Navigating the Challenges of Produced Water

00:00:03 Laura Capper
This episode of the Energy Pipeline is sponsored by Caterpillar Oil and gas. Since the 1930s, Caterpillar has manufactured engines for drilling, production, well service and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions. 

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. Hey everybody. As always, thanks for listening. I'm very excited about my guest today and we're not only going to have a lot of useful information, but maybe have a little bit of fun as, as well today my guest on the show is Laura Capper. Laura is the. Let me see what Laura is. She's president and CEO of Energy Makers Advisory Group and then also Cap Resources. So we're going to dive into that here. Laura, thanks for coming on the show. 

00:01:26 Laura Capper
Thrilled to be here. Thanks for having me. 

00:01:29 Russell Stewart
Okay, so President and CEO of EnergyMakers Advisory Group. What is that? 

00:01:34 Laura Capper
So we're a consultancy and we've kind of evolved over time what our focus areas are. We've been looking at produced water issues and opportunities in the oil and gas business starting in 2008, so, so we got into it really, really early, evaluating where the water's coming from, what quality, what we can do with it. So we've evaluated many, many hundreds of treatment technologies. As an example, how do we extract the things we want to from the produced water most affordably. And then that kind of evolved into overall how we manage all this water and oil. And, and as you well know, there's a lot of challenges these days. We make so much produced water out there and historically we had the luxury of just injecting it down a disposal well and you know, we could go home and sleep at night very easily. But fast forward 20 years and we're. 

00:02:45 Russell Stewart
Not, we're not sleeping anymore, are we? 

00:02:47 Laura Capper
Yeah, yeah, yeah. So we as, we've kind of lost capacity, you know, in this resource, if you will. So how do we avoid any environmental risk? How do we stay away from, you know, less. Less than safe areas, maybe areas that have, say, a lot of orphan wells in the area that we want to avoid. And then as importantly, if we're going to reduce what we're sticking down the hole, what can we do with that water? You know, what's the cheapest way to clean it maybe. How can we make some money off the stuff we take out of the water? 

00:03:24 Russell Stewart
Now you're talking about language. 

00:03:26 Laura Capper
Our latest thing is, you know, we gotta save the world in places like Texas and New Mexico that are having these immense water shortages. I mean, just frightening. And I think under publicized, you know, the extent of these water shortages and you know, produced water could play a major role in addressing some of the future and current, really water shortages in the state. So it's, it all gets very technical, you know, when you get into the details. But that's kind of big picture stuff we like to play in. 

00:04:01 Russell Stewart
Okay, so let's try to drill down, no pun intended, and focus. And you're such an expert on this subject. I'm supposed to be the guy who asks all the right questions and then I have experts like you come on and give these great answers and then it makes me look smart. But I, I don't even know. I'm not exactly sure where, where to start with questions. Because you're such an expert on the subject, I guess. Okay, produced water and saltwater disposal wells. Let's talk about that problem. And then I guess you can move on from there. I think there's maybe some new regs on that in the making, especially I guess in Texas with the railroad commission. I don't know where we are in New Mexico. You might want to address that or maybe some other areas. And then I'm really intrigued. You're really speaking my language. People have heard me say over and over again who regularly listen to this podcast that I don't think the oil and gas industry is the problem with the environment. I think the oil and gas industry is going to be the solution to the environment. I said that at a methane submission conference one time two or three years ago that I had to moderate and if looks could kill, I wouldn't be here right now. But I really do believe that. And I believe it's because of, you know, the oil and gas industry doesn't get credit for what it does, what it takes to bring oil out of the ground and then finally get it to where you pull up that pump and, you know, stick it in your car. It's a tremendous process. And then only half of that is used, or less than half of that's used for putting it in your car. Petroleum products are involved in almost every product that we have today. And that's another problem that we realize. And that's a campaign that I go on from time. That's the title of my keynote speeches. You Know, but so start with the, start with the saltwater disposal wells and those problems and where we're going with these new regs and we'll. 

