Navigating the Challenges of Produced Water – Part Two

00:00:03 Laura Capper
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00:00:28 Russell Stewart
Welcome to the Energy Pipeline Podcast. Your host, Russell Stewart. Tune in each week to learn more about industry issues, tools and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective, this podcast is your knowledge transfer hub. Welcome to the Energy Pipeline Foreign hey everybody. As always, thanks for listening. Today is part two of our podcast on produced water and the problems associated with it and the solutions that we're coming up with. Very positive solutions in the oil and gas industry. And my guest is again is Laura Capper. Laura is the president and CEO of Energy Makers Advisory Group. And if you didn't hear last week's podcast, all I can tell you is in a nutshell, Lars, a produced water expert, and with some of the new regs that have just come out in Texas and with the maybe even stricter regulations in New Mexico, and of course there's regs all over the place and the Department of Energy is involved in that sort of thing. If you want to navigate that world, you need to reach out to Laura because her company can help you do that. Laura also said last week that you were the you're president and CEO of EnergyMakers Advisory Group. But what is CAP Capital C, Capital A, Capital P? What is Cap Resources? Is that part of the same thing? 

00:02:18 Laura Capper
Yeah. So Energymakers is focused on oil, gas, water, environmental treatment, all that good stuff. Cap Resources is really where I started and that's on new technology commercialization. So taking promising technologies and getting it to market and really the overlap between these two little consulting companies is that to treat oil and gas water, we've had to develop many, many, many new technologies. As we discussed before, RO just doesn't work as a reliable treatment method for most produced water. So, you know, as an example, we've evaluated some 400 different treatment technologies over time and are really focused on about 25 now that look really promising to more affordably desalinate produced water. So we're always looking for new technologies that will help our customers, you know, skin the cat a little bit better and cheaper. And that's what Cap Resources does. 

00:03:35 Russell Stewart
That's. I didn't realize I was asking the perfect question to segue into where we want to go in part two of this interview. But that's exactly what we want to talk about, is whether or not we can use this produced water. And I mean, you talk about fracking, that requires a tremendous amount of water. Water is a issue in places like the Permian. Water's an issue in places like New Mexico. Water is an issue everywhere. And so we really need to be able to reuse as much of this stuff as we can. So let's talk about some of these, these new technologies. First of all, you said last week, I did not know this. You said there are, I think you said, two facilities in Texas that are desalin. Desalination. How do you say that? Three times? 

00:04:32 Laura Capper
Yeah, desalinating produced water. I think the biggest inland desal plant, if I'm not mistaken, is in El Paso. But it's not desalinating like oil and gas water. You know, we talked before about we have three times as much salt as the ocean, but what's happening. And maybe before we get into technologies, I want to talk just a little bit about water shortages because it's such a profound issue. 

00:05:02 Russell Stewart
Yes. 

00:05:04 Laura Capper
So what's happening is places like El Paso could find cheap, clean water that they had to do minimal treatment on to give it to their population. You know, for decades they had this big, big aquifer that they could just, you know, pull this clean water out and deliver it very inexpensively. Well, what's happening pretty much everywhere is the cheap, clean water. We basically used up so much of it, it's not recharging or replenishing fast enough. So we've kind of used our way through the cheap, clean water and now we're looking at lower quality water. This stuff I talked about earlier, brackish water that has more salt in it. So it's not as much as seawater, but let's say it's 5000k tds. So more than fresh water, which we would want under, say 500 parts of salt. So places like El Paso did implement reverse osmosis technology so they could take lower quality water and treat it and make it available to the local population. So you're going to see more and more of that. You're going to see desal plants going along the coast and basically our water costs are going to go up because it's a lot more expensive for them to treat it. But the other thing. So we prioritize giving clean water back to our citizens, first via municipal water plants, and then second, the biggest water user is agriculture. And in Texas, we have this thing, strategic water plan that looks out 50 years. And I've looked at some of the data there, and we're a big old state, lots of land, lots of agriculture. We think if you look at how much water we use for agriculture today and what that ratio is for each man, woman and child, and then if you project that going forward, and I've done that, what you find out is that in Texas, our population is going to increase by, I believe it's 73 or 74% over the next 50 years. So that means almost double the population size in the state. If you look at how much water we're going to make available to agriculture compared to today, it's going to decrease by 23% compared to today. So our population is almost going to double, and we're going to decrease the amount of water that's available for agriculture across the whole. So what it means that for every man, woman and child looking out 50 years, you're going to have 56% less water available for your fresh crops, for your agriculture, for farming, for ranching. So the question is, where are we going to get our food? Are we going to import it from China, Import it from Venezuela? We simply don't have enough. Enough water to maintain fresh food for our population. So it really has dire economic consequences for the state and health consequences for this state. And so you think, oh, my gosh, we need to find more water, which is what the state legislature is trying to do. There's kind of two things you can do. You can eliminate water losses, which I think we, you know, all these old leaky infrastructure, that's a big deal. 

