Water management: The shaking continues
In my last column, we discussed the impact of the Railroad Commission’s (RRC) development of Seismic Response Areas (SRA) and the impact that these actions were having on produced water management in the Permian basin. Initially we saw two SRAs, Gardendale and North Culberson/Reeves.
Since the writing of that column, a third SRA has entered the mix. SRAs begin as Investigation areas before developing into SRAs. We currently have two investigation areas, in Pecos and Snyder. This means we may see an additional two SRAs in the near-distant future. In North Culberson/Reeves, we have seen the development of an operator-led plan to minimize seismicity. This is the intent of the SRAs—to basically ask the operators in that area to develop a plan, or we will continue to limit and shut down deep disposal. In general, the SRA focus on deep injection wells only, limits them first to 10,000 bpd and then completely shutting them down, if seismic activity continues within a 30-day window of the development of the SRA.
In New Mexico, they took a different approach. They developed a Seismicity Response Protocol for the entire region. Their approach has two categories. Category one is for two events greater than 2.5 on the Richter scale within 30 days, and you begin a monitoring program. Category two is for one event greater than 3.0, 50% capacity restriction within 3 mi and 25% within 3 to 6 mi. For events greater than 3.5, no disposal within 3 mi and 50% reduction within 3 to 6 mi. There is no differentiation between deep or shallow wells.
The short-term effect in Texas is a move to permitting shallow disposal wells, but in both areas the need to develop a long-term plan is becoming critical. We see options from increasing recycling, pipelines to areas with less seismicity, enhanced evaporation that controls salt deposition and accelerating plans for desalination. The quickest and most economical solution is to increase recycling of produced water, but the reality is that we are a long way from this being a reliable alternative to replace disposal capacity lost or limited to seismicity.
The numbers. There are about 15 MMbbl of produced water coming out of the ground every day in the Permian basin (that’s 630 million gal/day for those of you that don’t think in barrels). About 1.9 MMbpd are recycled, and the total frac water demand is about 6 MMbpd. Essentially, that means about one-third of the water used for well completions is recycled, yet we produce 9 MMbpd more than we need, to use 100% of recycled produced water. Five years ago, we were around 10%. It took us five years to go from 10% to 33% recycling, and at that rate, we won’t get close to 100% any time soon.
Delaware versus Midland. These two basins are completely different, when it comes to produced water production. The Midland basin produces about 5 MMbpd, while the Delaware produces 10 MMbpd. There is more activity in the Midland basin today, not true a few years ago. The Midland Basin has a frac water demand of about 3.5 MMbpd, while the Delaware has 2.5-MMbpd rate. Their recycled volumes are similar, with 1 MMbbl of recycled produced water in the Midland basin and only 900,000 bbl in the Delaware. In short, the recycling rates are higher in the Midland basin, as compared to the Delaware. This makes sense, because less water is produced in the Midland basin, due to the lower water cut. Traditionally we see about 1-2 bbl of water for every barrel of oil in the Midland basin, as compared to 4-7 bbl of water for every barrel of oil in the Delaware basin. These numbers used to be higher, when completion activity was higher, because flowback volumes are larger when there is more frac activity.
Why aren’t we recycling more? Obviously, we have plenty of produced water to replace all of our frac demand and will still require disposal wells for most of our water. There are impediments to recycling, which range from landowner restrictions to water supply contracts to logistical challenges. Believe it or not we still have operators who are afraid of recycling, even though just about every major oil producer in the Permian is recycling.
In New Mexico, they addressed the landowner restrictions and water supply contracts by making these agreements void if they impeded recycling. That’s not likely to happen in Texas. Texas is mostly private landowners, while New Mexico is mostly state and federal lands. What we need is a royalty system, where the landowners allow recycling and get a royalty to compensate for the lost profit from water sales. With the drought conditions we see in the Permian, this should be endorsed by everyone—it’s the right thing to do.
There are other issues. Frac activity is driven by oil price, and with rising prices, we expect to see some increases in activity. This means more water, but what about when oil prices drop? With a drop, we see less activity and less opportunity to recycle, which shifts demand back on disposal wells. As simple as recycling may sound, it is not a reliable outlet today, maybe, but not forever. And decline rates of produced water production are very gradual in the Permian, so we can expect to continue to see produced water after we stop completing wells.
There does need to be a shift to recycling today, but we will continue to need a more reliable outlet for our produced water and the race for a cost-effective desalination option or a safe and effective evaporation technology is on. We are an industry of innovation, so I expect the challenge will be met and I’m excited to be part of it and watch the solutions materialize.
- Coiled tubing drilling’s role in the energy transition (March 2024)
- Shale technology: Bayesian variable pressure decline-curve analysis for shale gas wells (March 2024)
- Water management (February 2024)
- Digital tool kit enhances real-time decision-making to improve drilling efficiency and performance (February 2024)
- E&P outside the U.S. maintains a disciplined pace (February 2024)
- U.S. operators reduce activity as crude prices plunge (February 2024)
