Midstream’s “Watershed” Moment

Treatment, Re-Use & Innovation

In the face of mounting environmental challenges, businesses and communities alike in North America are renewing efforts to enhance operational best practices, integrate green technologies and reduce climate impacts. Within the midstream energy sector, this focus on environmental responsibility is most clearly seen in relation to the most essential of our natural resources: water.

The United Nations reports that over the past century, global water use has increased at more than twice the rate of population growth, with the Organisation for Economic Co-operation and Development predicting a 55% increase in water consumption between 2000 and 2050.  Locally, these statistics have a very real human impact: nearly half of the Western United States is currently experiencing some form of extreme drought.

At OWL, we believe it is our responsibility as a leader in produced water infrastructure and management to help shape a more sustainable future. Currently, midstream energy production re-uses less than half of its produced water. We believe there is a significant opportunity for technological efficiencies and innovative solutions to dramatically change the industry’s impact on freshwater scarcity.

From the perspective of Jeff Sawyer, Vice President of Engineering, OWL’s water treatment and re-use capabilities can help to preserve freshwater aquifers and drive industry-wide best practices.

OWL has traditionally focused on gathering, transporting and disposing produced water. Why further expand into water re-use and recycling?

Our story has always been one of adaption and innovation to better serve our customers.

OWL began 2012 by trucking water at drilling sites in New Mexico and Texas, but the need for more permanent solutions was clear and we evolved to meet growing demand.  Since that time, we have installed hundreds of miles of permanent, in-ground gathering networks to offer more efficient, sustainable produced water solutions for our customers. Water re-use and recycling initiatives are the next step in OWL’s commitment to continuous improvement, this time preserving local freshwater and providing exploration and production companies (E&P) with an efficient, cost-effective solution.

In October 2020, we were delighted to introduce a new mobile water treatment unit that offers a first-of-its-kind treatment and water re-use solution for our customers.  Developed in conjunction with one of the world’s premier water treatment companies, this new unit combines proven technology with a 20-year history in the industry tailored for OWL’s specific infrastructure.  The unit takes water from OWL’s pipeline after it has been produced from drilling and production operations and treats it on-site, creating completions-quality water ready for immediate re-use. It is capable of efficiently treating up to 50,000 barrels per day to be re-used on the spot, while also minimizing set-up times and maximizing throughput.

Managing produced water can represent between 25% and 50% of an E&P’s total operating costs. By treating and re-using water directly, this flexible solution has the potential to significantly lower our customers’ operating costs while decreasing the industry’s freshwater use and preserving aquifers, thereby contributing to overall water sustainability.

Taking a closer look at the environmental impact, how has the public push towards sustainability changed operations within the E&P industry? Has the approach to midstream water business models changed significantly over the last few years?

When I started in the industry 14 years ago, the model as we understand it today didn’t exist. Environmental, social and governance initiatives have grown in prominence as greater attention has been rightfully placed on the industry’s overall impact on water quality. This is particularly relevant in recent years as the advent of hydraulic fracturing, or fracking, technology has significantly increased water use in the industry.

Early in the shale revolution, water re-use consisted primarily of desalinating produced water before re-use, but over time completions chemicals have evolved to be more and more salt tolerant, meaning that the quality of water required is determined as much by storage life as frac compatibility.

Today, larger gathering systems make it easier to provide higher rates of re-usable produced water than a single operator can generally gather. Over the lifespan of a well, produced water rates decline and can contribute to ceasing operations prematurely. Extensive water gathering networks like OWL’s can combine volumes from many operators at once and use that increased capacity evenly across a geographic region, helping increase the lifespan of E&P infrastructure, decrease overall capital costs relating to water volumes and aid the industry in reducing freshwater demand.

What factors are helping to drive this broader industry shift towards water conservation?

Water scarcity, both as a result of climate change and population growth, is a major consideration. Limited access to water would have a dramatic impact on our quality of life and economy and challenge the ability of our communities to thrive into the future. By 2050, it is projected that around 40% of the world’s population will be subject to severe water stress, making water preservation a key priority in ensuring the long-term health of our communities.

Regulatory bodies are progressively encouraging water re-use within the midstream energy industry, helping to improve water quality and promote sustainability. The New Mexico Oil Conservation Division, for example, put in place Rule 34 in 2015 allowing E&P companies to create storage and recycling facilities to house, treat and use produced water. This was really the first step in addressing water consumption for drilling operations and creating a framework for increasing water recycling initiatives.

Continuing that trend, in 2020 New Mexico passed the Produced Water Act, which specifically encourages more produced water re-use in oilfield operations as well as future exploration into water desalination solutions. Furthermore, it states that New Mexico operators are now required to report on a monthly basis the amount of water they are using for fracking and the nature of that water. The idea of water re-use is spreading to neighboring states as well, with Texas now looking at legislation that encourages produced water re-use. Additionally, New Mexico’s regulatory environment is supportive of methods that preserve fresh water and encourages re-use and recycling of produced water.

The current drought in the Northern Delaware Basin region, along with policies to address freshwater preservation, form a picture of where we are headed and how to get there. By gathering data on water use through stricter reporting measures, we can get a clearer sense of how and where water is being used, then use those insights to preserve aquifers and ensure long-term water security within our communities.

How much of an impact can these efforts have on communities, customers and the broader state of the environment?

In addition to creating good jobs within local communities, produced water re-use has significant cost savings benefits. In the Delaware Basin alone, produced water volumes are expected to increase from 1.9 billion barrels in 2019 to 4.8 billion barrels in 2024. Considering that rig and completions fluid make up 15% of overall drilling activity costs, increasing produced water use at the wellhead could save Texas Delaware drillers more than $4.3 billion annually by 2023 by lowering the cost of water supply and reducing the disposal component of water management.

For OWL, re-using produced water from our systems really has a three-pronged value proposition: for our customers, for the environment and for our communities. For our customers, re-using water on-site reduces the costs associated with operating and maintaining their own gathering systems by providing the flexibility to have a mobile solution come to any operation site. For communities, reducing the industry’s overall water use directly preserves local aquifers, giving surrounding towns and cities peace of mind knowing that their water security is a top priority.  Lastly, from an environmental perspective, recycling allows us to help the industry as a whole to be better stewards of our natural resources by reducing reliance on freshwater that can be used for drinking or agriculture, helping ease the strain on local aquifers.

Environmental and community stewardship are central to OWL’s purpose as an organization.  Are there any other initiatives on the horizon?

We are always evaluating new approaches and emerging technologies that can help us improve the efficiency of our operations and the conservation of our natural resources.  As we look ahead to new possibilities and innovations, we are excited to see continued growth in the desalinization space, including for the technology to become a potential alternative to saltwater disposal wells in the future.

Our mobile on-site water treatment unit is an exciting first step in transforming the way we look at managing produced water, placing a renewed emphasis on customers, communities and the environment.  We believe there is tremendous value in increasing water re-use, and as OWL positions itself for growth in that area, we are aiming to expand recycled water to be a substantial portion of the water we gather and use. Ultimately, lessening our industry’s environmental footprint is vital to advancing healthier, more sustainable communities and guides OWL’s purpose to provide water infrastructure that benefits our stakeholders and environment.