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The fracing industry has long considered water a nuisance. But water reclamation and treatment companies see H2O as liquid gold, and the technologies they bring to the game will play a pivotal role in the shale boom.
Frac water has been at the forefront of lively and passionate national discussions about its safety and cleanliness. But as the shale boom demands more water, scarcity and the cost for treating it will drive the direction of the industry.
New Hampshire-based Cate Street Capital (CSC) is banking hard on water in the oil field as it just announced plans to invest another US $40 million into one of its subsidiaries, Clean Runner, a water treatment technology company. This is on top of a $20 million initial investment.
Clean Runner uses a combination of technologies that result in a low-cost, non-polluting method to cleanse and reuse frac water. CSC also has doubled capacity at its Red Desert Water Reclamation facility in Wyoming. Red Desert uses Clean Runner’s technology. In addition to expanding Red Desert, CSC has plans to build 10 similar facilities near oil and gas exploration centers around the country in the next two years.
Clean Runner CEO Judson Cleveland said his company combines a lot of proven off-the-shelf technology, from wastewater and frac water treatment, and partners it with new technologies to optimize a process.
“We wanted to make sure our technologies were low enough that they could get down to disposal pricing,” Cleveland said. “When I say that it is low-cost, I am not asking for a premium. Operators are still paying what they would pay to have the water taken to an injection well or evaporation facility.”
Cleveland and other water treatment companies see an enormous opportunity to repurpose water and send it back downhole. The Eagle Ford play in Texas often experiences drought, making water tough to come by. Water is heavy and trucking is a major expense. Residents in the Marcellus shale play have loudly voiced their distaste for trucks congesting their roads.
“Reusing water will be imperative for the industry going forward,” Cleveland said.
Anadarko, BP, and Conoco-Phillips are some of the major players in Wyoming in addition to mid-sized companies like Williams who have had interactions with Clean Runner. Clean Runner and Red Desert service BP in Wamsutter, which is BP’s largest onshore natural gas field. Located in southwestern Wyoming, Wamsutter is about 55 miles long and 35 miles wide.
Water that flows back from fracing is formation-dependent. In the fields in Wyoming, a greater amount of water flows back compared to a well in the Marcellus. Roughly 80% to 90% returns to the surface. Clean Runner currently processes up to 15,000 bbl of water daily at one site. That’s about 437 gal/min.
Clean Runner can treat frac and flowback water to remove heavy metals, bacteria, salt, and hydrocarbons recovering 80% to 90% for reuse. In Wyoming, the solid waste generated is certified as a non-hazardous substance and is acceptable in landfills. Some flowback can be converted into a brine and sold as a well-kill fluid.
Cleveland said the Wyoming Department of Environmental Quality, OSHA, and other agencies have come out to monitor and inspect Clean Runner’s operations and hold it to standards and added that it’s been a very positive experience.
Other companies are seeing dollar signs too.
Dean Themy, general manager for Houston-based Rockwater Energy Solutions has received incredible response from the oil and gas industry the past three years. Themy founded Neohydro Corp., a pioneer in the water treatment business, and last month he merged his company with Rockwater. His technology uses electrochemistry to treat frac flowback and produced waters for reuse.
“This onsite treatment of produced water for reuse is a billion dollar industry,” he said. “Only 10% of the companies are in a water reuse program.”
According to the 2005 US Geological Survey, 410,000 MMgal of water was withdrawn each day for use in the US. The shale boom has increased these already staggering numbers. Water reuse companies may soon be called into other industries and municipalities like San Diego, which imports 90% of its water.
Red Desert has been running virtually around the clock, and Cleveland said his company has spent more than 18 months evaluating oil and gas basins to assemble a very detailed plan for site selection because of the demand he has experienced for the service.
John Hallé, president and CEO of CSC, said he is very pleased with the progress the Clean Runner team has been able to achieve given the harsh environment and tight time constraints.
Cleveland said his eye is on the Eagle Ford because operators there can benefit from water reuse. Other basins under consideration are in Colorado, North Dakota, and New Mexico.
How much have water treatment companies penetrated the oil and gas market?
“I don’t think we’ve even scratched the surface,” Cleveland said.