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Lux: frack water market to grow nine-fold to $9B in 2020

6 May 2012

The market for water treatment for hydraulic fracturing (“fracking”) to produce previously inaccessible shale gas will grow nine-fold to $9 billion in 2020, according to a new report from Lux Research.

This expansion will spur technology innovation and novel thinking about water disposal and reuse, but the field is rapidly growing overcrowded, creating significant risk for new entrants, Lux Research said.

Fracking requires between 4,000 m3 and more than 22,000 m3 (25,000 bbl to 140,000 bbl) of water per well and produces toxin-laced brine that can be more than six times as salty as the sea. Its growth has energized the water industry, inspiring a range of new water treatment startups vying to treat the highly challenging flowback water.

Fracking represents a significant water treatment challenge—hydrocarbons, heavy metals, scalants, microbes, and salts in produced and flowback water from shale gas wells represent a water treatment challenge on par with the most difficult industrial wastewaters. While the opportunity is large, only a few companies are really positioned to profit. Meanwhile, nearly every start-up we talk to is going after frack water, regardless of their technology, and many of them are going to come to grief.

—Brent Giles, Lux Research Analyst and lead author of “Risk and Reward in the Frack Water Market

Lux Research positioned key companies on the Lux Innovation Grid based on their Technical Value and Business Execution—companies that are strong on both axes reach the “Dominant” quadrant—and also assessed each company’s maturity, and provided an overall Lux Take. Among its findings:

  • WaterTectonics has technology and alliances. WaterTectonics’ high-energy electro-coagulation technology addresses heavy metals, biological matter, and hydrocarbons, but leaves salt in place, meaning its use is restricted to areas where salt levels are moderate. Still, with its long-term alliance with Halliburton, WaterTectonics reaches the “Dominant” quadrant.

  • EcoSphere, AquaMost lead in oxidation technologies. EcoSphere combines ozone, cavitation, and electrochemistry, and the $9 million company leads in the “Dominant” quadrant. AquaMost, an early-stage startup, uses catalyzed UV to achieve many of the same results, but also removes metals. It ranks as “High potential” with strong technical value.

  • GasFrac is poised to disrupt the industry. GasFrac, with technology licensed from Chevron, uses high-pressure propane, rather than high-pressure water, to fracture gas wells. Its technology is being tested by Shell, Blackbrush, Husky, and Chevron, among others. With 300 employees, revenues of $300 million, and $50 million on hand, the profitable company outstrips every water start-up in the lineup, positioned in the “Dominant” quadrant and earning a “Strong Positive” Lux Take.

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SO, Um there are;

1. vast opportunuties for treatment of fracking water
and
2. a crowded field of enterprauneers

And Meanwhile, nearly every start-up we talk to is going after frack water, regardless of their technology, and many of them are going to come to grief.

So?

Same as for those who want to make PV panels, EVs, EV batteries, windmills, cell phones, any new autos, new ICEs.

Don't let the gov start picking "winners" with my money (stick to water polution standards) and we'll be OK.

The Gasfrac company is seriously interesting as they eliminate the use of fracking water. Mobile rigs that almost eliminate downtime when moving from one finished well to drilling a new well nearby is also going to cut costs importantly in this industry of shale gas and tight oil from shale.

The trend that many people still haven’t seen is that most new US drilling activity is concentrated on fracking sweet crude oil and natural gas liquids from shale rock that sells for 20 USD per million BTU rather than drilling for natural gas that only sells for 2.2 USD per million BTU. Typically shale rock only contains natural gas but some shale formations like the Eagle ford and the Bakken shale is rich in sweet crude oil and natural gas liquids. This is where the business is going right now. The US is about to increase its liquids oil production immensely in the coming years because of that. Don’t be surprised if the US become a net oil exporter by 2020.

http://www.gasfrac.com/

@Henrik: Considering the wide disparity in BTU costs between nat. gas and liquid hydrocarbons, I expect a boom in GTL installations in the coming years.

I don't.  I expect LNG trucks to take off, because the incremental investment is so much smaller and the efficiency is far higher.  GTL diesel is going to sell at the same price as petroleum diesel, which creates a very strong financial incentive to switch fuels.  Many parts of the country may also restrict or forbid diesel vehicles for air-quality reasons.

Nick I doubt that dedicated large scale GTL facilities will be build in the US because it is faster and less capital intensive to build gas pipelines and liquefaction facilities in the US and then export LNG to Asia at currently 17 USD per million BTU. There are eight such projects underway in the US right now and more may soon be disclosed, see link below.

There has historically been some parity between the BTU price of LNG and oil. The only reason that there currently is a very large difference is the lack of infrastructure to distribute US and Canadian gas to the global markets. Once that lack of infrastructure is solved (before 2020) the price parity will return. At that point GTL facilities will no longer be profitable because they are more capital intensive and more wasteful than the LNG producing facilities. I would estimate that a 3 digit billion USD amount will be invested in gas pipelines and liquefaction export facilities in the US and Canada before 2020. Exporting LNG could do much to pay back the debt that is owed to Asia through decades of trade imbalances.

Projected US LNG export terminals
http://www.eia.gov/todayinenergy/detail.cfm?id=5970

I would also like to stress a third technology (besides mobile rigs and GasFrac) that is making shale fracking far more efficient and that technology is microseismic monitoring that allows oil and gas frackers to map with high accuracy the extension and efficiency of the fracks they are creating in the solid shale rock thousands of feet below. There is a video of how that functions given at the website below. It also shows that fracking occur far below the layers where the groundwater is so fracking in itself is not at risk of polluting the groundwater. The layers are separated by thousands of feet of other water and gas proof solids. The only risk is spilling back flowed and contaminated fracking water stored at the surface onto the ground. That happens sometimes and it should be fined severely to prevent careless storage and handling.

http://www.microseismic.com/

Moreover a fourth technology that increases the efficiency of fracking is to add a gelling agent to the fracking liquid whether water or propane (I believe it functions to prevent added sand grains in the fracking fluid from being flushed away in the fracks when the fracking fluid is backflowed). That agent is increasingly guar gum that is also used as a gelling agent ice cream and other food products. It is non-toxic and it is in such high demand that the price of guar beans from which it is made is skyrocketing to the point where US farmers are beginning to grow it. It used to be the domain of Indian farmers.

For the guar gum story see
http://www.greentechmedia.com/articles/read/The-Natural-Gas-Shale-Gale/

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