le

Industrial Water Services

& Chemicals
mp
Sa

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 Executive summary

Executive summary
This report focuses on the trends in operating expenditure by industrial water users. The market is
. It is also highly dynamic, with change being driven by the ever more exacting specification of process water,
tougher environmental regulation, new challenges in the natural resources sector and a growing commitment to water
stewardship across the corporate sector. Such factors are professionalising the management of water in the industrial sector,

le
creating new opportunities for both established players and new market entrants. There are four broad areas of activity in water
management services:
• Chemicals and consumables: Specialist water treatment chemicals have been the key enabling technology for
industrial water usage for decades. Chemical service companies have the most regular and direct contact with
industrial water end-users, which makes them significant actors in the industrial water space. Other consumables
include ion exchange resins, activated carbon, filters and related media, as well as spare parts for operating
equipment.
• Outsourced operations: As water operations become more professionalised, outsourcing becomes a more attractive
proposition for industrial water users. A whole menu of services is available, from service contracts related to
equipment and consumables to operations and maintenance contracts, temporary mobile services and full third-
party ownership. This sector of the market is seeing , as businesses reassess their water

•
mp
management strategies.
Industrial water utilities: Industrial parks offering full utility services are becoming the preferred business model
for delivering water and wastewater services to industrial clusters in Europe, the Middle East and Asia. This trend
has been driven by both the restructuring of the chemical industry and the tendency towards planned industrial
development in Asia.
Water services for the oil & gas industry: The largest single sector of outsourced water operations is the management
of produced water and frac’ water in the North American oil and gas sector. The expansion of the unconventional
energy sector drove an unprecedented leap in demand, while the subsequent fall in energy prices has focused
attention on delivering greater efficiency.
Overall operating expenditure in the industrial sector is , reflecting the growth in the
economy as a whole. The opportunities are in the niches where the changing dynamics of water within the global economy are
creating new needs in terms of water expertise.

Chemicals, consumables and related services

The industrial water treatment chemicals market is expected to . Spending
on chemical solutions is set to experience a greater rate of growth than , at a
. This arises from the fact that industrial end-users are shifting away
from the use of environmentally hazardous commodities towards specialty versions that require lower dosage but give a superior
performance, with the ability to specifically target certain problematic contaminants. Higher volumes of specialty chemical types
and their associated services are especially required in order to treat wastewater for reuse – an activity which is increasing in
many industrial sectors in the light of increased freshwater scarcity. The main trends are as follows:
Sa
• The cooling water application is anticipated to remain , with total chemical spend
. Chemical use in this application will as
industrial end-users run their systems at higher cycles of concentration in order to optimise their water usage
and efficiency. The commercial & institutional sector is also set to experience in
the light of increasing global building stock floor space, and rising concern and mitigation of Legionella in HVAC
systems.
• The sectors will continue to be the biggest industrial users of water treatment
chemicals overall. also has a significant position in this market, with particular demand
for type chemicals to treat process water and process wastewater. Growth
in the chemicals for the will primarily be driven by the increase in industrial
activity in the Asia Pacific region.
• Service contracts relating to chemicals and other consumable products are becoming increasingly attractive to
industrial end-users. Plant operators are seeking full solution approaches whereby they can obtain the necessary
chemicals, services and replacement equipment for their water systems under one contract or from a single supplier,
reducing the level of complexity and risk often associated with the involvement of numerous third-party players.

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Industrial Water Services & Chemicals

The following figure shows the market for different types of water treatment chemicals by industry in 2015 and 2020.