00:09:00 Russell Stewart
That's a big deal. In the city of Houston right now, they've determined. 

00:09:03 Laura Capper
Absolutely, absolutely. I've heard numbers as high as 70% of our water is lost to leaky infrastructure, but that's not gonna fix the problem. We got a bigger problem than that, and we don't have the budget to do that. We also need to find some new sources of water, and so that's creating truly lemonade from lemons, if you will. So if you look at these new sources of water, it means treating wastewater. The gray water that goes down your shower drain, maybe not out your toilet, down your shower drain. And it turns out across the board, the most viable source of new water, if it can be treated correctly, is produced water from oil and gas industry. And we make 21 billion barrels a year of salty water that if we could treat it, that could be used to address these water shortages. So hopefully, that's what we're going to be talking about today, we call that beneficial reuse. We take a salty waste stream, which is kind of what produced water is today, take everything out to where it's really, hopefully a higher quality than even drinking water standards, and then make that available to either municipalities or to farmers for agriculture. We need something to save the day. And produced water is the only massive source that I've been able to identify. I don't think there's any other source out there that could possibly address this problem other than produced water. 

00:10:48 Russell Stewart
So how are we doing and what's the future of that look like? 

00:10:54 Laura Capper
Yeah, so it's kind of three steps forward, two steps back, I guess, is how I look at it. I want it to go a lot faster because I know these water shortages are so consequential and are beginning to happen. So we have been studying produced water and what's in it for probably 20 years. And we really ratcheted up over the last six years or so. So we have groups of scientists in New Mexico, in Texas. Academia is doing a lot of the work. Universities and then I know, like, companies like Exxon and Chevron have put millions of dollars into hiring toxicologists. And you listen to the word toxicology sounds like the bad stuff. Well, it is. You know, we've hired scientists to profile the water and make sure we understand everything that's in it. So that's kind of step one is know what you're starting with. And the DOE's been overseeing a lot of these programs, too, which is very helpful. I work real closely with the New Mexico Produced Water Recycling Consortium, and then we have a similar consortium in Texas that's looking at these, these problems and opportunities. So one is figuring out in the water. Two is figuring out what do we have to take out to make it usable and safe. And again, it's got to be even safer than drinking water with the new regulations that are going to be coming out. And then kind of the third step in that process is identifying the technologies that work best to take those constituents out. And there's many hundreds of technologies that can be applied, but it's a very expensive process. So it's kind of a. There's a scientific goal. You've got to get all the nasties out of the water. And then there's also economic goal. It has to be affordable. Can't cost me an arm and a leg. And certainly farmers can't pay that much for treated water. So what's really happening is, interestingly, the oil and gas industry pays a lot today to get rid of Its produced water. So they could be paying 50 cents a barrel, up to maybe $1.50 a barrel to take that water and either recycle it and reuse it or put it down a disposal well. So they're already kind of funding, you know, what do we do with this produced water? We're asking them to pivot and say instead of paying that 50 cents to a buck 50 to put it down a disposal well, instead, why don't you look at funding the treatment of that water so we clean it up and then can make it available for some other beneficial reuse, like for farmers. And so that process, I would say the funding activity and pilot studies started about five or six years ago where we're setting up these research centers out in the middle of nowhere in the Permian, where we take the salty water in and we trial different systems to see how well they work, see how economic they are. 

00:14:31 Russell Stewart
And that is happening right now. 