 00:06:21 Laura Capper
Sure, sure, sure. And just, you know, most people in industry kind of know this stuff, but for somebody that, you know, might be newer to these, these items. So it's kind of interesting when we look at water and water quality, we tend to measure water quality in terms of how much salt is in there. And then reference point is the salty ocean. And so by comparison purposes, seawater has about 35,000 parts per million of salt in it. And that's what these desal plants in the Middle east and a couple in Texas are used to kind of processing. And our technologies were all designed around seawater. 100% of them were designed around seawater to begin with. This 35,000 parts per million. What's interesting about produced water is produced water. There's really kind of two components to it. The biggest one is just the naturally occurring water underground that coexists with the rock. Whether you're 1,000ft underground or 15,000ft underground, you basically have this naturally occurring water. But in say in Texas in the Permian, it's got three times as much salt as seawater. And so all these existing technologies weren't really designed for that. Things that you hear about like RO or reverse osmosis just kind of falls on its face with water that is as salty as this naturally occurring produced water. 

00:08:09 Russell Stewart
It can't touch that, huh? RO can't touch that? 

00:08:12 Laura Capper
No, it really can't. It really can't. Now it can play some roles in the treatment stream and do some polishing and things like that. But basically after you've gotten all that salt out, so that's kind of one thing. You know, it's just a much saltier water. You know, you hear people talk about, oh all these toxic chemistries and yada yada, and it's like, well, it's no more toxic than what started out in your drinking water. It's water that's occurring with the rock. It just has a lot more salts and minerals in it. But then there is this man made component that really complicates things. And that's when we frack a well then we are introducing like a man made cocktail to that. You know, we start out with probably recycled formation water, but then we're going to add chemicals to make that well frack better. So maybe a friction reducer, a biocide or something like that. So there's a small percent of the water that's produced from the well that also has some of these fracturing related chemicals in it. And so we have to kind of treat that stuff differently than the produced water. So it just takes a lot of chemical understanding to know what's in the water in the right ways to extract it. The good news is we've been studying this in New Mexico and Texas and the DOE at federal levels for 20 plus years, and we know exactly what's in that water. There's a list of maybe 200 things, depending on where you're at, that we know what's in it and then we know the technologies to take it out. That's the good news. The bad news is it's still pretty expensive to treat it. And so what we've been doing historically is in the old days, it was just fantastic really, because we were drilling and producing from conventional oil reservoirs and we could produce up the water and then those, those reservoirs were so porous and so permeable, we could just stick that water right back down the hole, same place it came from, and kind of use it to help recycle out more oil and gas. So, you know, that was when life was really easy. It was just kind of this do loop where we just kept sticking it back down the hole and it was creating a, you know, useful products that was helping us remove oil from the underground. The problem is in the oil and gas formations that we're developing today, which are mainly shales or tidal resources, they're not as permeable or porous. So we can't stick the water back into those same tight formations. So we kind of doubled down in the old formations, which happened to be shallow. So we would produce water from a shale formation and then we used to stick it back into a shallower formation that had already been a workhorse formation for us for 20 or 30 years. So we just, you know, we, we pull water out of one section, put it into another. So pressures decreased in the production zone and we'd make them increase when we were putting water back in it and it would create some pressure disparity. And we've been doing all this stuff for decades, really. And so over time that kind of takes a toll. We realized, oh, those shallow guys are starting to pressure up a little bit. And then we found, oh, we can drill a more expensive disposal well, but we'll just go a lot deeper, maybe down below 10,000ft, and use that to get rid of our produced water. And that we're pretty successfully. Because those deep formations, in my mind they're very safe because they're well away from like groundwater and drinking water formations. They tend to be very low pressure under pressure. So I didn't have to crank up my pressures to put the water down there. They were very economic and that worked great for about five or six years. And then we started seeing earthquakes in the Permian kind of coincided when we put an earthquake measurement system in there. So probably we were having those earthquakes before then. We just didn't know it because we didn't have a good measurement system. But in 2017 we installed a better earthquake measurement system and started seeing, oh, we're causing some earthquakes, you know, related to these oil field activities and not just injection, but just really the movement of all these fluids in and out of the ground caused pressure changes which could lead to earthquakes. So fast forward to today. I would say this year has been kind of the environmental wake up call around injected water in the oil and gas industry. We started recognizing that we have seismic issues which everybody's really highly aware of. Although to be honest, there really hasn't been almost any damage around those earthquake issues. But they just, you know, they don't feel right. We don't want them to continue happening. There could be damage if they were allowed to persist. And then we started realizing, oh, some of these old shallow aquifers are increasing in pressure. And that wouldn't be that big a deal if it weren't for the fact that we have a lot of old weak infrastructure in shallow formations. So what's kind of interesting is we really, you know, I would broadly say, and I kind of check up on this, you know, there are regulations out there, you know, 99.98% of people are following the regulations. However, when we made the regulations in the 50s and 60s and 70s, we just didn't know things then that we know today. You know, we probably would have done things differently in the old days. So as an example, you know, our cement jobs weren't as good in the old days. So what's happened is we have this old infrastructure and you know, really things probably started going wrong in the 70s or 80s and we just didn't know it. So we've got these old, you know, now you hear the term orphan wells, which, which probably means it was an old well, you know, they were cemented it when it was plugged and abandoned, but then it was cemented, but, but maybe that cement job didn't hold. And so fast forward 20 or 30 years, I've still got oil filled activity going on next to that orphan well. And I've got more pressures in my oil field activity today, and those old wells just can't withstand it. So it's kind of the combination of the new wells are well constructed, can handle high pressures, have got better metallurgy. We're cementing much, much better. 

