Restoring Nature s Balance with Fracking Water Recycle

Transcription

1 Quarterly Feature June 2014 Restoring Nature s Balance with Fracking Water Recycle Robert Savarese

2 2 Tiger Hill Capital Energy & Industrial

3 Foreword Tiger Hill Capital (THC) is an investment management and advisory company that commits its capabilities, network and capital to businesses with the potential to deliver transformative solutions for global economic and social challenges. Our core capabilities of dual-bottomline investing; business-building; and global access to capital, knowledge and talent are attractive to both our investor and enterprise clients. Tiger Hill Capital attracts accomplished investment and business-building professionals with a passion for developing innovative businesses and projects. In our quarterly feature series, THC s partners present perspectives from their areas of expertise and insights from their recent projects. We typically focus on topics of broad relevance to our clients in which THC is driving innovation. In this feature Bobby Savarese, THC s global leader of Energy and Industrials, zooms in on the economic and envrionmental opportunity in recycling water from hydraulic fracturing in the Middle East oil & gas fields. 3 Quarterly Feature June 2014 info@tigerhillcapital.com

4 Restoring Nature s Balance with Fracking Water Recycle An oil & gas challenge In the current energy market, GCC members are diversifying their operations to more unconventional means. This includes exploration and drilling of vast shale rock formations in the Arabian Peninsula. Aged oil wells are also becoming increasingly attractive to exploit. But one has to wonder, in the vast desert regions, where to expect to find the enormous quantities of water required for these drilling process. The annual water requirement for fracking operations in the Water ıs 10% of well production cost Americas is somewhere between 80 billion and 140 billion gallons, the GCC will eclipse this figure as more well sites switch from exploration to production. By % of the world s natural gas will come from fracking operations. By 2020 Saudi Arabia will consume 12% of its available water capacity on unconventional oil & gas production. A major challenge is the ability to supply continuous water to Oil & Gas drill sites. This includes hydraulic fractionation operations where water is indeed essential. Currently major Oil & Gas operators are filling the gap by managing water needs with a strict supply chain management of clean injectable water as the input, then disposing of the brackish polluted backflow water return at the output. This type of supply chain is driving up cost to the point where water supply is now over 10% of the overall well production cost. In the Middle East it is a well-known fact that water is the most valued and precious commodity given the scarcity of fresh water supply and the greater cost of desalinisation processes. The problem intensifies for those GCC countries that are more industrialised and where water has always been in short supply. In these countries, the average cost of water exceeds the global average by a factor of ten. In the region there is a high demand from cities and industry. This high demand exceeds the water supply from natural aquifers to such an extent that it requires 30 desalination facilities, delivering nearly 400 billion gallons annually, to fill the gap. In today s energy business you need several million gallons of water to frack a typical shale gas & oil well. The logic of burning oil to desalinate water to produce more oil & gas is questionable economics. Fortunately, there is an emerging pathway for reducing or eliminating net water consumption in all well-site fracking operations. The industry standard practice of frack back-flow water disposal is becoming less tenable as regulatory issues and strong sanctions increase. The need for new water treatment technologies which are more effective and Did you know? Middle East oil consumption will increase 50% by 2040 Most Middle East conventional oil fields have peaked presuring margins Companies seeking capital efficiency 4 Tiger Hill Capital Energy & Industrial

5 Operational Hurdles The average well-head requires 5,000,000 gallons of water. This is enough water to fill eight Olympic size swimming pools. During the hydraulic fracturing process up to 50% of injected frack water flows back to the well surface and is known as frack water backflow. Frack water comprises 90% water, 9% sand, 1% chemicals. Furthermore the backflow water is extremely hazardous and requires specialist treatment at facilities often at great distances from well-sites. The current process employed by drill-site operators in the GCC region is to truck all of the required water to each site from water desalination plants where it is deposited into a large open air pond ready to be injected. Adjacent to the fresh water pond is a back-flow water pond where the hazardous back-flow water and chemical mix is stored. This dirty water is then sent by truck to a water treatment facility often hundreds of kilometres away where not only is the water cleaned but the truck also. Clearly this is a time consuming and uneconomical method for ensuring the water is treated as well as maintaining well up-time. 5 Quarterly Feature June 2014 info@tigerhillcapital.com

6 The Solution The key objectives of a well-site operator is to recycle polluted refuse water and regenerate in into reusable, re-injectable frack water in compliance with local regulatory environment requirements and significantly reducing well-head operational costs. THC has partnered exclusively with a Swiss water purification technology that is able to solve the current operational issue that well-site operators are facing in the GCC. Firstly this is an O&M field service solution which requires only 3 ingredients to turn back-flow water into re-injectable water: salt, iron and energy. The technology is driven via a traditional generator which can be powered by a renewable source such as solar or wind in mind. The technology is modular and deployable via standard 40ft shipping containers ensuring deployment around the GCC relatively simple as the logistics platform is already in place. Our technology is scalable to treat the average 1000m3 of back-flow water per day and can go far beyond this amount should the well-site require it. The logistics cost to deliver fresh water to the site and subsequently dispose of refuse water to a treatment facility is well over $5/gallon. Our system eliminates the need for a complex water supply chain by recycling frack water at the drill site in a closed-loop system thus reducing fresh water transportation costs and ratcheting down the cost of tanker truck re-haul to treatment facilities by 50%. From a maintenance perspective, the technology is monitored at all times from the Swiss base where any irregularities can be rectified remotely. Water is truly the new frontier and we are evermore involved in offering solutions on production and conservation of vital resources. The business objectives of the major oil companies are to increase production throughput without compromising on cost, operation efficiency, safety and environment. Our technology can transform the field of back-flow water management by offering a unique service solution to a process with no current tenable solution. 6 Tiger Hill Capital Energy & Industrial

7 About the Author Robert Savarese Partner, Energy & Industrials Robert Bobby Savarese brings to the THC team more than 25 years of project development experience in Energy, Oil & Gas, and Downstream Chemical Industries. As a partner, Bobby will add value by leading energy and industrial division globally. Over the course of his career he has lived and worked in the US, Middle East, Asia, South America, and Europe accumulating an array of industry experience and client contacts. Bobby has a strong Middle East background having held the position of Executive Vice President of Global Business Development for a leading Middle East holding group. While serving there, he developed a new business model that helped set the vision and strategy for repeatable multi-year business growth in the region. Mr Savarese has executive management experience with international engineering firms (CDI, Wood Group, ABB and DuPont) where he directed high value capital projects in the US, Europe, China and South America. He has also been involved in developing a new process turnover and start-up delivery tool - RTO (Readiness to Operate). 7 Quarterly Feature June 2014 info@tigerhillcapital.com

8 London HQ Dubai Office Enquiries 52 Brook Street London W1K 5DS United Kingdom Business Centre Logistics City Dubai Aviation City P.O. Box Dubai, UAE Tiger Hill Capital, Ltd. 2014