Hydraulic Fracturing Techbook 2017

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70 | October 2017 | HYDRAULIC FRACTURING: WATER MANAGEMENT the last 12 months in the Delaware Basin, Exxon- Mobil drilled two-well and three-well pads with horizontal lateral lengths ranging from 4,500 ft to 10,540 ft." More activity, more water These longer laterals require more water to complete, with as much as 12 million gallons of water per fracture needed, triple the volumes needed five years ago, according to the Bluefield Research report. "Demand is rising exponentially, particularly in West Texas, because of increased water volume per frack and an almost 30% reduction in time required to complete a well," the authors said. "As a result, water demand has been quicker to rebound to pre-2014 market collapse levels than rig counts." There were more than 1,200 land rigs at work in 2014 and with the price of oil hovering just above $100/bbl, water demand was 2.16 Bbbl with a total water managment spend of $10.9 billion, the Bluefield report said. In 2017, at oil prices forecasted at roughly half of what they were three years ago, Bluefield projects a rig count of 650 and a 54% increase over 2016 in water demand at 2.09 Bbbl with a total spend of $2.35 billion. With increased water consumption per frack, so to comes the need to manage the increased vol - umes of flowback and produced water. "Between 2017 and 2026, more than 20 billion barrels of water will be required to serve the U.S hydraulic fracturing market," the report's authors said. "A total of $136 billion will be spent from 2017 to 2026 on the supply, transport, storage, treatment and disposal of water." In 2014, $162 million of the $10.9 billion was spent for water treatment and reuse. Reuse rates— highest in the Permian Basin and Marcellus—will increase, from $198 million in 2016 to $307 mil- lion by end of 2017, the report said. Transportation of water represents the largest expense at 56% of the total water-related spend through 2026 across all U.S. plays, according to Bluefield. "The role of transport has become a primary driver of cost improvements, which has resulted n the installation of water pipelines and alternative water supply contracts," the Bluefield report stat- ed. "Scaling volumes of flowback and produced water are steadily rising as a percentage of water demand…the simple takeaway is that this wastewa- ter will need to be managed." Getting costs down and fewer transport trucks on the road are just a few of the many reasons why the industry is now seeing significant growth in the emerging water midstream sector. The emerging middle The rebound in drilling activity and the increased water demand delivered a wave of new midstream water investments, according to a research note re- leased by Blufield Research. These investments are at this time are primarily centered on providing water infrastructure and management services for operations in the Permian Basin. Private-equity-backed H2O Midstream an- nounced in June its acquisition of produced water infrastructure from Encana Oil & Gas. Under the agreement, H2O Midstream will gather, dispose and deliver for reuse produced water for a "sub- stantial portion of Encana's acreage position in Howard County, Texas," according to a press re- lease issued by the company. H2O Midstream will assume ownership and operation of the operator's existing produced water gathering system consisting of more than 100 miles of interconnected pipeline and five salt water disposal wells totaling 80,000 b/d of permitted disposal capacity. The existing system will be expanded to include new water pipelines, additional disposal wells and a water storage and reuse hub. "By 2018, H2O Midstream expects to have more than 200 miles of pipeline for gathering, 140,000 The installation of water midstream infrastructure will help remove saltwater disposal trucks from Delaware Basin service roads. (Photo by Tom Fox, courtesy of Oil and Gas Investor)

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