00:15:56 Russell Stewart
Okay, I was going to ask you that. 

00:15:57 Laura Capper
There's high pressures next to this old weak infrastructure. 

00:16:02 Russell Stewart
So we have the, we have the new cementing technologies that, that, that recognizes these, these high pressures and that sort of thing. It's these old orphan abandoned wells that, that don't have that kind of cementing. That's what's failing and that's what needs to be fixed. Right? 

 00:16:22 Laura Capper
Yeah, yeah. And, you know, I have to tell you this little tangential story, but I think it's fascinating. You know, in this field you talk about, you know, the known wells, the known orphan wells, and then there's this quote, unknown, unknowns. And I really been checking into this stuff and as I say, you know, it's. We hopefully say, oh, some bad actors weren't following the rules, but that really isn't true. You know, we just weren't as smart about designing the rules way back when. And case in point, on the unknown unknowns, I found out that during World War II, to support the war effort, you know, the government really encouraged us to develop parts of the Permian, you know, drill, baby, drill. We need oil for the war effort. Well, about midway through World War II, that was not the issue. And instead we had steel shortages. And so they changed the incentives. Now think this was following the Depression, right? Everybody was dying and poor, right, following the Depression, and the government started putting out incentives to operators of steel plants to get scrap steel into them to increase their steel production. So guess what we did in West Texas? We would go out and find moderately or poorly performing oil wells and basically just steal anything from that well that we could take it to a steel plant where we got incentives, we got payments. So we would cut through the casing, cut through the well head, basically just purge this poor active oil well and take it to these steel plants and government sanctioned programs. So there are some estimates that there could have been even 100,000 wells or more that were kind of raised in this way during the World War II effort. 

00:18:29 Russell Stewart
100,000 in the Permian just alone or. 

00:18:32 Laura Capper
Actually the number's higher than that, the estimate. So it's just, and that was a, you know, I mean, the government didn't say, go do this to oil wells. The government just said, hey, we'll pay anything for any steel source. And that was an available steel source. So I tried to investigate that and it was almost impossible. Cause I would have had to find, you know, drillers that were in their twenties then would now be 100 years old today. Right, right, yeah. To find out about that. So. So these problems really go back historically in some cases. Now fast forward today we have better tools to find them. We can use magnetics and there's scientific specialists that can use flyover methods to find old wellbores. 

00:19:23 Russell Stewart
I think they're using satellites to do that now. 

