Water management: The ever-changing produced water market

MARK PATTON, CONTRIBUTING EDITOR 

A few years back, I remember reading an article that talked about the produced water industry being very similar to the solid waste industry. When you consider the solid waste disposal market, you can see the comparisons. Both industries had permitted landfills and permitted disposal wells, and both managed a discarded waste product. The reality is, this was looked at as a good thing, as the solid waste market was a good investment, with trash as consistent a revenue stream as produced water. If anything, water volumes are continuously growing. 

A dirty start. Having started my career in the environmental industry, I worked with landfills all the time and got to know these markets very well. I also worked for a subsidiary of Waste Management for a number of years and honestly, it’s a dirty business—no pun intended. Permit challenges were expected and were sometimes driven by competitors. Solid waste companies guarded their markets to the point of illegality, accusations of monopolies, and bribery and other scandals were commonplace. Transitioning into produced water 13 years ago was refreshing. 

Escape to produced water. I found a growing market in produced water without the shadiness I saw in solid waste, and it was a welcome change. When I read these comparisons of produced water to solid waste, I had a different take. I’ve always recognized that produced water could easily become a resource, rather than stay a waste. This was not really the case for solid waste. Yes, we do see some recycling, but honestly, these programs are heavily subsidized and ultimately aren’t going to do well. I’m sure we’ve all seen some of the videos posted of recyclables going to landfills and not being recycled. 

On the other hand, recycling produced water is not only viable but also a legitimate replacement for fresh water in completion fluids. It has a double effect: it saves fresh water while reusing a waste product. The problem with produced water recycling isn’t its viability, it’s the instability of completion activity. As a result, you see a repeating cycle of peaks and valleys, as oil prices drive completion activity. Then, you also see activity moving around making permanent infrastructure a more difficult investment or in areas where permanent infrastructure has poor or low utilization. 

The recycling struggle. Both the solid waste and produced water industries struggle with recycling, but for different reasons. Solid waste doesn’t have a consistent outlet for recycled products, or the recycled product is considered inferior at times and, as I mentioned, requires subsidies for many products. Produced water has a viable outlet and meets all the quality specifications needed, but that market is volatile and unpredictable. 

The really big difference is the ability to transform produced water to freshwater standards and viable reuses—from agricultural, to cooling water and just plain discharge—all of which have a positive impact on the water cycle. Solid waste does not have this path. The closest it has come was through waste to energy. However, you won’t see waste to energy in the U.S.—only mostly in the EU. There was a company called Wheelabrator Technologies, which was building a network of waste-to-energy plants, but after being bought by Waste Management in the early 90s, they faded away as solid waste landfills proved far more lucrative. A little short-sighted when landfill space is at a premium now, and we need all the power generation we can get our hands on—especially to fuel the growth of A.I. with data centers. 

But back to produced water: we are seeing a transformation from waste to resource, and it is being driven more by necessity than it is by innovation. We need alternatives to disposal wells, with seismicity impacting disposal capacity and produced water volumes increasing. According to all the latest reports—and B3 Insights is a great resource for this—we are seeing climbing volumes and pressures, so we have to find alternatives. 

One thing I didn’t expect is that the shadiness I saw in the solid waste industry might materialize in the produced water markets. In one of B3 Insights’ recent reports, we are seeing an increase in permit protests. B3 reports that about 40% of permit applications have at least one recorded protest. In December, over 50% of permit applications had a protest. By individual basin, Delaware has 45% of its permit applications protested, and the Midland basin sees about one-third of its permits protested. According to B3’s analysis, these protests are concentrated where there is more disposal activity. 

I hope these are legitimately concerned people, but when I look at this analysis, my question is this: if people are concerned about an area, how did a concentration of wells in this area even happen? What I’m concerned about is this being the beginning of companies protecting their investments by trying to stop competitors. I hope this isn’t the case, but this is where my first thought leads me. Maybe I didn’t escape the shadiness of the solid waste industry after all, because these were the tactics I saw in the solid waste industry. There, companies got so good at it, they would form little protest groups to go after their competition while they quietly funded them. I hope I’m wrong. 

On the brighter side, the Bureau of Land Management (BLM) put out a memo encouraging their staff to pursue and assist produced water recycling and reuse on BLM lands. I expect the good news here will always outweigh the bad. There is a backlog of desalination permits working their way through the system, and beneficial reuse and discharge will soon become common occurrences in the Permian Basin. Yes, things are changing for the good in the produced water markets, and the next five years will be very interesting.