Water Use

WISE COUNTY -- Here, in a rural area dotted with Barnett Shale natural gas operations, a little company with deep Canadian roots is taking murky, salty water from hydraulic fracturing of gas wells and recycling it into clear, pure distilled water used to "frack" more wells.

Fountain Quail Water Management has a portable facility with four of its $4 million NOMAD mobile evaporator units. They process wastewater for Devon Energy, the largest Barnett Shale gas producer and a champion of efforts to improve oil field water recycling.

Fountain Quail, based in Roanoke in southern Denton County, has recycled more than 500 million gallons of water for reuse in Barnett operations since 2004, said Brent Halldorson, chief operating officer for the company and its parent, Aqua-Pure Ventures, based in Calgary, Alberta. That's enough water to frack 120 gas wells, Halldorson said.

Fountain Quail's Barnett operations account for virtually all the modest revenues of currently unprofitable Aqua-Pure. But Fountain Quail's new operation in the Marcellus Shale gas drilling boom in Pennsylvania "is going to be the real game-changer for the company," offering much better profits, Halldorson forecasts.

Fountain Quail, which has 40 Texas employees, is also planning operations in the well-established Fayetteville Shale in Arkansas and the relatively new, red-hot Eagle Ford Shale in South Texas.

It's been a tough go financially for Fountain Quail in the Barnett. Gas producers find it cheaper to pump wastewater down disposal wells, often called saltwater injection wells, long used by oil and gas operators in Texas.

Fountain Quail has also been thwarted by weak natural gas prices, which helped slash Barnett drilling activity more than 50 percent since peaking in 2008.

Marcellus opportunity

In Pennsylvania's Marcellus region, however, there are "very limited" options for disposal of well wastewater, because its geology is ill-suited for large-scale underground disposal, Halldorson said. Disposal often requires a long drive to Ohio, he said.

"It's cheaper to recycle it," Halldorson said. "That's why it's such an opportunity for us -- we can make a much better margin and still be the low-cost solution for gas producers.

"We're poised right now to really start generating some positive revenues in the Marcellus."

Aqua-Pure, the parent company, reported a net loss of $4.3 million on revenue of $2.8 million in the first half of 2010, compared with a net loss of $1.6 million on revenue of $8.2 million in the first half of 2009.

Fountain Quail has transported three of its nine mobile water-handling units to Pennsylvania, where it has teamed up with Eureka Resources, which has a facility in Williamsport, Pa., to recycle Marcellus wastewater. Customers there include Range Resources, Chesapeake Energy, Southwestern Energy and XTO Energy (now an Exxon Mobil subsidiary), Halldorson said.

Other prospects

Fountain Quail has two refurbished treatment units that could be dispatched to the Fayetteville or Eagle Ford regions and two new units being built, Halldorson said. The units are on 40-foot-long skids, enabling quick transportation via flatbed trailer to wherever needed.

Fountain Quail has already bought land in Arkansas for a water-recycling operation "right smack in the middle" of the Fayetteville Shale, Halldorson said. "I think it's safe to say we'd like to have equipment operating in the Eagle Ford by the end of the year," he said.

Halldorson said the Eagle Ford could especially lend itself to wastewater recycling because of the arid climate. Hydraulic fracturing, indispensable to shale-gas production, entails pumping huge volumes of water (usually several million gallons per well) and sand under high pressure to fracture the rock and release oil and gas.

Fountain Quail was spawned by Delzon Elenburg, a Haslet resident and oil industry veteran looking for a way to recycle oil field wastewater. He found Aqua-Pure, which had expertise in water recycling in heavy oil operations in Alberta. Elenburg and his wife, Jean, formed Fountain Quail, a name she liked "because it had a green feel to it."

Aqua-Pure eventually acquired Fountain Quail, now a wholly owned subsidiary of Aqua-Pure, whose CEO is Jake Halldorson, Brent's father. Elenburg remains president of Fountain Quail, but the company's water recycling technology "is all the product of Aqua-Pure and the Halldorsons themselves," he said.

How it works

When a Devon Energy gas well in the general vicinity of Fountain Quail's operation is fracked, 10 to 15 percent of the fracking water quickly comes back up the wellbore. This salty "flowback water" can contain dirt, clay, metals, traces of oil and chemicals that were added to the water.

This concoction is taken to Fountain Quail's site on property owned by Devon, then put into a lined, 17,000-barrel capacity "feedwater pit" surrounded by a protective berm. From there it goes through a clarifier that removes solids, leaving essentially salt water, Halldorson said.

The salty water flows to storage tanks and then goes into the NOMAD mobile evaporator units, which boil the water to make steam, which is heated 20 degrees higher by using a steam compressor powered by natural gas that comes from a nearby gas well.

The steam helps power the operation and makes it extremely energy-efficient, Halldorson said.

There are two major end products from the evaporator units:

Pure, distilled fresh water, piped to a lined pit that can hold 400,000 barrels, or nearly 17 million gallons.

A concentrated, salty solution that separately flows into two large brine tanks.

Halldorson calls the distilled water "more pure than the bottled water that you buy in a grocery store." It's pumped through 10-inch aluminum pipelines that snake along the ground as much as several miles for the next well.

The brine can be used as a heavy "kill fluid" to contain gas pressure when work needs to be done inside a wellbore or at the surface. What's not used is transported to the nearest saltwater disposal well 10 miles away, Halldorson said.

For every 100 barrels of wastewater recycled, 70 to 85 barrels become fresh water, Halldorson said. The Wise County site can treat 9,200 barrels (386,400 gallons) of water per day, he said.

Fountain Quail primarily recycles flowback water, but also some much-saltier "produced water" belched from Devon wells as they produce natural gas. A well typically generates 50 to 200 barrels of produced water per day, said Jay Ewing, Devon well completion/construction manager for the Barnett Shale.

Devon's recycling

Halldorson and Ewing said they don't know of any Barnett Shale producer other than Devon that recycles large volumes of wastewater, because disposal wells are a cheaper option.

"The base economics, the cost of recycling, is higher than if we took the water straight to disposal," Ewing said. "It's costing us probably in the range of 50 percent more."

On the plus side, he said, "we are generating some [recycled] fresh water that ... obviously has some value to it."

Devon wants to advance water recycling methods.

"We're helping to prove some technology that could be used in other places," Ewing said. "I definitely believe that water recycling is going to increase throughout the industry."

Fountain Quail previously announced plans to construct a freshwater pipeline that would deliver treated municipal sewage from Weatherford to gas producers needing water for frack jobs. That would reduce the need for using drinking or surface-water supplies for fracking. With drilling activity down, Fountain Quail has put the project on hold, but remains interested.

New competition

Corporate giant General Electric could soon provide competition for Fountain Quail in the Marcellus, where GE plans to have a mobile, truck-sized recycling unit available next year. Halldorson said he believes that Fountain Quail's units are superior.

"Our financial picture over the last decade has been pretty bleak," Halldorson said of Fountain Quail. But with the experience gained in the Barnett Shale, "we believe we are now by far the most efficient company" in recycling wastewater in shale-gas plays.

"We're very well poised to lead this market over the next several years," he said.

Jack Z. Smith, 817-390-7724

Read more: http://www.star-telegram.com/2010/10/22/2570000/wastewater-from-natural-gas-drilling.html#ixzz13NdSH3h0

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