CERAWeek 2014 - A conversation on unconventionals water management with GE Water & Process Technologies CEO Heiner Markhoff

GE Water & Process Technologies participated in an IHS CERAWeek Expert Briefing on "Drivers and Strategies for Oilfield Wastewater Reuse." Following the event, IHS Director Marcus Oliver Gay and CEO GE Water & Process TechnologiesHeiner Markhoff continued the conversation, discussing the challenge of variation in wastewater production over time, the development of integrated water management service companies, and prospects for water management in unconventional plays outside the United States.

Variation in wastewater production over time requires changes in water management strategies

Mr. Gay opened the conversation by raising the challenge of variation in wastewater production over time. He explained that for many plays in the United States, water demand for fracturing fluid as well as wastewater generation will increase over the next few years. However, the rate of drilling and completion activity in each play will eventually decline as the play matures. This will drive down demand for source water, but produced water generation will flatten out and remain high throughout the productive life of the play.

Mr. Gay suggested that this increased density and volume of wastewater production over time allows the treatment market to leverage economies of scale. Mr. Markhoff agreed and identified the need for a "multigenerational approach" to water management. Water treatment solutions applied early in the development of US unconventional fields will focus upon mobile or modular systems. Later, in mature fields, the industry will invest in infrastructure for centralized rather than distributed treatment systems. Integrated water management services companies challenge smaller technology and service providers

Mr. Gay noted the growing and varied competition in oilfield water management. IHS research estimates that the US oilfield water management market will be $34 billion in 2014. The spectrum of water management service providers includes traditional oilfield service companies, global water technology firms like GE, many smaller water service companies, and a growing number of integrated water management companies that combine services such as transportation and storage with treatment and disposal.

Mr. Markhoff confirmed that some competitors offer service solutions that integrate synergistic components across the water management value chain. GE Water & Process Technologies provides a variety of water treatment services. With over 600 mobile trailer-based water treatment systems and approximately 200 water treatment plants owned and operated by GE, the involvement of GE and other global water technology companies will help bring a level of professionalization to the oilfield water management sector. Addressing the need for integration in other parts of the water management value chain, Mr. Markhoff said if it makes sense for GE to integrate other water services into its current treatment-focused offering, it can do this. However there may be channel conflicts that GE would need to manage. International market face unique water management challenges and regulation

Mr. Gay noted that unconventional development outside the United States has significant potential, and water management solutions often vary among countries. Mr. Markhoff noted that other countries, notably Canada and Australia, have developed a different culture around water. This difference is illustrated in the way that water resources are accounted for and the way in which wastewater sources are managed. In some countries, regulation requires the treatment and reuse of wastewater.

Mr. Markhoff said that in Canada, GE Water & Process Technologies is a leading provider of evaporative water treatment technologies to address the water treatment needs of companies producing unconventional resources using a steam-assisted gravity drainage process. Furthermore, in Australia, treatment of produced water from coalbed methane is mandatory to enable the application of this fluid for beneficial use in agricultural operations. This regulatory pressure is key to creating an economic market for desalination. Mr. Markhoff commented that development of resources in water-stressed regions, such as western China and Argentina, may also prompt regulatory frameworks that drive water reuse to avoid freshwater consumption.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.