Water Security Network

The full cost of water: Thoughts from the Water, Oil and Gas Conference

On 2 December, I attended British Water’s Water, Oil and Gas Conference in Coventry, UK. Speakers at the event represented international knowledge in the oil and gas sector, not specifically to shale gas but in skills and technology that can be applied to shale gas development (alongside experience from the United States). I have attended similar events and so many of the figures, sector progress updates and regulation discussed specific to shale gas were not new to me. However, I was curious to see how information is interpreted by industry in the sector.

The utilisation of water for shale gas extraction was a prevalent topic; estimates of water resources required varied by speaker from 2,500m3 to 59,000m3 per well (as shown below in Table 1). Disparity exists in water demand estimates as the requirement is a function of the local geology, the length of lateral (horizontal well) drilled and the proportion of fresh water used (the potential exists for some of the water returned to the surface to be treated/diluted and re-used for subsequent stages). Ultimately, figures remain theoretical for the UK until development advances.

table

I was disappointed that a distinction between water withdrawal and consumption was not made – instead, ‘water used’ was a frequent, ambiguous description. Considering the above, up to 59,000m3 could be withdrawn per well, up to 80% of which could return as flowback, with two estimates at around 40%. Conversely, up to 60% of water does not return to the surface, but is retained within the shale, consumed.

Figure 1. The full cost of water (adapted from Lelliot’s presentation for Advision at the British Water: Water, Oil and Gas Conference, December 2nd 2015)

Figure 1. The full cost of water (adapted from Lelliot’s presentation
for Advision at the Water, Oil and Gas Conference)

It soon became apparent that when flowback was discussed, it was either described as a problem with regard to legal obligations for disposal or an economic hurdle – for example, how much it would cost per barrel to be treated either prior to disposal, or reused for subsequent stages. I perceive this to be a missed opportunity: flowback provides the chance to either reduce the water intensity of shale extraction by re-use or to enable a proportion of water withdrawn to be returned to the water cycle as opposed to it being locked within the shale, consumed. If water was viewed for its true, sustainable value depicted in Figure 1, it would perhaps be utilised with greater respect. An understanding of the resource would support environmental and economic decision making, enable risk management and provide an opportunity to enhance a company’s reputation whilst both reducing cost and increasing revenues, a philosophy shared by presenters Mike Lelliott of Advision and Adam Garland of WaterLens, acknowledged by Martin Bowland at Schlumberger.

The question was raised of whether state intervention is required to regulate the proportion of water re-used. It was widely acknowledged that traditionally, high oil/gas prices results in a ‘get it out quick’ mentality with little regard for water resources. However, in the UK – unlike the US system – water use is limited by an Environmental Permit authorised by the Environmental Regulator (Environment Agency in England) thus acting as a limiting factor. Furthermore, low oil and gas prices provide a favourable environment for sector innovation research and development to optimise efficiencies. It is hoped that economies of scale in the US shall enable technology to treat water onsite both energy and cost efficiently, reducing the water demand per well.

Shale gas development is in its initial stages in the UK. The announcement of licences purchased in the 14th round from Department of Energy and Climate Change (DECC) on 17 December 2015 highlights that the sector is gaining momentum. DECC remain confident that regulations are in place to mitigate and prevent water stress. It is hoped that lessons have been learned from the US and that wider education about the true value of water resources shall – optimistically – facilitate respectful use.

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