The Surge of Saltwater Disposal Service

The business of saltwater disposal has never been more important to the development of the Bakken. The constant increase in new wells and the advent of slickwater fracking has created a major demand for SWD service providers.
By Emily Aasand | August 15, 2014

The business of saltwater disposal has never been more important to the development of the Bakken. With the industry moving into full production mode—a process that puts more oil wells on a single pad—oil production has reached record levels. As oil production rises, so too does the production of flowback and produced water created during the oil retrieval process. The constant increase in new wells coming online and the advent of slickwater fracking—a method that relies on high volumes of water during the fracturing process—has created an unprecedented demand for saltwater disposal service providers.

Citadel Energy and 1804 Operating are just two of many companies working to provide a safe and dutiful resolution to take care of the saltwater and waste management issue found in the Bakken. Although each firm offers a different backstory, both have experienced quick growth and provide insight into the current state and future of the saltwater disposal business.

Citadel Energy
Citadel, which began as a freshwater provisioning company, recognized the demand for an effective way to dispose of saltwater. The Citadel team laid out a plan to expand its services and brought on key members to help execute its expansion plans.
One of those new members is Bruce Langhus, the former state director for Class II Underground Injection Control for the Oklahoma Corporation Commission, an entity responsible for roughly 25,000 oil and gas saltwater disposal wells in the state. Langhus has been in the geology industry for the past 25 years.

“We brought Bruce Langhus, our chief geologist, on board so that we could take a different approach toward saltwater disposals and really try to make a real, scalable business in the Bakken and to build a sustainable, complete solution that could serve the exploration and production companies in the area,” says Stanton Dodson, founder and executive chairman of Citadel Energy.

The company currently operates three freshwater depots on the Fort Berthold Indian Reservation, but the main focus for Citadel is in the saltwater disposal business.

Citadel began drilling its first saltwater disposal well in December 2013 and was scheduled to open the July 1. Due to harsh winter conditions and a tornado that went through western North Dakota earlier this summer, Citadel’s construction was delayed by a few weeks, pushing back the opening of the disposal well by roughly one month.

The fluid services management provider’s facility has been permitted to dispose of 15,000 barrels of saltwater per day and features state-of-the-art monitoring technology that assesses the well facility 24 hours per day, seven days a week. Permanent surface tanks store the oil and gas waste and saltwater. The saltwater is eventually injected through a high-pressure pump into a permitted injection zone.

The process to drill a saltwater disposal well is similar to that of a vertical oil well. The state does require each disposal well to run a mechanical packer on the top of the disposal well. Mechanical packers are components in the well used to seal the outside production tubing from the inside of the casing or liner. The packer provides for the presence of a monitoring annulus between the casing and the tubing so that personnel monitoring the well can detect if a leak occurs in the casing or tubing.

1804 Operating
1804 Operating, a North Dakota-based company founded a little over three years ago, began as an idea from a small company that had working interests in a few Bakken wells. It was then that the founders, Patrick Walker and Robert Rubey, noticed a shortage of disposal wells and timely wait periods for disposal access.

Walker and Rubey developed a fluid services plan. Fred Kershisnik helped the duo form the company and was appointed president. Prior to joining 1804, Kershisnik was field superintendent for Tracker Resource Development II from 2008 through its sale to Hess in 2011.

After forming the executive trio, the team began to design facilities that would withstand the weather extremes in North Dakota. After research and planning, 1804 developed their first disposal well only months after forming.

“The greatest need we’ve seen from our customers is being able to unload water quickly and efficiently, without a long wait, and a place that can handle more than two trucks at once,” says Kershisnik. “We’ve kind of designed our facility to deal with those demands, plus we’re trying to make long-term commitments with our customers to provide it to them at a lower cost with better efficiency.”

1804 only has facilities in the Williston Basin.

“We’ve looked into expanding beyond North Dakota and we have a couple areas that we’re considering,” says Kershisnik. “We haven’t had to look too much further to keep ourselves occupied. We’ve been very busy and very thankful.”
The saltwater disposal company has slowly begun to add pipelines to their credentials.

“Our goal is to set up a disposal well where it’s needed, create a long-term relationship with the local producers in that area and facilitate to their water needs,” says Kershisnik. “And part of that is to get it [saltwater] in a pipeline system and bring it in automatically.”
According to Kershisnik, one concern he hears from those in the field has to do with the recycling of water produced at the well site. In his opinion, the industry is taking care of that issue the best it can.

“I think we’re doing a good job with all of our disposal wells and all of our operations,” says Kershisnik. “We have a good facility design that can take care of the water and any other byproducts in a very safe and careful manner.”

A Surge In Competition
Both companies have found successful ways to handle saltwater being produced at well sites, but that hasn’t come without challenges.

“The weather has always been a tough situation,” says Kershisnik. “Trying to keep the truckers happy and finding good, reliable construction crews is difficult. We feel that we have a really good staff of pumpers and people working for 1804 to keep our facilities running.”

“More than anything, the biggest challenge has been the weather and the usual challenges of competition” says Dodson. “Other than that, the state has been great, the permitting process we have to go through is relatively straight forward.”
Both can attest that the competition for saltwater disposal facilities has been on the rise in the past few year.

“The competition is there because the demand is there,” says Dodson. “Everyone out there wants to be mindful and careful. Everyone’s out there trying to do business so we want to strategically put these wells in places where everybody can get along, yet still make money.”

“When we first started there wasn’t a lot of competition,” says Kershisnik. “Now, there are some places with public disposal wells every two miles. There are a lot of saltwater disposal companies who make deals and get worked in with oil companies and only work for them, so there’s quite a bit of positioning going on out there too.”

An Increase In Demand
According to Dodson, Citadel has more disposal sites coming within the next 12 months to support the overwhelming demands.

“There are more disposals coming because there are more wells coming,” says Dodson. “Depending on what part of the Bakken your production is in, you’re going to get different levels of produced water. If you multiply the barrels of water produced each day at a well by the number of wells, we’re going to have to be strategically locating saltwater disposals.”

1804 Operating currently has six disposals running and has three more in the construction process.

“We have a system that works well that provides a good service for the industry,” says Kershisnik. “We’re working with our customers—the oil companies—to try to help them get rid of their water as quickly and efficiently as they can. That’s what we strive for.”

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Author: Emily Aasand
Staff Writer, The Bakken magazine
eaasand@bbiinternational.com
701-738-4976

Printed in The Bakken magazine - August 2014