CERAWeek 2014 - Drivers and Strategy of Oilfield Wastewater Reuse

IHS Director Marcus Gay and IHS Senior Research Analyst Sarah Fletcher chaired the Expert Briefing "Drivers and Strategy of Oilfield Wastewater Reuse," which assessed the key factors driving oil and gas operators to reuse their wastewater. The chairs identified five primary drivers: saltwater disposal capacity, water availability, quality and quantity of wastewater, regulation and social sustainability, and completion engineering. A poll of the audience, comprising water technology providers, oilfield service providers, and E&P companies, showed that the majority of attendees viewed water availability and regulation and social sustainability as the strongest drivers of wastewater reuse.

Mr. Gay and Ms. Fletcher led an audience-driven discussion, starting with the impact of regulation and public acceptance on wastewater recycling. There were mixed views about the types of regulation that were most impactful. Some attendees thought that limits on injection disposal owing to concerns about seismicity would be the most impactful regulation; others viewed limits on water access for oil and gas operators as the largest risk. Several attendees agreed that public distrust of reused wastewater limits opportunities for reuse outside of the oil field. Additionally, an E&P operator pointed out that the liability risk of spilled wastewater can offset other regulatory drivers that encourage recycling. The group agreed that public perception around water issues is often more important than regulation, as operators must manage their "social license to operate."

A discussion of water availability identified three key impacts from interruptions in water access. First, water scarcity can raise costs, both in water procurement and in transporting freshwater to site. Second, a disruption in the water supply chain can cause drilling delays, which can cost the operator millions of dollars. Finally, underuse of water in the completions process can cause revenue impacts by reducing the estimated ultimate recovery (EUR) of completed wells. The audience reached consensus that water scarcity usually creates increased costs for water rather than physical shortages. However, an exploration and production (E&P) operator pointed out that in China, a potentially emerging region for unconventional development, the severe water crisis could mean true unavailability of water for oil and gas operations.

The audience debated the impact of completions technology innovation on wastewater recycling. While there was agreement that the use of gel-based completions fluids instead of slickwater was reducing the amount of water required in the completions process, there was significant debate about the viability of waterless completion technologies such as propane- or diesel-based completions. Many thought environmental hazard and public concern about these technologies would prevent them from gaining widespread use.

The audience was more positive about technology innovation in water treatment. Although a variety of water treatment technologies, including desalination, are already commercially available, their high costs often prevent them from being a viable option for wastewater recycling. However, attendees agreed that the costs of these technologies are likely to decrease in the future and make recycling more cost effective. Additionally, innovations in business models and logistics, such as the development of large, centralized water treatment infrastructure, are likely to reduce the overall cost of water recycling.

In closing the sessions, attendees agreed that wastewater management strategy was influenced by two critical components: cost and public acceptance. Many of the drivers influencing wastewater recycling, such as water availability and saltwater disposal capacity, encourage wastewater recycling by driving up the cost of traditional water acquisition and disposal strategies. Additionally, public acceptance of E&P activity is often even more critical than cost to an operator's bottom line. The locations where the public is concerned about competition for freshwater resources are most likely to see increased wastewater recycling in the future.

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.