The Water Mix

Oil and people are finding new ways to connect to water
By Luke Geiver | June 24, 2013

John Rivers calls Michigan home, he’s moving to Denver, and during a recent sit-down conversation with The Bakken magazine held at his employer’simpressive Grand Forks, N.D., headquarters just hours before boarding a plane to Oklahoma, all he wanted to talk about was water in the Bakken. Director of Business Development for AE2S Water Solutions, Rivers has a lot to talk about. Like many others tasked with understanding, utilizing or supplying water within the oil and gas play of western North Dakota, Rivers speaks about water with an easy sense of passion, seriousness and exhaustion. He is one of several in the play tasked with tracking the way water has been, will be or could be handled.

And, after listening to Rivers talk for nearly an hour, his right leg crossed, one arm resting on the expansive table and his sight line rarely shifting from the windows for most of the conversation, it is clear that water is a serious topic that requires both immense effort and time to understand. Rivers and the other experts we spoke to about water in the Bakken, circa 2013, prove that the popular phrase most of us know about water doesn’t apply to the Bakken. Water and oil do mix. 

Complex Connections
Every time a weather system drops precipitation on the Missouri River, Yellowstone River or any tributary feeding either, a Bakken well site in need of water is affected. In early June, Jaret Wirtz, executive director of the Western Area Water Supply Authority, the state-formed organization that helps to spearhead the massive task of expanding water infrastructure and supply to western N.D., had to deal with turbidity issues created from heavy spring and early summer rainfalls. The influx of water muddied the supply used in city treatment plants in Willistion, N.D., while maxing out the local water handling capabilities and according to Wirtz, “that affects what we can sell to the industrial users.” 

To provide water to industrial users, the resource is typically taken from the Missouri River system, including Lake Sakakawea, or freshwater aquifers operated by both private and public entities. Water for industrial use is accessible at water depots located on main water supply pipelines in rural and urban locations, or via private pipeline linked into the main lines. WAWSA and the Southwest Water Authority, a similar organization tasked with water supply to the southwestern portion of the state, both utilize the seasonal climate of the state to provide water to industrial users. Both organizations operate under the premise that excess water capacity created during cold temperatures, or any times when water treatment facilities are not running at full capacity for any reason, can be sold to industrial users. “

On the days that we are not at peak capacity, we are able to sell that capacity that isn’t being used,” Wirtz says, “So we are able to run our plants at capacity most days and sell that extra water that isn’t needed for domestic uses to the oil industry to pay for the project.” But in all cases, domestic use takes precedence over industrial, so when infrastructure used to supply both struggles, industrial users are at risk. 

According to Wirtz and Mary Massad, manager and CEO of SWA, the need for industrial water use is always immense, but unless it’s sent via pipeline, the need isn’t directly linked to oil production companies. The majority of all water moved in the play for oil and gas extraction purposes is sold directly to water transport service providers who then move the water by truck from a water depot to a well site. Some water is piped to crew camps and developments as well. Private water depot operators also supply water to trucking teams and centrally located oil production facilities. 

Because water is made available in most cases by state-based pipelines that serve people, the issue of access for industrial users is complex. In 2010, the WAWSA system was created to service—through the appropriate new infrastructure, including pipe, pump and storage—a population of 50,000 people by 2030. The system is currently serving 58,000. Now, Wirtz and his team expect to serve 100,000 people. Because domestic demands are growing but, at the same time, difficult to predict, producing a system capable of meeting domestic and industrial water use demands in a timely fashion is a challenge. “That is the toughest part, designing for what is here today and planning for what could be here tomorrow,” Wirtz says. Infrastructure availability is the No. 1 challenge for water in the Bakken, not resource availability, say Wirtz and Massad. “We are perfectly fine on our water supply,” Wirtz says. 

Massad and her team have been trying to bring water to some rural locations for several years. The lack of infrastructure and the funding required to link one location to the next along with the need for over 50 percent of those tasked with funding a new water pipeline to agree, has made her job about infrastructure management and development more than accessing water supply. But, a greater water supply is on the way. Massad is working to add another intake from Lake Sakakawea to meet the growing needs of Dickinson, N.D., and the surrounding region. And the list of infrastructure paid for by the SWA or WAWSA currently under development is extremely long. Both Massad and Wirtz are working to upgrade water treatment facilities, add pumps, add storage, add pipelines and water depots. Depots that were started in 2011 by WAWSA came online in late 2012, but not all of them are operational yet. 

