves the recycling facility Decide if owners of the commercial recycling facility can sell water to users other than oil and gas E&P operations Besides E&P operations, what are acceptable uses of water from stationary, commercial water reuse/recycling facilities?  Not acceptable for drinking or for watering edible crops  What is OK? Dust control? Boiler feed water? Fire control? Livestock watering? Wildlife habitat? Aquaculture? Irrigation? Vehicle washing? W D Hall Company Austin, Texas 47
  48. 48.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility Agreement on analytical measurements and procedures required to document the quality of water when it leaves the recycling facility Decide if owners of the commercial recycling facility can sell water to users other than oil and gas E&P operations What are the current restriction on use of water from centralized, stationary, commercial water recycling facilities? Will it be necessary to involve TCEQ in approvals for reuse of the recycled produced water?  Signs point to YES (30 TAC Chapter 210E)  Especially if for reuse in non-oilfield situations W D Hall Company Austin, Texas 48
  49. 49.  Approval of centralized, stationary, commercial water recycling facilities Approval to collect and combine produced water from different operators and leases Decide who owns the water once it leaves the lease and goes to the commercial recycling facility Agreement on analytical measurements and procedures required to document the quality of water when it leaves the recycling facility Decide if owners of the commercial recycling facility can sell water to users other than oil and gas E&P operations What are the current restriction on use of water from centralized, stationary, commercial water recycling facilities? Will it be necessary to involve TCEQ in approvals for reuse of the recycled produced water? What about financial incentives for operators or recyclers?  The drum beat has begun. Texas Water Recycling Association (TWRA) – new in 2013 W D Hall Company Austin, Texas 49
  50. 50.  Technology development (Produced water treatment & management) Reliable water chemistry data – before and after treatment Collaboration with RWPD and GCDs Tax incentives Pioneer investors and solid financial analysis Focus on reducing water transport and storage costs Legislative changes and Regulatory rules updatesAll required for recycling and profitable sale of treated producedwater to conserve fresh groundwater in South Texas. Bottom Line: Water is jobs, pure and simple W D Hall Company Austin, Texas 50
  51. 51. Thank YouFor more information / brainstorming: Doug Hall W D Hall Company Austin, Texas 512-306-8444 W D Hall Company Austin, Texas 51

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