With the oil and gas industry still in the midst of a financial downturn, companies are looking for efficiencies to exploit in their operations. As the cost to source, transport, store, treat, and dispose of water remains relatively high, water management programs will become a greater priority in the coming year, an expert said.
At a presentation hosted by the SPE Gulf Coast Section Water and Waste Management Study Group, Laura Capper discussed the low-cost developments in water management that the industry should notice in the upcoming year. Capper is the president of CAP Resources, a Houston-based oil and gas consultancy.
In her presentation, “Taking Stock of Water Management in 2016: Activity Levels, Volumetrics, Treatment Tech,” Capper said that, relative to other sectors, water management service providers have fared well financially during the oil industry’s downturn because of legacy costs. Operators must continue paying for water treatment, storage, and disposal at their project sites. But while this may be positive news for service providers, Capper said that water management is an area where operators may need to examine if the downturn dictates further spending reductions in the coming year.
“If I was an operator, I’d say it’s more important to really manage my water management costs because it’s a bigger part of the overall cost basis compared to a year ago or a year-and-a-half ago. If you’re a service provider, you can argue that this is your time to really keep your eye on the ball because this is such a significant part of your development costs,” Capper said.
One area where operators can save money is in transport. Capper said the reliance on trucks to move fresh water and produced water between sites is inefficient, primarily because of the high cost of operating trucks. The health, safety, and environmental (HSE) issues that may arise from truck transport—spills, leaks, accidents, emissions, traffic congestion, and road damage—could prove costly to operators.
Capper said pipelines are the most efficient means for water transfer, and operators should look for ways to reduce their use of trucks.
“It drives me nuts,” she said. “I think we are not yet seeing all of the ramifications of what we are doing to small towns, but I think one of the biggest problems we have in the industry is how much stuff we’re trucking around. It you’re an operator and you’re looking for areas to save money, this is where I think you should focus.”
If an operator is committed to using trucks, Capper suggested a few strategies for lowering costs. She said operators should try to use trucks that are located closer to their water supply, or closer to the destination of the transfer. They should also take greater steps to assure that the destination storage capacity of the right type is available. Capper said operators often send trucks to deliver fresh water for a hydraulic fracturing operation only to find that the fracturing site does not have enough space to store the water.
In addition, Capper said operators should also use historical vendor performance as an indicator of future performance, avoid rerouting trucks already in service, and assure a valid transfer of water.
Safety systems are another area where operators have continued to invest significantly in spite of the downturn. However, Capper said there has been too much investment in “back office” safety measures, such as improved cybersecurity systems for off-site computers, and not enough investment in better on-site safety. She said operators must focus on incorporating safety practices at on-site water management facilities.
“We seem more conscientious about needing to enhance these systems to protect our businesses. [But] we’re focused on the back offices and we’re not keeping our eye on the field, where the issues are really happening. We’re not equipping people in the best way in the field,” Capper said.