A drive through eastern Laramie County is a dusty one on a windy, summer day. The high desert holds its water deep in its belly.
Water is life to landowners, ranchers and crops in Wyoming. But it’s also a necessity for the state’s bedrock industry: oil and gas.
As the approach to drilling wells in Wyoming advances, and technology drives new opportunities in Converse, Campbell and Laramie counties, water availability on the arid slope of east Wyoming may become more of problem.
A recent report from Duke University charted a 1440 percent increase in water produced from drilling and fracking wells between 2011 and 2016. The amount of water used to hydraulically fracture wells had also soared by 770 percent in some areas.
The report, which was funded by the National Science Foundation, notes that the increase in this type of water use is largely in arid regions, from Texas to Wyoming, and will be a growing problem as drilling advances.
The big numbers in the report come from the most successful plays in the country. The Permian and Eagle Ford plays in West Texas boomed even through the bust and continue to do so.
The numbers in the Niobrara shale formation, which includes Wyoming, are not as dramatic. But drilling had slowed in Wyoming over the last few years, and many see the Powder River Basin’s best days as around the corner.
While water use hasn’t exploded in eastern Wyoming shale development like it has in other parts of the country, that may not be the story going forward. Drilling will increase if the price holds and so will the unconventional approach that brings in so much more oil per well, but uses so much more water.
“The level of activity here isn’t that high yet,” said John Fanto, manager for Casper-based True Oil. “As the activity ramps up, there is only so much water.”
A boom to come?
There are a number of reasons to anticipate a potential increase in drilling in Wyoming. For one, there’s good rock in the state. According to the number of applications to drill – which gives producers first rights in drilling — firms are increasingly focused on the Denver Basin in Laramie County, the Powder River Basin, which spans Converse and Campbell, and the gas fields in western Wyoming.
The price of crude has held in a band that’s encouraged more activity.
Meanwhile, Colorado voters will soon decide on a setback rule for oil and gas that industry says will knock out the majority of new drilling in that state. Insiders anticipate that rule, if approved in November’s election, would drive investment into Wyoming’s oil and gas fields.
And if drilling goes up, so will water use. This is more true today than it once was.
Bigger and better
Drilling practices have changed. Fracs are bigger and require greater volumes to crack and prop the rock close to the well bore. The volume of recovery that’s becoming possible in shale plays is directly related to these advances, as are the water challenges that come with it.
“Prior to the big frac jobs and the big horizontal wells, water was pretty available,” said Fanto, of True Oil. “If we were going to drill a well, it would be pretty easy for us to contact a rancher and get the water from him to drill a well. It doesn’t take that much volume to drill a well compared to a frac.”
The firm is fracking a well down in Laramie County, an area whose water use is already limited due to drought and weakened resources. Water is tight there and it’s a challenge on drillers’ minds going forward, Fanto said.
“It is something that will affect us in this industry,” he said. “We’ll have to plan for that and design for that.”
Some industry groups have pushed back on the Duke report, arguing that it is fails to note the benefits of new drilling practices.
“One way that producers have increased output in each well is use of horizontal laterals significantly longer than those used in the earlier years of shale development. The increase in length allows for a single well to extract more oil or natural gas while minimizing surface impact,” the Independent Petroleum Association of America noted in a recent blog post.
“Naturally, the longer the lateral, the more water is required to hydraulically fracture the well.”
A water puzzle
Water use is also complicated. It varies by basin and layer of rock. Anticipating the kind of water volumes that will be used if activity grows in eastern Wyoming is difficult.
“Figuring out how best to drill and complete these wells in different basins or different formations includes determining the optimum fluid and proppant volumes used during the fracs,” said Tom Kropatsch, deputy oil and gas supervisor at the Wyoming Oil and Gas Conservation Commission.
Compared to the trends in other parts of the country, Wyoming isn’t necessarily behind the curve in terms of water use in areas like the Powder River Basin, he said.
