Earthquakes in the Lower 48 oil and natural gas patch have been steadily increasing over the last four years and will continue to do so if the industry doesn’t adjust its methods for disposing of produced water, according to new analysis by Rystad Energy.
The Oslo-based consultancy examined seismic activity in Louisiana, New Mexico, Oklahoma, and Texas.
Researchers found that tremors registering above 2 on the Richter scale totaled 242 in 2017, 491 in 2018, 686 in 2019 and 938 in 2020. In other words, the frequency of the seismic events quadrupled over a four-year span.
So far in 2021, about 570 of these tremors have been recorded, meaning this year could see another record amount of quakes, researchers said.
“The trend appears to be moving not only to more frequent, but also larger events,” the Rystad team said. “So far this year, there have already been 11 individual seismic events of magnitude 3.5 or greater, which can certainly be felt but may not cause any damage, a worrying sign compared to just six such events annually in 2018 and 2019, and 14 events in 2020.”
Saltwater disposal through underground injection is “by far” the biggest oil and gas industry contributor to seismic activity.
Disposed volumes of saltwater in the four states totaled 12.4 billion barrels in 2019, up from 7.7 billion barrels in 2011. In 2020, volumes dipped to 11.3 billion barrels amid the pandemic-induced slowdown in upstream activity.
“To maintain water disposal at 2020 levels and offset its coming growth, the amount of water that is treated and recycled must instead grow going forward and the cost of doing that could accumulate to above $1 billion annually for oil and gas producers,” said Rystad’s Ryan Hassler, shale analyst. He said the costs can vary by region, but “the Permian Basin has very competitive economics compared to other areas.”
Rystad is forecasting that in order to offset projected growth in disposed water volumes, volumes of treated and recycled water must increase from 1.5 million barrels in 2020 to 1.7 billion barrels in 2021 and 2022, and to 1.8 billion barrels in 2023.
“Earthquakes are not the only environmental issue caused by water disposal,” said Hassler. “Freshwater sourcing in arid regions of West Texas and New Mexico threaten the water supply of local communities and essential agriculture activities, while environmental concerns surrounding the chemical composition of produced water serve only to fan the flames of public antipathy.”
Rystad estimated that by the end of 022, Permian producers could source 40-43% of their fracture water demand from recycled produced water. To achieve this, though, “additional investment from the midstream space will be required to drive costs down further.”
Researchers noted that produced water in other states such as Wyoming and California is repurposed for uses not related to energy.
The Rystad team said that, “while there are several avenues in which produced water can be reused from an agriculture, irrigation or wildlife standpoint, the fact is that Texas — with its massive produced water volumes — is currently taking advantage of none.”
Researchers noted that a recent legislative change in Texas transferred permitting authority for the beneficial reuse of produced water from the Environmental Protection Agency to the Texas Commission on Environmental Quality (TCEQ).
“In theory, the change in regulatory bodies…should allow for a more streamlined permitting process, enabling operators to discharge produced water volumes into surface water to be beneficially reused for agriculture or wildlife.
“However, this does not appear to be the case, as the TCEQ has yet to administer a single permit since taking over responsibilities.”
The Texas Alliance of Energy Producers has called for changes to the state’s policy and regulatory framework to economically and sustainably manage the projected increase in both water needed for hydraulic fracturing and for produced water volumes.
Permian-focused Solaris Midstream Holdings Inc. this year completed a $400 million offering in unsecured notes for the first sustainability-linked bond in the produced water infrastructure industry.
A 2019 Raymond James & Associates Inc. study found that in the Permian alone, the market for disposal and treatment of produced water could reach $12 billion by 2025.
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