March 17, 2015

New rules to restrict shale wastewater ponds could put tank manufacturers in demand

March 17, 2015 12:00 AM

By Laura Legere / Pittsburgh Post-Gazette


Laura Legere:

The era of shale drilling waste pits is closing in Pennsylvania. Storage tanks and the companies that market them are on the rise.

Last week, the Department of Environmental Protection announced plans to ban temporary waste pits at Marcellus and Utica shale gas well sites, marking the official end, if the rules pass, of a once commonplace practice that regulators said every shale operator in the state has already dropped for tidier and safer alternatives using tank systems.

The environmental agency is also proposing to apply stricter standards similar to those that control the state’s landfill impoundments to the large centralized wastewater ponds that some shale operators use to store waste fluids from multiple well sites.

Companies that do not upgrade their centralized wastewater ponds, or impoundments, which can be the size of football fields and have been tied to several cases of soil and water contamination, will be forced to close them within three years of the rules taking effect.

For operators who do not want to deal with that bother or risk, companies that sell above-ground storage tanks or tank-based fluid treatment services are ready with options.

The trend for several years has been for companies to use modular tank systems instead of pits and ponds for both fresh and wastewater storage, said David Yoxtheimer, a hydrogeologist with Penn State’s Marcellus Center for Outreach and Research.

“You can bring them in, deploy them, store fluids in a relatively quick fashion and once you’re done, remove the tanks and take them to the next site,” he said.

Impoundments can be comparatively expensive and time-consuming to build, and their footprint is larger, although they can be an efficient method for storing large quantities of wastewater if drilling operations are concentrated around them.

For environmental regulators, the biggest issue is the impoundments’ record of failure. 

“They are just simply prone to leak,” Mr. Yoxtheimer said.

DEP counts 17 centralized impoundments that could be affected by the proposed rule change: 11 in Washington and Greene counties operated by Consol Energy Inc., Range Resources and Antero Resources; four in Bradford and Susquehanna counties operated by Southwestern Energy Co.; one in Lycoming County operated by Pennsylvania General Energy Co.; and one in Centre County operated by WPX Energy.

DEP spokeswoman Amanda Witman said the agency did not have information readily available about whether any of the existing impoundments meet the stricter proposed standards, but she said, “It’s safe to assume that most of these impoundments do not.”

Cecil-based Consol, which has seven existing impoundments that could fall under the proposed rule, the most of any company, declined to comment on how the change could affect its operations.

Even if pits and impoundments go away, the need to store and manage enormous volumes of wastewater won’t. Operators producing gas from the Marcellus Shale and other unconventional formations reuse the majority of their wastewater, but before they send it down the next well, they have to put it somewhere.

“We would be an alternative to them having to build it themselves,” said Teresa Irvin McCurdy, a spokeswoman for the Tioga County-based gas field fluid storage and treatment company Hydro Recovery, which uses above-ground, glass-lined steel tanks in secondary containment to hold wastewater.

The company has two treatment and storage sites in Tioga County, is building a third with 12 million gallons of fluid storage capacity in Washington County, and has permits for a fourth facility in Bradford County, Ms. McCurdy said. Two other potential sites in Susquehanna and Beaver counties are in the planning stages.

Trucks can drop off the salty waste fluids that flow out of wells and leave the facilities with treated fluid that can be used to coax natural gas from the next well.

Some exploration and production companies also are looking for more mobile solutions that they or their contractors can set up near active drilling sites.

When companies first started adopting tanks instead of pits for fluid storage years ago, they tended to link together a battery of frack tanks — the rectangular, often colorful tanks with corrugated sides that each hold 21,000 gallons of fluids and are stacked side-by-side on well sites during the hydraulic fracturing, or fracking, process.

Environmental Tank and Container, a Johnstown-based company that manufactures a variety of tanks used by the oil and gas industry, developed a large-volume, above-ground steel storage tank after a client in West Virginia wanted an alternative to installing liners in pits or stacking frack tanks together.

The company’s KwikTanks, which vice president of business development Matt Hughes likened to heavy duty above-ground swimming pools, have since become very popular.

More than 130 of the KwikTanks are deployed at well sites in the Marcellus and Utica shale region and in Texas, and the company has more ready to go, he said. The largest of the tanks holds 2.5 million gallons and several can be placed on one site.

“It’s much more economic than frack tanks, but it’s also much safer than putting a pit in the ground,” he said.

One of the environmental benefits of above-ground tanks is that leaks are easier to see, stop and clean up than fluids seeping into the ground beneath a breached pit. The tanks also are placed in secondary containment — an area of compacted earth and liners, encircled by berms — to keep any leaks from spreading.

Mr. Yoxtheimer, who was recently named to the state oil and gas advisory board that will review the draft regulations, said the proposed pit rules present an opportunity for environmental protection that will also allow operators to work more efficiently and cost effectively in many cases.

“There is always that opportunity to do the next better thing,” he said. “I think this is definitely the next better thing.”

Laura Legere: