SO YOU OWN SHARES IN AN OIL COMPANY AND THEY ARE LOSING MONEY.
Once you understand some of the reasons for high costs of some of their operations you may rethink where you put your money when it comes to oil investments. The companies that are making money whether the oil companies do or not are the service companies that take care of the problems that the oil companies are creating and this article will show you some of those.
This article takes you inside one of the most misunderstood areas of the oil patch to this date. That area is the natural gas wells that are being drilled all over America into what the oil companies are calling Shale Plays. A shale is a zone of the mantel of the earth that was laid down when the US was mostly covered by the ocean back many million years ago. Shale is made up of tiny organisms and plant life that died over a long period of time in the earth’s past. These sunk to the bottom of the ocean and over millions of years sediment came in over them and covered them with a layer of dirt. Over more time as the earths crust shifted and realigned itself this layer became trapped under thousands of feet of earth. This created heat and pressure and turned this layer into a stone known today as shale. It is gray to black in color and contains millions of tiny bubbles of natural gas. This is a very tightly compacted rock and is rather hard as rock go.
In the 1980’s a man in Texas found that this layer contained enough natural gas to make it possible to extract gas from it when it was fractured. The problem was that drilling vertically only produced a small area of shale that would produce gas. His research took him to think that if he could first drill down to the shale and then drill horizontally into it that this method would give him more surface area to fracture and obtain more gas. This was the start of the technology known today as “directional drilling” and it has led to the tremendous natural gas boom that was brought on by the first large field which was named after the man that discovered it and today it is called the Barnett Shale which lays from 5, 000′ to more than 9,000′ down in the earth. This field lies in a half moon pattern starting at the border of Texas and Oklahoma at the city of Gainesville. It is known that this zone goes west at least 60 miles and then goes south around Ft. Worth to the south and west to as far as Cleburne. TX and to the west from here about 50 miles to this date. The real boundary has not been determined as of yet, because each new well that is drilled and hits gas extends this edge.
This original oil company was sold to a large company known as Devon Energy who started using this technology and producing large amounts of natural gas from this zone back in the 1990’s. Their procedure for this type of drilling is rather complex, but I will try and simplify it for the general public. First the well is drilled vertically at a point some feet above the Shale Zone the directional drilling starts to angle the drill slightly off vertical and this deviation continues until the drill string is drilling horizontally into the Shale Zone. This horizontal well can be as long as 5,000. Once the drill rig is done with the drilling it pulls off of the well pad and goes to another well site. The well now has what is called a “Christmas Tree” on it and this is what blocks the well from anything coming up or going down the well.
This well is now ready to “Complete” which means one of the Service Companies must bring in their equipment and inject from 50,000 barrels up to 200,000 barrels of a specially designed fluid called “A Slick Frac Water” into the well at tremendous pressures. The purpose of this is to drive the solution down into the well and into the horizontal area where the pipe that has been left in place has small openings in it that allow the water to exit the pipe and contact the Shale Zone. This is what “Fractures” the Shale and allows the start of the natural gas to come up the well to the surface. However, this action also brings with it the Slick Frac Water that was used to complete the well in the first place. This water has picked up many of the earths elements while it was underground. This water has been tested and is known to have as many as 20,000 PPM to 220,000 PPM of Salt in it and some of this water even has radio active isotopes of Uranium plus as much as 8 times the amount of Arsenic that is allowed to be discharged onto the land or back into the streams of Texas.
Let me explain why this process is so costly to the oil companies that is using this process. First, they must obtain up to 2,000,000 gallons of water from some source whether it is ground water from creeks and rives or ponds. If those are not available one company has resorted to drilling water wells next to their natural gas wells and using that water for this process.This “Makeup Water” as it is called, must be very clean and free of contaminants such as Calcium and Sulfates or it cannot be used without first removing these elements so that they do not destroy the gels that are the long string polymers that give Slick Frac Water its name and its slickness. This water will cost between $0.15 a barrel up to $2.15 per barrel depending on how much contaminants have to be removed from the water or whether it is recycled water from another well, purchased from a city or from their own drilled water well.
However, this is not the end of the cost to this water, the plot gets deeper. Once this water starts coming back up out of the gas well it must me either allowed to flow into a pond that has been lined with a special lining or it is pumped directly into tank trucks and hauled to what is known as a “Down Hole Disposal Well”. Alright, lets look at the costs associated with getting rid of this contaminated water. First it has to be trucked, that is a cost per barrel again that has different costs associated with it but can be from $75.00 to $150.00 per truck load and this is depending on how far it has to be hauled and if there are fuel surcharges on top of the base cost. Second, once it arrives at the Down Hole Disposal Well they charge anywhere from $0.25 to $1.25 per barrel to pump this water down another well that goes sometimes as deep as 10,000 feet into the earth. The problems with this type of disposal method is that you loose the quantity of water that is pumped into the earth and you cannot use it again, so each new well that is drilled has to have more fresh water. This method has proven that it is not fail safe for in Wyoming there were wells like these that leaked this contaminated water up into the aquifer and contaminated an entire areas drinking water and the Disposal Wells were shut down by the EPA. This agency has adopted policy that will require the closure of all Down Hole Disposal wells by the year 2015. The bad thing about this bit of news is that most of the oil industry doesn’t know what to do with this water except what they are doing now and in a few years they will not have that method available.
This brings up the question of what technologies are available that can deal with this water and can any system be built that can take the contaminants out of this water and recycle it so that it can be used from one well to another. Over the past few years various methods have been tried to recycle this water. First there was Reverse Osmosis but this proved of no use for the oil in the water plugged the membranes and if these was no oil the flow through volume of this system and the cost per barrel to handle it was not economically feasible. Filters are impractical and costly. Ion exchange was tried and this was not usable due to a number of design problems and cost. Distillation was the first successful method that was used by Devon Energy in Texas on this problem water. Over the years they have worked with such companies as GE and Fountain Quail to refine their distillation system so that a larger volume of water can be processed per minute but about the best flow through that they have achieved to date is around 60 to 70 GPM. One thing to understand is that every month around the United States there is approximately 10 million barrels of this kind of water that must be dealt with and with an energy hungry system such as Distillation it very quickly becomes uneconomical to try and recycle this mush water. This type of equipment can cost from $2,000,000 to $4,000,000 per unit to get built and installed and considering the small flow through this is a very expensive way to recycle this water.
In 2003 a new player was called in by the Director of Region 6 for the EPA. This company had been successful in showing the EPA what technologies could take the contaminants out of Super Fund Sites such as Tar Creek in Oklahoma where they were able to remove almost 100% of Iron, lead and zinc from the waters of Tar Creek. Also in California they had devised a plan for the Governor of California that would lead to the eventual remediation of the Salton Sea and this plan would create a large shipping canal from the Sea of Cortez in Mexico to the California border then continue on east and north around the Salton Sea at sea level, to Indio then turn west and terminate at Palm Springs where there is an Indian Reservation Gaming Casino. The third Super Fund Site was in Northern California at the Iron Mountain Mine that was polluting the Sacramento River and had been for years, here they used their Electrocoagulation system to remove heavy metals from the water and again EPA had been shown a way to remedy a bad water problem. Ironically this was a small non-profit research company that was used to tackling these kind of bad water problems. They first studied and tested the water to see what variances of contamination levels there existed in the wells. Before they were through with this first step they would build a footprint of the waters from over 70 wells in the area. Once these parameters were known they sit about testing different technologies from such places as Europe but nothing in the known world could touch this water from a stand point of flow through volume and economy.
The team that started working on this problem consisted of a Geologist, 2 chemists, an inventor of Electrocoagulation, 2 physicist and an engineer. One of the members had family in Germany that had found an old technology that Hitler wanted to use to remove Uranium from its host rock. If this could remove metals from rock just maybe it could remove metals from this water, so tests were started and at the same time the team, over the next two and a half years would scour the world for any technology that they could use that would benefit their work on this problem. Luck was with them in Switzerland for they encountered an inventor that had made a special valve that worked with a vacuum system and worked under water so that the valve would close when under water and open when within one half inch of the surface. Later while looking for ways to generate their own electricity to run a system they encountered a university that had spent ten years and millions of research money and had created a new permanent magnet that was ten times more powerful than anything in existence and weighed only half of what conventional magnets weigh.
In Europe they found a newly designed distilling system that would allow them to distill water from the gases that make up water, which is Oxygen and Hydrogen. With these components in hand they put together what was called the Plasma Incubator Reactor System and the Bubble Gen Electric Co-generation technology. What this technology allowed them to do was to run enough electricity through two specially designed electrodes housed within a tank in water and protected by insulation so that the water would not short out the system. When the switch was thrown there was a loud report from within the tank they had built so that it sounded like a 357 Magnum had gone off. The first tank was 4′ x 4′ x 8′ long. This is where the plasma is generated that destroys the water within the tank at a rate of 100 GPM. This created Hydrogen and Oxygen gas in what they referred to as the Enclave,(TANK) The temperature of the Plasma Arc was around 7,000F. After experimenting they found that they could raise the temperature of the system if they re-injected some of the Hydrogen back into the Plasma Arc so that a temperature of around 10,000F could be obtained. They had designed an electric generating system that utilized the stronger magnets by making solid Stators in a rectangle and making Rotors that were flat and in a rectangle as well. The Stators were mounted under a flat bed trailer that had a large water tank mounted on it with an open top. Inside of the tank they had hundreds of small beer can sized corks that had hoses attached to them and there was a stiff metal rod that ran through the bottom of the trailer and was attached to a Rotor made out of the new Permanent Magnets. The tubes to the corks delivered pressurized Hydrogen gas so that the corks floated and then sunk as the Hydrogen filled the cork and then the valve on top allowed the vacuum system to extract the Hydrogen from the cork and moved it to a waiting tanker truck that was compressing the Hydrogen as it was pumped to it. The technology behind the Bubble Gen was that the Rotor moves up and down 20 times per minute. Each time the Rotor passed the Stator a charge of electricity was created and this went to a collection panel on the side of the trailer, which sent the electricity to a transformer that in turn sent enough electric power to the Plasma system to destroy the water.
With this new Plasma Incubator Reactor System all types of oil field water can be both desalinated and purified allowing the water to be used time and time again without the need for additional water to be acquired, thereby saving the oil companies at least 50% of the cost of water used in the oil patch and in the completion of the natural gas wells. Cal-Neva Water Quality Research Institute located in northern California was the inventor of this new technology and they hope that it will change the industries of desalination, Hydrogen generation and the way electricity is made in the future.