00:14:34 Laura Capper
That's been happening for some years now. But what we also want to do is this isn't just a one trick pony, prove it out for a week. You've got to prove it out reliably so that there is a zero flaw process. There's zero tolerance for errors. And so that's a bigger, you know, that's a bigger engineering and scientific process is making sure that there is no way, you know, some contaminant is going to come out of this process. So it means testing the water, right, to begin with, applying the right technologies and then testing it before it's discharged to kind of guarantee and assure that it was treated correctly. And there's many, many, you know, millions of dollars going into evaluating all those processes. And then on top of that, when we get there, these plants are, you know, These are not $10,000 or $20,000 treatment plants. They're not like municipal treatment plants that might cost a couple of million dollars. These are going to be really, really expensive big plants. You know, a huge one might cost as much as a billion dollars to treat this water, but it would be very high throughput. We could put out a million barrels a day of treated water. So that would be so valuable to address these water shortages we're seeing in the state. So that's kind of the science is there, the technologies are being identified. If there's a little bit of a kink in the armor right now, it's that the rules and the policies have not been published yet. We're pretty much rewriting the rule book on what quality of water we need from Produced water. And I think there's some frustration amongst many of us that unless those new rules are written, how do we know what standards to treat to? There's kind of some urgency in updating the rule book, which is kind of interesting because as you well know, we've had rules for what water quality is acceptable to agriculture for many decades. We know we don't want any of these constituents that could hurt the plant or make it unsafe. And then we want a certain amount of minerals that will help the plant grow, you know, simply speaking. So these rules have been published for many decades. You would think they take those rules. 

00:17:26 Russell Stewart
And say, okay, well, that was my next question. So what's. Why are you reinventing the wheel? 

00:17:32 Laura Capper
Give us the rule book that we know already works. Right? Well, that's not what's happening. What's happening is, in the spirit of being really cautious, is they're going to revisit and rewrite 100% of those rules. And what's so interesting in all this is those rules, like for drinking water. Let me just contrast this to the drinking water game. We haven't updated our drinking water rules until very recently. Now we're looking at stuff like PFAs and PFAs and, you know, new things we're concerned about. But we really hadn't updated our drinking water rules in decades. You know, we might have a list of 150 things we look at, and that's for drinking water, which you would think is the most important water to us, you know, being ingested by humans. Well, guess what? For this produced water, those rules are going to be more strident than those for drinking water. 

00:18:32 Russell Stewart
Drinking water. 

00:18:33 Laura Capper
We're not going to look at just 150 things. We're going to look at three. 300 things that we have to measure and test against. So it's a considerably more rigorous rule that will be ultimately published than even we're using for drinking water standards today. I guess that's the good news. The bad news is it's taking so long to get there that we're probably gonna experience some water shortages before they get there. The rule books are published. 

00:19:04 Russell Stewart
Oh, wow. 

00:19:04 Laura Capper
Yeah, that's the challenge here. 

00:19:06 Russell Stewart
Okay. All right. Any. Anything else along those lines? Any silver bullets you see out there or. 

00:19:20 Laura Capper
Yeah, there's. There's some. You know, it's kind of interesting, too. So a. There's just a lot of misconceptions out there and things that are published that are simply not true. Like this. This issue about the rule book. You know, some people Think, oh, to dumb down the rules for produced water. And it's like, no, no, no, quite the opposite. They're going to be far more stringent than drinking water to where produced water treated is going to be a safer product than drinking water you're getting from your municipal treatment center. And think about today what might be going into your drinking water. You have things that come out from a household. So what comes out from a household? Well, you have prescription drugs, you have hormones, you have whatever gets released from, you know, humans processing those drugs and hormones. 

00:20:18 Russell Stewart
You have salt in your water softener. 

00:20:20 Laura Capper
You have chemicals, products you're been using. You know, anything basically can be discharged from a home and make its way back into a municipal drinking water plant. And we're really not regulating all that with the same scrutiny that we're going to be regulating produced water. So I always like to clarify, it's going to be a much, much higher, safer bar for produced water treatment. And folks that tell you otherwise have just not studied the regulations and these, you know, reports that have been generated about what's in the water and how it has to be treated. The downside of all this stuff is that it's going to be really expensive for us to do all these treatments and get it to those standards. And kind of the fun side is, though, we're trying to figure out how to lower our cost. And we figured out, well, if we again, take lemons and make lemonade out of it. So if I take out as an example, I take a bunch of calcium out of the water, if I can make some new form of brick out of all the calcium I took out of the water, I might be able to sell those environmentally conscious bricks on the open market, make some money and kind of reduce my costs. So the other thing that's going on in the market is mineral harvesting, or you'll hear it called rare earth harvesting, meaning, okay, let's not just take the waste stream, all the junk we take out of the water, you know, let's see what industrial products we can make out of that. And so probably the one you've heard the most about, maybe over touted, but taking lithium out of it, which is in very, very small concentrations. But then I could use that to make batteries as an example. So that's kind of, you know, there's some really interesting science going on to, you know, take the waste and, and convert it to something beneficial as well. But the only unfortunate side, it takes time and money to figure all this stuff out. 