Global spending on water treatment chemicals by industry, 2015 and 2020

2015 2020

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$ million
$ million

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Source: GWI
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Outsourcing and mobile water
There are three main sectors of this market: operations and maintenance contracts (either stand-alone or part of a design-
build-operate procurement), asset ownership (either build-own-operate or build-operate-transfer) and mobile water. The
growth potential of these business models is a function of the underlying growth of the industrial water market and increasing
penetration of the addressable market. The following figure illustrates the trend:

Addressable market penetration of outsourcing models

Sa

BOT/BOO 2025

Mobile water 2025

BOT/BOO 2015
Mobile water 2015
O&M 2025
O&M 2015
Time
Source: GWI

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 Industrial water services: an introduction // Spending on industrial water operations

1. Industrial water services: an introduction

1.1 Spending on industrial water operations
The annual cost of managing water and wastewater services in industry is estimated to be around .

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This figure includes the cost of the energy used in pumping water, the cost of treating process water and cleaning up wastewater
before it is returned to the environment, and all the support services relating to water. Despite this very large amount of
money spent on managing water in industry, it is largely an invisible market, primarily because water use is a relatively
small component of a huge range of industrial processes. Expenditure on water management is very rarely aggregated within
companies. In fact this report represents the first attempt to aggregate operating expenditure of water within industry on a global
scale in any detail. The following figure summarises our estimate of global spending on industrial water management, and the
potential market for outsourced services.

Figure 1.1 Global industrial water operations spending and outsourcing market, 2015

mp Industrial water
operations market
(2015)*

Industrial water
Utility water and wastewater services:
outsourcing market
(2015) Energy:

Chemicals:

Consumables/parts:

In-house service:
BOT/BOO:
Oil & gas water services:
Chemicals related:
Out-of-house services:
Equipment maintenance contracts:
Integrated water operations:
Sa
Media & consumables services:

Specialist services:

Operations contracts:

Mobile water service:

*Individual segments do not add up to total due to double counting of energy, chemicals and consumables in BOT, BOO and
operations contracts.
Source: GWI

This estimate does not include the energy expended in heating and cooling water. The large figure assumed for “integrated
water operations” essentially represents expenditure on activities which involve water but are difficult to separate
from other production processes (e.g. washing, cooling and energy transfer). In this sense the potentially addressable
market for outsourced water services and consumables (excluding energy) is (plus the energy
component of whatever services are outsourced). For services alone (i.e. excluding chemicals, consumables, and parts),
. The opportunity in the market that this
report investigates is the potential to grow the share of the actual market for outsourcing within the addressable market.

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 Industrial water services: an introduction // The menu of services

1.2 The menu of services

The industrial water services market exists in a continuum. At one end of the scale everything is managed in-house, with
supplies of chemicals and consumables bought in where necessary. At the other end of the scale, some industrial customers will
outsource every aspect of water operation to a third party on a build-operate-transfer (BOT) model.
Minimum outsourcing: Chemicals and other consumables are procured from third-party suppliers for delivery to the site.
The industrial end-user takes responsibility for servicing and maintaining all water-related equipment in-house. This ensures

