Frac Water Management Industry Still Worth $1.9 Billion

As global oil prices have dropped, fracking activity has declined. But treating fracking wastewater remains a major opportunity for the water industry, according to a recent report by Lux Research.

“Despite a precipitous decline in hydraulic fracturing activity following the dramatic decline in global oil prices, the market for frac water management is still estimated to be worth $1.9 billion, not including water transportation and disposal,” the Oil & Gas Financial Journal reported, citing Lux’s research.

Between October and February, industry activity declined from about 2,300 “fracs” to 1,350. Nevertheless, Lux researchers argued that this market is still ripe with opportunity for water servicers, according to the research report:

The market for water management – from sourcing to disposal – remains strong for those who know how to play the opportunity. As oil and gas companies look for ways to cut back on capital spending, operators turn to new technologies in water treatment to tighten up their water management strategies and lower costs associated with water treatment, transportation, and disposal. Additionally, the space is seeing new regulatory momentum that could usher in stricter oversight on water transportation and disposal, as well as rules that aim to facilitate more extensive water recycling.

Reese Tisdale, president of Bluefield Research, explained key marketplace conditions that define the water industry’s relationship to fracking.

“Fracking has been the wild west for the U.S. water industry,” he said after his firm released a report related to these questions last year. “There are three reasons for this– first, there has been an explosive build-out of fracking well installations, now surpassing 126,000. Second, there has been a lack of clear regulation on water management in key markets. And third, there is not a one-size-fits-all treatment solution for fracking, meaning solutions providers have had to ascend a steep learning curve to treat the variable wastewaters that a single well is capable of producing.”

Federal regulations in this space remain in flux. For instance, the EPA’s plan to ban the processing of fracking waste at municipal treatment plants is drawing heated criticism from the energy industry.

Fuel companies are calling it “a short-sighted measure that ignores its long-term needs and violates the Clean Water Act,” according to NPR. “The Independent Petroleum Association of America argued that the EPA had overstepped its bounds by proposing an outright ban on the practice rather than requiring that municipal treatment plants use technology to remove contaminants from fracking wastewater.”

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