Fracking-water distiller exits

It sheds state permit, cites drilling ebb due to low gas prices

— CORRECTION: The Arkansas-Democrat-Gazette originally reported that "BHP Billiton ... trucks most of its wastewater to disposal wells throughout the state ...." BHP Billiton actually recycles the majority of its wastewater and the remainder goes to disposal wells throughout the state.


A Canadian company that had a state permit allowing it to discharge distilled wastewater from hydraulic fracturing into Cadron Creek in north-central Arkansas has suspended such plans because of low naturalgas prices.

“We’re finding that with low natural-gas prices and the slowdown in activity, we’re focusing more on the oil developments,” said Brent Halldorson, president of Fountain Quail Water Management LLC. “But we’re still very interested in Arkansas.”

“There is just not enough activity to justify maintaining the permit,” Halldorson said. “You have to fill out the reports and do all the work and maintain a bond with the state. We may resurrect the permit when prices come back up, or we’ll recycle 100 percent of the distilled water.”

The recycled water would be reused for fracking.

On Feb. 22, Fountain Quail sent a letter to the Arkansas Department of Environmental Quality requesting that its permit be terminated and seeking to have its $126,027 bond returned. In the letter, Halldorson said the company had never started operations in the state.

The department granted the request on March 7. The department requires companies with discharge permits to supply financial assurance in case the company goes bankrupt or leaves the state, agency spokesman Katherine Benenati said.

Debbie Doss, chairman of the Arkansas Conservation Coalition and the conservation chairman of the Arkansas Canoe Club, said the idea of fracking wastewater being discharged into Cadron Creek is “worrisome.”

“If they do come back, as long as they follow regulations, it’s not too bad,” Doss said. “But that’s always the question: Will they adhere to the standards that they should?”

Fountain Quail, a subsidiary of publicly traded Aqua-Pure Ventures Inc., says that the wastewater is drinkable once distilled by its machine.

The company was hoping to capitalize on drilling in the Fayetteville Shale, a geological formation in north-central Arkansas that has experienced a surge in natural drilling since 2005.

Fracking is the process of injecting millions of gallons of water, mixed with sand and chemicals, to create artificial fractures that maximize oil or natural gas flow. The technology has led to a surge in natural-gas reserves in the U.S. but is also criticized by environmentalists because of the amount of water it uses and the chemically laced water that comes up after drilling.

Much of the fracking water comes back out of the well and can contain carcinogenic chemicals.

In Arkansas, most of the water is recycled or injected into about 900 disposal wells in the state. Some is trucked to injection wells in Oklahoma or Texas.

Southwestern Energy Co., the top producer in the Fayetteville Shale, sent a document Wednesday to the Arkansas Democrat-Gazette that said the Houston-based company recycles 100 percent of its wastewater.

Australia-based BHP Billiton, the second-largest producer in the Fayetteville Shale, trucks most of its wastewater to disposal wells throughout the state, said Danny Games, external-affairs manager for BHP.

XTO Energy, a subsidiary of Exxon Mobil and the third-biggest producer in the formation, recycles about 70-75 percent of its wastewater, spokesman Jeffrey Neu said.

Both Southwestern and BHP have said they plan to reduce the number of rigs drilling for natural gas in the Fayetteville Shale while prices remain low.

Last year, the Arkansas Oil and Gas Commission shut down four disposal wells in a 1,150-square-mile area mostly north of Conway after it was suspected that wells led to 1,000 minor earthquakes in the area in less than a year. There are currently fewer than 20 wells in the Fayetteville Shale.

Halldorson said on Wednesday that if Fountain Quail comes to Arkansas, it would “compete with disposal wells.” He said the cost of trucking the wastewater to south Arkansas or out of state is more expensive than moving it to a site in the Fayetteville Shale for distillation by Fountain Quail.

If the company does recycle 100 percent of the water it distills, it wouldn’t need a discharge permit Halldorson said. Instead, Fountain Quail would need only an air permit, which is “easier to get,” he said.

He added that the company is not selling the property it bought near Damascus.

Partly because of the success of the Fayetteville Shale and other formations such as the Barnett Shale in Texas and the Haynesville Shale in Louisiana, natural-gas prices have been hovering near or below 10-year lows since January and are not expected to come back up this year.

On Wednesday, for April delivery, natural-gas prices were $2.28 per thousand cubic feet on the New York Mercantile Exchange, down 2 cents from Monday and from a high of $13 in July 2008. When Fountain Quail first got a permit to operate in the Fayetteville Shale prices were about $5 per thousand cubic feet.

With natural-gas prices so low, companies are shifting to oil formations such as the Eagle Ford Shale and Permian Basin in Texas and the Bakken Shale in Montana and North Dakota.

Business, Pages 23 on 03/15/2012

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