Employee or Independent Contractor? Follow the Money!

Chris Sutton – Partner, Clover Global Solutions, LP

The oil and gas industry has a strategic reliance on freelancers, 1099 contractors, consultants and small businesses, collectively referred to as “non-employees”. In both good times and current times of economic uncertainty the reliance depends upon continued availability and unique expertise of some contractors. Short-term, well-defined projects often turn into multiple years of full-time engagement.

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At some point an individual who may be an employee of a contractor, is provided advice by their tax accountant that they should set-up their own company and become an independent contractor. The resulting legal entity may be an LLC, LP, or Inc. However, nothing about the consulting assignment has changed except a desire to control more of their bill rate and plans to claim additional tax deductions.

This scenario is somewhat unique versus other industries in which employers do not want to engage workers as employees. In oil and gas it is often employees who are asking to be classified as 1099s and creating the huge risks for employers as to fines, penalties, back-taxes, overtime claims and benefits.

On July 15, 2015 the U.S. Department of Labor’s Wage and Hour Division Administrator Dr. David Weil issued Administrator’s Interpretation No. 2015-1.

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SUBJECT: The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors.

Excerpts of this guidance as related to the Fair Labor Standards Act (FLSA) to be utilized in properly classifying workers and curtailing misclassification of employees as independent contractors follow:

Dr. David Well articulates, “Understanding that combating misclassification requires a multipronged approach, WHD has entered into memoranda of understanding with many of these states, as well as the Internal Revenue Service. In conjunction with these efforts, the Administrator believes that additional guidance regarding the application of the standards for determining who is an employee under the […] (FLSA or “the Act”) may be helpful to the regulated community in classifying workers and ultimately in [limiting] misclassification.”

Well points out, “an entity ‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity. The factors typically include: (A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer.

In applying the economic realities factors, courts have described independent contractors as those workers with economic independence who are operating a business of their own. On the other hand, workers who are economically dependent on the employer, regardless of skill level, are employees covered by the FLSA.

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Moreover, the economic realities of the relationship, and not the label an employer gives it, are determinative. Thus, an agreement between an employer and a worker designating or labeling the worker as an independent contractor is not indicative of the economic realities of the working relationship and is not relevant to the analysis of the worker’s status.

The ultimate inquiry under the FLSA is whether the worker is economically dependent on the employer or truly in business for him or herself. If the worker is economically dependent on the employer, then the worker is an employee. If the worker is in business for him or herself (i.e., economically independent from the employer), then the worker is an independent contractor.

In summary, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. […] Each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee).”

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Questions for you to consider:

  1. Based upon these guidelines, how many workers within your “non-employee” workforce are classified as independent contractor and have been properly vetted?
  2. What is the percentage of your contingent workforce that should be properly classified as W-2 employee of your company or should be a W-2 employee of a staffing firm on a contract assignment?
  3. Are you aware of the overtime claims, fines, penalties, and loss of company reputation that may result from your company’s misclassification and continued use of 1099/Independent Contractors?
  4. Would you like some assistance in answering questions 1 – 3 above? If so, contact 1099audit.com.

Chris Sutton has a sound foundation in the energy sector contracting from both client and contractor sides with specific expertise in working with oil and gas operators, senior leaders and program managers who are significantly challenged by today’s state of the industry and must deliver optimal results now, without creating new risks in: Re-engaging prior employees and furnishing client identified resources, cost reduction, HSE, compliance (day rate compensation plans and 1099 contractor compliance), flight risk, existing Vendor Management System (VMS) cost/value analysis, and supplier/contractor consolidation.  To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com.

Posted in 1099 Compliance, Clover Global Solutions, Contingent Workforce, Oil & Gas, Opportunities, Risks, Workforce Changes | Tagged ,

Plant Turnarounds: Volatile, Challenging & Inevitable

Chris Sutton – Partner, Clover Global Solutions, LP

Plant turnarounds make up the single largest identifiable maintenance expense, and controlling their costs and duration is quite the challenge.

Turnarounds are scheduled periods of non-production within an industrial plant (refinery, petrochemical, power plant, and pulp and paper mills). Daily operations stop during the duration of a turnaround and instead, the focus shifts to maintenance related activities, cleaning, inspection and equipment repairs required to improve safety.

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During a turnaround, plant employees and other contractors work continuously to prepare the plant to resume its regular operations.  The short story: with no production, increased labor and equipment expenses, shutdowns are extremely expensive.

Turnarounds are essential to maintaining the peak efficiency of complex operations and the high costs are discovered when production losses due to downtime are factored in. They may take months to complete; and can require the management of possibly hundreds of contract and permanent personnel.

There’s no doubt that keeping all of those dollars, hours, and people on target requires extensive planning. Just preparing for a turnaround can be even more time-consuming than the turnaround itself, taking anywhere from a year to 18 months for an execution ranging 2 to 4 weeks.

However, even with the best set-up and preparation, turnaround predictability isn’t really that predictable. Experts say that there are three characteristics that can influence the outcome: the size of the project, measured in direct field labor hours; the amount of capital work; and the interval or timetable.

