Produced Water Volumes and What Disposal Actually Costs

Water handling is an operating cost that produces no revenue, scales with the least valuable thing a well makes, and gets worse every year. Understanding how it is priced is worth doing carefully, because for a large share of Alberta's mature wells it is the number that determines whether the well keeps running.

Water-Oil Ratio Over a Well's Life

The water-oil ratio, usually written WOR, is simply the volume of water produced per volume of oil. Related is water cut, the water fraction of total liquid. A WOR of 9 is a water cut of 90 per cent.

A conventional Alberta oil well typically follows a recognisable arc:

• Early life: low WOR, sometimes well under 1. Water handling is a minor cost.
• Mid life: WOR climbing steadily as the reservoir depletes and water encroaches. Handling becomes a visible line item.
• Waterflood breakthrough: if the pool is under waterflood, injected water eventually reaches the producers. WOR can jump sharply rather than drifting up.
• Late life: WOR of 10, 20 or higher. The well is, in volume terms, a water well that makes a little oil.

The important thing is that this is normal rather than a fault. A rising WOR is what depletion looks like. What matters operationally is whether the revenue from the oil still covers the cost of lifting and disposing of the water that comes with it.

How Disposal Is Priced

Costs vary with location, competition, volume and the specific facility, so what follows is structure rather than a price list. Anyone quoting you a single provincial number for disposal is guessing.

Trucking is usually the largest component and is the one most sensitive to distance. It is typically charged either hourly for the truck and operator or per load with a distance band. Because it scales with haul distance, proximity to a receiving facility matters a great deal to the economics of a remote property.

Disposal fee at the facility is charged per cubic metre received. It varies with the class of facility, what is in the load, and whether you have a volume arrangement. Clean produced water is at the cheap end; anything requiring special handling costs more.

Pipeline tariff, where a gathering system exists, replaces trucking. The per-cubic-metre cost is dramatically lower than trucking, which is why producers with enough volume build or buy into water gathering systems. The trade-off is capital cost and the regulatory work of building a line.

Lifting cost is easy to overlook because it does not appear on a disposal invoice. Every barrel of water has to be pumped to surface, and that is pump wear, power and workover time. On a rod-pumped well at high water cut, this is real money.

Treating and chemical costs for demulsifier, corrosion and scale inhibitor scale with water volume too.

Trucking Versus Pipeline

The rough rule is that trucking is flexible and expensive, pipelines are inflexible and cheap. Trucking needs no capital and can be turned off tomorrow; it suits low volumes, short-life wells and properties where the future is uncertain. A gathering line needs capital, right-of-way and approvals, and is worth it where volumes are high and expected to persist.

The crossover point depends on volume and distance, and it moves with diesel prices and trucking availability. Many operators run a hybrid: piped where the infrastructure exists, trucked from the outlying wells.

When Water Ends a Well

A well is shut in when the revenue it generates no longer covers the cost of operating it. At high water cut, water handling dominates that cost, so the calculation usually reduces to a straightforward comparison: does the oil revenue per cubic metre of total fluid exceed the cost of handling that fluid?

This is also why the same well can be uneconomic for one operator and economic for another. A producer with its own disposal well and a gathering system faces a fraction of the water cost of one trucking to a third-party facility, and can keep a well running long past the point where the neighbour shuts theirs in.

Reducing Water Cost

• Shut off the water at the source. Mechanical isolation of a watered-out zone, or a chemical water shutoff treatment, addresses the problem rather than the symptom. It is not always possible and not always durable, but it is the highest-leverage option.
• Downhole or wellsite separation, where feasible, avoids lifting or hauling water you are going to reinject anyway.
• Pipe it instead of hauling it, where volumes justify the capital.
• Optimise the pump. Running a pump far beyond the well's inflow capacity wastes energy and wears equipment while producing nothing extra.
• Segregate waste streams. Keeping clean produced water clean avoids paying special-handling rates on the whole volume because something was mixed into it. See our waste oil guide.

Common Questions