For a time, water usage for hydraulic fracturing was treated more as an environmental nuisance than a economic challenge for oil and gas companies. Today, though, water use is becoming one of the most expensive aspects of the whole shale drilling process. Pioneer Natural Resources (NYSE:PXD) estimates that well costs in the water-starved Permian Basin region have increased by 11% over this quarter; all of which is from increased water costs. Yet despite the $5-per-barrel-of-oil-produced cost for sourcing and disposing of freshwater, only 10% of the water recovered from wells is being recycled today.
In regions like the Permian and Eagle Ford, this problem is only going to get worse, and it's getting the attention of major shale drillers such as Devon Energy (NYSE:DVN) and Encana (NYSE:ECA). Find out some of the techniques companies are using to reduce costs through better water usage and how it impacts the bottom line by tuning into the video below.