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Current Issue
Issue No. 31 July/August 2010 |
 The Future of Water Recycling Energy from unconventional resources such as the Newark East (Barnett Shale) Field in the Fort Worth Basin may represent almost 50 percent of the natural gas produced in the United States in the next 25 years, according to the Global Petroleum Research Institute (GPRI) at Texas A&M University. However, the processes used to recover that natural gas are very dependent on water resources. That’s why A&M researchers and several private companies are focusing on technologies to recover freshwater from oil- and gas-produced brine.
Hydraulic fracturing, or fracing, is used to develop tight-gas reservoirs, such as those found in the Barnett Shale. Large volumes of fresh water are injected into a well at pressures so intense that the structure cracks, or “fractures.” The water generally has been treated with a friction reducer, biocides, scale inhibitor and surfactants, and contains sand as the propping agent, according to the Railroad Commission of Texas (RRC). This “slick” water, or light sand, fracing process of a vertical well completion can use more than 1.2 million gallons (28,000 barrels) of water, while the fracturing of a horizontal well completion can use more than 3.5 million gallons (more than 83,000 barrels) of water, according to the RRC. Other experts say a horizontal well fracturing operation may use 5 million gallons of water. In addition, the wells may be re-fractured multiple times after producing for several years.
Consider, for example, a well fracturing operation in the Barnett Shale using fresh water from the municipality of Cleburne, in Johnson County. Cleburne sells water to operators at retail rates to stimulate Barnett Shale wells. Flow back of the water at the drilling site, now containing mineral salts from the underground formation, occurs over a period of several days to months. Typically, flow-back water is captured in lined pits and transported to off-site disposal. Most of that water then goes to re-injection disposal in a deepwater disposal well that is often located miles away from the original well site. But with modern water recycling technologies, it is now possible for much of this brine to be reused in subsequent well fracs, and a great deal can also be recovered as fresh water for beneficial use. The potential for reuse not only bodes well for the environment, but could help the oil and gas industry save money in the long run. Several companies and technologies are now competing to get a share of the water management market in the Fort Worth Basin.
Devon Energy and Fountain Quail
Thus far, Devon Energy has been the most proactive company in seeking to recycle water in the Fort Worth Basin. In 2005, Devon (www. devonenergy.com) began working in partnership with Fountain Quail Water Management LLC, a Texas-based subsidiary of Aqua-Pure Ventures Inc., a Canadian company (www.aqua-pure.com). Fountain Quail had developed mobile water recycling units called NOMADs, on-site vapor distillation units that apply heat to separate brine from water used to fracture gas formations. The companies tested a recycling process that could allow reuse of approximately 80 percent of the returned fracture fluid, according to RRC documents. When water injected to fracture formations returns to the surface, it becomes unusable due to its high salt content. Under this system, instead of hauling unusable return fracture fluid to a disposal well, the fracture flow-back fluid is stored in tanks on location and piped into treating equipment. Natural gas produced on location is used to fire the distilling units that in turn boil the returned fracture fluid and produce fresh distilled water. The distilled water can then be used to fracture treat another Barnett Shale well.
On Oct. 30, 2006, the Texas Railroad Commission authorized Fountain Quail Water Management (FQWM) on a permanent basis to treat fracture flow-back fluid from the Barnett Shale for reuse by using mobile distillation units. The joint venture with Devon and FQWM has been so successful that, as of March 2008, 90 to 100 percent of the flow-back water recovered was being recycled, according to Devon’s Jay Ewing.
“We are pleased with the progress of our recycling program to this point, and we are looking forward to continued development,” Ewing said. “We are actively testing other technologies and we are looking to improve the efficiency of our current system. “Over time, we hope to expand our effort to include produced water as well as flow-back water.”
Brent Halldorson, a professional engineer and chief operations officer for Aqua-Pure, added that the type of water being dealt with in the Barnett Shale “is extremely hard to treat because of the variability. It is highly variable in composition -- the longer it is under ground the more salt it picks up,” Halldorson added. The water “is also highly variable due to the chemicals added by the frac companies. Regionally, the water changes within the Barnett Shale due to differences in the subsurface conditions. So now we are not dealing with treating a ‘known entity,’ we are treating a wide spectrum of highly contaminated wastewater that varies from day to day, truck to truck.”