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the lowest cost of direct procurement, and gives greater control, but does not necessarily lead to the long-term optimisation of
systems unless there is considerable in-house water expertise.
Service contracts: The end-user takes advantage of service contracts with suppliers, who attend onsite to advise on water
chemistry, service machinery and fit replacement parts. This increases the direct costs of procurement, but ought to reduce life-
cycle operational costs. It makes fewer demands on the expertise of the industrial client, but it does not necessarily lead to the
optimisation of all water-related systems as the various vendors have a greater interest in increasing their sales than improving
the efficiency of the overall water system for their clients.
Operating contracts: Where there is scope to separate out water and wastewater management operations meaningfully, some
industrial companies choose to appoint a third-party operator to take responsibility. This is typically as part of a design-
build-operate (DBO) procurement model, where the company (or consortium) which designs and builds the plant also takes
responsibility for operations. This involves a degree of loss of control, and some loss of margin, but this is compensated for by
mp
the ability to transfer risk to the contractor, and greater access to expertise in optimising water operations. The actual role of
the operator varies widely as the practical scope for third-party operations varies from facility to facility. See Chapter 3 for more
information.
Industrial utility services: In some parts of the world, notably Northern Europe, China, India and many other developing
economies, industrial parks provide specialist water and wastewater utility services to their tenants. Typically these services
will include providing high purity process water and treating wastewater in common effluent treatment plants. Sometimes
the industrial park owners will provide these services directly, and sometimes they will provide them through third-party BOT
contracts. Industrial water utilities tend to grow up around large chemical industry parks, where there are large volume users
of water with specific water and wastewater demands and some synergies with the provision of other services such as the fire
brigade, solid waste disposal and power generation. See Chapter 4 for further details.
Mobile water services: Industrial water and wastewater treatment systems will from time to time suffer outages. Mobile water
treatment services have grown to cover for those eventualities. Typically the service will involve a truck-mounted treatment
train which can be deployed within hours of being requested. The market for this kind of service expanded rapidly in the US
after the deregulation of the power sector, which had the effect of increasing the cost of unexpected outages, and increasing the
attractiveness of rapid emergency ion exchange systems for boiler feedwater and condensate polishing. Since then the market has
expanded geographically and in terms of the industries served and the technologies on offer. Furthermore, industrial customers
increasingly use mobile water treatment systems in non-emergency situations, with medium- and long-term contracts offered to
provide greater flexibility of operations without capital commitment. Typically mobile units are priced per day of operation and by
volume of treated mobile water. See Chapter 3 for more information.
Water services for unconventional oil and gas: This is a niche market which has grown up with the hydraulic fracturing industry.
It involves sourcing, storing, treating and disposing of frac’ water and its related flowback. Typically it involves trucking water to
and from the pad, supported at times by mobile treatment facilities, although there is some expectation that pipelines and fixed
Sa
treatment facilities will be used more in future. It is attractive for unconventional drillers to outsource this activity to third parties
because it reduces the capital costs tied up in developing a play, enabling greater flexibility to increase or decrease production
according to conditions in the oil and gas market without worrying about sunk costs. See Chapter 5 for more information.
BOT/BOO contracts: Build-operate-transfer and build-own-operate contracts involve the private developer financing the
infrastructure and operating it for a contract period, at the end of which the assets may or may not be transferred back to the
customer. The scope of the operations element varies greatly according to the client’s requirements. At one end of the spectrum
the client may require no more than a leasing contract to finance the capital cost of the assets; at the other end of the spectrum
the plant may be fully manned and operated by the private contractor 24/7. In between there may be different arrangements for
monitoring and maintaining the plant, but not necessarily running it on a day-to-day basis. There is also some variation in the
risks that are transferred from the industrial user client to the third-party contractor.

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Industrial Water Services & Chemicals

The following figure depicts a comparison between the spending on commodity and specialty chemicals in industrial
applications.

Figure 2.7 Global spending on commodity and specialty chemicals, 2013–2020

le
$ million

Chemical type ($m)

Source: GWI
mp
2013 2014

Although the commodity market will

2013
2015 2016

2014
2017

2015
2018

2016
2019

2017
2020

, it is the specialty market that is

2018 2019 2020

in comparison to . This is largely due to the following factors:

• Shift towards more specialty formulations: Low cost commodity products, particularly commodity versions of
coagulants and biocides, are being replaced more often by specialty chemicals that have a superior performance but
require a lower dose. Industrial end-users are looking to adopt chemical solutions that address specific problems
or contaminants in their water systems, in order to maximise operating efficiency and equipment life spans. End-
users also want to reduce their reliance on large volumes of commodity chemicals which are often deemed more
environmentally unfriendly, thereby improving the company’s sustainability image.
• ‘Green’ chemical solutions: In line with concerns relating to the environmental impact of water treatment chemicals,
many ‘green’ chemical solutions are being developed and offered by chemical suppliers which have a reduced
impact upon human health and environmental contamination. These types of chemicals are becoming increasingly
considered by end-users which have strong corporate sustainability initiatives. However, such solutions are yet to be
commonplace in industry, with it still needing to be proven that the products are able to achieve the same, or better,
level of treatment without drastically greater costs.
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• Increased need for service support: As specialty solutions are becoming increasingly in demand, and the treatment
of water and wastewater systems is becoming ever more complex due to greater use of alternative water sources,
industrial end-users are becoming more inclined to gain the expertise of service companies to assist with their
chemical solutions. Many of these service companies supply specialty solutions, and only source and provide
commodity chemicals if specifically requested by the client. Consequently, specialty types are becoming more
commonly adopted within the industrial market.

