Issue #16 | Of Sand & Water

Oilfield Water Weekly

Wednesday July 24, 2019

While reading the top story in our weekly digest below, we were struck by the many parallels between pre-frac water and frac sand procurement. 

This pattern of thought was probably triggered by the name of the interviewee in the story, Bill Zartler, who is the epitome of sand and water. As most readers of this newsletter know, Bill is actively the CEO at one large water midstream company (Solaris Midstream) and one large frac sand logistics company (Solaris Oilfield Infrastructure). Both are very well run by the way – does he even sleep?

In the interview, Bill tells the Midland Reporter Telegram that the E&P industry is increasingly comfortable using less clean water in fracing. This is the story of local frac sand as well, which began when operators lowered sand specs in order to access plentiful in-basin proppant supply unburdened by the long and costly journey down to Texas from Wisconsin. A similar loosening of spec requirements in pre-frac water sourcing has opened the door for clean brine to phase out some fresh water. The question is how clean must the water be (and in sand, how crushable is too crushable) – but that’s a story for another day…

Many other similarities came to mind as we contemplated the duality of frac sand and frac water sourcing. Here are some trends that sand and water share in common:

  • commoditization
  • exponential volume growth in consumption
  • increasing velocity (rate of demand at wellsite), driven by frac spread efficiency gains
  • long histories in the O&G industry, but never with this much attention paid
  • large scale infrastructure requirements
  • rapid market structure change
  • fully delivered costs are more important than cost at origin
  • logistics is paramount
  • timing of delivery is critical to avoiding NPT
  • consistency of the material over time is key to completion recipes
  • land owner issues are very important given physical impact and footprint
  • disruption (rapid adoption of new practices / solutions)
  • tons of new entrants offer a wide variety of solutions with varying business models too
  • heightened focus on mitigating counter party risk
  • trucking is a persistent challenge, attracting logistics hardware and software innovators
  • and on top of all that… sand and water mix in the blender to comprise the vast majority of frac fluid (together sand and water are the very essence of modern fracing)

The frac sand business has experienced momentous change over the past few years. In the water business, the action is hot and getting hotter.

As we suspect Bill Zartler would probably tell you from his experience with both, it’s a fascinating time in each of these sectors at the moment. The spotlight on sand and water has never been brighter.

And now for this week’s top oilfield water industry headlines…


News Digest

Permian Water Recyclers See Increasing Need For Larger-Scale Facilities

"In general, the industry has accepted less clean water to frac with," Bill Zartler said in a phone interview with the Midland Reporter Telegram. "There's growing comfort with less clean water."

Former Schlumberger CEO Says Permian Frac Jobs Are Under-reported

Andrew Gould, former chairman CEO of Schlumberger, said: “With far more wells contributing to Permian and U.S. oil production than accounted for, current shale oil production is substantially more water- and sand-intensive than is commonly believed...”

3 Ways Produced Water Could Hamper Permian Production [Wood Mackenzie Editorial]

Saltwater disposal costs are estimated at 40% of total Delaware Wolfcamp well lease operating expenses. To target a deep injection formation more than 14,000 feet for saltwater disposal, the cost can surpass $10 million a well.

Where There Are DUCs, There Will Also Be Water

Kurt Knewitz writes: "There are over 4k DUC's in the Permian Basin alone. If you factor in 300k bbls per frac on average that means 1.2 Billion barrels of water will be required for completing the drilled but uncompleted wells in inventory. A 25% recovery rate would equate to..."

NGL Ranked Top Oklahoma Business By Revenue

NGL Energy Partners, with 2,400 employees and revenues of $17.3 billion, is the largest Oklahoma company per Business Insider’s recent ranking of largest companies in each state.

Another Reason To Put Water On Pipe: 1/3rd Of Texas Trucks Inspected Are Placed Out Of Service

TX DPS said it has conducted 8,400 inspections this year and placed 2,924 vehicles out of service...

Permian Bandit Steals Pump, Attempts To Sell It Back To The Victim!

If this post is accurate, then this thief might have earned the "Oilfield's Dumbest Criminal" award. Oilfield theft happens, and it is a real business risk in West Texas, especially during boom times...

WATER TALENT POOL: Executive Recruiter Comments Thoughtfully On Oilfield Water Trends

Jack Coker (a partner at an executive search firm focused on placing leaders in private equity backed growth companies) wrote a nice summary of produced water trends on LInkedIn this week. Reading his comment, we were reminded that executive search activity in the oilfield water management sector is elevated...

WATER TALENT POOL: Senior Water Folks In High Demand

Recruiters are scrambling to fill senior level Water Resources, Wastewater and Environmental roles...

Oilfield Water Covered By National Geographic Magazine - Mainstream Attention Rising

Although we had to look past the mistaken identity of a drilling rig for a "hydro fracking tower" (whatever that is) in the opening photo caption of this article, we find it notable that National Geographic is writing about oilfield water. The mainstream publication writes that "the dense, salty water produced as a byproduct of oil and gas operations can stress fault lines even when operations cease, new research shows..."

DEEP DIVE: Economically Recoverable Water In Texas - An Underappreciated Water Management Strategy?

