As oil production in the US shale industry soars to record levels, so does the need for water.
New research from Rystad Energy shows that demand for so-called frac water has more than doubled from 2016 levels. Current demand in the Permian, the prolific shale basin located in western Texas and southeastern New Mexico, now exceeds the total US demand of 2016.
Rystad Energy forecasts demand will grow by an additional 6% in 2019. In the Permian, demand will likely surpass 2.5 billion barrels by 2020.
“Frac water demand has sky-rocketed. This surge is driven by both increased activity and higher proppant intensity. But even with such steep growth, market concerns about sourcing challenges and bottlenecks appear to be minimal,” Rystad Energy senior vice president Ryan Carbrey said.
Vast volumes of wastewater are byproducts of fracking operations, the process by which water, sand and chemicals are blasted into underground rock formations to unlock oil and gas reserves.
The market for water treatment continues to see strong growth with a 28% expansion to 1.4 billion barrels in 2018. Rystad Energy forecasts it will double 2016 totals by 2020.
The Permian is expected to see substantial treatment growth, surpassing 800 million barrels by 2021. Growth in treatment utilization is driven by larger operators that can make necessary investments in treatment systems, Rystad Energy finds.
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With produced water in the Permian set to increase by a third by 2021 there will be local disposal constraints, but at a macro level spare disposal capacity will remain. Producers have historically relied on trucks to move the water.
“Water disposal is not currently an issue across the Permian as a whole, but some operators are having local difficulties. We expect the water disposal market in 2021 will be tighter due to significant water production increases from the Permian-Delaware. More infrastructure would be needed beyond 2021,” Carbrey added.
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About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy’s headquarters are located in Oslo, Norway with offices in London, New York, Houston, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.