That being said, “the more people getting in and recycling water the better - there is definitely enough to go around,” Halldorson asserted. “It took us four years of hard work to get our systems to the point where they are getting good recovery.”
Fountain Quail’s Business Development Leader Jack Pearson, who offices in Acton (near Granbury), said in May that Devon remains Fountain Quail Water Management’s(FQWM) primary customer in the Barnett Shale (BS) for now. In May 2008, FQWM had nine water treatment units on the ground in the BS at four Devon locations (Circle R near Bono, West Crossroads near Godley, Johnson near Decatur, and McCurdy near Justin).
“To date, we have recycled approximately 7 million barrels of frac flow-back water,” Pearson said of his company’s partnership with Devon. “Of that, we have returned approximately 85 percent (about 6 million barrels) as reusable distilled water,” which is typically used for fracing.
Devon uses trucks or a surface line (pipeline) to deliver frac flow-back water from its drilling sites to the NOMAD locations. After FQWM cleans the water, the resulting distilled water is then pumped via surface line to another drilling site for use on a frac job. “The intent is that this water is reused and recycled, reducing the demand on surface water and aquifers,” Pearson said. “We’re recycling the water that has been used and returning it for reuse.”
Devon’s Ewing estimated earlier this year that his company’s cost to recycle water has been about $4.43 per barrel, which includes transportation and disposal of the concentrate (20 percent of the fluid that could not be recycled). Devon ends up with a net disposal cost for water of $3.35 per barrel, as compared to an estimated $2 to $2.50 per barrel for typical water disposal into an injection well. Ewing also estimated that just less than 5 percent of Devon’s revenue goes towards the cost of handling flow-back water.
Fountain Quail’s current arrangement with Devon is essentially as a service company where FQWM owns, operates and maintains the NOMAD equipment, charging Devon a fee to process the water. Right now, all of FQWM’s nine units are on either Devon-owned land or leases. However, FQWM has plans in the works for expansion. In March 2008, the company signed a letter of intent with the City of Weatherford to purchase 2 million gallons per day of treated effluent (cleaned and treated municipal wastewater) from the city for resale to energy companies in the area, according to Pearson. Details of the purchase, spelled out in a news release on Aqua-Pure’s Web site, state that the effluent water would be combined with fresh water produced by FQWM’s recycling facilities and used by energy companies to fracture gas wells in the Barnett Shale.
FQWM proposes to set up its own water processing/recycling site in Parker County, where it can collect flow-back water from any interested energy companies (via pipeline or trucks), clean the water with NOMAD units, then combine the NOMAD-produced distilled water with the Weatherford effluent. The resulting “fresh” water would be delivered to frac sites through a FQWM pipeline for reuse in the field.
“We propose to build a pipeline to service Parker County and possible future extensions into Wise and Jack counties,” Pearson said. FQWM has obtained preliminary approval from the RRC and the Texas Commission for Environmental Quality for its proposed plan and has been working with a land company to secure rights of way for the water pipelines that would both deliver water to the Fountain Quail location in Parker County, then return it back to drilling sites after processing. Pearson said the company hopes to determine the exact routes of the pipeline as it identifies producers that want to participate in the project. “We can route, within reason, that pipeline near to their drilling programs,” Pearson pointed out. “We have several major producers who have expressed interest in participating in our project. We anticipate as early as the third quarter of this year to start work.”
If all of its plans come to fruition, Pearson said FQWM will need to build additional NOMAD water processing units. Although the first units were constructed in Alberta, Canada, he expects more of the component pieces of new units to be built in Texas.
Pearson said he believes Fountain Quail’s business model is working: “When I came down here (to Texas) two and a half years ago, we had nine employees. Now we have 73 employees in Texas. If our proposed pipeline project proceeds, we plan to double our Texas staff within six months.”
Fountain Quail’s parent company, Aqua-Pure, in April 2008 announced financial results for 2007, reporting revenue at $10.8 million, resulting in a net loss of $4.3 million. Aqua-Pure CEO Jacob Halldorson commented on the financials: “In early 2006, when we committed to constructing and putting into service in the Texas Barnett Shale six new NOMAD evaporator units, we knew that there would be a learning curve required in tripling capacity in a little over a year from when the first new units came on stream. ... We began to see the results of our efforts in the fourth quarter (2007) with improved operating efficiency and margins. Our fourth quarter operating margins confirm the potential for profitability of our units, but the real impact of investments ... will show up later in 2008.”