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 Chemicals and consumable services // Industrial water applications

2.3 Industrial water applications

The adoption of water treatment chemicals in industry is heavily linked to both the specific industry in question, as well as to the
particular water application that requires chemical treatment. There are several key applications that appear in many different
industries, for which appropriate chemical solutions are designed and applied. These are depicted in the following figure.

Figure 2.8 Global spending on industrial water treatment chemicals market by application, 2015

le
Coagulants/flocculants:

Biocides:

pH control:
Process water
Scale inhibitors:
chemicals
market
Global chemicals Corrosion inhibitors:
market
(2015) Other:
mp
Process water treatment:

Internal boiler treatment:

Boiler
Coagulants/flocculants:

Biocides:

pH control:

Scale inhibitors:
chemicals
Cooling water treatment:
market
Corrosion inhibitors:
Process wastewater treatment:
Other:
Other:

Coagulants/flocculants:

Biocides:

pH control:
Cooling
chemicals Scale inhibitors:
Sa
market
Corrosion inhibitors:

Other:

Coagulants/flocculants:

Biocides:

pH control:
Process wastewater
chemicals Scale inhibitors:
market
Corrosion inhibitors:

Other:

Source: GWI

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 Chemicals and consumable services // Procurement of industrial water treatment chemicals

2.5.2 Service companies

Service companies, as mentioned previously, are those offering specialty formulations as well as a number of associated services
to an industrial client. Such services include system monitoring, troubleshooting, process optimisation and cleaning, to ensure
that the appropriate volume of chemicals being used are maintained to the most efficient level, and that the chemistries applied
are the most effective solution for the particular application. Depending on the specific plant in question, onsite presence by a
chemical specialist may be necessary, and as such, service companies tend to perform site visits ranging from a daily to annual

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basis.
Service companies tend to directly target end-users with their solutions. These types of companies often have the ability to be
highly flexible with their approach and can tailor their offerings to suit the needs of the individual client. Most commonly, the
cost of chemicals and associated services are integrated into one price and are not separated unless at the customer’s insistence.
Monthly or annual contracts are the most common approach to providing chemicals and services, and it is rare for contracts to
exceed a duration of three years. Performance of the chemical treatment programme is now much more important to the end-
user than price. A service company’s competitive edge lies in product effectiveness, as well as their reliability and proximity to
a customer. In some instances, worldwide framework agreements may be set up between a service company and an end-user,
especially if the end-user is part of a large, multinational corporation. These agreements are sometimes preferred as it eases
contracting for the end-user, reduces the number of chemical suppliers that they have to communicate with, and allows them to
standardise operations worldwide.
It is rare for specialty service companies to manufacture and supply commodity chemicals themselves. Supply of commodities
mp
is only usually provided as a convenience to the end-user if requested as part of the service package. In such cases, the specialty
service company will typically source commodities from the cheapest local supplier. In other cases, the end-user will source the
commodity type chemicals from the supplier themselves.

