GreenHunter Water LLC's $1.7 million water treatment, recycling and condensate handling logistics terminal in Wheeling, WV, remains in limbo nearly one year after the company announced the project.

Announced last March as a "first-of-its-kind" facility to serve producers throughout the Appalachian Basin, GreenHunter is awaiting approval from the U.S. Coast Guard (USCG) to ship bulk water on inland waterways (see Shale Daily, Oct. 31, 2013). It also continues to work with West Virginia authorities on a permitting snag after the state’s Division of Highways (DOH) denied a road-use permit last August.

But that's not stopping the company's aggressive focus in the basin, said John Jack, vice president in Appalachia. Since it first moved into the region in 2011 with the acquisition of a water service property in West Virginia, the company has grown to become the largest brine water disposal business there.

Jack told NGI's Shale Daily that the company is "sold out every day," moving 100,000 barrels of production and flowback waste per week.

"What makes us so different is that water in the Ohio River is still free for producers," he said. "If you encourage recycling you have to be better than free. If a producer drops off waste and takes it back with them, we're essentially paying them to take the product back."

GreenHunter operates several injection wells throughout the basin and has built a network of wastewater receiving terminals along the Monongahela, Allegheny and Ohio rivers to serve the region’s producers.

Although GreenHunter operates a similar bulk storage and treatment facility in Washington County, OH (see Shale Daily, July 1, 2013), and another disposal facility in Meigs County, OH, Jack said the Wheeling facility would be different because a proposed barge terminal on the Ohio River could serve producers as far north as Pennsylvania.

When the company first announced the facility, GreenHunter said construction would likely begin in April 2013. Remodeling the Wheeling site -- a former gasoline storage facility -- called for constructing a logistics terminal with 19,000 barrels of water tank storage (see Shale Daily, May 29, 2013).

Permitting issues have been widely misreported, Jack added, with the West Virginia Department of Environmental Protection giving the facility a green light in August. The road-use permit issue was "not a big deal." The DOH denied that permit because of low-visibility at the proposed site's exit, which is expected to be resolved.

For now, Jack said the biggest impediment to the project is the USCG approval. He said once that happens, it would take three to four months for the facility to be operational.

In any event, GreenHunter has identified the Appalachian Basin as a multi-billion dollar opportunity. Jack said he didn't believe demand for water recycling services in the basin has peaked, and the company is working to get "ahead of the curve.”

The U.S. Department of Energy estimates that a typical unconventional well requires 1-8 million gallons of water, with some of the deeper targets, such as the Utica Shale, requiring up to 7 million gallons. An independent report released last year by researchers at Duke University and Kent State University found that wastewater generated in the Marcellus Shale alone had increased by 570% since 2004. In Ohio, the latest numbers available show that some of that waste found its way there, where 14.2 million barrels were injected in underground wells in 2012.

With the volume of waste and the disposal costs for exploration and production companies rising, better water management strategies may be required as time goes on.

"It's relatively simple when you look at the viability of recycling wastewater," said Shawn Bennett, a spokesman for the industry-outreach group Energy In Depth. "You have to have enough productivity to justify the recycling of your brine. In Pennsylvania, something like 87% of the water is recycled there and they're much farther along than Ohio with this process. But as Utica development ramps up, producers here have more consistent and scheduled drilling operations, which will allow them the ability to recycle and reuse their water for the next [hydraulic fracture] job."

Lisa Kasianowitz, a spokeswoman for the Pennsylvania Department of Environmental Protection, said that in the first six months of 2013, 14 million barrels of wastewater were generated from drilling in the state and 90% was either directly reused or treated and reused.

Ohio is taking a cue from Pennsylvania and it is working to update regulations for wastewater impoundments and recycling facilities at the request of operators that want more guidance to manage their water-use, according to officials at the Ohio Department of Natural Resources (see Shale Daily, Jan. 17).

Tom Connelly, assistant director of economic and community development in Wheeling, said the city last year approved the first phase of GreenHunter's project, establishing a site where storage tanks would be located and a filtration device would remove solids for return to the well pad. The company has not yet applied for approval of the second phase for the barge terminal, he noted.

"All we really did was give them approval to renovate an existing building for office space. They would still have to install storage tanks aboveground and underground," he said. "We'd have to see their application for the second phase, but the way the zoning ordinance is written and with the way the map looks, the area they want to use for barging is not zoned for industrial use, and it's the city's position that they can't do barging there."

Jack said he's confident all phases of the project will be approved. Above all else, he said, GreenHunter is trying to get producers to think differently about how they use water in the region.

Drillers that fill their trucks with recycled water on the same trip that they bring wastewater to the Wheeling facility would receive discounts and save enough money that the water would in some cases come to them at virtually no cost. Jack said GreenHunter's model essentially cuts transportation and injection disposal costs out of the picture.

Kathryn Klaber, of the energy consulting firm The Klaber Group, said that in Pennsylvania alone, the oil and gas industry spent roughly $250 million for water disposal last year. She also noted that researchers at IHS Inc. have estimated that nationwide, total water-related costs for the industry would be $38 billion annually by 2020.

Klaber, former CEO of the Marcellus Shale Coalition, said a large part of her work would be focused on helping operators manage their water use more economically.

"Businesses are entering the era of comprehensive water management -- deploying new methods to value water, assets and liabilities," she said. "They're applying more intense scrutiny to water-related risks and high variable costs such as logistics and transportation."