00:22:34 Russell Stewart
Well, at least we're Figuring and that's what I want to, that's the message that I want everybody to hear today. Laura, I could talk to you all day. So we'll have to plan on a follow up to this and you know, next year or whatever to see what, what kind of progress we've made. But I really appreciate you taking the time to do this. Before we go, you, you're, you're not a novice to the oil and gas industry. Your dad is considered to be kind of a maverick oil man, isn't that right? 

00:23:20 Laura Capper
In our own minds, maybe. 

00:23:23 Russell Stewart
Well, he is a member of the Fort Worth Petrole. So he was at the Fort Worth Petroleum Club a few weeks ago. 

00:23:33 Laura Capper
Oh yeah, that's fun. 

00:23:35 Russell Stewart
Who was at the Fort Worth Petroleum Club when he was there? 

00:23:39 Laura Capper
So my dad, who's 86 years old, still running an oil and gas business, goes into the office every day, calls to report to me that he rubbed elbows with Billy Bob Thornton. And that may be a stretch. I don't think they actually came within touching proximity, but they were in the same room. He was cited in the Petroleum Club and I didn't appreciate. The producer behind the Landman lives in Weatherford, Texas, which is west of Fort Worth. And so a lot of the filming is going on in downtown Fort Worth and the stockyards and in the Petroleum Club there. It's a regular sighting now that they're filming Landman there. And if you want a very entertaining view of the oil and gas industry, you know, you gotta watch that show. It's kind of, you know, the Dallas. 

00:24:35 Russell Stewart
Yeah, yeah. And there's some of us in the. I was actually at a, I think it was an API Houston chapter meeting and somehow or another Landman came up and we kind of had a divided room. There were some people who thought it was entertaining and, and, and then there were other people who said, you know, they don't really paint us in the best light there. It's not really. We don't really appreciate this. So. So we're looking for some more positive productions perhaps. 

00:25:07 Laura Capper
But yeah, both are very true. You know, they, they have a, a crew of five guys that work straight for the landmen that frack complete do the land deals. No service companies present, no safety. 

00:25:25 Russell Stewart
I guess you have to. 

00:25:26 Laura Capper
It is entertaining. 

00:25:27 Russell Stewart
Take it in the spirit that it's offered. Well, again, thanks, Laura. And we're gonna close off here. Thanks as always to everybody out there for listening. You know, the oil and gas global network we have, I don't really know how many we're up to now, between 15 and 20 oil and gas podcasts. So you can go to www.oggn.com and you can check out our entire list of podcasts. I actually host two of them. One is the HSE podcast which I've hosted for almost 10 years now. And the other is a newer podcast called the Energy Pipeline. And they may have been a little too cute when they named the podcast because you hear Energy Pipeline and you think, oh well, this is a pipeliners podcast. No, that's not what it is. It's kind of a play on words. It's the pipeline of all things oil and gas. And so there's just a tremendous variety of subjects. And it's sponsored by Caterpillar Oil and Gas. And sometimes I have podcasts that I think are so good I run them on both podcast. So this podcast will run on hse. It will also run on Caterpillar. And I need to say thank you to Caterpillar for the Energy Pipeline podcast. It's Caterpillar Oil and Gas, who for more than 80 years has been helping customers with their oil and gas power solutions. And they have a wide range of durable and reliable power products to meet the demands of your specific application. From design experts who get your operation up and running, to experts in more than 200 countries who are there to help you maintain it, Caterpillar has the people to make your power solutions work for you. And we'll see everybody next time. Thanks. Thanks for listening to oggn, the world's largest and most listened to podcast network for the oil and energy industry. If you like this show, leave us a review and then go to oggn.com to learn about all our other shows. And don't forget to sign up for our weekly newsletter. This show has been a production of the Oil and Gas Global Network.