6 minute read

On the Importance of Water

By Andy Knapp, Energy Workforce & Technology Council

If the current energy transition isn’t complicated enough, energy producers are also contending the energy paradox – consumers demanding affordable and reliable energy with little or no environmental impact.

The corresponding “energy mix” is about offering options for communities, be it a nation or village, to make choices about which combination of energy sources works best for its population. To be a truly effective energy mix, the inventory of offerings must be inclusive. With competing community priorities, the goals and path to achieving the agreed outcomes will likely not be easy.

As Council CEO Leslie Beyer has put it, “Oil and gas will remain part of the energy mix for years to come.”

The energy sector recognizes and respects its place as one of the most regulated industries on the planet. However, the operating aperture continues to tighten. Legislative and regulatory actions continue to challenge access to resources. Increased emissions controls demand continuously improving technology. Proper disposal and remediation require specialized engineering and action. Even with these headwinds, oil and gas are first-pick options in the energy mix inventory and will remain so for the foreseeable future.

The energy dilemma gets even thornier when we add the availability and importance of what was once seen as ubiquitous and renewable: water.

Water access, utilization and volumes have been flashpoints for wars, court battles and family feuds. Myriad industrial, commercial and residential applications employ water as a universal solvent in any of its phases: solid, liquid and gas. And as humans, we cannot discount water’s vaunted role as the essence of life.

The U.S. Environmental Protection Agency (EPA) reports that the average American family uses more than 300 gallons of water per day at home, at a cost of more than $1,000 per year. On the industrial side, EPA estimates the U.S. employs 18.2 billion gallons per day from direct water withdrawals, not including water from public supplies. Thermoelectric power water withdrawals account for an estimated 49% of the total.

Regardless of its many uses and sources, societies around the world have grown complacent to the difficulty of finding and processing water. Much like the energy challenge, water consumers demand it be cheap, clean and plentiful.

On the other end of the spectrum, some societies simply demand water, in whatever form they can get it. Growing scarcity has been attributed to increased demand for freshwater resources by expanding populations and the corresponding depletion of fresh water sources. Following eight years of drought in California, even Wall Street’s supply and demand ears perked up in 2020 with the CME Group’s foray into the water hedge business. And as we all know, with scarcity comes rising prices.

The energy sector has worked hard to “sell every molecule” in competitive markets. Accessibility to water is increasingly strained and we are moving toward a reality that there is no such thing as “wastewater.”

Water in any form has value. Businesses are constantly determining the difficulty of separating target water from the components mixed with it. Further, experts are endlessly calculating which processes are needed to impart the quality levels required for the water’s next intended use. Can the purification process be done with limited environmental impacts, or do we need high-energy brute force that potentially blow emissions targets? Can the produced water be processed in situ, or can it be safely transported offsite? Can this water enter a pipeline to send it for further processing, utilizing the remarkable safety record of the pipeline system?

In situ or offsite, ESG considerations come into play, like risk to the communities where we operate and compliance with applicable legislation and regulation. Does taking water from one location and reintroducing it into another create a shortage or other challenge at the original site? Every solution comes with intended and unintended outcomes.

How we associate with water today is different than how our predecessors viewed the resource. “Water is a precious commodity” has been used for generations and the quip is true … for the most part. Water is indeed precious and becoming more so. As global populations expand and the impacts of climate change are felt, concerns about water usage, access and quality are accelerating as fast as the debate over our energy future.

An introductory economics class would say that a commodity is an economic product that is useful or has value, and that the market views as fungible, with little or no regard for the producer of that product. By this definition, water seems like a commodity. However, do industry and society really agree with the macroeconomics 101 textbook?

It isn’t as simple as potable vs. non-potable anymore. With enough differentiators in the types of and uses for water, is it time to give water its due and change the way we talk about it? Ultimately, does water need to be decommoditized, differentiated based on its specific characteristics? It is clear — water needs a new marketing team.

In the energy sector, we have a particular respect for water. From well site production activities to hydroelectric power generation to equipment cooling, water is integral to the process of delivering what consumers need. Already environmentally conscious, energy producers recognized long ago the need to conserve water. They have pushed themselves further to improve the speed and efficacy of their environmental stewardship efforts, many specific to water.

While it is difficult to quantify a “typical” hydraulic fracturing job due to differences in rock formations, well type, operator and equipment, and number of stages, improved pressure pumping technology and practices have significantly reduced water requirements. In just a few short years, the adoption of “slickwater” hydraulic fracturing as an alternative to hybrid cross-linked gel hydraulic fracturing has enabled the widespread use of produced water rather than freshwater resources.

To better facilitate this transition, the market has seen the rapid emergence of a new midstream water segment that has contributed technology, capital and large-scale buildout of water pipeline infrastructure. As a result of this sizeable water management investment, produced water is being cost-effectively treated closer to the well site, reducing emissions and risk. Water treatment technologies and methods have been upgraded to allow for increased recycling and in most cases, a higher tolerance for different water types used in those applications.

It isn’t about simply reducing groundwater consumption; it’s about utilizing the incremental resource of produced water and swiftly transitioning industry to the widespread application and practice of treating, recycling, reusing and recovering that produced water resource across the supply and value chain.

The Council’s diverse membership includes companies dedicated to water treatment, management, conservation and utilization. The future of water is not solely the responsibility of these companies. It is up to every member of the Council and the industry to recognize the importance of water and assure its permanent availability.

The Council’s ESG, Environmental, Energy Transition & Technology, and Government Affairs committees have all addressed the issue of water at some point in their discussions. These committees can offer so much expertise in assuring that as a critical component of the world economy, the energy industry treats water with the respect it deserves.

Our members have already proven through their capital investments and technology innovations that they are committed to conserving water resources. Now, the Council has an opportunity to be the business leader in addressing the many “waters” we interact with every day.

Andy Knapp is the Senior Advisor - Sustainability, ESG and Energy Transition & Technology for the Energy Workforce & Technology Council. Andy develops and manages the Council’s positioning, strategy, and activities for ESG, Sustainability and Energy Transition & Technology.