Water emerges as a serious constraint amid shale boom
It's 'the biggest challenge we have right now,' Talisman vice-president says
When Talisman Energy Inc. struck a 20-year water licensing deal with BC Hydro last July, it was a clear indication of the energy industry’s ever-sharpening focus on water consumption. The contract allows Talisman to pump up to 10,000 cubic meters of water every day from the W.A.C. Bennett Dam reservoir, shipping the water through a 26-kilometer pipeline to numerous shale gas wells in Talisman’s Farrell Creek portfolio. The pipeline went online last November.
At a cost of $35 million, the 16-inch line will save Talisman an estimated $300,000 every year in supply costs. Most of those gains will come as a result of minimized dependence on trucking water to the site, located in the central region of the Montney tight gas formation. Tucked away just outside Alberta’s western border, where the prairies roll into the Rocky Mountains, Farrell Creek’s remoteness makes transporting water a costly affair. Its wide rivers and narrow roadways stifle easy access to the wells. Supplying and transporting freshwater has, in certain circumstances, become tantamount to drilling itself.
Jim Fraser, Talisman’s senior vice-president of North America, shale division, says the company saves $3 per barrel of water using the pipeline. “We had literally thousands of trucks on the road over a many-month period to move the water last year,” Fraser says. “And now all that’s gone.”
But the issue of water supply and consumption goes well beyond cost. The shale and tight gas revolution gripping the United States, and now Canada, is buoyed by a tremendous amount of water use. When the B.C. government granted Talisman the water license last year, it was immediately met with heated protest from local critics. Water consumption in hydraulic fracturing is a particular flashpoint. And, as experts predict future freshwater shortages, the discussion around water usage in the industry looks poised to reach a fever pitch. That has caused producers to re-evaluate water usage on-site, resulting in a dramatic shift in the way companies approach the resource at every stage of the drilling process – from supply to disposal.
One of the drawbacks of fracking is the sheer volume of water used. The United States’ Environmental Protection Agency reports that enough water is used in the process to meet the needs of roughly 40 to 80 cities with populations of 50,000. This is due to the increased depths of unconventional wells. Farrell Creek’s wells reach between 2,000 and 3,000 meters below ground level. Typical shallow to medium wells are closer to about 200 to 400 meters. As a result, water volumes needed for multi-stage fracking jobs are immense. Drillers will use between three million and 12 million gallons of water through an entire fracking job.
The issue of preserving freshwater is a complex problem. Because water supplies are so integrated – water use in one region can alter overall water levels in another – the problem is not confined to provincial or even national borders. Rivers often flow through multiple jurisdictions. That has created haziness over governments’ entitlement to the resource, as opposed to other finite resources locked beneath the earth’s surface.
This borderless nature, coupled with general over-consumption, has made water conservation a global issue. Mike Wood, Talisman’s vice-president of Canada, shale division, told a Calgary unconventional resource conference late last year that water supply is becoming a top priority in Talisman’s international portfolio. It’s “the biggest challenge we have right now in any shale play, whether we’re in South Africa, the Marcellus, [or] the Barnett,” he says.
The concern over how to manage a resource coming under increasing pressure from both industrial users and the public is what caused the World Resources Institute to establish the Aqueduct Alliance, a Washington-based think tank focused on global water consumption. Talisman joined Aqueduct in August of 2011. The alliance also includes corporate juggernauts Goldman Sachs, The Coca-Cola Company, General Electric and others. It is primarily a public data gathering agency, mapping out regions that face the highest risk of water shortage.
Aqueduct aims to map out every water-sensitive area in the world, giving businesses a clear understanding of the challenges surrounding the resource. Betsy Otto, Aqueduct’s director, says information on water supply is currently scant, considering the amount of industrial activity taking place worldwide. That information could be invaluable to companies seeking out potential drilling prospects. Often producers are forced to tie into municipal supply lines, technically incapable of pumping out enough water to support a horizontal well.
Aqueduct was not established strictly for the oil and gas industry. The oil patch doesn’t use nearly as much water as other sectors. For example, in the U.S., 80 per cent of its water is used on agriculture and power generation alone. Even so, Otto is aware that unconventional drilling has brought water usage to the minds of oil and gas producers everywhere. “In a sense, anybody in the oil and gas business is also in the water business,” she says.
The alliance allows companies to recognize this connection through its water mapping tools. Oil and gas firms can quantify their water intake and disposal, subsequently trimming consumption where possible. Otto says businesses do not typically gauge their usage through the entire chain of production, causing inefficiency.
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