Avoid pitfalls and shore-up well economics by partnering with the right service provider.
Time is of the essence. It’s no secret that water management – from sourcing to disposal – is quickly becoming the single biggest challenge to oil and gas production, especially in booming areas like the Permian Basin. In fact, recent forecasts predict that water disposal volumes are expected to double in the Permian Basin by 2022. That means if operators and service providers don’t find a solution soon, oil and gas production costs will significantly increase and may even result in well shut-ins.
Recent disposal well regulations in Oklahoma, paired with new regulations from the Texas Railroad Commission, signal possible future concerns for water disposal.
These regulations target allowable pressures in saltwater disposal (SWD) wells and will result in a significant decrease in how much water can be disposed of. This creates an even bigger case for water reuse due to lack of injection capacity in areas where capacity is limited. Even as companies drill more SWDs, operators have begun to focus on alternative water management techniques such as recycling water and using different water sources, including treated brackish water. These methods allow operators to keep lease operating expenses (LOE) and authorization for expenditure (AFE) low. Basically, it’s time for the industry to go back to the well of ideas for water disposal and reuse – sooner rather than later.
IN A HARD PLACE
Historically, reuse and recycling were only used in areas where water was scarce and hard to source. This was primarily because the infrastructure needed for reuse was cost prohibitive. However, times are changing and reusing water is becoming a more viable solution for operators. Not only is it more economical than ever, reuse is rapidly becoming a necessity. The exponential growth of oil production in the Permian Basin region and proportional growth in water production, particularly in the Delaware Basin, has created a perfect storm of increased water management needs and requirements. Operators now find themselves between the shale rock and a hard place.
Permian water production has created a perfect storm of increased management needs and requirements.
Possible solutions to this dilemma were raised in a panel discussion at the recent Permian Basin Water in Energy Conference, in Midland, Texas.
Gabriel Collins, a Baker Botts Fellow in energy and environmental regulatory affairs, at the James A. Baker III Institute for Public Policy, at Rice University, said that the water midstream sector is key to helping the Permian Basin remain competitive.
Midstream companies, Collins said, are typically known for processing, storing and transporting gas and liquids. Now, midstreams include those that own and manage infrastructure to store produced water and transport it to other locations. Their business models include building and managing SWD wells and transporting water to frac sites, which makes reuse practical via pipeline.
Just like with any business opportunity, there are many obstacles for midstream companies to avoid.
One difficulty to expanded reuse is that many E&P companies organize engineering staff and contractors into silos: reservoir, drilling, completions, and production. These engineers, and their management teams, often have separate goals, issues and budgets that inhibit collaborative communication to achieve big picture goals. A water management provider should be prepared to bridge that gap and create success for the company. Communication and education across these groups is key and can greatly impact the operators’ long-term production potential.
So how do midstream and water companies find their niche? A thorough cost-benefit analysis will examine each operator’s needs, including water quality, geography and more. From there, midstream companies can build a precise program to address the operator’s problems and establish goals that prove how program benefits boost the bottom line.
There is risk to every investment, but with a bit of due diligence and thinking through of possible pitfalls, a largescale reuse project can reap a huge reward.
The four areas operators should look at closely before engaging any water management service provider include: sourcing and water availability, storage, blending capability, and chemistries.
SOURCING AND WATER AVAILABILITY
Because the entire Permian Basin is located on the northern edge of the Chihuahuan Desert, water is understandably scarce. As a result, environmental concerns must be considered whenever a plan calls for using fresh water, especially for oil and gas activities.
It is not surprising that in Texas, freshwater volumes for hydraulic fracturing account for less than one percent of groundwater withdrawals. Agriculture and municipalities are by far the greatest users of groundwater in Texas. Oil and gas producers already rely heavily on recycled and reused produced water for operations, but more can be done.
For example, innovative water managers have found ways to turn brackish water, traditionally thought of as a waste product, into something usable. This innovation must continue to evolve with its top priority finding new sources of water for drilling and completions.
The water management company an operator chooses should provide valid assessments of the most economically viable options and availability of the latest technology for treating produced water while optimizing water quality standards.
When considering a water management company for a large-scale reuse project, there are advantages to choosing a turnkey, one-stop-shop service provider. The company must be skilled in designing, building and operating water infrastructure, including storage, treatment and transfer, trucking, piping and more. Choosing a single vendor to manage the project from inception to completion saves time, money and potential headaches that arise from communicating with multiple service providers.
