Recycled Water Industry Suffers As Oil Prices Drop

By Sara Jerome
@sarmje

Dropping oil prices are a setback for recycled water companies that serve oil and gas industry sites and could slow technological advancement in this sector.

"The drop in oil prices should mean less water used by the industry in drought-stricken West Texas, but with that comes a blow to long-term efforts of water recycling even as the amount of produced water injected into the ground continues to grow, industry experts and outside analysts have said," according to the Odessa American.

"Water requirements for fracking Permian Basin wells should drop from 551 million barrels last year to 422 million barrels in 2015, according to PacWest, a company recently bought by the Houston firm IHS that tracks industry water usage. PacWest revised water usage as oil prices drop from their June peak of about $104 a barrel," the report continued.

Pier Wells, the CEO and co-founder of Digital H20, a firm that analyzes water use, explained the conundrum.

“The drilling and completion activity has just fallen off a cliff,” he said, per the report. “Demand for water to complete wells has really dried up.”

That's good news for municipalities, who have less competition for freshwater. However, innovation in the recycled water industry could suffer.

“Their completion programs have been dramatically reduced,” said Chris Robart, a partner with PacWest and founder of Digital H20, per the report. “So they just don’t have the water demand for the next year, or two years. Activity has fallen very, very quickly there. That means demand for all products and services related to development are dramatically reduced. And that includes water.”

Recycled water tech had been making promising gains in the oil and gas industry, according to the Midland Reporter-Telegram.

“It used to be more expensive — that’s why it wasn’t popular. But as technologies change and the fluid systems change, it gets more cost-effective,” said Bailey Morgan, a Permian sales manager of water solutions for Haliburton’s chemical-blending service, Multi-Chem.

At the same time, energy companies are aware of the risks involved in using this technology.

“It’s a huge risk; you can spend millions and cause problems if you use too much recycled water,” said Mark Patton, engineer for HydroZonix, a water treatment solutions company for the energy industry, per the report.

The price of oil had risen from its lows in January, but it has dropped again in recent days, the New York Times reported in March.

For more on water reuse, visit Water Online's Water Reuse Solution Center.

Image credit: "Standard gas station, Las Vegas, Nevada," Minale Tattersfield © 2013, used under an Attribution-ShareAlike 2.0 Generic license: https://creativecommons.org/licenses/by-sa/2.0/

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