Water-intensive shale gas production creates huge demand for water treatment and recycling technologies
The oil & gas sector is one of the most water-intensive industrial sectors. This is particularly true in the natural gas industry. The abundance of shale gas reserves has led to a boom in the exploration and production of natural gas, particularly in the US. Water plays an extremely important role the extraction of shale gas and the rapid expansion of this unconventional energy source is adding to the growing demand for water in the sector.
A typical well with horizontal drilling and hydraulic fracturing requires about 15 to 20 thousand cubic meters of water. To free the gas trapped in shale layers over 4,000 feet (1500 meters) below the Earth’s surface1, the rock is drilled vertically and then horizontally. Next, a mixture of water, sand and chemicals is injected into the drilled well, opening up cracks in the rock and releasing the natural gas. The trapped gas then flows upwards.
Each year, an estimated 70–140 billion gallons (265–530 billion liters) of water are used in the 50,000 wells in the US – enough to fill 150,000 Olympic swimming pools. Given the concentrated time frame of the drilling and extraction process, it can place disproportionate stress on local water resources, particularly in some of the shale plays located in water stressed areas.
Not only does shale gas production require huge volumes of water, approximately 10–40% of the fluid flows back to the surface. This generates vast amounts of wastewater containing fracking chemicals that need to be treated. Effective treatment of flowback water and increasing water reuse in the shale gas industry will therefore play an important role in protecting local water resources and reducing water consumption.
With intensifying demand for water from the gas industry and tightening regulations on water standards, the wastewater treatment market for the oil & gas industry is expected to grow from USD 1.3 billion in 2011 to USD 3.6 billion in 2025 – a compound annual growth rate of 15%, offering investment opportunities. Companies such as Veolia, Newalta and Ecolab provide wastewater treatment solutions to the oil & gas industry, enabling higher rates of water reuse, ensuring proper treatment of waste sludge for disposal, and providing environmental remediation services to the industry, and are expected to benefit from this growing market.
Senior Equity Analyst
RobecoSAM Sustainable Water Strategy