Key Criteria
When planning for a produced water recovery project, it is important to take into consideration the key criteria that are instrumental to a feasible and successful beneficial use of produced waters. The key criteria or attributes are those factors that are important to the buyer, the seller, or to both of them; they are the factors that either make a potential deal attractive or conversely, are deal breakers. In the framework, sellers are those who generate produced waters (e.g., the owner/operators of coal bed methane (CBM) or other energy-producing wells). Buyers are those entities or individuals who might make a beneficial use of produced waters (or any new water supply).
Key criteria include water quality, economics (price relative to cost and value), and other factors that are important to the potential buyers and sellers. For each criterion, a set of categories was developed that was defined by key parametric values that reflect the considerations that are important for either the seller or buyer. For example, for water quality criteria, categories are defined by total dissolved solids (TDS) concentrations and other relevant water quality parameters and associated values, as described further, below:
- Water quality, in terms of key characteristics of source waters and definitions of potential uses (e.g., potable, irrigation, in-stream flows). If the quality of produced waters at the source does not meet the water quality needs for a given potential use, the technological feasibility and cost of water treatment (i.e., through Water Quality Module and Treatment Selection Module) can be assessed to determine whether it is possible to match supplier and potential buyer through water treatment.
- Water quantity, or "scale", in terms of the volume of water produced over a relevant time interval (e.g., daily, seasonally, annually). Relevant issues including matching of expected buyer’s need/demand and producer’s supply, and whether buyer’s needs/demand are enough to justify the investment in infrastructure by potential sellers.
- Supply timing and reliability, in terms of how well the quantity of produced waters that is likely to be supplied does (or does not) match the needs of the potential user, in terms of consistency throughout the year and meeting seasonal demands. This is likely to be influenced by factors such as energy prices, which influences suppliers’ decisions about when wells and well fields are operated.
- Duration of supply, in terms of how many years the produced water supply is likely to last (as determined by the expected duration of economically profitable energy development from a well). Is the water supply likely to exist for a long enough time to meet the needs (or creates a willingness) of potential buyers to tap into a water resource such as by investing in infrastructure and/or a long-term purchase agreement.
- Location/Delivery, in terms of the physical proximity of buyers and sellers, and the types of delivery mechanisms (e.g., in-stream transport, dedicated new pipe and pump infrastructure) that impact the cost and feasibility of transporting waters from sellers to buyers.
- Economics, in terms of whether the value to potential buyers exceeds the cost to sellers of delivering suitable qualities and quantities of produced waters to them, and whether the cost savings or revenues generated for sellers are sufficient to warrant their investment in delivering suitable produced waters to buyers (compared to their alternative options for managing the produced waters they generate).
- Institutional Factors and Associated Uncertainty, in terms of factors that influence legal, regulatory, public perception, and business operating conditions and decisions for the suppliers or potential buyers. For sellers, key institutional factors and uncertainties include water quality liability, beneficial use permitting, water rights, fluctuations in energy markets and prices, and other potential changes in regulatory or other institutional factors that impact their ability to operate or complete transactions. Similar uncertainties also impact potential buyers’ decisions about developing contracts to acquire produced waters for their intended beneficial uses.
In addition to the above key criteria, the following factors were identified that may dictate whether a seller/buyer match can be made within the context of one or more of the above criteria. These include:
- Energy prices
- Risk analysis about the liability of water uses and supplies
- Cost-effectiveness
- Different values by use
- Regulatory context
- Willingness to transact
- Infrastructure on water conveyance
- Water scarcity context, and industrial and population growth
- Environmental consequences
- End user and impacts upstream
- Incentives of buyers/sellers
- Cultural consequences – subsistence resources
- Carbon footprint/greenhouse gas emissions
- Project phasing potential
- Scalability
- Water/energy/agriculture interrelationships
- Price trade (commodities)
- Competing suppliers of produced water