2.5.2.1 Key service companies in industry

Company: Chemical types:



Industries:


Regions active: Applications:
W WW

Originally a supplier of is now the global leader

in the industrial water treatment chemicals market. provides specialty products for an array of applications, including
boiler and cooling water, plus other specialty applications such as membrane treatment. It has a particularly strong presence
in , and is an important player in the .
The acquisition of has also enabled to gain a strong foothold in
, both in terms of water treatment and process chemicals. Alongside chemical sales, offers a range of services
including real-time monitoring, troubleshooting and membrane services.
Sa

Company: Chemical types:



Industries:


Regions active: Applications:
W WW

entered the water treatment chemicals market through the acquisition of . The
company offers a range of chemicals and associated services to customers, such as online data management and real-time
system monitoring, and has established itself as one of the top global players on the industrial side of this market. is
particularly strong in the . The company is aiming to increase its presence in
other industrial sectors, , having recently made an agreement with
.
also offers specialty chemicals for membrane cleaning purposes in industrial applications.

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Industrial Water Services & Chemicals

3. Outsourced operations and mobile treatment

3.1 Outsourcing contracts
Outsourcing contracts can be divided into those which involve third-party asset ownership and those which do not. The following

le
figure shows the breakdown of this market by contract type.

Figure 3.1 Global market for outsourcing services by contract type, 2015
BOT/BOO:

Operations:

Mobile water:

Outsourced
operations
(2015)

Source: GWI
mp
3.1.1 Asset ownership contracts
The main types of asset ownership contract in the water industry are as follows:
• Build-operate-transfer (BOT): Also known as BOOT (build-own-operate-transfer) and DBFOT (design-build-finance-
operate-transfer), the contract is typically used for greenfield projects where a developer finances the EPC contract
and the operations contract out of revenues paid by the client. These revenues are typically based on a fixed capacity
payment and a variable off-take payment determined by actual usage. Sometimes this arrangement is styled as
a “take or pay” contract where there is a minimum fee with variable amounts charged over and above that based
on usage. These arrangements remain in effect for the duration of the contract – which in the industrial sector is
typically between eight and 12 years, but can be as long as 25 years – after which the assets are transferred to the
customer and a new operations contract may be let.
• Build-own-operate (BOO): This is essentially the same as a BOT contract, but at the end of the contract the assets
remain with the developer. If the assets are still required after the end of the contract period, a follow-on agreement
can be negotiated.
• Brownfield BOT/Transfer-operate-transfer (TOT): This is where the client sells some assets to the third-party
developer who typically refurbishes or upgrades them and then operates them for the period of the contract. It can
also be done under a BOO-style contract.
Sa
• Build-lease-transfer (BLT): This is similar to a BOT but without the operations element. It means that the client
takes responsibility for running the plant, but the developer or leasing company owns it for the length of the contract
period.
• Merchant plant: Where there is no take-or-pay contract or other long-term commitment to paying capacity charges,
it is still possible to sell water or treat wastewater on a merchant basis, billing customers for the volume supplied or
treated. This is typically the arrangement where a developer sees an opportunity to sell to multiple customers (for
example in an industrial park).
BOT and BOO contracts are most appropriate in cases where assets can easily be separated from the rest of a client’s facilities and
the client does not need or want to be involved in the day-to-day operations of the water or wastewater treatment facility. There
is some difference of opinion over whether the BOT or BOO model is preferable. Some clients prefer BOT because it puts them
in a stronger position to make decisions on the future if they have clear ownership of the assets. Some investors also prefer BOT
because it clearly extinguishes any contractual liabilities once the assets have been transferred back to the client. BOO contracts
are attractive to developers because there is greater scope for increasing profits at the end of the contract period, although clients
are wary of this. In the rest of this chapter BOT is used to represent both BOT- and BOO-type contracts.
Brownfield BOTs and TOT-type contracts are typically used where the client has either had difficulties with its existing water
facilities and wants to bring in third-party expertise or where the client anticipates greater difficulties in future with plant

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Industrial Water Services & Chemicals

The following figure gives an overview of the major players, which together account for more than half of the global mobile water
treatment market.

