Evolving Collaborative Strategies Can Mitigate Impacts and Assure Long-term Industry Growth

Water conveyance is the backbone of many of the new water systems. The various oil and gas basins in the U.S. are each facing unique challenges and are working out their own solutions.

Nearly three years ago, I wrote an article for this magazine about the importance of water infrastructure (see SPWM, Jan-Feb 2016, pg. 26). At that time, oil prices had dropped below $30 bbl., which turned out to be the the low point in the downturn. I can’t take credit for the rise in oil prices since then, but at the time, with the rig counts falling, demand for source water and water disposal also fell. Very few producing companies expended capital on water projects making it a difficult time for many producing companies, service companies and their employees.

As prices revived in early 2017, many companies began to reconsider water planning and how to optimize costs and operations. Numerous producer and midstream water projects have been announced and water systems in many basins are growing. As industry water sourcing and disposal requirements steadily increased in 2018, companies have put the oil price downturn behind them and are now more concerned about potential water constraints.


Today’s unconventional wells are drilled to longer lateral lengths and demand higher water concentrations per stage. As a result, overall water use per well has risen consistently. Today’s typical well will likely produce much more oil and gas than wells developed before 2016. The source water demands of hydraulic fracturing has created a scramble in key production areas to lock up water for future needs. Often, the best solution involves a reliable water source and pipeline to deliver the water.

The demands of hydraulic fracturing for source water has created a scramble to lock up water for future needs.

Primary domestic oil and natural gas basins. Map by DrillingInfo.Primary domestic oil and natural gas basins. Map by DrillingInfo.For produced water, the economics of piping produced water to nearby saltwater disposal (SWD) wells are improved due to increasing volumes of water with increased activity.

Another trend is use of brackish water and/or reusing produced water in key basins. Most mid-size and larger producing companies have established corporate goals to reduce freshwater use in operations. The ten largest companies surveyed for this article have all pledged to decrease freshwater use. The companies include: ExxonMobil, Shell, Chevron, BP, ConocoPhillips, EOG, Oxy, Anadarko, Pioneer, and Concho.

Our survey included discussions with water managers in the major oil and gas producing regions. Each manager cited an objective to use nonfresh water sources when possible. The most commonly used non-fresh water sources were brackish surface or groundwater, produced water, and municipal wastewater effluent. In some regions, especially the Permian and Eagle Ford, brackish water is preferred over freshwater by many companies. This makes available more freshwater for agriculture, human consumption, aquatic life, and other industries that require freshwater.

As source and disposal costs have increased in some areas, the economics of produced water reuse are improved. A significant number of new projects have been announced, especially in the Permian and Oklahoma.

The use of impoundments for water storage complements water pipelines and help smooth out the balance of water into and out of the systems. Impoundments as large as 1 million barrels of water are seen in the Permian Basin in particular. On the other hand, Pennsylvania regulators are not allowing new impoundments due to environmental concerns.


Increased activity in western Texas and southeastern New Mexico strains water sourcing but offers opportunities for efficiencies in water management strategies. There is a correlation between rig counts and demand for source water and for water disposal as it is understood that new unconventional wells normally flow much higher water rates than older, unconventional wells. The Permian Basin continues to lead all other basins in the number of rigs running and the number of announced water projects. Companies report building water networks to move produced water by pipeline rather than by truck. This represents a major investment toward reuse capability and a reduction in emissions and community disturbance.

Of the largest companies operating in Permian, all report that they are now reusing produced water. This increase is substantial compared to recent years when only a few companies were reusing.

Shell, an international oil major, reports increased water recycling in western Texas. In late 2016, the company replaced about 40 percent of freshwater use by recycling produced water near new developments and now reuses produced water sourced from three saltwater disposal facilities. Apache Corp., based in Houston, reports that in 2017, recycled produced water made up more than 40 percent of the company’s hydraulic fracturing water usage in some of its projects in the Midland Basin. The company’s 2018 goal is to raise reuse to 50 percent where possible.

spwm dunkel3Drilling rig developing an Apache well in the Permian Basin. Photo by Apache Corp.SM Energy, headquartered in Denver, is building water pipeline infrastructure in Howard County, Texas. The company reports moving more than 95 percent of its source water via pipelines. It also ships produced water via pipeline to reduce truck traffic.

Fasken Oil and Ranch, a privately held company based in Midland, reports it reuses produced water for hydraulic fracturing. Water needs that are not met by reuse are sourced from available brackish. Matador Resources, based in Dallas, reports it sourced 26 percent of the 11.6 MMbbl of water needed in 2017 from reused produced water in the Delaware Basin. The company recycled more than 9 MMbbl of water since May 2015 through recycling facilities in Loving County, Texas and Eddy County, New Mexico.

