An anticipated 35% increase in global energy consumption by 2035 combined with energy production’s reliance on water, including in water-stressed regions, has put the spotlight on water stewardship and management.

Adding to the challenge is competition for water with demands coming not only for oil and gas production but also for food production, which could increase between 70% and 100% over the next 20 years to meet increasing population growth, said Will Sarni, director and practice leader of enterprise water strategy for Deloitte Consulting LLP, during the company’s recent webinar on the topic.

“Persistent drought and increasing competition for water resources are creating challenges for the energy sector in particular in water-challenged states such as California and Texas,” Sarni said.

However, places across the world are experiencing water scarcity and water stress. Among these are the Middle East, India and China.

“There are a number of megatrends in places that are driving water scarcity. They include increasing population, the rise of the middle class, accelerated rate of urbanization, expanding economic activity, increased demand for energy and increased demand for food,” Sarni said. “If you look at the projections out to 2030, under business as usual, we have a 40% shortfall,” but the percentage can be higher or lower for some countries.

He added that increased energy consumption will lead to an 85% increase in water consumption, and “the more you need energy, the more you need water.”

Using shale gas plays in the U.S. for example, he said nearly half of the wells hydraulically fractured since 2011 were in regions with high or extremely high water stress, and more than 55% were in areas experiencing drought. But nowadays energy companies are paying more attention to water stewardship and how to mitigate that stress, thinking about physical (water scarcity or quality), regulatory (access to water and pricing) and reputational (competition with other stakeholders) risks across the entire value chain, including supply and operations, he said.

This comes while maintaining attention on finances, considering that higher costs and water supply disruptions among other factors can impact a company’s bottom line. Companies are turning to water preservation and conservation as they aim to become better water stewards.

“Scarcity does drive innovation, technologies and partnerships, and that is a very key part of water stewardship strategies,” Sarni continued, noting that some companies are innovating around membrane technologies.

Shell is utilizing several methods to reduce water usage, including recycling water in its Canadian oil sands operations. But in the Middle East, Shell and Petroleum Development Oman (PDO) created a commercial reed-bed water-treatment plant that treats water from the Nimr oil field.

“It’s quite typical that oil wells in Oman are producing about 10% oil and about 90% water,” said Ashley Nixon, NGO and stakeholder relations manager, Americas, for Shell Oil Co. But the water that comes to the surface has a heavy salt content and must be treated, which he said takes a lot of money and energy. “What we came up with is a reed-bed technology that enables us to extract a residual amount of oil from that processed water, and then we’ve got something that is clean.”

Reed beds are used to clean the contaminated water at the plant, which includes an upstream oil separator and a bio-based treatment facility. Since the plant started operating in 2010, it has cleaned about 47 Mcm/d (1.88 MMcf/d) of contaminated water, with plans to eventually increase the treatment capacity to 95 Mcm/d (3.8 MMcf/d), according to Shell.

Prit Kotecha, director of environmental excellence and climate strategy for Suncor, explained how the company is working to reduce water use in oil sands by 65% by year-end 2015. The strategy, which includes water conservation, water reuse/recycling and regional water sharing, also involves “recycling a lot of water on our site so we can offset utility and boiler feedwater usage by installing some technology to treat wastewater and by looking at regional operations where we now take tailings water” for use in in situ operations, he said.

After tackling low-hanging fruit, he said the company then looks for where technologies such as desalination and zero liquid discharge fit into the strategy. Suncor uses a zero liquid discharge process at its MacKay River in situ facility to maximize water reuse by recovering wastewater from produced bitumen, according to the company’s website.

Companies can mitigate risks while also creating opportunities with a water stewardship strategy. According to Kotecha’s presentation, this involves:

  • Understanding the water footprint and assessing business risks from operational, regulatory and reputational contexts;
  • Identifying internal water actions to reduce risks within the plant fence line and developing water goals;
  • Building effective watershed stewardship through collaboration and partnership outside the plant’s fence line; and
  • Becoming a trusted steward of the watersheds in which the company operates by protecting the value of water for future generations.

“The current paradigm that we are operating in is we extract water, we use it, we lose some to transportation, we treat it and we discharge it—we essentially throw it away,” Sarni said.

“Where we’re moving toward is this 21st century paradigm thinking about water, which is diversifying sources of water—whether it’s surface water, ground water, rainwater, wastewater, or in some cases salt and brackish water—and then reusing water as much as possible,” he said. “Water in some ways is the ultimate renewable resource. We can use it over and over again, but there are certainly some costs associated with that.”

IHS estimates that the cost of water management—including acquisition, storage, transportation and disposal—can be as much as 10% of the total capex for a shale well.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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