Unconventional Plays: Water Management’s Evolution and Forecast

Abstract

_ Prior to 2012, water management for unconventional oil and gas plays was in its infancy and was trying to keep up with operations. Questions about the scale of the unconventionals, water-sourcing limitations, economics of water reuse, infrastructure needs, and sustainability were already being considered. Industry volatility, seismicity, and regulatory challenges were major factors continuously during this evolution. Today, many of the initial challenges have been resolved but new challenges persist. Regional water management variations and challenges are apparent. What does the future hold for water in the US onshore unconventional plays? Water Management 10 Years Ago Water management for the US onshore unconventionals has come a long way in 10 years. In the 2011–2012 timeframe, it was still not clear which shale plays would be most viable. Some plays like the Barnett and Haynesville have come, gone, and come back again. In the Permian 10 years ago, operators were asking where they would get the water to complete thousands of wells. Produced water reuse was mostly being evaluated in pilot tests by producers such as Apache, Devon, and Pioneer, but was not considered viable due to the high cost of treatment and transportation by truck. Much of Texas and the West was experiencing a significant drought that also raised concerns about water sourcing for hydraulic fracturing. Despite these challenges, sustainability was considered a factor in these new development areas, but usually was not sufficient to override cost differences. Ten years ago, it was apparent that each basin had unique water management considerations. Some basins such as the Bakken and Marcellus had significant surface water sources available, whereas Texas, Oklahoma, and New Mexico were regularly quite dry. Most areas had good formations available for disposal, with Pennsylvania and West Virginia being the exceptions. A third area of difference was how much produced water flowed from the new wells. The wells in the Permian stood out as having the highest water/oil ratio seen in US onshore production. All of these differences impacted how each region was best able to manage its water challenges. In 2012, the water management strategy to build out water pipeline networks to move large volumes of water was not yet seriously considered by most operators. Earthquakes were not a significant factor in any of the US basins. However, some of the water management issues were changing. For example, the historically independent nature of producing companies began to change as water challenges became viewed as shared problems. Regional water groups were established as companies began to share ideas pertaining to water management. The Energy Water Initiative (EWI) was formed as a group of oil and gas companies trying to improve water practices. Their 2015 report on water management case studies broke new ground for industry collaboration. The EWI report documented seven trends including the ability to use non-freshwater sources and technology innovations making produced water reuse more feasible. Water Management 5 Years Ago Jumping ahead 5 years to around 2017, several macroeconomic events impacted water management for unconventionals. Perhaps most notable was the dramatic oil price collapse in late 2014 from roughly $100 to about $50/bbl. The increase in US onshore oil and gas production impacted global oil prices. The lower commodity pricing resulted in substantial pressure on costs, including water sourcing and disposal. At the same time, producers were increasing the length of horizontal wells and the volume of water required to complete the well.