Figure 3.10 Overview of major players in the mobile water treatment market
Company Breakdown of process applications Key regions Market position
Emergency: 25% North America, Global market leader

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Short term to medium term: 60% Europe, Asia Pacific, Leader in North America
Long term: 15% MENA Among the top three players in Europe
– North America Second position globally

Europe: Europe, US, Asia Third position globally

Emergency: 25% Pacific, MENA Among the top three players in Europe
Short term to medium term: 35%
Long term: 40%

US:
Emergency: 30%
Short term to medium term: 30%
Long term: 40%

Source: GWI
mp Emergency: 45%
Medium term: 50%
Long term: 5%
Europe, US,
MENA
Among the top three players in Europe
Among the top 10 players in the US

The treatment technologies that the largest market players offer in their mobile water and wastewater units are displayed in the
following figures.

Figure 3.11 Mobile water market players by technology provided in process water applications
Company Filtration IX RO UF/MF EDI
• • • •
• • •
• • • • •
• • • • •
Source: GWI

Figure 3.12 Mobile water market players by technology provided in wastewater applications
Flotation
Company UF/MF Clarification (IAF, DAF) MBR
• •
• •
• • •
Sa
• •
Source: GWI

Beyond these top four players, the market is much more fragmented with many regional and local suppliers active.
In the US, the top 10 players include
. is different to other companies in that their equipment is only
based on their proprietary , while other providers tend to have a variety of
technologies which typically includes elements purchased from other suppliers.
The European market is very fragmented and is served by a large number of global, regional and local players.
are dominant players active in this region. Smaller players include
.
is a significant player in Australia, with a mobile fleet and a strong position in long-term BOO contracts. The
company is also present in the Middle East, Southeast Asia and South America.

3.2.8 Accessing the market

The mobile water treatment market offers significant advantages for established players in the water treatment industry. As
there is a high capital investment in the production of a mobile water fleet and uncertainty about the return on an investment
period, companies which are generating profits from other areas of water treatment typically have much higher financial

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 Outsourced operations and mobile treatment // Market forecast

Figure 3.15 Capital and operating expenditure under BOT/BOO contracts, 2013–2025

le
$ million

0
2013 2014 2015 2016 2017 2018 2019 2020

$m 2013 2014 2015 2016 2017 2018 2019 2020 2025

Source: GWI
mp
We expect that spending on mobile water services will grow from
, representing a . The main drivers of this growth
are the increased adoption of these services in Europe as the market becomes more mature, and the take-off demand in Asia
Pacific. Annual growth in these two regions is expected to be
as much growth in the mature markets
. We do not expect to see
, particularly in the power industry. In this industry, the
current market is nearly saturated and the addressable market is unlikely to show any expansion as growth in generating capacity
becomes minimal.
Elsewhere, it is the industry that offers some of the greatest potential for
growth. We anticipate that spending will increase on average at to reach , by which
point it will have overtaken spending in the industry. Other markets that show some promise are those that
require demineralised water for boiler systems and the need to meet stricter discharge regulations. Of particular interest are
, which we expect will be worth respectively in 2025.
In terms of contracts, we expect the shift towards longer durations to continue, with spending on such contracts growing at
to reach . The following figures summarise our forecast of spending on mobile water services.

Figure 3.16 Spending on mobile water services by region, 2013–2025

Sa
$ million

0
2013 2014 2015 2016 2017 2018 2019 2020

Region ($m) 2013 2014 2015 2016 2017 2018 2019 2020 2025

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 Industrial utilities // Industrial parks in China

The following figure summarises our forecast of spending on industrial utility services.