Warning: this is not a quick read, but it might be a useful desk reference for some of our water newsletter readers. Published on July 19, 2109, the piece unpacks water loss audit data for two planning regions that are home to almost a third of Texas’ population and three of the five largest cities. The author explores the value of economically recoverable water losses...

Open Season At Blue Mountain Midstream For Crude Oil & Water Gathering Systems

The initial water gathering facilities will consist of approximately 100 miles of water pipeline contained within the dedication area of a contiguous 67 Townships covering portions of seven Oklahoma Counties. Produced water will be directed to treatment facilities for reuse or to Wildcat Water Gathering owned and operated saltwater disposal wells, as well as third-party disposal wells...

Blue Mountain Midstream Bags Roan Deal

Blue Mountain Midstream announced a definitive agreement with Roan Resources to gather Merge crude over a 10-year term covering an 89,000 net acre dedicated area in nine Townships in central Oklahoma...

What To Do With Oil Boom’s Wastewater?

Environmental engineering professor Pei Xu laughed when asked if a tank of “produced water” could be mistaken for fresh water, ripe for drinking. “Generally, you’ll find produced water is blacker and has a lot of hydrocarbons in it, so we should not drink it,” said the New Mexico State University educator, who has studied the issue of wastewater treatment for years...

Produced Water Insights From Mark Patton At Hydrozonix

Mark Patton writes that oilfield water "is a new and emerging market. Yes, produced water has been around forever, but unconventional oil and gas has redefined the produced water market and for the matter, the entire oilfield water management segment. This reset of our market clears the table for an exciting year, but what changes can be expected and, more importantly are we up to the task to provide the services the market values most?"

A BASIC OILFIELD WATER PRIMER: Flowback Water Issues In The Permian Basin

Released on July 19, 2019, this primer covers the basics of oilfield water at a very high level. It's a good, digestible background read for folks new to this niche...

Rise To The PW Challenge [Part One]

Dr. Ming Yang, TUV SUD NEL, UK, reports on industry attempts to better manage discharge of produced water...

Rise To The PW Challenge [Part Two]

Oil-in-water concentration used to be measured by extracting the oil using Freon-113 (a solvent that was known to cause ozone depletion and damage to the environment) and then analysed using an infrared absorption-based instrument...

Engineers Eye Oilfield Advances At URTeC While Grappling With Profitability

They looked at two nonrevenue items—water management, software, and applications spending. Both offer opportunities to significantly lower costs and reduce risk, but they are not in the budget at many companies. The survey found more than 35% of the companies “have not undertaken any initiatives related to water management..."

Wall Street Funding Slowdown For Energy Continues

A Drillinginfo study cites WaterBridge's pulled IPO in midstream’s dynamic water management sub-sector...

A New Fund Is Attempting To Raise $250mm To Invest In Energy; Oilfield Water Assets Are A Plus For Targets

Elite Opportunity Fund has launched a new fund to attract O&G investors. The fund will look at targets with "upside opportunities in Artificial Lift Optimization, Power, Salt Water Disposal, and Midstream...

Northern Colorado’s Water & Energy Economies Are Converging

Could water providers take a page out of the oil and gas industry’s book and build a pipeline to the Mississippi basin?

Wyoming Water Discharge In Focus Locally

The federal Environmental Protection Agency has told Wyoming regulators that a draft permit to allow Aethon Energy to discharge polluted water into creeks above the Wind River may result in significant degradation to that protected waterway...

Stronger Earthquakes Induced By Wastewater Injection, Study Says

Virginia Tech scientists have found that in regions where oilfield wastewater disposal is widespread -- and where injected water has a higher density than deep naturally occurring fluids -- earthquakes are getting deeper at the same rate as the wastewater sinks...

Earth Sciences: Oilfield Wastewater May Cause Earthquakes For Years To Come

The model, published in Nature Communications, suggests that following wastewater injection rate reductions in Oklahoma and Kansas, the frequency of high-magnitude earthquakes may decrease more slowly than the overall earthquake rate.

Texas Landowners Pivot To ESA To Block 2 Bcf/d Permian Highway

The proposed 42-inch diameter Permian Highway Pipeline, designed to move 2 Bcf/d from the Permian Basin to the Gulf Coast, is facing another assault as plaintiffs prepare to sue the sponsors using the Endangered Species Act.

Four Steps To Managing Risks In Desalination Projects

As global water shortages worsen, desalination projects are likely to proliferate. Sponsors that can manage project risk will capture significant value while helping the world meet its water needs...

Giant "Minion Tank" A Big Draw At Canadian Oil Show

You absolutely couldn’t miss the giant water tank that Campbell Oilfield Rentals Ltd brought to the Saskatchewan Oil and Gas Show as it towered over the west side of the outdoor exhibits. While it wasn’t the tallest object on display, it certainly had the most bulk....

Baytex Energy Pipeline Leaks PW In Northeastern Alberta

Cleanup crews were on site in northeastern Alberta yesterday after an estimated 100,000 litres of salty produced water leaked from a pipeline operated by Baytex Energy Corp

Most Of Last Week's Canadian PW Spill Has Been Cleaned Up

Cardinal Energy was cleaning up after 320,000 litres of oil and produced water spills near Swan Hills, Alta.

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