SAN ANTONIO—Despite the sharp fall in the number of wells being drilled in the Eagle Ford Shale over the past couple years, a significant increase in lateral lengths and proppant loading has actually elevated the amount of water used in the play in that time frame, according to Josh Adler, CEO of the online water recycling marketplace Sourcewater Inc. This phenomenon could lead to logistical problems when oil prices increase, he suggested.
Other experts on the panel included Kerry Harpole, water management supervisor for Houston-based Marathon Oil Corp. (NYSE: MRO), and Kirk Trosclair, CEO of Keller, Texas-based water management company Fountain Quail Energy Services.
Moving water by truck is 5x as expensive as moving it by pipe, Adler noted, so replacing trucks with pipes is the “single biggest strategy for operators” at present. As a result, most injection water now comes in by pipe, as evidenced by Marathon.
“Very little source water in the Eagle Ford is actually transported by trucks,” she said. “Most operators are pad drilling, and trucking 1 to 2 million barrels over a 30-day period to keep up is logistically not possible.”
The presence of an aquifer on the assets makes the logistics of source water that much easier. “You literally have a source beneath your feet.”
Most of the challenges of frack water, however, are centered on flowback logistics, the panelists agreed.
“A lot more water is going into the fracks, and during flowback, the trucking can easily get out of control,” Adler said.
Most operators don’t want to put their flowback water into permanent infrastructure that they own, he said, due to the chemical impact on the pipes and the inefficiencies of building infrastructure to accommodate peak flows. They thus rely on third-party midstream operators to build out the flowback takeaway capacity. In the meantime, trucking water to disposal sites remains necessary.
Trosclair emphasized the solution is as simple as maximizing loads.
“After two turns, that’s one less truck. It sounds simple, but it’s the small things that add up.”
Many larger operators with concentrated assets now truck just 10% to15% of total flowback waters, Adler said, but that trucking component still accounts for some 50% of total costs due to the higher cost of trucking. But that’s not all bad, he added.
In fact, Adler advocated against operators building their own flowback infrastructure, which he sees occurring in response to the higher-intensity completions and slower development period.
“There is a cost to that capital; that’s capital that’s not available to drill new wells when the price turns up.”
In the short term, companies will “look like geniuses” by getting operating costs down by replacing trucks with pipes, but “you’re going to look like a fool when the company doesn’t have the money available to take advantage of high energy prices with high-return development because that capital is locked up in low-return pipeline infrastructure.”
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Marathon puts some 60% of its disposal water on pipe, Harpole said, suggesting that the economics make sense when a certain volume is achieved. Companies that can move the product “are going to be the ones that survive in a low price environment,” she said.
Earthquakes related to water disposal are also a hot-button issue, said Trosclair. In 2012, Fountain Quail made a strategic decision to completely avoid drilling disposal wells in deep formations and instead focus only on mid-level injection zones.
“The seismicity issues are all in deep wells where you’re going to lubricate a fault, and if you put it under pressure, it will move.”
His company has placed seismicity monitors on all disposal wells drilled since 2012, “and we have not had a single recording.”
“We take just as many precautions in our engineering and design effort to permit a disposal well as we do in a production well,” Trosclair said.
Misinformation fed to the public surrounding water issues is the greatest challenge facing the industry, said Harpole.
“Water is a very emotional issue for most stakeholders,” she said. “The industry wants to combat questions with logic, and when it’s an emotional issue, sometimes that doesn’t work very well.”
The industry is measured in public by its lowest denominator—groundwater contamination, seismicity, trucks—all the issues associated with frack water disposal that people are inherently afraid of or simply don’t like, she said.
“Industry needs to be on the front end, not the back end, so these perceptions don’t bite us in terms of legislation or regulatory when actually, the concerns might not be all that valid.”
Steve Toon can be reached at [email protected]