Figure 4.1 Forecast of spending on industrial utility services by region, 2013–2025

le
$ million

0
2013 2014 2015 2016 2017 2018 2019 2020

Region ($m)
mp 2013 2014 2015 2016 2017 2018 2019 2020 2025

Source: GWI

4.2 Industrial parks in China

Industrial parks are an enticing market in China that has been the focus of increasing interest over the past few years. An
industrial park is an area of land used to accommodate industries, which must be approved by the government. China has been
enhancing the geographical distribution of its industries by encouraging them to relocate to industrial parks. There are plans for
nearly a thousand refining and petrochemical plants to be relocated to industrial parks, which will cost over
. The environmental and regulatory impetus behind this move is likely to be strengthened following
the Tianjin explosions in August 2015.
There are currently more than 3,300 industrial parks in China, but fewer than have installed centralised wastewater
treatment plants (WWTPs). A lot of work is therefore required in order to meet the new target issued in April 2015, which states
that all industrial parks should have installed centralised treatment facilities by 2017 (with a deadline of 2016 for parks located
Sa
in the most developed regions of Tianjin-Beijing-Hebei, Yangtze River Delta and Pearl River Delta). Currently, around of
wastewater treatment services are estimated to be supplied by third parties instead of the industrial park developer.
Industrial parks in China can be organised in two ways:
• Integrated industrial parks: Different industries are located in the same industrial park. The Beijing Economic-
Technological Development Area is an example of an integrated industrial park, where the information technology,
bio-pharmaceutical, equipment manufacturing and automotive industries are present.
• Industrial parks containing one industry (or one dominant industry): Industries present in this type of park include
refining & petrochemicals, chemicals, textiles, and pharmaceuticals. Industrial parks for refining & petrochemicals
are the most dominant in China, and are also the most attractive market for international water players owing to
the involvement of larger state-owned entities, the difficult-to-treat wastewater streams and the high margins of the
business which enable clients to afford more advanced treatment technologies.

4.2.1 General utility outsourcing

Industrial parks, often managed by the management committees of industrial zones (usually local governments), compete
against other parks (either in the same province or throughout China) to attract profitable blue-chip companies to invest. Local
governments that want to attract companies with specific water treatment needs will be driven to outsource the utility services
in the park to create the best platform for these companies. If the presence of the water treatment company attracts even more

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 Oil & gas water management services // Chemicals for upstream oil & gas

The chemicals used in the completion and production phases of a well’s life cycle are often very similar, with a large degree of
overlap in terms of the different types of chemistries needed. However, the way in which these markets are structured and the
supply chains of chemical sales are quite different.

5.2.1.1 Completion chemicals

The completion stage involves the steps needed to prepare a drilled well for production. A major element of this stage is hydraulic

le
fracturing – a process which requires significant volumes of water and demands a wide variety of different chemical additives.
The level of treatment necessary depends on the quality and source of the water, and the type of frac’ that is required, which is
itself a function of the geological conditions and particular well characteristics. The most common types of fracturing fluid are:
• Slickwater frac: This type of fluid largely consists of water and sand (98–99.5%), with the remainder composed of
various chemical additives to enhance the fracturing process, and is most suited to formations that have low liquid
(oil/gas) content. It is commonly adopted in unconventional shale plays, with approximately half of US fracturing
activity utilising this fluid. Low quality water is often sufficient, thus requiring little pretreatment.
• Linear and cross-linked gel fracs: These types of fracturing fluids consist of greater amounts of chemical additives
such as gels and crosslinkers including borate or zirconium, and lower amounts of water. They are often used
in association with tight oil wells and formations with high liquid content, and are typically viewed as higher
performance fluids which create more effective fracs than slickwater.
The following figures show the typical composition of fracturing fluid used for US shale plays and the types of chemical
mp
additives employed.