Matador reports a recycling capacity of 160,000 BWPD and plans to expand capacity to 220,000 BWPD.

Chevron, based in San Ramon, Calif., reports more than 95 percent of the water used in Permian Basin well completions is from brackish water sources.

H2O Midstream, of Houston, reports opening the first truckless produced water hub serving the Permian in Howard County, Texas, with pipelines, storage and disposal wells. It acquired produced water assets from Encana Oil and Gas in June.

spwm dunkel4Solaris Midstream, of Houston, states it completed more than 50 miles of 12- and 16-inch produced water pipelines in Eddy and Lea Counties, New Mexico. Plans call for building out 300-miles of high-capacity water lines through 2018. Earlier, Solaris acquired water supply company, Vision Resources, adding more than 15 MMbbl. of industrial water capacity per year plus access to water sources, freshwater storage ponds, and more
than 200 miles of water supply lines.

WaterBridge Resources, a private midstream water company based in Houston, announced a partnershipwith the City of Fort Stockton, Texas, to purchase water resources for oil and gas operations. It then acquired Arkoma Water Resources, operator of 110 miles of water pipelines, and EnWater Resources, of Midland, and its water management assets including 100 miles of pipelines and five SWDs.

Layne Christensen, acquired in June by Granite Construction, of Watsonville, Calif., provides water sourcing, field services, and reuse to operators in the Permian. The company completed a 20-mile, 200,000 BWPD capacity water pipeline system in 2017.

In summary, Permian has many new water pipeline systems, treatment facilities and impoundments to facilitate water reuse.


Oil and gas operators in the Marcellus and Utica plays face different water challenges than those in the Permian. With limited disposal formations, the region has seen high levels of reuse for many years. According to the Pennsylvania Department of Environmental Protection, in 2013 produced water reuse was approximately 90 percent with the other 10 percent injected in UIC wells. Operators find that water reuse is economically viable due to shorter truck transfer routes to nearby hydraulic fracturing sites.

The Marcellus and Utica regions have led the way in development of commercial water treatment plants. These plants, some operating since 2010, take water from multiple producers and have the capacity to store water until needed for reuse.

Chevron reports its Appalachia region recycled or reused 97 percent of produced water in 2014 and 2015. The company creates water-sharing partnerships with local operators to facilitate reuse of Chevron’s produced water. These partnerships maximize water recycling to offset freshwater demands and limit disposal volumes. Since March 2017, Chevron Appalachia has shared approximately 667,000 bbl. of water.

Hess, an independent E&P company headquartered in New York City, states it reused approximately 2 MMbbl. of produced water for hydraulic fracturing in 2017, offsetting freshwater use by that same amount.

Range Resources, an independent E&P company based in Fort Worth, states that in its core Marcellus operating area, it uses treated water that originated from other operators which contributes to a play-wide recycling and reuse program. The company recycles nearly 100 percent of its produced and process water.

Eureka Resources, a private water services company based in Williamsport, Penn., operates three commercial water treatment plants with a combined treatment capacity of 10,000 BWPD. Two plants have a permit to discharge treated water to the Susquehanna River and one plant also removes methanol from water for resale to local natural gas users. The third Eureka plant recovers sodium chloride and calcium chloride for industrial sales.

Southwestern Energy, an independent E&P and midstream company based in Spring, Texas, reports constructing a water infrastructure project to serve its West Virginia Panhandle acreage. The company notes the project is designed to share produced water with other operators under water-sharing agreements using planned efficient transportation routes. In 2016, more than 708,000 bbl. of produced water was used by other operators.

Fairmont Brine Processing, a private water services company based in Fairmont, WVa., operates a produced water treatment facility at its commercial plant in Marion County. Plant capacity is stated at 5,000 BWPD and water treatment costs are about $4 bbl. A larger second plant is projected to have treatment fees of about $2.50 bbl.


Water rules in Oklahoma include a few unique characteristics. For example, Oklahoma surface ownership is more fractionated than most other areas in the West, making obtaining rights-of-way more difficult. Additionally, central Oklahoma plays do not produce large amounts of water, reducing the economies of scale for reuse. Finally, brackish groundwater is not widely available, so operators rely on more surface water sources than in Texas.

Despite the challenges unique to Oklahoma, several producers have reduced disposal volumes by reusing produced water.

Continental Resources, an independent E&P company based in Oklahoma City, operates four recycling facilities in the SCOOP and STACK plays in central Oklahoma with a capacity of 127,000 BWPD and peaking capacity of 333,000 BWPD. Continental states its goal is to reduce its fresh water use by approximately 50 percent. The company works with the state and with other producers to make its recycling facilities available, further reducing the industry’s fresh water footprint.

