Minimizing Bankruptcy Risk with Efficient Oilfield Water Management
Published on by Water Network Research, Official research team of The Water Network in Business
A recent review of 59 North American-focused Independent E&Ps by Oil Pro highlighted the massive $200 billion debt that the industry has accrued in pursuit of tight-oil and shale-gas resources over the past 10 years.
For many years the industry has discussed the importance of the Energy-Water Nexus. This term highlights the interconnection and critical nature of water in energy production and conversely the requirement of energy for water production. Professionals in the upstream energy sector live and work within this Nexus on a daily basis. Water is both the largest input and output within oil and gas operations, and therefore optimization of water management has one of the biggest potential impacts on fiscal performance. According to Xylem, a global water technology company, “…for an industry focused on improving margins, solving water challenges may be the best opportunity to reduce costs [and] improve profitability…”
A recent review of 59 North American-focused Independent E&Ps by Oil Pro highlighted the massive $200 billion debt that the industry has accrued in pursuit of tight-oil and shale-gas resources over the past 10 years. In recent months, oil prices have dropped to historically low values, creating a significant financial burden on many operators. Some operators have cut capital budgets, high-graded assets and pushed for efficiencies throughout all components of their supply chain. Others have not – and as many as 38 E&Ps have subsequently filed for Chapter 11 bankruptcy protection. As water often accounts for as much as 80 percent of a producer’s operating cost, the continued evolution of more efficient water management practices is critical to surviving this economic downturn.
Delivering on increased efficiency within the upstream landscape is not always easy. The Energy Water Initiative (EWI), a collaboration between 12 upstream E&Ps, including Anadarko, BG Group, ConocoPhillips, Devon Energy, Marathon Oil and Southwestern Energy, among others, published a report highlighting best practices from case studies within their US-based operations. One of the six best practices highlights the need for in-house dedicated water management teams. The role of these teams is often to liaise between the drilling, completion and production teams and to coordinate both the price and availability of a variety of water management products and services.
Today significant demand is placed on water management professionals within upstream operations. Tight margins and efficient cost controls are critical to managing service contracts for sourcing, storing, disposing of and transporting water within a company’s operations. Furthermore, an evolving component to the management of water within this ecosystem is finding and executing opportunities to trade and/or sell water and water infrastructure between peers. Further highlighted in the EWI 2015 report on best practices is the opportunity to reuse one company’s produced water as another company’s fracture fluid or enhanced oil recovery (EOR) injection fluids, essentially converting water management from a cost center into a profit center (or at least a break-even). Operating companies can save financial resources by effectively navigating the ecosystem of services more efficiently.
The main driving force in the oil and gas water ecosystem is the energy producer. Interacting with the energy producers are landowners and an array of service providers offering disposal wells, water treatment, water hauling and storage. The nature of the transactions between these players varies based upon specific needs. The diagram below is a graphic illustrating the buying and selling relationships among all the major players.
Source: Eaglefordtexas
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This article on using water management as a way to more profitable bottom lines for the oil companies and the Oil Field Completion Services company hits the nail on the head. However, I am about to reveil a technology that has been available to these companies ever since 2006 when a little research institute in California. The name was Cal-Neva Water Quality Research Institute. This Institute is well known to all of the major oil companies that were drilling in the years of 2003 up to the present because they were presented with two technologies that could, if it had been used would have saved them millions in dollars and would have saved Texas hundreds of millions of gallons of drinking water that could have been saved if such companies like Devon Energy and Chesepeake and XTO and Mobil, Champion Oil, ETC. had chosen to use it. Instead they had what is called "Down Hole Disposal". Back in the early 2000's these companies could dispose of a 42 gallon barrel of water for as little as $0.25 -$0.65 per barrel. Recycling of their "Frac Water" cost as little as $1.25 per barrel, but they didn't have to recycle so they didn't.
The two technologies that were developed for the recycling of this water was called "Electro-coagulation" and the more advanced desalination and Hydrogen Generation technology was named the "Plasma Incubator System with the Bubble Gen Linear Generator". The EC unit could handle 100 gallon of this water per minute and the technology removed up to 99.7 of all metals suspended and dissolved in the "Frac Water". However the Fracing of these wells created a salt called Sodium Chloride or common table salt. But this is a double bonded compound and the EC unit could not remove it although it did remove the other single bonded salts like Potassium Chloride. Early in 2004 it was decided by Devon Energy that if we were going to be able to recycle their Frac Water we would need to remove the Sodium Chloride down to a level of less than 5% by volume. The team of scientists started looking for a new and revolutionary way to remove salt from water that did not use filters of any kind. During the next three year period a new technology was developed by the team of scientists of Cal-Neva. This used components found from all over the world. When they were compiled on papeer first and then in a lab in Arizona and the first prototype was built to show how a Plasma Arc could be used to disassociate water into its two components of Oxygen and Hydrogen. This technology was so energy intensive that the team decided that we needed to develop a way to generate our own electricity to run this energy hungry system. The team developed what is called today the Bubble Gen Linear Generator which uses the Kinetic Energy of the Hydrogen atom to lift a specific weight a specific distance. By the way all of this technology is controlled by Physics and it parts knows as the Postulates, Axioms and Theroms of the science and when you apply these to all components of this system it is proven out by the use of Physics. By using Hydrogen in this way we are able to create not only enough power to run the reactor but to power all of the equipment used on a drilling platform to drill and complete the well. Then we return the Hydrogen to its partner, Oxygen and through another new tec.hnology used in the Fuel Cell Industry, called the Tornado Fuel Cell we are able to re-combine the two gases and produce a product called Medical Grade Distilled Water. This is the product that can be used again in the next well on the site.
These technologies can be read about on two different websites the first is "www.eco-web.com /EDITORIALS/AUTHORS/DRABEBEAGLES." the other site gives you the total knowledge of the PIR System and it can be found at "www.abescousin1.com" For More information on these technologies Dr. Beagles can be reached at gerrybeagles@aol.com or by phone at 916-877-1553