“There is likely a mix in the PRB, where some of the formations ... are still being tested to see what works best and some formations may have optimized completions at lower fluid and proppant volumes than other formations or other basins.”
Industry is also becoming more interested in treating and reusing water, Kropatsch noted.
If that developing technology is deployed, which many of the larger players say is likely, it will cut back on the amount of fresh water needed for completions in the years ahead.
Re-use is what many on the environmental side are pushing for as well, and was one of the suggestions in a report on the water challenges associated with unconventional drilling published by the Powder River Basin Resource Council, a Wyoming landowners’ group, in 2013.
The group was heavily involved in pushback on the state’s handling of the coal bed methane boom, which created a fair amount of controversy from landowners and ranchers.
“We were pumping that ground water out and dumping it,” said Jill Morrison, an organizer for the council. “Now they are going, ‘Well, we wish we had that water now.’”
When the council put out its report, it did so knowing that oil and gas could pick up and that water would be a problem. But technology has moved forward so quickly, that the problem is bigger than anticipated.
“It’s going to be worse than we thought,” she said. “We need a water budget established for each major aquifer in the state … and a comprehensive water inventory.”
Treating flowback water and then reusing it has a number of firms’ attention, but the technology hasn’t proven itself in terms of cost. If it’s more economic to reuse water than drill injection wells or send produced water to disposal ponds, industry will take it up.
State Engineer Patrick Tyrrell argues that though there is certainly an uptick in demand for water from the oil and gas industry in areas like Laramie County, far more is going to other uses.
Agriculture in the area is using about 52,000 acre feet of water to 2,600 acre feet for oil and gas, he said.
“To the extent that we are seeing some additional use of groundwater, it is at or a little above the levels we saw eight years ago,” he said noting the last boom in water demand from industry, when oil prices were higher. “It’s still minor (compared to) the amount we pump out of the ground for ag.”
“I guess my only point is in keeping the numbers in perspective.”
Tyrrell is aware that water use in plays like the Bakken has gone up substantially in recent years.
“I don’t know that I’ve seen the same thing here in Laramie County or up in Converse County,” he said.
Whose job is it anyway?
Environmental groups and landowners have pushed the state engineer’s office, along with other agencies, to put restrictions into place ahead of potential depletion of resources, but Tyrell said that’s not the role of his office.
Oil and gas firms are free to buy water from others who have rights to that water, such as a rancher who also has a right to barter that exchange, he said.
“It’s inappropriate for a state engineers office to weigh in on the preference for one type of well or another,” he said. “The way our laws are currently written, when we get an app in, unless we can find that there is a lack of water, or diminished water, we are almost bound to issue those permits, but we can do that with constraints.”
The limit of what agencies do within the law is something landowners like Alex Bowler of Laramie County say is a problem. Bowler is the current president of the Cheyenne Area Landowners Coalition. Agencies need to be proactive, he said.
“It makes good sense to me that they should be real concerned about this,” he said. “Water is a lot more important to folks out here than oil and gas.”
Tyrrell, the state engineer, said water use for oil and gas rises and falls with the booms and busts. If there was a crisis on the horizon, it would likely take a move from lawmakers to do something about it.
“If we see things growing well beyond our ability to manage them, I would probably have to take it to the governor’s office and the Legislature,” he said.
Tyrrell said he does not see that coming.
The crystal ball
There remains an area of uncertainty to the future of water demand in the Powder or the DJ Basin: the price of crude. The steady band of pricing for West Texas Intermediate sweet crude, between $65 and $70 a barrel, is not guaranteed to last. It’s guaranteed to shoot up or dive down according to a host of uncontrollable factors.
Years ago, the price of crude was low and the amount of development that Bowler could view from his property was nil. Now there are wells nearby, wells planned just far enough from Bowler’s home that the company doesn’t have to alert the landowners. There’s a fracked well that runs right underneath his subdivision.
What happens next is an unknown to landowners, state agencies and industry.
“I don’t know if anybody that has been in this business long can ever feel confident (about the price tomorrow),” said Fanto from True Oil.