Exhibit: U.S. Water Management &
Services Spending by Activity, 2017-2026
Oil and Gas Online
June 7, 2017
A new wave of drilling activity in the hydraulic
fracturing sector has kick-started demand for water management solutions in a
sector that was lagging less than a year ago. With a rebound in drilling
activity underway, energy company spend on U.S. water management is forecasted
to rise 47% by the end of 2017, according to Bluefield Research's new Market
Insight, Water for U.S. Hydraulic Fracturing Market: Competitive Strategies,
Solutions, and Outlook, 2017-2026.
"Oil prices are up 62% from last year, and the
impact on water demand is following in step. This turnaround, from the
industry's collapse, has thrust upstream oil & gas into a new phase, one in
which water services are even more critical at US$50 per barrel of oil,"
says Bluefield President Reese Tisdale.
Over the last six months, the stabilization of oil
prices and new drilling techniques has created a surge in drilling activity,
reversing the downturn in water management spending for hydraulic fracturing
from previous years. According to Bluefield's analysis, energy companies will
spend more than US$136B from 2017 to 2026 on water management- including water
supply, transport, storage, treatment and disposal.
Increased innovation in the hydraulic fracturing
sector, including techniques to drill faster and generate more production at
each well, are leading to shifts in water strategies. Demand for water
solutions is rising exponentially, because of increased water volume per frack
and an almost 30% reduction in time to complete a well. In some basins, well
completions require as much as 12 million gallons of water per frack- triple
the water volumes needed five years ago.
From 2017 to 2026, more than 20 billion barrels of
water will be required to serve the U.S hydraulic fracturing market at today's
rig count. Cost of water transport, rather than availability, has become the
primary concern for most energy companies. ???Transportation will represent the
lion's share of spending, totaling US$75.8B from 2017 through 2026. "There
are a number of ways companies are addressing the cost of transport, including
water pipelines new business models, such as alternative water supply
contracts, and mobile treatment," says Tisdale.
These market shifts are also influencing the
competitive landscape- both in energy and water. The debt-laden energy sector
has experienced over 110 bankruptcies in recent years, but those remaining will
benefit from a more experienced sector. A heightened focus on water has also
led to an emerging group of midstream water service providers. Several firms,
including Antero Midstream, Noble Midstream, Rice Midstream, NGL Energy, are
poised to benefit from their production companies' energy positions. At the
same time, a number of private equity backed firms are positioning to address
the sector's water challenges through pipelines, treatment, and disposal…
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