by Mark Patton, President of Hydrozonix
THE OIL-FIELD WATER AND SUSTAINABILITY NEXUS/ENVIRONMENTAL SUSTAINABILITY AND GOVERNANCE
2020 is going to be an interesting year. We have seen environmental sustainability and governance (ESG) take a significant step forward as one of the key principles that will drive the energy industry forward.
We are all aware of the capital markets moving away from oil and gas as an investment. We have also seen the negative sentiment toward our industry take front stage in the Democratic debates, with calls to ban oil.
Many have said the negative sentiment has resulted in our industry becoming “The New Tobacco.” BlackRock, considered the world’s largest money manager, made a bold statement earlier this year when they announced that they would factor sustainability and climate into their investment strategy, further putting pressure on the oil and gas industry.
So, where do we go from here? Well, many companies began making their announcements and strategy known late last year with others beginning this year. Let’s take a look at what companies are doing.
Baker Hughes made a bold statement of its own, one of the first to do so, by saying they would be carbon neutral by 2050. Oxy made a similar statement as did BP just recently looking to become carbon neutral. Equinor took a bolder position and stated carbon neutrality by 2030.
Well, it seems a big part of this will become carbon capture. Oxy, Chevron and ExxonMobil have big plans in this area, with ExxonMobil even looking at carbonate fuel cells as part of their carbon-capture program.
Others, like Shell, announced major cuts in greenhouse gases (GHG) by 2050. Shell’s goal is a 50% reduction in GHGs. Carbon capture, for the most part, is recovering CO2 from the air to offset emissions in other areas.
Essentially, the investment community, Wall Street and the public at large are saying you are not worthy of investment unless you clean up your act. Personally, I think the public at large and to a lesser degree the investment community and Wall Street need to be better informed. Alternative energy, for example, cannot replace oil. It is unreliable, uneconomical for many reasons and is not carbon neutral.
Let’s not even bring up how much wildlife is killed every year from solar and wind farms. You would be surprised. The number is in the thousands yearly. But before I go down that road and get labeled a climate denier, let’s take a real look at our industry. Can we reduce the carbon footprint? Yes. Can we be more environmentally responsible? Yes. So, let’s stop making excuses, and let’s get to work.
Carbon capture, as I mentioned earlier, is about creating an offset for other activities. But reducing emissions in general means less offset, and carbon capture isn’t free. There is a cost to carbon capture, and the first step should really be reducing emissions to reduce the amount of carbon capture needed to get to carbon neutral. So, when do I begin talking about oil-field water management? Well, that would be about now!
Oil-field Water and Sustainability
You see, the oil-field water-management industry has a lot they can do to reduce emissions and improve the industry’s ESG profile. The first has to do with what is already happening—pipelines. Going from truck to pipeline means a greater than 90-percent reduction in emissions and a significantly lower carbon footprint.
This is a normal transition from truck to pipeline, but nobody seems to pay attention to how much this changes our ESG profile and reduces GHGs. The growth of the water midstream is accelerating this transition to pipeline and improving our ESG profile, but nobody talks about it.
We need more water pipelines. And when the protesters line up to stop us, we need to explain we are reducing emissions and GHGs. And when they say, “What about impacts to wildlife?” we can say, “You know thousands of birds, lizards, tortoises are killed yearly by solar and wind farms. Why don’t you let us reduce emissions with a pipeline?” End of argument.
OK, not that simple, but you get my point. We have a story to tell and should tell it.
This brings me to the second topic, recycling of produced water. Recycling isn’t about lowering emissions. It’s more about environmental sustainability. When you recycle, you are eliminating an equivalent amount of fresh water.
In the Permian Basin, we produced about twice as much water as we use for well completions. We could legitimately eliminate all fresh water and still have water left over. Unfortunately, it’s not that easy. We don’t always have the water where we need it and in the right quantities. Well, nothing a few pipelines wouldn’t solve.
You see pipelines can help solve this problem, as well. But there is more to this topic than just more pipelines. Some landowners want operators to buy fresh water and leverage access to their property or mineral rights to freshwater sales. New Mexico resolved this issue with the Produced Water Act. This act says you can void freshwater purchase agreements if you want to recycle produced water.
In New Mexico, the biggest landowners are the state and federal governments, making it easier to get this type of legislation passed. In Texas, private landowners reign and have significant sway over Texas legislation.
I’ve always felt that because of private landowner’s political power, we will never see Texas adopt a similar program. But wait, rumors are that Texas is paying attention to New Mexico and asking a lot of questions about the implementation of the Produced Water Act. If this is true, it could mean an acceleration of recycling activity.
Don’t get me wrong. Recycling will increase in 2020, and we see a nice growth trajectory for the rest of the year. This would be even greater if Texas passed something like the Produced Water Act.
Pipelines, recycling, what else? Well, how about onsite generation of chemicals or using natural processes? There are a few low-carbon footprint recycling facilities in the Permian. I know because we have been involved with them.
Onsite generation of oxidant to eliminate truck deliveries of chemicals, aeration instead of pit treatments with chemicals and gravity settling instead of adding chemical coagulants. You see, even recycling can reduce carbon footprint while being more sustainable by eliminating fresh water.
Most publicly traded majors are making carbon neutrality a goal because the industry depends on it. And carbon neutrality comes with a cost. We can reduce this cost if we target emission reduction today. We at Hydrozonix are taking this position seriously by introducing our patented HydroFlare, an emission-reduction system for flare gas that evaporates water.
We’ve built the lowering of the carbon footprint into our recycling programs. We all need to take this issue seriously because there are forces trying to make our industry irrelevant, and we need to fight back. How we fight back is with pipelines for emission reduction and recycling for an improved ESG profile. But we can do more.
We will be making some significant announcements in the coming months on how we will help our industry on the path to carbon neutrality, but that’s all I can say for now. How’s that for a cliffhanger to have you looking for the next issue?
Authored by Mark Patton
Mark Patton is president of Hydrozonix. He has more than 25 years’ experience in the development, design, implementation and operation of treatment technologies. Mr. Patton’s oil and gas background includes treatment systems for waters, wastewaters, drilling muds, tank bottoms and process residuals. He holds one produced-water patent with two additional patents pending.
Mr. Patton earned his B.S. in chemical engineering from the University of Southern California in 1985.