Newfield Exploration, an independent E&P company based in the Woodlands, Texas, reports that its 30,000 BWPD water treatment facility in Kingfisher County saved the company more than 7 MMbbl of freshwater in its first year. Newfield’s 144-mile infrastructure system serving the company’s Oklahoma operations, mostly in the SCOOP and STACK development areas, has reduced truck traffic by more than 60,000 round trips per year.

Devon Energy, an independent E&P company based in Oklahoma City, states that its pipeline network in the STACK play in west-central Oklahoma, connects well sites to a central water reuse facility. This conserved millions of barrels of water during a drought.

Lagoon Water Solutions, a water midstream company, reports a commitment of private equity up to $500 million to fund company growth in the STACK and SCOOP and other basins in Oklahoma. Once completed, the expansions will give Lagoon more than 350,000 BWPD of disposal capacity across 17 facilities and over 150 miles of water-gathering pipeline.


Anadarko Petroleum, a large independent E&P company based in The Woodlands, Texas, implemented water reuse programs and closedloop water management systems in the DJ Basin. Its underground piping system transports about 98 percent of is water, reducing onsite storage and eliminating approximately 8 million truck-miles in 2017.

EOG Resources, an independent E&P company based in Houston, reports it has drilled water wells and installed water gathering and distribution infrastructure in its Rockies plays, allowing water to be transported directly to company wellsites, decreasing the need for trucking services. EOG also invested in produced water gathering, recycling and disposal infrastructure in the Rockies.

Laramie Energy, a privately held E&P company based in Denver, reports it built a 1 MMbbl lined, treated-water pond serving its hydraulic fracturing and water reuse needs in the Piceance Basin in western Colorado. The system includes water lines and two pump stations for long distance delivery and reuse.

In Wyoming, five major oil companies are planning a 5,000-well development project in the Powder River Basin. In January, a Bureau of Land Management environmental study moved the project forward. Called one of the largest single projects to go through the federal permitting process in Wyoming, the 10-year, 1.5 million acre “Mega Project” would be located between the towns of Glenrock and Douglas. Signing on to the project are: Anadarko, Chesapeake, EOG, SM and Devon. The project could add more than 700 miles of roads, use an additional 28.6 MMbbl of freshwater per year and 30 new disposal wells.

BAKKENspwm dunkel6Oil and gas development in the Bakken generally
does not reuse produced water. Photo by Dan Larson.

In the Bakken area of North Dakota only about 5 percent of the wells drilled four years ago used produced water in fracturing fluid. State regulations prohibit storage of briny produced water in open-air pits and operators report that water treatment and reuse is difficult and expensive due to the very high salinity of produced water.

EOG reports that it has operated a water reuse facility in the Bakken since 2012. The company built a water pipeline system, which consists of more than 40 miles of dual 8-inch and 12-inch pipelines, to carry treated flowback water directly to well pads. As a result, EOG’s well completion costs are reduced as are truck miles needed for water transportation.

Hess states its closed-loop fluid containment systems in North Dakota eliminate the need for wastewater storage pits, minimizing the risk of evaporation or overflow during heavy rain.

Goodnight Midstream, a privately held company based in Dallas, operates 22 saltwater disposal wells (SWD) and water pipeline infrastructure in the Bakken. By connecting directly to operator tank batteries, truck transportation to SWD wells is eliminated.


A few years ago, water companies supporting shale plays were thought of as water sourcing companies or disposal companies or water treatment service providers. In the past two years, a new oilfield service segment of water midstream companies has emerged. These companies own and operate integrated water systems for multiple producers. Water midstream companies can be existing companies that have expanded their offerings or newly formed companies backed by private equity. Several E&P companies have also started water midstream subsidiaries. Finally, several established oil and gas midstream companies have added water to their service menus. As a result, the top producing basins are seeing the benefit of hundreds of millions of dollars invested in new and acquired water infrastructure by these new water midstream companies.

Water management discipline in unconventional oil and gas development is relatively new and has evolved rapidly. Droughts, induced seismicity, technology, proximity of well development activities, disposal capacities, regulatory constraints, and oil and gas prices have all influenced the evolution of water practices by region. Water practices and operations likely will continue to evolve as the industry adapts to changing regulations and technology.

The emergence of the water midstream industry provides operators the benefit of infrastructure and economies of scale to more efficiently and economically manage water, without incurring the cost and operational risk. However, crude-price driven rig counts and advances in drilling and completion technology that require increasing water volumes will stress local water resources and disposal.

The industry gains by examining best practices in each region but must also take a systemic view. Only by extrapolating the impacts of continued production increases and continuing to develop collaborative strategies to mitigate or avoid impacts, can we assure long-term, responsible, sustainable industry growth.


Authored by Michael Dunkel