Summary

With increasingly stringent regulations governing the use of fresh water in hydraulic fracturing, operators are struggling to find alternative sources of fracture fluid for hydraulic fracturing operations. In some regions of the world where abundant fresh water is not available, such as the Middle East and China, using large amounts of fresh water for fracturing is not possible to develop fields. FracKnowledge Database tracking of USA water usage per well indicates that, on average, a well requires 3 to 6 million gallons of water, even up to 8 million for the entire life cycle of the well based on its suitability for re-fracturing. This depends on the number of fracturing stages and particular characteristics of the producing formation. The same industry sources also suggest that about 30 to 70% of injected water remains in the formation with unknown fate and potential consequences to formation damage. Sourcing, storage, transportation, treatment, and disposal of this large volume of water could account for up to 10% of overall drilling and completion costs. As a transition to a reliable and complete replacement for water in the fracturing fluid, mixtures of fresh water with produced and brackish water are being applied. On the other hand, waterless fracturing technology providers claim their technology can solve the concerns of water availability for shale development. These waterless or minimal water methods have been used for decades, but are higher cost than conventional water fracturing techniques and have usually been used in water sensitive formations that required the technology.

This study reviews high-level issues and opportunities in this challenging and growing market and evaluates key drivers behind water management practices such as produced and flow-back water, waterless fracturing technologies and their applications in terms of technical justification, economy and environmental footprint, based on a given shale gas play in the United States and experience gained in Canada. Water management costs are analyzed under a variety of scenarios with and without the use of fresh water. The results are complemented by surveys from several oil and gas operators. With low economic margins associated with shale resource development, operators need to know which practices give them more advantages and whether waterless methods are capable of fracturing the wells at optimal conditions. Based on a high-level economic analysis of cost components across the water management value chain, we can observe relative differences among approaches. Our analysis does not consider the effect of fracture fluid on productivity, which can be considerable in practice. Bearing this limitation in mind, as one might expect, fresh water usage offers the greatest economic return. In regions where water sourcing is a challenge, however, the short-term economic advantage of using non-fresh water-based fracturing outweighs the capital costs required by waterless fracturing methods. Until waterless methods are cost competitive, recycled water usage with low treatment offers a similar NPV to that of sourcing freshwater via truck, for instance. Despite positive experiences with foamed fracturing techniques in Canada, and the potential improvements offered by these techniques, the technology is still challenging to apply in large scale fracturing jobs in the United States, primarily due to operators' perceived level of technology complications, safety, economics, and other logistics. However, if these emerging technologies become widely accepted, the development of shale resources, especially in those basins exposed to drought, has the potential to grow both nationally and internationally. Although environmentally friendlier than using fresh water, the environmental aspects of these technologies must be clarified and deserve closer examination. Such variables must be reviewed based on specific shale reservoir characterizations before implementation on a large scale, and there are numerous other supply logistics and HSSE-SR (Health, Safety, Security, Environment, and Social Responsibility) issues that need additional discussion. Conclusions regarding current and future shale development have been proposed based on results from comprehensive technical, environmental, economic, and regulatory evaluations.

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