New Midstream Water Sector Develops in Response to Increased Water Needs in the Oil and Gas Industries

As the oil and gas industries continue to increase lateral drilling operations, the industries need for water resources continue to increase respectively. Fracking operations have dramatically increased, propelling the lucrative industries forward at a rate that has proven difficult to sustain in terms of water supply and financial demand. Now requiring three times the amount of water, fracking operations are racking up an impressive bill that is expected to meet or exceed at least $136 billion over the course of the next ten years.

As the need for water to sustain fracking operations increases, the cost and financial ability to meet those needs will also climb – it is this troubling realization that has industry leaders frantically searching for ways for operators to effectively cut costs accrued through water usage, machine use, and maintenance. In 2016 alone, the Marcellus and Permian fracking operations spending reached nearly $200 million – and it is expected to rise exponentially this year to approximately $300 million.

The increase in demand for water services essential for supporting fracking operations has led many water transport firms to capitalize on the current market, leveraging their company assets to build more pipeline networks and transportation services. Having established a substantial lead in the development of horizontal wells throughout the last six years, Texas and Oklahoma dominate the oil and gas industries through their fracking efforts.

It’s interesting to note that salt water wells mitigate the needs for excessive water re-use service in areas that aren’t able to generate water for its re-use in fracking efforts – leaving only about 10% of water to be sourced through treatment and reuse systems. It is through this method that Texas and Oklahoma have been fortunate enough to sustain their needs for water resources, effectively reducing the overall cost of their operations. However, Ohio and Pennsylvania are located in regions that pose more of a topographical challenge, making well solutions hard to come by. It’s in these less fortunate regions that water service costs visibly skyrocket. 

As the water management and services industry continues to adapt and evolve to meet the needs of the gas and oil industries, trends emerge, leading local water authorities to entertain potential business opportunities while transportation businesses divert their focus to their potential role in water management and transport services. As industries keep pressing forward to achieve a common goal in which all will profit, water reuse is projected to steadily increase to 16% over the course of the next ten years – and the environment is reaping the water conservation benefits.

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