INGHAM: Texas Alliance of Energy Producers Takes on Texas Oilfield Water Issues

Its almost like Energy Producers are in the business of extracting produced water and a little crude oil comes with it

By Karr Ingham

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AUSTIN Texas (Texas Insider Report) An estimated 1.27 Bbbl of oil were produced in Texas during 2017. Concurrently about 8.5 Bbbl of water were extracted alongside that crude oil. Thats a ratio of over 6.5 bbl of water produced for each bbl of crude oil.

  • Those numbers were bigger in 2018.
  • Crude oil output ballooned to over 1.6 Bbbl and by that same ratio the produced water volume increased to over 10.5 Bbbl.
  • Production is going to be higher yet again in 2019.
  • The rate of oil production growth is slowing but still stands to be at least 10 higher.
  • This would swell the volume of oilfield produced water to over 11.6 Bbbl.

So its almost like Texas energy producers are more in the business of extracting produced water and a little bit of crude oil just happens to come with it.

This is not true of course because its the crude oil (and/or natural gas) that has value and the petroleum is very obviously the reason for drilling the hole in the first place. However the water must be managed to gain the value of the petroleum production and as water volumes have risen and done so dramatically oilfield water management has become more difficult.

The need for potential solutions is becoming more immediate with each additional barrel of production. But while the seemingly ideal solution is easy to identify it is exponentially more difficult to achieve.

That solution would be to treat the water and convert it for surface discharge or for beneficial reuse. In other words use that water as a new source of freshwater in a state and in regions of the state that could be used for either household or agricultural use (even as drinking water!).

As one can imagine the obstacles between current practice and the beneficial reuse by households including personal consumption are many and high.

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On Sept. 16 in Austin the Texas Alliance of Energy Producers (TAEP) released a white paper titled Sustainable Produced Water Policy Regulatory Framework & Management in the Texas Oil & Natural Gas Industry: 2019 and Beyond. The paper authored by TAEP President John Tintera Blythe Lyons & Kylie Wright represents the culmination of a year-long effort to put oilfield water into context identify the scope of the issue(s) and suggest a legislative and regulatory framework for moving forward at state and federal levels.

The 2019 paper builds on a 2014 white paper titled Sustainable Water Management in the Texas Oil & Gas Industry authored by Tintera and Lyons and published by the Atlantic Council. It was written in recognition of the heightened oilfield water issues due to rapid growth in domestic U.S. (led by Texas) oil and gas production in the five years leading up to that papers publication.

Factors at Work

The study addresses drivers" or major factors that influence operators produced water management strategies.

These drivers include:

  • Increasing Fracturing Water Demands
  • Increasing Freshwater & Trucking Costs
  • Decreasing Treatment Costs
  • Local Climate & Geologic Realities
  • Company Culture; and
  • Increasing Volumes of Produced Water

One of the papers key objectives is to identify policy recommendations at Regulatory & Legislative levels that will pave the way for the advancement of sustainable use of oilfield produced water.

  • Next months issue of World Oil will feature an in-depth breakdown of the 2019 paper.
  • It will lay out these recommendations and discuss them in detail.

Oil and gas operators in Texas and beyond have already made great strides with oilfield water issues including usage for oil and gas operations and produced water management. Increasingly produced water is used in E&P for hydraulic fracturing and other upstream functions dramatically lowering the need to use freshwater (which contextually has always represented a less-than-1 share of total freshwater usage). However even if produced water should comprise 100 of water used in E&P that would be a small share of total oilfield water production.

Other solutions are therefore paramount.

Theres a Long Way to Go

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Over 90 of produced water is returned to the ground via injection in saltwater disposal wells. While disposal wells will always be a sizable part of the produced water management portfolio developing limitations in disposal capacity will soon necessitate other practices capable of dealing with high volumes of produced water.

Developing and implementing these practices and strategies which is well underway requires developing a legislative and regulatory framework that accommodates a new way of thinking about produced water.

This clearly means considering oilfield produced water as an asset rather than as waste an expensive nuisance for operators.

It means thinking about produced water in the midstream sense rather than simply upstream and developing a flourishing midstream water services industry.

The importance of addressing these issues on behalf of all operators is easy to define. The clear objective broadly speaking is to establish and maintain an environment in which a wide range of produced water management options may develop including establishment of active markets for treated produced water.

Simply put the Alliances desire is to get and stay ahead of the game so that water issues do not constrain Texas E&P activity.

Significant rapid progress on these issues requires not only continued technological advancement (particularly high-volume solutions) but also going through the process in such a way that public perception allows for implementation of solutions.

Stay tuned for next months article!

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Karr Ingham an Amarillo Texas-based economist and President of InghamEcon LLC has served as Consulting Petroleum Economist for the Texas Alliance of Energy Producers since 2003 and created the Alliances Texas Petro Index a tool for measuring oil & gas exploration and production in Texas. Ingham became the associations Executive Vice President in 2018.

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