Ecosphere Technologies
In late May, Devon Energy also signed an agreement with Florida-based Ecosphere Technologies (www.ecospheretech.com) for a pilot project using Ecosphere’s Ozonix™ Advanced Membrane Process to recycle produced waters in the Barnett Shale. Pending regulatory approval, the project is expected to commence in the Barnett Shale on July 15, 2008 and continue for 90 days, according to company founder and Chief Executive Officer Dennis McGuire.
“The Ecosphere Ozonix™ equipment for the project is presently being built and we expect to be operational pending final approval by the Texas Railroad Commission," McGuire said in late May. On June 13, 2008, Ecosphere filed a formal application with the RRC for a pilot program with Devon in Johnson County to treat frac flow-back water.
Ecosphere Technologies entered the water recycling business in the Fort Worth Basin in 2007. The company has been providing
To serve the oil and gas industry, the company is providing mobile filtration, treatment and recycling technology, with systems and services designed to recover, treat and recycle frac flow-back and produced waters at the well site. Specifically, the Ecosphere Oaonix™ process combines advanced oxidation and membrane processes into mobile, self-contained systems for use at the well site.
“What separates us from others in the water recycling business in the Barnett Shale and other shale plays is that we are treating frac flow-back waters directly at the well frac site,” explained McGuire. “Energy companies are currently loading frac flow-back water onto trucks and hauling it away from the well site for further treatment or disposal, often at significant distances and costs,” McGuire continued. “We can process the frac flow-back water and turn it into clean water for reuse in ongoing fracturing operations at the well site or for use on other well sites.”
“Our technology can save as much as 99 percent of the water from re-injection into disposal wells, which is a significant environmental play,” McGuire said. “We are providing energy companies with very clean water for reuse so they can conserve vital water assets.”
McGuire believes several other factors also differentiate his technology from others. The first is mobility. Ecosphere’s recycling systems are highly mobile and can be set up and operating on site in a couple of hours, rather than a week or more, which McGuire says is true with some other systems. Second,Ecosphere's systems have a compact footprint and are clean and quiet in operation, all of which are increasingly important advantages in an urban play. The third factor is cost savings. According to McGuire, energy producers are coming to realize they have an alternative to the heated thermal distillation process for treating frac flow-back waters. As McGuire explains it, energy companies have been paying for heating, hauling and disposal costs and not always achieving significant water recovery rates. Ecosphere’s goal is to help them reduce their per barrel production costs by removing some of these water management costs from the equation.
Ecosphere’s Ozonix™ process technology combines ozone generation and two forms of ultrasonics within a single system to treat frac flow-back and produced waters. According to McGuire, the process rapidly oxidizes the heavy metals and organics that normally clog a membrane filtration system.
“When an effective pre-treatment system is not used before frac fluid goes through the membrane, water treatment becomes very inefficient and often results in membrane fouling, which adds a replacement cost,” McGuire added. “Ozone and ultrasound is a powerful combination when delivered within a single system.”
On May 21, Ecosphere Technologies Inc. (OTCBB: ESPH), announced that its wholly-owned subsidiary, Ecosphere Energy Solutions, Inc., had granted an option to Bledsoe Capital to form a new company, owned by Bledsoe Capital and Ecosphere Energy Solutions on a 50/50 basis, to acquire an exclusive worldwide license for the use of the Ecosphere Ozonix™ technology in the energy business. Upon exercise, Bledsoe is committed to $50 million for the purchase of an exclusive license, of which $10 million would be paid upon closing to Ecosphere Energy Solutions and the balance of which would be used to fund the working capital of the new company, according to an Ecosphere Technologies news release. “Upon the successful completion of Ecosphere's 90 day pilot program with a major energy company in the Barnett Shale area of Texas, Bledsoe Capital may exercise its purchase option,” the company’s announcement stated.
