Rystad Energy: Frac water demand is skyrocketing

As oil production in the US shale industry soars to record levels, so does the need for water.

New research from Rystad Energy shows that demand for so-called frac water has more than doubled from 2016 levels. Current demand in the Permian now exceeds the total US demand of 2016.

Rystad Energy forecasts demand will grow by an additional 6% in 2019. In the Permian, demand will likely surpass 2.5 billion bbl by 2020.

“Frac water demand has skyrocketed. This surge is driven by both increased activity and higher proppant intensity. But even with such steep growth, market concerns about sourcing challenges and bottlenecks appear to be minimal,” Ryan Carbrey, Rystad Energy Senior Vice President, said.

Vast volumes of wastewater are byproducts of fracking operations, the process by which water, sand and chemicals are blasted into underground rock formations to unlock oil and gas reserves.

The market for water treatment continues to see strong growth, with a 28% expansion to 1.4 billion bbl in 2018. Rystad Energy forecasts it will double 2016 totals by 2020.

The Permian is expected to see substantial treatment growth, surpassing 800 million bbl by 2021. Growth in treatment utilization is driven by larger operators that can make necessary investments in treatment systems, Rystad Energy finds.

With produced water in the Permian set to increase by a third by 2021, there will be local disposal constraints, but, at a macro level, spare disposal capacity will remain. Producers have historically relied on trucks to move the water.

“Water disposal is not currently an issue across the Permian as a whole, but some operators are having local difficulties. We expect the water disposal market in 2021 will be tighter due to significant water production increases from the Permian-Delaware. More infrastructure would be needed beyond 2021,” Mr Carbrey added.