Can Recycling Help Oil Companies Save Money?

Technological advancements may soon make hydraulic fracturing — the process used to extract oil and gas from shale-rock formations using highly pressured water and chemicals — a cleaner and more profitable practice.

The Wall Street Journal reported on Sunday that energy companies like Halliburton (NYSE:HAL) and Schlumberger (NYSE:SLB) are pursuing technologies to reuse the so-called frack water that is left over from the extraction process. So far, the recycled water cannot be drunk or used for crop irrigation, but it can be reused to frack other wells. It is estimated that such a technology would save companies billions of dollars each year.

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Recycling wastewater is currently an expensive process, and many companies chose to inject it underground instead of cleaning it. However, according to the Journal, experts say that oil and gas producers will adopt the technology more quickly as fracking becomes more widespread. Schlumberger predicted at recent conference that a million new wells will be fracked worldwide by 2035 and Forbes said in a September article that fracking is expected rise by about 28% this year.

Due to fracking, the United States’ oil production has reached its highest level in more than 14 years. But the process requires a great deal of water and raises costs for energy companies. According to a 2011 report published by the Environmental Protection Agency, the industry uses between 70 billion and 140 billion gallons of water to frack 35,000 wells each year. The cost of securing that quantity of water was estimated by the oil driller Continental Resources (NYSE:CLR) to cost the company between 10 and 14 cents per gallon, and each fracturing attempt can cost up to $400,000.Continental plans to frack more than 200 wells next year.

Furthermore, oil companies must pay to dispose of the wastewater, however, that cost can vary state to state. It is the highest in the Northeast, where companies are charged $8 per 42-gallon barrel by contractors that haul the wastewater for disposal elsewhere, as Wood Mackenzie analyst Jeanie Oudin told the Journal.

Recycling wastewater is not the only solution proposed; companies are researching the use of propane gel and compressed air as alternatives.

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