Despite current rock-bottom North American natural gas prices, frack water treatment companies continue to pile on. While the short-term lull in demand should shake out marginal players, we expect renewed demand in the coming years, barring the emergence of disruptive technology. (See our report “[Risk and Reward in the Frack Water Market: https://portal.luxresearchinc.com/research/report/10190]” Client registration required.) Several U.S. gas companies, including Sempra Energy and Dominion Resources, have sought permits to export natural gas to gain access to higher gas prices in Europe and Asia.
The less-than-ideal geology in the Marcellus Shale region, combined with thousands of old shallow oil and gas wells, practically eliminates deep well injection as a viable option for disposal. Approximately 20% of this wastewater is currently desalted, and with a range of treatment and reuse strategies among gas companies it is unclear whether that percentage is likely to increase. Demand for fracking wastewater treatment surged in 2010 when Pennsylvania tightened wastewater discharge regulations for the natural gas industry. Competitors Eureka Resources and Altela (Client registration required.) made critical partnerships in parallel, leaving them well positioned to tap the fraction of water treatment applications where salt must first be removed before the water is blended for reuse or disposal.
Eureka partnered with Aqua-Pure (Client registration required.) to expand its existing Williamsport facility. In 2011, Altela partnered with Casella Waste Systems to use landfill-produced methane to power thermal distillation units.
In May, Eureka announced plans to construct a new facility in Standing Stone Township, Bradford County, PA, with expected completion in the third quarter of 2013. This facility includes a concentrated brine crystallizer that will generate solid-phase salt cakes and distilled water. The new plant will reduce the need for brine disposal and its associated transportation costs and will recover valuable water for reuse in the industry. There is also potential for the creation of salable salts for purposes such as road deicing. Look for dropping treatment prices and narrow margins as competition heats up for applications of this traditional technology to flowback water.