By ALISON SIDER, RUSSELL GOLD and BEN LEFEBVRE
Companies are racing to find ways to recycle the water used in hydraulic fracturing, chasing an emerging market that could be worth billions of dollars.
From energy industry giants Halliburton Corp. HAL +4.14% and Schlumberger Ltd. SLB +3.61% to smaller outfits such as Ecologix Environmental Systems LLC, companies are pursing technologies to reuse the “frack water” that comes out of wells after hydraulic fracturing, or “fracking”—the process of using highly pressured water and chemicals to coax oil and gas out of shale-rock formations.
While the recycled water can’t currently be cleaned up enough for drinking or growing crops, it can be cleaned of chemicals and rock debris and reused to frack additional wells, which could sharply cut the costs that energy companies face securing and disposing of water.
Some companies are finding it is still cheaper in many parts of the U.S. to inject the wastewater deep underground instead of cleaning it, which has slowed adoption of recycling technology. But experts say that is likely to change as fracking grows.
At Schlumberger, which predicts that a million new wells will be fracked around the world between now and 2035, reducing freshwater use “is no longer just an environmental issue—it has to be an issue of strategic importance,” Salvador Ayala, vice president of well-production services, told a recent conference.
Though fracking has brought U.S. oil production to its highest level in more than 14 years and produced a glut of natural gas, it requires huge amounts of water, raising costs for energy companies and spurring opposition from environmental groups at a time when some states are suffering through droughts.
It takes between 70 billion to 140 billion gallons of water to frack 35,000 wells a year, the industry’s current pace, according to a 2011 report by the Environmental Protection Agency. That is about the same amount consumed every year by Chicago or Houston—and the price tag for securing that much water can be substantial.
In North Dakota’s Bakken Shale, one of the current fracking hot spots, fresh water delivered to a drilling site costs between 10 and 14 cents per gallon, according to Continental Resources Inc., CLR +4.15% an Oklahoma City-based oil driller. Water alone can cost upward of $400,000 per fracturing attempt—and Continental plans more than 200 next year in North Dakota.
Energy companies are also struggling with how to get rid of the tainted water that comes out of fractured wells; the fluid, which contains a mix of chemicals and salts, must be taken to a licensed disposal facility.
Companies are researching moving away from using water entirely to fracture rock, with efforts aimed at using propane gel and even compressed air. Moving away from liquids entirely, however, is still several years away—if early laboratory work can be successfully applied in the field.
While the cost of getting rid of the millions of gallons varies from state to state, it can be substantial. In Texas, where there are plenty of emptied-out oil fields, companies can often inject the water into spent wells, which are generally older conventional wells that have been converted to accept oil-field wastewater.
But in places such as Pennsylvania, companies have to haul the water hundreds of miles to the nearest injection wells. Injection wells pump the untreated oil-field liquids deep underground into porous rock formations for permanent disposal. There are less than 10 working injection wells in Pennsylvania, so most of its wastewater is carried by trucks into Ohio.
These injection wells are controversial after being linked by some scientists and state officials to minor earthquakes. The injected liquids are essentially thought to lubricate faults and accelerate movement that causes tremors. Ohio only recently began issuing permits for new injection wells, after imposing rules to prevent tremors.
In the Northeast, oil companies have to pay up to $8 per 42-gallon barrel to contractors to haul wastewater for disposal elsewhere, said Jeanie Oudin, an analyst with energy consulting firm Wood Mackenzie. She said operators have reported recycling—which eliminates the cost of disposal and the cost of acquiring fresh water for fracking—can cut costs by as much as $2 per barrel in some areas when done on site, which could equate to a $200,000 savings over the lifetime of a typical well.
“It’s a multibillion-dollar business that someone is going to capture and reap the benefits of,” Ms. Oudin said of the sector and its potential annual size.
Chesapeake Energy Corp. CHK +5.05% has begun recycling 100% of the water it retrieves from wells in northern Pennsylvania. In addition to cutting the company’s costs, recycling reduces the number of trucks on the road ferrying clean water to drilling sites, a sore point for local residents, said spokesman Michael Kehs.
After a well is fracked, contractors typically clean the water that flows back out of the well by filtering it or adding a chemical that attracts small solid particles, making it easier to remove these contaminants. Some companies treat water at the well, while others bring it to a facility built nearby.
Fourteen percent of water used to frack a well in central Pennsylvania is now recycled, up from less than 1% two years ago, according to the Susquehanna River Basin Commission, which monitors water usage.
Clay Terry, strategic business manager of Halliburton’s Water Solutions unit, said operators in areas such as Texas have been slow to embrace recycling, largely because using injection wells there is fairly inexpensive. But there are growing economic benefits to recycling water, he said, and political ones, too.
“As the political and regulatory environment continues to shift toward protecting and constraining the use of finite resources,” he said, “the operating community will continue to move to alternative sources.”
The interest in water recycling is creating opportunities for small companies such as Select Energy Services LLC, a closey held Houston firm that said it has had a rapid rise in demand for its water-recycling services. It currently has full-scale operations in four areas including North Dakota and Colorado, up from one at the end of last year, as more companies examine recycling frack water.
Ecologix, an Alpharetta, Ga., recycling company, claims its service can cost as much as 80% less than injecting wastewater into a disposal well. It is building new facilities in west Texas to purify 31,000 barrels a day of wastewater after having earlier sold all of its recycling units to Halliburton.
“Hopefully, we’ll mend the dispute between environmentalists and oil companies by answering the wish list of both,” said Chief Executive Eli Gruber.
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