Spending by oil and gas companies on water management for hydraulic fracturing (fracking) in the United States is expected to total $174 billion and average $17 billion annually from 2019-2028, according to a new report from Bluefield Research.
The $17 billion figure is up from $15.5 billion expected for 2019, and from $11.7 billion recorded in 2017, researchers said.
“Emboldened by growing demand for scaling water supplies and disposal needs, a host of midstream water companies backed by private equity and sovereign wealth funds are positioned to seize the opportunity going forward,” Bluefield said Tuesday.
Of the $174 billion total, transport is expected to account for 48% of water management costs from 2019-2028, Bluefield said, followed by treatment (20%), storage (18%), supply (11%) and disposal (3%).
“Water management does not just start and stop at the frack,” said Bluefield president Reese Tisdale. “The significant share of transport costs to the industry has ushered in more than 57 water management firms — pure-play water players, energy services companies and technology promoters — along the industry value chain.”
Most of the recent activity uptick among water management firms has occurred in the Permian Basin, Bluefield said, where 47% of active horizontal drill rigs are located.
“Eight of the 10 most active counties in the U.S. are in the Permian Basin, which spans West Texas and Eastern New Mexico,” the firm continued. “Over the last two years, Bluefield has identified more than 30 water transfer projects in the Permian Basin alone, targeted at addressing water transfers for fracking.”
Since the last oil market collapse, which began in 2014, water service providers have become more resilient to oil and gas price swings in the United States, researchers found.
Additionally, “water management strategies have zeroed in on water transfers, which make up approximately 49% of total water management spend,” Bluefield said.
The water management strategies of Lower 48 natural gas producers have been under increasing scrutiny amid low gas prices and investor demands to trim costs.
Bluefield is an independent advisory firm that helps companies navigate the latest trends surrounding water issues.
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