Fracking Industry's Financial Cracks Growing: Permian Alone Needs $9 Billion For Wastewater Wells

[hatrack]

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Fracking and agriculture compete for land and water near Denver City, Texas.

While fracking for oil and gas in the U.S. has contributed to record levels of fossil fuel production, a critical part of that story also involves water. An ongoing battle for this precious resource has emerged in dry areas of the U.S. where much of the oil and gas production is occurring. In addition, once the oil and gas industry is finished with the water involved in pumping out fossil fuels, disposing of or treating that toxic wastewater, known as produced water, becomes yet another problem.

These water woes represent a daunting challenge for the U.S. fracking industry, which has been a financial disaster, something even a former shale gas CEO has admitted. And its financial prospects aren't looking any rosier: The industry is facing another round of bankruptcies as producers are overwhelmed by debt they are unable to repay.

This week, Bloomberg reports that the Permian region of Texas and New Mexico, a fracking hotspot, will need an estimated $9 billion of new investment to create 1,000 new injection disposal wells to deal with fracking wastewater over the next decade, citing a note to clients from financial services company Raymond James and Associates.

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“Most investors are simply unaware of the fact that as crude production grows, produced ‘dirty’ water grows even faster,” wrote Raymond James analyst Marshall Adkin. In July the industry analysts at Wood MacKenzie — who have been highlighting issues about water and fracking for some time — pointed to this factor, and its financial impacts, only getting worse, while also predicting wastewater output in the Permian would double in the next four years. “The entire Permian production cost curve is shifting as produced water volumes expand, posing a risk to production growth in the most prolific U.S. shale play,” wrote Wood MacKenzie.

EDIT

https://www.desmogblog.com/2019/08/02/fracking-wastewater-financial-challenges-permian

[CanonRay]

1. They will walk away and leave a mess

just like they always do. This may be the industry that crashes the financial markets.