Figure 5.5 Typical composition of hydraulic fracturing fluid for US shale plays

Typical composition Other Breakdown of

of fracturing fluid for ‘other’ chemical
US shale plays additives employed

Acid: Scale inhibitor:

Corrosion inhibitor: Breaker:

Sa
Friction reducer: Iron control:

Clay control: Biocide:

Crosslinker: Gellant:

Source: GWI; adapted from FracFocus, 2015

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 Oil & gas water management services // Water storage

As a result, there is a growing trend towards a hub and spoke type arrangement, in which water is conveyed using temporary
surface pipelines and fixed in-ground pipelines. The temporary lines – which tend to be lay flat hoses – are particularly utilised
to transport water from the storage pit to the well pad, or in instances when the water source is in relatively close proximity to the
well site.
Several E&P companies have invested in their own surface pipelines and pumping systems, but this is again a factor of the
economic status of the industry as well as the company’s organisation philosophy. Fixed pipelines are also being adopted,

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especially in locations where the density of wells is sufficient to warrant this type of investment. Buried pipes are much more
common at greenfield sites, where E&P companies are building in-ground pipes for oil and gas flow, and so can easily install
pipelines for water within these trenches at the same time.
A key concern regarding the use of pipelines instead of trucking is the risk of leakage between pipe connections. This is
especially concerning when transporting water that is not freshwater, as contaminants in the water stream are often more
harmful and can have impacts on the surrounding environment should leakages occur. Despite this, trucking continues to be
replaced as a transportation method in the upstream industry as the costs and environmental concerns of hauling are often seen
to exceed the risks posed by pipelines.

5.4.2 Flowback and produced water

Although there is a growing trend for sourcing freshwater via pipelines, flowback and produced water still tends to be
transported by trucks. However, there are increasing cases of produced water being transported by pipeline to treatment or
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disposal facilities. For example, Nuverra is currently constructing a 150 mile buried pipeline network in the Bakken shale, which
will include a gathering line for flowback and produced water in addition to the distribution line for freshwater delivery. It is
attempting a midstream model for water pipelines as many US basins progress from drilling to the production phase, which
offers more stable returns for water service providers.
If a pipeline is available to transport produced water for treatment or disposal, then a truck would transport the impaired water
from the pad to the pipeline. There are also cases of pipelines running the entire distance between a pad and disposal well, but
this is very rarely practised as water needs change especially quickly in the unconventional sector. If the impaired water is being
trucked to a disposal well, most hauling firms will dispose of water at the closest or least expensive well.

5.4.2.1 Contract structure

The contract structure for outsourced flowback or produced water transfer depends on the mode of transfer: if these wastewater
streams are being trucked away, then it will be undertaken on a fee per barrel of water trucked basis. For piping, a water
management company may have to pay a set fee per month, as well as a per-barrel cost, though the latter may be at a reduced
rate.

5.5 Water storage

Once water for hydraulic fracturing has been sourced and transported to the well site, it has to be stored for future use and also in
order to be mixed with fracturing chemicals. Water for fracturing may be stored in mobile containers known as frac’ tanks, or in
in-ground impoundments. Mobile frac’ tanks are designed to store relatively small volumes of water (around 500 barrels) but can
be readily moved between fracturing locations. In-ground impoundments on the other hand can hold substantial water volumes
(up to 400,000 barrels). However, this type of storage facility may be impacted by regulations regarding where they can be built
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and may also require evaporation control covers to reduce the impacts of evaporation when located in regions which experience
high temperatures.
Produced or flowback water can be stored in impoundments or frac’ tanks after it has flowed out of a well prior to being
transported for treatment. Pits for holding impaired water will be lined to prevent seepage into groundwater.
Frac’ tanks will normally be rented out for a daily fee, with a minimum rental period being stipulated. It is quite common for the
company constructing a pipeline to also supply storage facilities linked to these pipelines as part of the contract.

5.6 Water treatment

5.6.1 Produced water treatment
Although flowback/produced water treatment is a small part of the overall water management services market, different water
management options are being considered in a bid to reduce the reliance on hauling. An effective water treatment programme
– aimed increasingly at recycling impaired water for future frac’ jobs – can reduce costs associated with hauling and disposal,
particularly given the large volumes of flowback water a frac’ will generate.

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