Fracking: Time to end US “wild west” wastewater treatment
By reusing wastewater onsite, operators of hydraulic fracturing wells (fracking) can save nearly $2 per barrel of water used, a new report has said...
^Above: MIT spin-out Gradiant Corporation is one company developing new wastewater treatment solutions for the fracking industry
By reusing wastewater onsite, operators of hydraulic fracturing wells (fracking) can save nearly $2 per barrel of water used.
With the US fracking industry estimated to produce up to 500 million barrels of wastewater per year, this could lead to a $1 billion saving nationwide if operators switched to reusing wastewater onsite.
However, currently only 14% of water consumed is reuse onsite at fracking operations, according to a new report from Bluefield Research.
With water supplies increasingly at risk, tighter regulations emerging in key states and costs of disposal on the rise, water treatment and re-use is expected to increase substantially, accounting for 27% of total produced and flowback water by 2020, the report said.
Furthermore, wastewater treatment spending for fracking is expected to grow almost three-fold, from $138 million in 2014 to $357 million in 2020.
Driving this, state regulators are beginning to tighten control of produced water disposal.
In Pennsylvania, it was in 2010 when state policymakers placed discharge limits on wastewater from unconventional oil and gas operations. As a result, statewide treatment and reuse rates for the Marcellus Basin jumped to 90% in 2014. The increasing cost of transport and injecting water into wells − now accounting for 66% of water services spending − and the improving cost structures of treatment provide another driver of reuse.
In Texas, legislation was passed in 2013 to encourage greater reuse with a bill providing clarity into wastewater disposal risks by limiting a well operator’s liability after wastewater has been transferred to another company for treatment. New Mexico regulators are currently evaluating a similar policy.
“Fracking has been the wild west for the U.S. water industry,” said Reese Tisdale, president of Bluefield Research who produced the report. “There are three reasons for this: first, there has been an explosive build-out of fracking well installations, now surpassing 126,000. Second, there has been a lack of clear regulation on water management in key markets. And third, there is not a one-size-fits-all treatment solution for fracking, meaning solutions providers have had to ascend a steep learning curve to treat the variable wastewaters that a single well is capable of producing.”
Technology shifts are also creating new opportunities for treatment and reuse, according to the research company. Demonstrated commercial deployments from an emerging group of pure-play technology providers will provide a vote of confidence as operators look for reliable solutions that can cost-effectively treat wastewater of variable qualities over the life of a fracking well.
“Based on these key shifts in the market, Bluefield is forecasting a three-fold increase in the volume of fracking wastewater treated and reused by 2020,” Tisdale added.
With forecasted growth, a fragmented competitive landscape is emerging. The new report profiles 57 key companies active in the US fracking industry’s water management supply chain, categorizing them in three segments– pure-play water service providers, energy service providers, and key technology providers.
“The competitive landscape is in transition,” said Erin Bonney Casey, research analyst at Bluefield.
“We are going to see firms with advanced water treatment technologies competing for business against diesel trucks over the next few years. Even though water treatment and reuse costs have proven to be nearly 15% lower than trucking and disposal in some cases, fracking companies have yet to fully embrace treatment.”
While new technologies continue to crop up in the market, mergers and acquisitions along US fracking’s water supply chain so far have been limited. According to Bluefield Research, there have been 15 water-fracking acquisitions over the past four years, with an average disclosed value of US$130 million.
For more information on Water for U.S. Hydraulic Fracturing Market: Competitive Strategies, Solutions, & Outlook, 2014-2020 report, click here.
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