00:19:25 Laura Capper
Yeah, they are. 

00:19:27 Russell Stewart
I had somebody on my podcast a couple of years ago, they're using satellite technology to do that. 

00:19:34 Laura Capper
Yeah, yeah. So we are, you know, in the, the regulators are tracking these wells, we have reporting systems and then we're remediating, you know, about, you know, between in Texas, 10 and 20,000 wells per year. We're getting out there and fixing these old wells. But you know, the problem is where it's almost like we're finding other problems about at the same rate we're fixing them. So it is kind of like playing whack a mole to remediate this damage that actually happened because of activities 40 and 50 years ago or more. So it's a real interesting environmental time for us. And I think really we've just had kind of a big wake up call over the last five or six years. In particular that continuing to maintain oil and gas productivity going forward means we're also having to start correcting some of the sins from the past. And so it's quite an additional burden to companies. It's not like you can just go in and go boom, I'm going to drill a new well here. It's like, oh, I'm going to drill a new well here. And I'm going to have to do this forensic investigation of everything around this well to make sure that I can place a new well safely and won't have any leaks in my area of operation. And these new regulations are putting that burden on the operator. You've got to do a whole lot more homework than you used to do to prove that you can put in a new well safely. And that might even mean fixing a lot of old stuff around you that you even really had nothing to do with. You know, it wasn't your company, it wasn't your lease at the time, but if there's damage there, they're not going to let you put in a new well. Somebody's going to have to fix it first. So It's a very interesting time. It's adding a lot of expense and kind of forensic processes to placing a new well in the oil and gas industry. 

00:21:50 Russell Stewart
Okay, so I can already tell we're probably going to have to turn this into two podcasts because we haven't gotten into the other parts that I want to talk about. So let's see if we can. Let's see if we can put a button on it here or let's see if we can put a summary here before we move on to part two. Okay. So produced water, the biggest problem is the salinity, correct? 

00:22:21 Laura Capper
Yes. 

00:22:22 Russell Stewart
Okay. And in many instances, it's a lot more salty than what we all relate to when we've all been to the beach. Now, not all produced water is that salty, right? 

00:22:39 Laura Capper
Very true, very true. Like, you know, the saltiest areas are like up in eastern Pennsylvania, Pennsylvania area up north in the Bakken, that's very salty water. Interestingly, they have a lot of fresh water in those areas too. You know, kind of a lot of diluent. Some areas are very low salinity, like Wyoming and Colorado. And what's cool about those areas, it's got less salt than seawater. And so in those areas, there's technologies that are readily available to treat that water pretty affordably. So in areas like Colorado and Wyoming, they've been taking kind of low salinity, or we use this term brackish, that means salty, but not through the roof salty. They've been taking low salinity or brackish water, treating it with things like ro. And then it's been a great resource because they're able, once it's treated and that they guarantee that the right things have been removed. They have been making that available to farmers and agriculture for crops, restoring aquifers, putting it in riverways. So. So in those areas, they've really addressed many water shortages using produced water. But it's, you know, it's a lot cheaper and easier for them because it is low salinity water. We're heading the same way in Texas and New Mexico, but it's going to be a lot more expensive for us because we've got so much salt here. 

00:24:22 Russell Stewart
Because it is high salinity. Okay. 

00:24:25 Laura Capper
Yeah, yeah. 

00:24:26 Russell Stewart
That's the biggest challenge we're, we're working on. And we'll probably talk about this in the, in part two. We are working on these new technologies. There have been some advancements in that, right? 

00:24:37 Laura Capper
Oh, completely. Completely. 

00:24:39 Russell Stewart
And all right. We're going to, we're going to get into that we're going to get in. Okay, so you got this problem with produced water. We thought we solved the problem by just pumping it down the hole in a saltwater disposal well. There's problems with that. So we can't continue to do that. We're going to have to do something different. 

00:25:03 Laura Capper
Well, we're always going to continue to do that, but. 

00:25:08 Russell Stewart
We'Re going to do it smarter. 

