Production of gas from shales has increased from near zero at the start of the new millennium to over 9.35 trillion cubic feet (Tcf) in 2013, nearly half of U.S. annual consumption of natural gas. Such an influx in production has severely depressed gas prices -- from an average of $9/Mcf in 2008 to under $3/Mcf in 2012 -- and has led to a greater interest in the 'wet' oil rich shales of Texas, North Dakota, Ohio, and Colorado.
The recent drop in oil prices has put gas and oil development on a more even footing. Figure 1 shows the dramatic increase in oil production from shale basins in the past few years, which has come primarily from hydraulic fracturing.
Treatment needs for produced water are highly variable and depend on the water quality coming out of the well on any given day and the ultimate end disposal/reuse route chosen. Oil and grease content can be high in flowback but is usually not significant, as most of the water comes to the surface before the oil permeates through the pore structure of the newly fractured formation rock.
Dissolved salt levels in produced water from petroleum found in shale or tight sandstone (tight oil) are very high, with reports indicating that solids concentrations of 25 percent are a common occurrence in the Bakken Shale basin. The Eagle Ford basin averages between 50,000 and 100,000 mg/L, which poses challenges for reuse. Water scarcity in Texas has made saline and non-saline reuse economically viable for certain producers.
Produced Water Reuse
Some shale regions, such as the Marcellus, are shifting towards more treatment for reuse. Current practices, as can be seen in Figure 2, show a dramatic shift towards treatment for reuse in Pennsylvania compared to four years prior.
Texas' long history of oil and gas development has resulted in low-cost disposal options, but new developments are happening in drought-prone regions. Likewise, the state is encouraging reuse of produced water by reducing barriers to recycling.
The new Permit by Rule regulation is a key example, although it will largely benefit onsite recycling operations rather than commercial facilities. However, it is anticipated that some of the next steps in the regulatory environment of Texas will include tax incentives for water treatment infrastructure investment.
Although there is some treatment for reuse in North Dakota, a key barrier for produced water treatment in Bakken Shale is the high salinity of the water (>200,000 ppm), making treatment economics unfavorable.
Fragmented Market
Unlike other oil and gas operations, such as in the Canadian oil sands where only a few major companies are active, shale development has seen a proliferation of effective smaller players exploiting shale resources. In fact, over 250 separate companies are estimated to be active in well operation.
This has partly resulted in the growth of service providers who are contracted to manage water and flowback. These providers are the main procurers and testers of treatment technology for hydraulic fracturing operations, and BlueTech's reports show that they should be targeted by technology companies looking at the marketplace.
Shale oil and gas exploration companies typically buy produced water treatment as a service, in effect outsourcing treatment to service providers. Therefore, the customer for treatment equipment is more often the service provider than the actual exploration company. Alternatively, many companies with treatment technologies are developing service-based business models where they sell services as opposed to equipment.
BlueTech Research's Insight Reports focus on trends in advanced treatment and water reuse within oil-rich and gas-rich shales. They also highlight innovative technologies and approaches currently being applied in the industry. Examples include mechanical vapor compression, advanced membranes and cavitation technologies.
BlueTech's Insight Reports on shale gas and oil produced water treatment envisage the market opportunities to be in providing flexible solutions to deliver the most cost-effective treatment solution, depending on the feedwater quality and end-use of the treated water.
