Some key takeaways from the Catapult’s Water Leadership Symposium in Calgary, Canada
1. A water midstream sector doesn’t exist in Canada, but it could
Montney/Duvernay shale operators largely manage their own water for several reasons:
- Shale development and water volumes haven’t achieved the same scale seen in the US Permian Basin.
- The water services market is divided among only a handful of companies.
- Producers aren’t prepared to part with their water assets and give up control over a critical part of their operations.
Some operators have explored the idea of selling off water assets and concluded that the market, pricing and timing are not yet right. Growing frack water demand and produced water volumes could help drive the sector’s development, but investors willing to finance full-cycle water midstream companies are also needed.
2. “Recycle, reduce, reuse” is slowly becoming a local mantra
Panelists representing operators and regulators alike continuously referred to the need to increase recycling and reduce freshwater withdrawals from nearby rivers and reservoirs, despite the abundance of water in some areas. As an example, Canbriam Energy, which operates in British Columbia (BC), has spent $90 million on infrastructure to pipe freshwater from the Williston Reservoir to a facility where it is blended with produced water and sent back out to well pads for fracking. This system allows the company to conserve freshwater resources and reduce operating costs by avoiding costly disposal.
3. Canadian regulators are lightyears ahead of US agencies when it comes to data collection
Energy and environment regulators overseeing shale development in Alberta and BC not only collect and publish data on water production, but also on saline and non-saline water use and volumes sent for disposal and recycling. This water data can even be accessed for each operator and lease. Meanwhile, in the most active US shale play, New Mexico only requires operators to report produced water volumes and Texas does not compel operators to provide any water production or usage data.
4. Necessity is sometimes the mother of regulation
As shale operations ramp up in in BC, operators have faced increasing disposal constraints due to the local geology. It became clear that operators needed an alternative for their produced water, and that was storage for later reuse. The BC Oil & Gas Commission responded by laying down regulations allowing for operators to store produced water in double-lined earthen pits with regular monitoring for leak prevention. Alberta lags on this front, but officials are working to provide more clarity on the storage permitting process. Operators would also like regulators to allow for the movement of produced water through temporary hose, as is common in the Permian Basin. That would enable cost savings and help remove water hauling trucks from the road.