00:25:10 Laura Capper
As we produce more oil, more formation water comes with it. And so it's like we need a growing base to get rid of the water. And the flat is our disposal capacity at best, is probably going to be flat. So we've got to find other outlets for that water. Or worst case scenario, kind of economically is we could almost end up restricting our oil and gas production in places like New Mexico and Texas. And New Mexico is really up against that right now. And, you know, I know not everybody's fans of the oil and gas industry, but guess what? Guess what's funding your education system. 

00:25:55 Russell Stewart
Yeah, exactly. 

00:25:56 Laura Capper
From oil and gas. 

00:25:57 Russell Stewart
Guess what makes your smartphone. You know, it's like that. Dr. Scott. Is it Dr. Scott Tinkler. Tinker. 

00:26:04 Laura Capper
Tinker. Yeah, yeah, yeah, yeah. 

00:26:06 Russell Stewart
You know, I was listening to one of his speeches, and. And he shows this picture of a Tesla in Colorado, and the license plate says, no oil. And so he looks out at the audience and he says, no oil. He says, no tires, no oil, no car. 

00:26:25 Laura Capper
And guess where the electricity comes from to power up that battery. It probably comes from natural gas. So it's just loopy the way people aren't kind of tying all these things together. You know, the only energy form that's not heavily subsidized as well is a whole different story. 

00:26:45 Russell Stewart
Okay. 

00:26:45 Laura Capper
All right. 

00:26:46 Russell Stewart
Okay. So. So we. And that's what we're gonna. We're gonna talk about that. We're gonna try to delve more into that in part two. So some of our understandings and regulations that were developed decades ago, you know, we now know that those weren't up to par. They've not proved to be up to par. So we're acknowledging that. We're addressing that. In fact, I think. Didn't I see on one of your LinkedIn posts or something, aren't there new regulations being introduced even as we speak. 

00:27:25 Laura Capper
At the Texas Railroad Commission? I think they went official two days ago. Yeah. Starting about six months ago, they started floating the draft ideas for some new policies, and they formalized that just a couple of days ago. And essentially, I'll give it to you just in some Fast sound bites. So in the old days, you really just had to look out a quarter mile from your well and see what was going on, make sure there weren't any problems. Now they're saying, oh, that's insufficient. We want you to look out on some parameters a half mile outside of your well. Other parameters we're going to have you look two miles outside. And that's a lot of homework. In some areas within two miles, you could have many hundreds of of wells over all of time. So that means you got to go check out every single well that ever existed and make sure that it was cemented right, cased right. The perforations are in the right place so that if you put a new well in the middle of things, you don't have any potential, you know, conduits for leakage. So they expanded the radius of review pretty considerably. And then they're also going to guide how much you can inject by a number of factors. You know, frac pressures, bottom hole pressures. So it's a bit more of a science fair project than it used to be to kind of tick through this list of stuff to make sure you can reliably put a new injection well there. So now, you know, toot my own horn here. My group took all those new parameters and rules that are coming out, and we basically have analyzed it to death throughout the Permian Basin. So we track 134 things per block and lets, you know, you know, can I get a disposal well in or am I going to be restricted for environmental concerns? And if so, you know, what performance should I expect to see from that disposal well? But it's a long list of things you have to kind of sort your way through. And so I think we're all, you know, most of industry is kind of getting their head around it. Oh, you know, what is it in the wizard of Oz? We're not in Kansas anymore. It's a new world ahead of us. 

00:30:04 Russell Stewart
Exactly. But it's a good new world ahead of us. I love hearing about this. I love how we're addressing this problem of. And one of the reasons people listen to this podcast is because of the quality of the guests we have on there. So there you go, folks. We're going to put her information in the show notes. You need more information about this Lars person that you need to reach out to. We're going to put a cap on this and take it into to part two. So be looking forward to, to the the next issue of this with Laura, which we'll pick up in part two. As always, thanks for listening. Post us on LinkedIn and we'll see you next time. 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 shows. Don't forget to sign up for our weekly newsletter. This show has been a production of the Oil and Gas Global Network.