“The exclusive application of Ecosphere's technology is for the treatment of industrial waste waters generated during the exploration, production, refining and distribution of energy from natural resources,” the announcement continued. The terms of the purchase option require Bledsoe Capital to form a new Delaware, limited liability company with Ecosphere Energy Solutions as co-owner and to pay $10 million as a licensing fee. The remaining $40 million of capital commitments will be used to facilitate the building of additional Ecosphere Ozonix™ equipment, as well as to fund marketing and operations, to take advantage of new opportunities in the energy business. The agreement also provides for Ecosphere Energy Solutions to build the equipment for the new company,” the news release continued.
Additionally, Bledsoe Capital recently completed the funding of the first $1 million of a $5 million credit facility that will allow Ecosphere to build equipment for its first water recycling pilot program in the Barnett Shale. Construction has already begun to build the initial Ecosphere's Ozonix™ mobile water treatment plant capable of treating 7,000 barrels (294,000 gallons) of water per day, according to the release.
212 Resources
A Utah-based company, 212 Resources, is working to bring its water recycling technology to the Fort Worth Basin. 212 offers a transportable plant, or pod, that uses thermal distillation and evaporation combined with polishing technologies such as sonic and advanced ultra-violet light. The pod can process flow-back or produced water at well sites to create drinking-quality water.
The patented system self-cleans while separating and recovering natural gas condensate, methanol (a chemical not widely used in the Barnett Shale) and brine to produce distilled water that can be reused in drilling, for completions make-up, or for discharge into environmentally sensitive areas such as a river or creek, according to 212’s Web site (www.212resources.com). Using this process can help energy companies maintain low operational costs while being conservation minded, according to 212 Resources Executive Vice President Robert Waits. 212 is focusing its resources on processing “the more difficult produced water with its higher TDS (total dissolved solids) levels, where our ability to more than double the concentration is quite significant,” Waits continued. Flow-back water in the Barnett Shale has less brine and is therefore easier to clean than produced water by almost a third, Waits explained.
“Basically, we have the ability to do complete phase separation of all the components in water that are associated with drilling and production,” Waits said. “We get methanol, total dissolved solids, minerals, metals – all these things that are in the water.” The 212 system can separate out these different components so that they may be recovered for reuse. With 212, “because of our ability to concentrate to near saturation or near crystallization, we get more usable water and reduce residue concentrated brine,” Waits pointed out. The concentrated, leftover solids can be injected into a salt water disposal well or reused by the energy industry as a “kill” fluid to be placed back in a well to keep pressure down the hole.
Waits added that, in some respects, the 212 process is not just recycling water, but is manufacturing new water found deep below the aquifer: “There’s a fresh water zone of drilling, usually to about 4,000 feet, where the driller must use clean water to drill through the aquifer so it is not contaminated. Once the piping set is around that drill core, they start going much deeper and can reach water formations that are heavily salted brine water (such as the Ellenberger in the Barnett Shale) – that’s where it would stay forever if you didn’t drill the hole.” 212 can process this water that is more difficult to clean, water that would not normally be in the aquifer.
At some point, enough wells are drilled that the amount of produced water will exceed the amount of flow-back water. All of this water can also be cleaned for use, and it’s not unimaginable that the water could be enough to sustain a small city, Waits said. For example, he calculated that 7,000 wells with 40 barrels of produced water per day in a year would create approximately 4.5 billion gallons of water (The February 2008 producing gas well count for the Fort Worth Basin was more than 16,000). If one person uses about 44,000 gallons of water a year, “you’ve just created from 7,000 wells enough water to sustain a city of 100,000 people,” Waits asserted. “So the reality is as the gas companies become more sophisticated in their drilling and water management processes, they’re actually creating net gains to the aquifer.”
212 has been in “deep discussions with several companies in the Barnett Shale,” Waits continued. “We are hoping that this will lead to service contracts and move forward.”
Although 212’s pods are transportable, when assembled on location they resemble a plant in an enclosed building. “In Wyoming (where pods are currently in use), every six to eight months we’ll move to a new well location because they are drilling some 32 wells at a single pad. They’ll use 40 to 50 thousand barrels of water to drill a well and they have to haul the water in,” Waits continued. So being able to reuse the water on site helps reduce the amount of water transported.