Added into the water mix is the struggle to staff needed positions, find the appropriate contractors to build water tanks or lay pipelines and predict where future capacity will be needed. “Some communities we serve are selling water that is within their allocation, to the oil industry,” Massad says, “which as they grow they won’t be able to do that because they will need it for human consumption. So, that is where we can come in.” 

The connection between water availability, oil and population estimates is one thing Wirtz believes many look over. “This thing doesn’t work out here unless you provide water for housing, schools and amenities. All of those things take water,” he says. 

Rivers and his team are among those working to understand the link between population growth and how to match domestic water needs with industrial demand. They are a prime example of a for-profit organization that is alleviating the havoc water supply is wreaking on those in or around the Bakken play. To do that, Rivers has spent the past year promoting the  use of pipeline to link oilcompanies to water sources and water treatment facilities. 
 

Connecting Water to the Well
To understand the amount of truck traffic required to supply the necessary amount of water to a well site during the completion process is to understand why Rivers believes in pipelines: hydraulically fracturing one well takes 500 truckloads of water delivered. To put that in context, Rivers offers this example. What if you are a landowner considering pipeline easements on your property and the road in front of your property leads to an oil development that will feature 12 to 14 well pads? Each pad could have 8 to 10 wells. Considering that each well will require 1,000 truckloads (there and back), that landowner “is going to have semi-trucks traveling on that road for the rest of his life unless the infrastructure gets put into the ground.”

And, in addition to the incredible amount of truck traffic required if no pipeline is present, Rivers also says, that the state should be in favor of piping water to and from the site, considering each Bakken well requires the state to pay $108,000 in road construction per well per year. On top of all of that, most Bakken wells will be re-fractured roughly 10 years to 15 years after the initial completion. 

Wirtz shares Rivers' opinion on piping water to the well site. “More and more oil companies are seeing the light and the benefit of using pipelines instead of having water trucked.” Although most oil companies have been “hopscotching around,” as Rivers says, to secure their leases, times have changed. “Now they are in a different mode, and they are just starting to transition into that mode. It is a farming mode, where they are trying approach the lease acres like a farm property.” Doing that means finding efficiencies and linking up to infrastructure.

“The thing that is swinging the economics is that we are putting both fresh water and saltwater lines together,” he says of efforts to provide pipelines to the well site. Along with dual lines, there are several other reasons that water pipelines are being installed more frequently. 

One of Rivers' main objectives over the past year has been explaining to oil companies of all sizes that pipelines are always possible. “Just because you don’t have enough lease area to justify the pipeline system, doesn’t mean we can’t do it. We just have to get others involved.” Pipelines are always possible because the AE2S team can bring together multiple companies on a single line, and, the company is also willing to own, operate, design or build the lines in any combination possible to make it happen. 

When that happens, oil companies save. Most proposals the team has submitted to oil companies in search of a pipeline system lately have been to transport any water for less than $1 per barrel. In most cases, oil firms pay anywhere from $2 to $5 per barrel of water. Most wells use 60,000 barrels of plus additional fresh water supply and saltwater removal capabilities over the life of the well. 

Adding pipelines for water transfer is also a pathway to increasing value. According to Rivers, the desire of large oil operators to buy-out smaller leaseholds or oil operations in the Bakken is becoming more and more prevalent. “If your wells are connected,” he says, “you’ve just increased the value of your lease holdings.” 

Although wells in the Bakken will never all be connected to a pipeline water grid, Rivers estimates that roughly 75 percent of the area could one day be connected to pipelines, and even if that happens, there will always be truck traffic to and from the well site. Regardless of what happens, it is clear that oil and water are connected. And, as Rivers says, “there is no excuse any more to not look at this shale play long-term.”


Author: Luke Geiver
Managing Editor, The Bakken magazine
lgeiver@bbiinternational.com
701-738-4944

 

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Quick Takes

 Robert Hearne, associate professor in North Dakota State University’s Agribusiness and Applied Economics department, has led a team in researching the economics of recycling or disposing of flowback water produced during fracking. Along with perspective on water recycling, Hearne has several thoughts on water in the Bakken. 


- Mathematical programming employed by his team shows there are substantial benefits to recycling frack water. 

- The availability of Missouri River water is very convenient for the oil producers. The presence of surplus water is exceptional. 

- Public officials need to protect water supplies and roads, and should use authority to develop incentives for drillers to conserve water. 

- Water disposed of in deep wells takes water out of the hydrological cycle and should therefore be considered differently than other water.