When evaluating reuse and storage projects, the inflow water quality, and any prior processing or treatment, play an important part in setting storage timelines, processes and potential treatment options. In other words, water composition needs to be thoroughly evaluated to represent its full scope and variability so that a customized solution effectively meets the user’s needs. Processing options for storage should consider the economic impact of the volume of usable treated water (minus discharge volumes) and waste streams after the project is completed.
An emerging topic of discussion is water storage evaporation-rate quantification. When calculating upfront project viability, or during an after-action review, actual water quality and the quantity used during a frac operation is an important part of the economic discussion. Where applicable, evaluation of all alternative storage and processing programs that minimize evaporation can lead to a net benefit to the operator.
Water management service providers that are wellversed in water storage logistics can offer turnkey logistics solutions for all water from the moment it is sourced to the moment it is disposed. For example, Bosque Systems provides efficient design, installation and management of water programs that have a positive impact on LOE, AFE and help support overall investor goals.
Compatibility of freshwater and produced water within the reservoir is an important factor in determining the right treatment solution.
For an operator that is evaluating a water recycling program, the water management service provider should analyze the blending capabilities of each water source based on the subsurface formation and on the frac package being utilized.
Bacteria and other contamination issues can occur within a water network and create problems for all users.
On a recent project in the Permian Basin, Bosque found that there were significant amounts of sulfates present in the sourced freshwater. This led to high scaling tendencies. The customer’s frac package rebuffed high-sulfate water, so a solution included a treatment protocol that reduced sulfate levels and ensured compatibility for the remainder of the completion.
Recently, we have seen many companies commercialize water pipelines and connect SWD facilities to those pipelines, creating a large, hub-like network. Unfortunately, bacteria and other contamination issues can occur within the water network and create problems for all users. Improper blending of waters creates, or expands, problems with souring, scaling and corrosion. When fouled water is used for acreage development, well economics are impacted and production is reduced over the long-term.
Typical water constituents that can have a negative effect on frac packages and downhole conditions near the wellbore or across the formational include: total dissolved solids, chlorides, calcium, magnesium, iron, pH, acid gases (CO2, H2S), sulfates, bicarbonates and carbonates, and oil carryover in produced water.
The wrong chemicals or concentrations can trigger remediation efforts not apparent until months after the frac.
It is necessary to model freshwater and produced water scenarios to understand the potential issues seen in the short term, such as during the frac or on flowback, or during the life of the well. Using available analytics provided by geographical big-data systems, modeling of production losses from these water scenarios can be made with a high degree of confidence. This helps avoid potential issues on both the completions and production sides. Sampling and analyzing water quality before, during and after the operation can reveal trends and tell the story. Often the solution is either lower blend rates by design or make changes onthe-fly, but treating potential issues the right way from the start is the most economically feasible option.
Water recycling facilities should be designed and built to meet the specific needs of each operator. When correctly developed, a recycling facility should have the ability to use up to 100 percent of produced and flow back water onsite when it operates in conjunction with innovative water treatment technologies.
In contrast to freshwater, produced water for reuse is treated according to the operator’s requirements based on the frac package and constituents present in the water. A combined fresh and produced water system manages bacteria, scale inhibition, friction reduction, surfactants, clay control, solids and loading rate to ensure each frac proceeds as planned and the longevity of the wellbore is preserved.
The consequences of choosing the wrong chemicals or concentrations can trigger remediation efforts that may not become apparent until months after the frac is completed and after the production group takes ownership.
According to company research, the importance of proper chemical treatment is vital to a well’s production. Without it, the effects of downhole scaling, corrosion by-products and chemical degradation from stagnant, non-recovered frac water can have a significant impact.
The influence of existing reservoir H2S, bacteria, scaling and corrosion are equally important when determining what may have caused well characteristics to change.
When introducing another fluid to the reservoir, it is critical to consider the lifecycle of water in the short and long-term. Remediation is costly, so it is important to assess all factors to ensure water treatment at various intervals helps prevent harmful issues down the road.
Water disposal volumes are expanding exponentially in the active oil and gas plays and available disposal options are not keeping up. We believe now is the time for industry to widely embrace reuse.
When considering reuse, take a hard look at the field of service providers and choose the one that provides the right fit for your needs. Our company has a dedicated team of experts whose consultative approach is key to developing unique solutions that ensure the operator’s goals are met. By offering turnkey service and collaborative engineering and field services, we can meet the operator’s water quality standards at an economical rate.
Modern, cost-effective solutions are available to reduce dependency on freshwater for well completions and for reuse of produced water. There’s no time like the present to give water reuse a closer look.
Authored by Ryan Boyd, Executive Director of Technology and Chris Kapcsos, VP of Wolfcamp & Special Projects, Bosque Systems