This series of blog entries is extracted from a presentation developed for The Center for American and International Law’s 65th Annual Oil and Gas Law Conference held in Houston, TX February 19-20, 2014. The paper was presented by Kevin Ewing of & Giuliani LLP and by D. Nathan Meehan of Baker Hughes Incorporated. In parts I and II we discuss the current Federal and State outlooks (respectively) for regulatory issues. In parts III and IV we address water management issues.
Wastewater Treatment Challenges
Unconventional oil and gas operations that involve hydraulic fracturing use larger quantities of water than conventional operations. Historically, oil and gas wastewater would be disposed of via a Class II Underground Injection Control (UIC) well, disposal at a local wastewater treatment facility, and in some instances, road spreading. The quantity of freshwater used in unconventional wells means that operators are also likely to see more flowback than in a conventional well. Additionally, the wastewater that flows back or is produced often has some unique characteristics that pose certain challenges to operators. The quantity and quality of the unconventional oil and gas wastewater stream presents unique disposal challenges.
Disposal via Class II UIC wells is limited by the availability of the appropriate geology and the time needed to obtain the necessary permit from the state or the regional EPA office, which is the case in Pennsylvania. Costs associated with waste injection are also on the rise, with a 2010 estimate of $0.05 per barrel up to $0.20 per barrel for “out of region” waste.
Induced seismicity is another complication that is gaining attention over the past few years. What started as allegations in Youngstown, Ohio, was confirmed by the state regulators and resulted in the first state regulations applicable to oil and gas disposal wells in relation to induced seismicity. Since that time, there have been increasing reports of induced seismicity linked to disposal of unconventional wastewater in Class II UIC wells. The U.S. Geological Survey (USGS) is currently working with EPA and the Department of Energy to better understand induced seismicity and even map occurrences.
Disposal of unconventional wastewater via traditional means can also be difficult because of its unique chemical make-up. Until recently, oil and gas wastewater could be disposed of at local publicly owned treatment works (POTWs). Another option is privately owned centralized waste treatment (CWT) facilities, which often treat oil and gas wastewater and then ship it for discharge via a POTW.
As noted above, wastewater from shale gas wells can be high in naturally occurring radioactive material (NORM) and may exhibit high concentrations of total dissolved solids (salts), organic chemicals, inorganic chemicals, and metals. As mentioned above, EPA and Pennsylvania coordinated in 2011 to stop POTWs from accepting for treatment wastewater from unconventional wells in the Marcellus Shale play. As of early 2014, POTWs in the state of Pennsylvania are still not accepting unconventional wastewater. Some have speculated that disposal of unconventional wastewater at POTWs could be barred nationwide in the future. This has led many operators in the state to start recycling. Additionally, PADEP is currently undertaking a study of oil and gas NORM in Marcellus Shale oil and gas wastes. That study is expected to be released in the first half of 2014.
As referenced above, EPA has indicated that it intends to provide additional controls on pollutant discharges from the unconventional oil and gas extraction industry, by issuing new standards under the Clean Water Act for oil and gas wastewater discharges from POTWs. EPA continues to collect and analyze data in that effort and confirmed that this was a priority for the Agency in its January 2014 letter to NRDC.
Water Treatment Innovations
As with water sourcing, industry has shown innovative creativity in the face of regulatory, environmental and cost challenges associated with unconventional oil and gas wastewater. Whether through the development and distribution of “greener” chemistry chemicals, via new treatments that require less water thereby reducing wastewater, or by adopting recycling programs, look for a wider distribution in 2014 of industry answers to the challenges that come with treatment and disposal of unconventional wastewater.
Inevitably the chemicals used in a hydraulic fracturing treatment play a significant role in the contents of the flowback and produced water. Considering this, the use of “greener” chemicals in a treatment can have a positive effect, not only on the front end, but also on the character of the wastewater that is generated. By developing and using chemicals that degrade quickly, there is less of a risk to aquatic environments, a reduction in potential risks when a spill does occur and increased safety for workers handling the chemical. Industry is rapidly moving forward with green chemical innovations and has even developed processes for determining what is the best performing green chemical for a particular well.
Treatments Requiring Less Water
While not necessarily a new treatment, fracturing using foam as the carrier fluid may gain popularity if conditions for its use are favorable. In cases where the bottom-hole pressure is low or if a reduction in the amount of liquid introduced to the reservoir is favored, a foam based fracturing treatment may be warranted. Foam fracturing treatment systems may contain nitrogen, carbon dioxide, or a combination of both gases, in place of traditionally used water based fluid systems. Foam fracturing treatments can reduce the amount of liquids introduced to a reservoir, as up 80% of the liquids can be replaced with gas.
Recycling programs/Water reuse
Another area where industry is pushing forward, often beyond state regulatory requirements, is the recycling of unconventional wastewater in shale plays where disposal options are limited and sourcing fresh water is difficult or expensive. Recycling not only provides an answer to the disposal question but also helps reduce an operator’s fresh water sourcing requirements. The quantity of recycled flowback water that a company uses on its next hydraulic fracturing directly offsets the need for freshwater.
Trends in the use of recycling water include using both recycled flowback and produced water either as all or part of a fracturing treatment. Industry has developed methods for centralizing recycling treatment and storage facilities to deliver water to multiple wells or locations efficiently. Additional treatments such as the Baker Hughes H2PrO services can service water through a variety of applications that can be completed at the jobsite to allow for efficient reuse of water. An operator in the Permian has opted to not only recycle water, but to also use brackish water in lieu of freshwater.
Reducing the number of hydraulic fracturing stages required
Production logs in unconventional wells allow operators to identify how much oil, gas and water production occur along the horizontal lateral. These tools are somewhat expensive and difficult to deply in horizontal wells compared to vertical wells because they need to reach the bottom of a horizontal lateral that might extend 5,000 to 10,000 feet without the aid of gravity. Although only a small fraction of unconventional wells have production log data, data from the available logs suggest that many of the hydraulic fracture treatments along a horizontal wellbore are ineffective, producing little if any hydrocarbons. Many operators utilize a kind of “geometric” spacing with, e.g. one fracture stage every 250 feet. More advanced approaches are available that require additional formation evaluation and geomechanical analysis to identify the optimal locations of each fracture stage. This optimization not only reduces costs but significantly reduces the water usage along with corresponding emissions.
Reducing the number of wells required to develop the resource.
The performance of unconventional wells is highly variable and some operators believe that large statistical variations in the production rates and recoveries from unconventional wells is inevitable and unavoidable. This belief leads to a commitment to “factory drilling” in which hundreds of nearly identical wells are drilled with a focus on reducing well costs. Pad drilling is an important part of this development, reducing surface costs and enabling reductions in drilling, evaluation, completion, stimulation and production costs. However, even in commercially attractive unconventional plays, 25% to 40% of all wells drilled are uneconomical. Integrating surface seismic, advanced petrophysics and geomechanics and reservoir engineering into an integrated model can allow operators to identify the most productive areas and eliminate the drilling of sub-economic wells. This dramatically lowers environmental impacts while improving economics.