Water Use and Development of the Eagle Ford Shale

1. Doug Hall, W D Hall Company
And
Gene Murray, W&M Environmental Group
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2. W D Hall Company Austin, Texas 2

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4. Drought spurring 2011
fracking concerns
(San Antonio Express-News, 2011)
Oil’s Growing
Water 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)
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5. 2012
Growing water needs pit agriculture
against recreation Houston Chron. July 16, 2012
Water use for hydraulic fracturing in Texas
2008 = 36,000 ac/ft; 2011 = 81,500 ac/ft
125% increase (TX Oil & Gas Assoc., 2012)
Boom Promises 20,000 New Jobs but
Shortages Too
KATE GALBRAITH (July 14, 2012, Texas Tribune)
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6. 2013
Collaborative conservation key to ensuring
adequate resources (Andrew Sansom, Feb 2, 2013)
Drought puts drain on
Eagle 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)
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10. How will we know?
Who will decide?
Collaboration! ……….. And Planning
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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
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17. Who directly impacts the availability of
groundwater for E&P operations?
 Land Owners
 Groundwater Conservation Districts (GCDs)
 Railroad Commission
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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?
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20. What are they?
 Desired future conditions are the desired,
quantified condition of groundwater resources
such as:
water levels
water quality
spring flows, or
Volumes
for a specified aquifer within a management area
at a specified time or times in the future.
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21. Fresh Groundwater
Conservation
Ideas
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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
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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?
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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
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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
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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 Clay
Before 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.
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27. $1/bbl/hr
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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?
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29. Something Else to Consider…
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30. $$$$$-Saving and Revenue
Generating Water Management
Ideas
Operate centralized treatment facilities
for produced water from multiple operators and leases
which can be sold for a variety of beneficial uses
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31. Yes if:
 There are sufficient quantities and appropriate locations of
produced water that are available to treat
 These quantities are available for greater than 5 years
 Local fresh water costs increase and available supply
decreases
 The facility operation costs are predictable and controlled
 The facility stays flexible with cost-effective treatment
technology
 The costs to transport water for re-sale are reasonable
 The facility has the right to re-sell the treated/recycled water
 The commercial facility saves $$$$ for E&P operators
 Operator obtains regulatory and community approval
 and more!
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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
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34. What Does a Stationary, Commercial Produced Water
Reuse/Recycling Facility Look Like?
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36. High Sierra’s
Pinedale Anticline
facility in Wyoming
treats 60,000 bpd
of frac water
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37. Red Desert Reclamation, Wyoming
20,000 bpd of produced and flowback water
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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
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39. STW Resources to build two
facilities to treat produced
water in Texas, US
(Water-Technology.net - February 6. 2013)
One facility to be located in Upton County in West Texas and the second
will 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.
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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
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41. “The results of our economic analysis show that, over the long-
term, the large volumes of water managed in the development and
production of shale resources justify investments in water
treatment infrastructure.”
“Lifecycle water management in the development and production of
shale resources presents a significant opportunity for cost
savings.”
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.
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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
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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
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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
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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
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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
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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?
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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
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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
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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 updates
All required for recycling and profitable sale of treated produced
water to conserve fresh groundwater in South Texas.
Bottom Line:
Water is jobs, pure and simple
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51. Thank You
For more information / brainstorming:
Doug Hall
W D Hall Company
Austin, Texas
512-306-8444
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