|November 18, 2013|
Water Shortages Could Dry Up Shale Gas Craze
|Environmentalists won't stop the shale gas craze. Neither will federal regulators. But a lack of water could possibly do so. And that is why drillers are looking for new ways to find water supplies --- or fresh water supplies would be jeopardized as a result of fossil fuel development.|
During the exploration of shale gas, a concoction of sand, water and chemicals is pumped into the ground. Some of the dirty water returns and it must either be treated or re-injected underground, which at least in the northeastern United States involves trucking such tainted water to different locales --- something that then upsets the green movement. Treating --- or recycling --- the "fracking water," by contrast, optimizes a scarce resource while potentially mitigating any ecological ramifications, albeit at potentially higher costs.
"No question: Recycling is the way that the industry is moving," says Bill Charneski, chief operating officer of OriginOil, in a telephone interview. "It makes economic and environmental sense to do so. "There's not a technical hurdle and there's not an economic hurdle. But there is an investment that is required in new equipment, which has a payback that would occur in less than two years."
Across the United States, Charneski says that roughly 10 percent of the water used in the drilling process --- called hydraulic fracturing, or fracking --- is recycled. What's not recycled is disposed of, or re-injected underground. Nationally, Downstream Strategies says that in 2006 there were 35,000 wells that had been fractured that had required as much as 140 billion gallons per year of water --- a number that has climbed.
Where do the savings come from? It's mostly from not having to buy fresh water supplies at 50 cents a barrel and from not having to cart off the dirty supplies, which can often amount to $14 per barrel. Comparatively, the executive says that it cost between $1 and $4 to treat the fracking water, which surfaces from the ground with oil particles, clays and heavy metals. The treatment process separates those solids, allowing the water to be re-used.
The math: Depending on the job, the equipment may cost about $2 million. But it would save roughly $300,000 a month, giving the investment around an 18-month payback, adds Riggs Eckelberry, chief executive of OriginOil, during the same call. He adds that his company's equipment can treat three barrels per minutes, which can be scaled to 10 barrels a minute.
If producers would use treated water, then that is comprised of "flow back" that returns after a job is done as well as from water that naturally returns from the reservoir, often called brine or wastewater. On average, about 4 million gallons of water are used to do a fracking job, says Eckelberry. More than enough water is returned to continue drilling more sites, he adds --- if the water is treated. If not, shortages might occur.
Thousands of drilling sites are consuming billions of gallons of water. At this pace, shale producers are encroaching on the needs of not just other water-intensive fuel sources but also on farmers who use it to irrigate their crops.
Consider the Marcellus Shale region and specifically Pennsylvania and West Virginia: A Downstream Strategies and San Jose State University examination has concluded that 4.1 million to 5.6 million gallons of fresh water is used per fractured well, where between the two states, 9,000 wells have been permitted. In West Virginia, for example, surface waters supply most of the need, although only 8 percent is recycled. In Pennsylvania, roughly a third of the water is re-used with Chesapeake Energy recycling nearly all of its water in parts of that state.
"While a considerable amount of flow back fluid is now being reused and recycled, the data suggest that it still displaces only a small percentage of freshwater withdrawals, which will limit its benefits except in times of drought where small percentages could be important," says Downstream and San Jose State. "While West Virginia and Pennsylvania are generally water-rich states, these findings indicate that horizontal drilling and hydraulic fracturing operations could have significant impacts on water resources in more arid areas of the country."
To be clear, the treated or recycled water is not potable. But it has proven to be an adept source when it comes to loosening the shale gas from the rocks where it is embedded, a mile beneath the earth's surface. Given that the role of shale gas is expected to continue expanding, the economic possibilities are attracting the biggest oil and gas service companies that include Halliburton Corp. and Schlumberger, and even General Electric.
"If there was not an additional cost, everyone would prefer to use new fresh water to frack," says Charneski, with OriginOil. "But there is an economic and environmental cost of doing so. Treated water has proven to be just as effective in many cases."
The discovery of shale gas may be infusing the country with new energy --- literally speaking --- but it may also be tapping into a national sore spot, which is limited water supplies that are also demanded by other energy sources and by American farmers. It's a reality that could dull the industry's future unless, of course, the recycling process reaches scale and is thus able to penetrate a greater share of the fracking market.