Potential Oil Boom in SE Wyo Raises Water Questions

Reprinted from Land Letter with permission from Environment & Energy Publishing, LLC. www.eenews.net

In the rush to lock up oil drilling permits in southeast Wyoming, energy firms are finding creative ways to acquire massive amounts of water needed to stimulate the new wells into production.

So far this year, Wyoming regulators have approved requests to drill more than 100 wells, most of them in the Niobrara formation, in an arid part of the state where drilling has been virtually non-existent in past decades.

Oil in the Niobrara will be blasted from tight shale rock more than a mile underground using hydraulic fracturing, which uses a pressurized mixture of water, sand and chemicals, to loosen petroleum-rich formations and get oil and gas flowing to the surface.

The technique has been credited for oil and gas booms in Pennsylvania’s Marcellus gas shale and North Dakota’s Bakken oil formation — which some believe is geologically similar to the Niobrara. But the fracturing process is also highly controversial because of the risks associated with pumping the chemical compounds underground and the millions of gallons of water required to successfully frack a well.

In southeast Wyoming, where water is already scarce, drillers have been striking deals with farmers and ranchers to siphon water from agricultural wells. Other firms have sought access to municipal water supplies from cities like Cheyenne, while others have pondered the use of deep wells to access new water sources.

“They’re going to have to pursue a number of different sources to get it,” said Wyoming State Engineer Pat Tyrrell, who handles applications for temporary water use permits.

As of last week, two dozen permit requests had been submitted from water hauling companies seeking temporary water use agreements, and Tyrrell said oil companies have estimated they may need between 15,000 and 20,000 acre-feet of water over the next two decades, or slightly more than the city of Cheyenne consumes in a year.

“I think there is available water,” Tyrrell said, adding that pending permits total some 1,000 to 1,500 acre-feet, or about 400 million gallons.

Leaving no supply source untapped, two water hauling companies recently struck deals with the city of Cheyenne to siphon 6 million gallons of water from municipal fire hydrants and deliver it to oil fields, said Cheyenne Board of Public Utilities spokesman Clint Bassett.

But in the arid rolling hills and grasslands of southeast Wyoming there is no surplus of groundwater to allocate, said Bern Hinckley, a hydrogeologist who runs a consulting firm in the city of Laramie.

Groundwater in eastern Laramie County, for example, is fully tapped. State regulations require that each gallon diverted to an oil field is a gallon less that can be used to water alfalfa or hay crops used to feed cattle, Hinckley said.

“It’s a zero-sum game,” Hinckley said. “They could hardly have picked a worse place in Wyoming.”

Too early for concern?

Industry officials maintain that concerns about water shortages are premature considering no oil wells in the Niobrara field have reported production to the state.

John Robitaille, vice president of the Petroleum Association of Wyoming, said there is no reason to believe that water scarcity has slowed the pace of Niobrara development so far, adding, “we don’t even know if it’s going to become a full-fledged field.”

In addition to fracturing water, operators would need additional roads, pipelines and electrical infrastructure to power the well pumps if the formation does eventually pan out, Robitaille said.

Nevertheless, interest in the Niobrara field has spiked since last year, when a Houston-based oil firm struck what was described as a “gusher” of a well named Jake just south of the Wyoming-Colorado border.

Since then, companies have spudded more than a dozen new wells in Wyoming, said Tom Doll, supervisor for the Wyoming Oil and Gas Conservation Commission, the agency that regulates drilling in the state.

“The romance of this thing is because of the Jake well,” Doll said. “That well came on so strong.”

Jake produced some 50,000 barrels of crude oil in its first 90 days, according to a May report from EOG Resources Inc., which now has at least 400,000 acres under lease and has completed three successful wells in the Niobrara.

Other firms have since moved into the region, including Chesapeake Energy Corp., Rex Energy Corp. and Continental Resources Inc., which this week announced it has increased its Niobrara acreage to 73,000 acres, most of it in Wyoming, and plans to spud its first well by the end of the year.

Both the Bureau of Land Management and Wyoming land managers have hosted lucrative lease sales at oil and gas auctions this year, netting more than $100 million, much of it from southeast Wyoming operators.

“We do see a lot of activity in this area right now,” said Tyrrell, the state engineer, adding that his office this week was scheduled to hold informational meetings with water users in Cheyenne, Pine Bluffs and Torrington.

Water use unknown

But regulators and industry officials remain unclear about how much water will be needed to fracture the Niobrara shale.

Chesapeake said it expects to use 4.5 million gallons of water for hydraulic fracturing at each of its Marcellus gas wells, but wells in the Niobrara could require more or less fracturing and different quantities of water for each fracturing job, observers say.

“We don’t really have a picture of how much water is going to be used by industry,” said Doll of Wyoming Oil and Gas.

But that information will soon trickle into the public domain as operators comply with state rules implemented last month requiring disclosure of the quantity of water used in fracturing jobs and the chemicals used to lubricate the rock (Land Letter, Sept. 23).

The information is being posted by on the Wyoming Oil and Gas website in completion and sundry forms, Doll said.

Some of the water that is injected into wells makes its way back to the surface and could potentially be reused, Doll said.

Vertical wells in the Pinedale area of Wyoming returned about 90 percent of the fracturing fluids, while wells in other parts of Wyoming have returned as little as 20 percent of their process water, Doll said.

In the Niobrara, companies would benefit by recovering the water they inject underground because wet shale rocks can reduce the flow of oil over time, Doll said.

In the future, companies may consider recycling fracturing fluids using stationary or mobile recycling plants, eliminating the cost of buying and transporting new water, said Bill Heins, general manager of thermal products at GE Water & Process Technologies.

GE last month announced that it has developed a mobile evaporator unit designed for Marcellus drillers that could reduce the volume of wastewater and fresh water needed by between 50 percent and 90 percent.

The truck-mounted units use thermal evaporation technology to separate the water from impurities underground and can yield 50 gallons of freshwater a minute to be remixed as fracturing fluids, Heins said.