If crude prices, rig counts, and tight oil production demonstrate a stronger upward trend in the months to come, US shale operators may find themselves with more produced water than they bargained for. The concern is that a surge of produced water could eat into profit margins even as oil prices improve by driving up costs for hauling and disposal. Many shale producers can ill afford a significant spending hike on such services when, according to IHS Markit, produced water management can represent half of a shale well’s operating expenses. The severity of this issue will depend on how aggressively shale producers seek to rebound from the downturn by drilling new wells. It also will depend on how quickly they activate the estimated 4,000 oil-rich, drilled-but-uncompleted wells (DUCs) that have amassed over the past 2 years as both a cost-cutting and a production management maneuver. “If you get a lot of new completions in a short amount of time, that means you are going to get a whole bunch of water too, and this is something that the industry needs to be thinking about and planning for,” said Piers Wells, co-founder and chief executive officer of Digital H2O, a company that uses analytics-based models to forecast oilfield water resources. Because it is the most active and prolific shale play, the Permian Basin of Texas is already under pressure. As shown by Digital H2O’s model, the recent uptick in drilling there and in the adjacent Delaware Basin is yielding produced water volumes that are approaching what many of the disposal wells can take away. “While they may not be at full pressure utilization today, many are getting close and, in a higher-price environment, you will see many more areas shifting into high utilization,” Wells said. “The thing that people need to be aware of is that this could all happen really, really fast.” With far less drilling activity happening, North Dakota’s Bakken and Texas’ Eagle Ford shales are not facing quite the same situation as the Permian currently is. However, higher prices would start to change that, and there are also more than 2,000 DUCs in those two plays that if brought on line in quick succession have the potential to drive water-handling costs higher. Produced water management is complex and expensive for shale producers partly because they have fewer options than their conventional counterparts on what to do with it. One major disadvantage is their inability to reinject into unconventional reservoirs, underscoring that disposal wells will always play an outsized role in shale developments.