Getting water to the right well at the right time is a constant challenge for oil and gas operators, but one startup company is hoping to make it easier and more efficient with an online service called Sourcewater.
The following presentation is part of the Technology and the Corporation Conference Series sponsored by MIT’S Industrial Liaison Program.
JOSH ADLER: And source water came out of the MIT Energy ventures program three years ago when we looked at the rise of unconventional energy. Which is a polite term for fracking or hydraulic fracturing, which differs from conventional energy largely in its use of water. So for the first time, water is the largest input and output of the hydrocarbon production process for oil and gas. And there are two primary challenges with water management in oil and gas production. One is finding the water and the other is what to do with all the wastewater that comes out of the ground.
In terms of finding water, most, about 75% of unconventional energy production, occurs in places that are considered water stressed, like West Texas, North Dakota, parts of Colorado. And in those places, it can be difficult to find the 8 to 10 million gallons of water you need to complete, to stimulate, a new oil or gas well. Especially fresh water where there’s a lot of competition for those freshwater supplies from municipalities, from agriculture, from other types of intensive water users.
The other thing is that those water supplies can be unreliable because they’re usually sourced from groundwater, they’re pulled out of the ground. And these are places where there are record droughts going on. And so, the water that you thought might be available three months or six months ago might not be available for the just in time delivery the day or two before you’re going to start fracking that well. And when that happens the cost overrun from that supply chain break down– oh, we’ve got an overhead display– the cost of– the cost of overruns from the delay of starting that well stimulation can be half a million dollars a day. Also of note is that this well stimulation, or fracking, can use pretty much any kind of water. It can use really dirty water. Which is fantastic because it makes fracking the first really great consumer for non-freshwater in a productive way.
Note: Access your free tour of Sourcewater’s online marketplace and water intelligence platform. Schedule yourself on our calendar by clicking here.
The other side of the water management problem in oil and gas production is actually the much bigger problem, which is that the typical oil well produces about 10 times as much water as oil for the entire life of the well. Most people don’t realize that oil and gas companies are mostly water companies. Now it’s pretty dirty water, but it’s a lot of water. So there’s an opportunity for the energy industry to be a net contributor of water to the environment.
And this cost of disposing of what’s called produced water from the oil and gas industry is the single largest cost of operating any oil or gas well in the United States throughout North America, really onshore in general. The cost of trucking and disposing of that water is their single largest cost. Which didn’t matter that much when oil was $100 a barrel. They didn’t really care because their margins are so large. But when oil is at $40 or $45 a barrel, being able to bring down that single largest cost of the disposal of wastewater is the difference between staying in business and going bankrupt. And so we’ve gotten a lot of attention from the industry since starting about two years ago because of our potential to bring down that cost.
What we do is we solve the water sourcing problem with the water disposal problem by putting all these points on a map so that we can connect all of the different sources of produced water and access fresh water and non-freshwater with all of the uses of water in that same area. So what we’ve done is focused on information technology and using the internet as a marketplace to solve what is ultimately a logistical problem. Because there’s plenty of water out there. And there’s plenty of water uses out there. The thing is that there’s never been a system before to help these sources and uses of water and wastewater to find each other.
We also connect the entire oil and gas and water ecosystem, not just energy, but actually agriculture and other sources and uses as well. So as you can see from this chart there’s a number of different sources of water. Some of them are fresh water, some are non-freshwater, some are wastewater. And some of them– and there’s a number of uses, which include oil and gas use, disposal wells, treatment facilities, and agriculture farms, and ultimately municipal uses.
We connect all of them through this marketplace to create the benefits of a marketplace for the allocation of water including non-freshwater. And we’ve had a lot of success in the last six months with getting– since we launched about six months ago the live product– we’ve gotten a majority of the major energy companies on board in Pennsylvania and Texas. We’ve got over a billion barrels of water for sale or recycling on the system today. And we’ve got our first real transactions going through the system in the last couple of months. Thank you very much.