On May 20, 212 announced that the company had signed a contract with Denver-based Delta Petroleum Corporation for managing its flow-back and produced water in the Colorado Vega field. “This ten year service contract involves multiple 212 Resources “pods” and is similar to our work being done in Wyoming, except that the treated water will be discharged off-site (the Wyoming project water is reused for drilling),” Waits reported.
Exactly how 212 Resources might set up its pods in an urban environment such as is found in parts of the Barnett Shale remains to be determined.
“It depends on whether the water will be trucked or piped, how it will be reused, where it will be discharged (to a river, etc.),” Waits said. “We certainly haven’t determined all this yet -- whether in an urban setting it would be better to locate near wells or be out in a central facility and have water brought to it. For example, we could have three to four pod locations in an area. In many ways you can still reduce truck traffic because a truck that was bringing in dirty water for treatment could then take clean water back for use in drilling.” The truck tanks would be cleaned at the site before being refilled with cleaned water. Other options would include piping water and/or locating the plant near a discharge location. “Every circumstance is different,” Waits pointed out.
Operating in an urban environment might be new to 212 Resources, but their company, under the name H2Oil, already operates a successful crude oil tank bottom disposal/recovery plant in Andrews. After being in operation for only two years, the Andrews facility serves more than 300 oil companies and some 84 trucking companies, Waits said. The Andrews facility cleans crude oil waste from tank bottoms and trucks, then recovers the oil for recycling.
Originally funded through significant private investors and then by a Series B round from @Ventures of Silicon Valley and Boston (CGMI), 212 Resources, in addition to its equity financing, is now backed by a $250,000,000 GE Capital (Energy Financial Services) credit instrument to fund future development, according to the company’s Web site.
Global Petroleum Research Institute/GeoPure
Texas A&M University’s Global Petroleum Research Institute (GPRI), working with a consortium of energy producers and service companies, has developed a pretreatment and reverse osmosis (RO) process specifically adapted to oilfield wastewater purification. This fresh water recovery technology was licensed to GeoPure Water Technologies LLC (www.geopurewt.com) to commercialize the process. After being granted the license, GeoPure constructed a mobile 20 gallons per minute field confirmation unit, which has been used to prove up the process, in accordance with the company’s business strategy, according to GeoPure President David A. Crowe.
GeoPure has been installing and supporting the desalination systems for oil and gas operators, as well as service providers, throughout the United States. The pretreatment process reduces suspended solids, metals and some salts to a level where the processed water can be effectively processed by the GeoPure RO system.
“We now have proven the viability of our treatment process by running extensive field tests across the U.S., including two projects in the Barnett Shale for major operators, one coal bed methane project, and three projects in mid-continent area handling produced water,” Crowe stated. “All of these used our 20 gallons per minute truck-mounted demonstration unit.
“The two units in the Barnett Shale resulted in installation of a 200 gallon per minute desalination facility, which was online for about nine months until it was moved to a new location by the operator,” Crowe added. In addition, the Barnett Shale projects included a seven-day confirmation test for a separate operator to process well fracturing fluid, which led to the design of a mobile treatment system that can be moved from well to well.
The GeoPure unit is not currently in operation at this time, but the company is seeking new projects processing fractured or produced water.
One hold-up to improvements on GPRI’s current desalinization research, according to A&M researcher and petroleum engineer David Burnett (who is also director of technology for GPRI), is that manufacturers need to produce “new types of membranes that will work at higher temperatures and higher pressures. But the oil and gas market for this is small, so you don’t have a lot of incentives for manufacturers to bring this product out.”
Burnett also believes that another way to manage water use in the energy industry is to use less water during the fracing process. “I’m trying to convince my industry brethren to cut down on the amount of water they’re using,” Burnett said. “I think it’s possible for them to get the same results with less water.
In the meantime, A&M’s Department of Petroleum Engineering is working on how to optimize the drilling process, including where it’s drilled, how to stimulate it to produce gas, and when to go back and re-stimulate. “The science of reservoir engineering is all about how to contact the maximum extent of the reservoir possible with the least effort,” Burnett explained. “The key to Barnett Shale productivity is the advent of the horizontal well and the use of water fracs to contact as much of the formation and microfractures as possible. So the trick is to do that with the minimum expended energy. And our industry is doing a good job. We’ve increased our subsurface footprint 6,400 percent in the last 30 years.” |
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