Cost Analysis of Wastewater Production from Conventional and Unconventional Oil and Gas Wells

Abstract

Production of high volumes of flowback and produced water (FPW) from hydraulic fracturing (HF) is among the environmental concerns associated with hydrocarbon recovery from unconventional low-permeability formations. FPW management costs are a key factor for oil and gas companies in deciding the fate of FPW (treatment, disposal, recycling, and reuse). In this study, a comprehensive library of more than 20,000 oil and gas wells in the Montney Formation, Canada, is created to compare the FPW management costs from conventional and hydraulically fractured wells. The results indicate that for oil wells, both conventional and HF wells have similar volumetric oil–water ratios during the first two years of production. Since HF wells in the study region produce higher volumes of oil, on average, than conventional wells, the gross revenue from a typical HF oil well is higher than a typical conventional oil well. However, over the course of two years of production, conventional gas wells have higher volumetric gas–water ratios than HF gas wells. Estimation of the gross revenue for gas wells is sensitive to the average natural gas price and FPW management costs as HF wells typically generate more natural gas and FPW than conventional wells. Due to the fluctuating nature of oil and gas prices, we have created master curves for revenue (i.e., produced hydrocarbon value) and FPW management costs. The master curves cover oil and gas price ranges of $10–100/bbl and $0.5–5/MMBtu, respectively. Furthermore, since the FPW management costs may vary depending on the implemented technology or local labor costs, the master curves encompass a FPW management cost range of $5–100/m3. The provided master curves introduce a basis for the rapid analysis of FPW management costs of oil and gas wells, and can be incorporated with other well operational costs (such as drilling and completions, water withdraw permit, and well maintenance) for detailed evaluation of the profitability of hydrocarbon recovery processes.

Keywords: Wastewater management cost, Hydraulic fracturing, Conventional wells

JEL Classification: M11, O13, N52