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Shale gas development has transformed the US energy landscape and global development of shale gas resources has the potential to expand significantly outside the United States.
However, there continue to be environmental concerns, particularly with respect to water use. There are many lessons that can be taken from the United States’ experience. Accenture’s upcoming study “Water and Shale Gas Development: Leveraging the US experience in new shale developments” focuses on three key aspects of water and shale gas development.
These are water regulation, water management and water movements. The report highlights areas that operators of new shale developments should consider. It also includes an analysis of considerations for Argentina, China, Poland and South Africa. The report concludes with lessons learned for new shale developments and implications for operators.
Shale gas reserves outside the United States are in the very early stages of development, but there are many lessons learned from the US experience that can be leveraged. These include six key lessons learned:
Lesson 1: Data collection and management is critical and needs to be planned early to satisfy regulators and understand environmental impacts.
Lesson 2: There needs to be a balance between standard national legislation and regulation optimized for local shale characteristics (such as geology, depth and water scarcity).
Lesson 3: In this constantly evolving landscape, water management options can change. Proactive engagement with operators in developing regulation will help the implementation of effective solutions and reduce compliance costs.
Lesson 4: Geographies will have different issues and solutions, depending on the geology of the shale and the particular regional characteristics – regional solutions should be sought to share knowledge among operators.
Lesson 5: Investment in creative water management options, particularly water treatment solutions, is worthwhile. This investment will provide a competitive advantage in the long term, in a stricter regulatory climate or in the case of water shortages – but water treatment providers need to increase efficiencies.
Lesson 6: The logistics operating model will impact congestion, efficiency and reporting of water movements. New markets have the opportunity to design for the basin.
Implications for shale gas operators center on five main areas to succeed in the current operating landscape:
The increased data requirement on material flows, particularly water, throughout the shale gas life cycle, makes it vital for operators to upscale their data management capabilities.
Wastewater disposal methods vary and each has its advantages and disadvantages. Ultimately, operators need to seek continuous improvement opportunities to recycle higher water volumes, at lower costs, while increasing efficiencies.
With pressures on global freshwater sources, and increased public scrutiny and reporting of shale gas water use, the focus on reducing the water intensity of production processes will grow. Ultimately, operators need to seek ways to reduce both water and emission intensity.
Given the intensity and scale of water movement requirements for shale gas, shale operators should consider making logistics a key part of their development strategy and adopting leading logistics practices and operating models, as well as actively pursuing cross-basin collaboration opportunities in new locations.
Collaboration with regulators and other operators to reduce the intensity of the basin (for example, shared logistics, shared excess capacity, shared infrastructure) and to enable water treatment (shared regional facility) is a key option to overcome the challenges of increased regulation.
December 10, 2012
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