Could Alberta or British Columbia develop a midstream sector like that in the Permian Basin?
The Catapult Water Leadership Symposium opened with a leaders panel which focused on water management practices in Canada’s Montney and Duvernay shale plays. The panel included representatives from three local operators, as well as the Ontario Teacher’s Pension Plan (OTPP) which invests in several industries including oil & gas.
Panelists discussed the possibility of a midstream sector forming in Alberta and British Columbia like that which has grown out of the US Permian Basin. Canada’s shale players largely source and manage their own water, with few large third-party companies delivering services such as hauling or disposal.
A model in which water midstream companies provide multiple operators’ water solutions through interconnected water assets has not yet emerged in Canada, but panelists said it could become a possibility in the coming years. Karen Nielson, chief development officer of Seven Generations Energy, said the buildout of third party-owned water midstream networks would be incentivized by hydrocarbons production growth, collaboration among operators and further industry consolidation.
“When you start to look at that type of business model, a lot of things can change where you’re talking about much more skilled infrastructure networks, both for the sourcing and the disposal side. Recycling can reach true scale when you have multiple parties feeding into that system,” explained Aaron Manz, senior principal at the OTPP.
Despite the operational gains that such a model could provide, Canada’s oil & gas producers still see key advantages in owning their own water infrastructure. Canbriam Energy chief operating officer Graham Janega told the audience that the company had investigated selling its assets but kept them to ensure the lowest possible operating costs and maintain strategic operational control.
“I think having a third-party water provider and water manager is a very valid idea,” Chris Slubicki, CEO of Modern Resources, said. “We own all our infrastructure […], but we’re one of the lowest-cost operators, so giving that up would take a pretty good crowbar. It’d have to be very compelling.”
Even without a water midstream model in place, the practice of recycling produced water is starting to take hold in Canada’s shale plays where frack water demand has been increasing. The operators on the panel all spoke of their recycling programs, which have been driven by factors including cost savings, operational efficiencies and sustainability goals.
Nielson told the audience that, due to the availability of the resource, five years ago Seven Generation’s strategy was to source freshwater for fracks. “Now we’re more focused on the economics of using produced water,” she said. “We are absolutely setting internal targets for ourselves to use more produced and recycled water.”
The difficulty of finding suitable locations for disposal in British Columbia have pushed Canbriam to strive for 100% recycling even though the company has access to freshwater, Janega told the audience. Slubicki said that disposal is expensive and a last resort for his company.
The panelists also agreed that recycling allows for the conservation of valuable freshwater resources and helps keeps trucks off the road. Those benefits help address the interests of other stakeholders, including the government, local communities and investors concerned with environmental risk.
WATER VOLUMES USED FOR HYDRAULIC FRACTURING IN ALBERTA
Source: Alberta Energy Regulator