So, what is it that keeps plant operators and maintenance managers up at night? It’s the labor concerns – not having the resources to find the right people they need when every minute counts (and costs).

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Case in point: researchers at Independent Project Analysis (APA) evaluated more than 400 maintenance turnarounds, they heard a common refrain: there aren’t  enough people to do good planning.

The Need for Skills & Availability

Unfortunately, turnaround projects are facing a skills shortage just like the entire energy industry.  Many turnaround veterans are retiring and not enough new labor is entering the market. This makes the need for external expertise higher than ever, creating ample opportunities for individuals with specialized skills.  Their biggest paint point for a manager: knowing what they need, but starving for the right people simply because none are available or aren’t the right fit for the job.

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Skilled labor is increasingly hard to find because of many turnaround veterans leaving the workforce versus a bleak replacement of young professionals. Deficiencies of up to 50% are expected in mechanical trades in particular, but there is also a lack of project managers and planners – positions that require skills that are hard to develop internally, thus creating a need for external expertise.

According to a survey from T.A. Cook, skilled staffing will most likely be the main factor to cause turnaround budgets to blunder. With the expectation that turnarounds will be more expensive in the future, keeping staffing costs in line is a big part of a clean start for an efficient, effective turnaround.

Developing a Possible Solution to the Problem

In times of need, it is especially difficult for managers to find the right kind of people at the right time to fill their turnaround project needs. We’re developing a ‘turnaround bench’ concept that will solve the turnaround woes. POCHere’s the idea:  the client has to define the specifics of each turnaround project and the resources they need; and those resources can be client-direct or contractors.  In turn, the “resources,” or turnaround specialists will then have the opportunity to review future project scheduling needs and sign-up for consideration on-demand. These candidates are 100% pre-qualified and are available when needed – based on their own admission of availability.

Please note that these images are ONLY a proof of concept and are not indicative or accurate of current or past turnaround projects.

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If any readers are interested in learning more about our bench concept and can see the value in it, let’s have a conversation.

After having read this, here are some questions for the readers to consider:

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  1. Do you think there is an optimal way to structure an organization to facilitate a good project-turnaround, or is each case different?
  2. What are some of the current trends in plant turnarounds that will shape the future of this field?
  3. What are some of the challenges to recognizing that turnarounds are repeatable events that can be optimally challenged through proper planning and preparation?

 

 

Chris Sutton has a sound foundation in the energy sector contracting from both Client and Contractor sides with specific expertise in building alliances to facilitate service capabilities. To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com. 

Posted in Uncategorized

Reversal of Fortune: Converting the Golden Pass LNG Terminal

Chris Sutton – Partner, Clover Global Solutions, LP

On the banks of the Sabine-Neches Waterway outside the small town of Sabine Pass, TX, is a monument of sorts to the vast and rapid changes that are part and parcel of today’s natural gas sector. But it’s not a statue, museum, or culturally significant structure.

It’s the Golden Pass LNG Terminal, now essentially dormant but originally built to bring Middle Eastern gas to energy-hungry America. The facility was completed in 2010 at a price tag of more than $1 billion. If that figure seems steep, consider that it’s just one-tenth of what two energy companies are prepared to spend to turn the terminal from an import to an export facility so they can meet the needs of energy users around the world.

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Sending LNG to Asia, Latin America, and Europe

Constructed by American companies ExxonMobil and ConocoPhillips and state-run Qatar Petroleum, the Golden Pass LNG was intended to hold and distribute liquid natural gas (LNG) produced from offshore oil fields in Qatar. However, it served that purpose for only two years. It’s been idle ever since, a victim, if you will, of the surge in domestic natural gas emanating from American shale developments, which has virtually eliminated our need for Qatari gas.

When it was fully operational, Golden Pass LNG employed more than 1,000 workers and utilized numerous local workers, suppliers, vendors and subcontractors. Now, the terminal has about 80 full-time employees.  But the new project promises to bring a significant economic boost to the area.

Golden Pass Products, as the expansion project will be known, will create the equivalent of 45,000 U.S. jobs during construction and 3,800 permanent jobs across the U.S. during operation, including 200 at the facility itself.

Currently, the Golden Pass LNG Terminal is capable of accommodating 15.6 million metric tons of liquefied natural gas per year, or approximately 2 billion cubic feet of natural gas per day. That translates to nearly three percent of current US production. The terminal’s immense dual berth ship docks occupy an area large enough to hold about 77 football fields. Sticking with the sports metaphors, Golden Pass LNG’s five storage tanks are each large enough to hold the volume of 62 Olympic-size swimming pools.  The tanks were constructed with 50 million pounds of steel and 5,000 valves.  The terminal is designed to handle a range of LNG ships — including the largest vessels in service today, which have a total capacity of up to 266,000 cubic meters of LNG.

The proposed Golden Pass Products project is expected to cost $10 billion, 70 percent financed by Qatar Petroleum. The conversion will include adding three liquefaction process trains, each with a nominal throughput (in layman’s terms, volume) of 5.2 metric tons per year, plus associated treatment, power, and utility systems, and interconnections to existing import facilities.

The terminal connects to the national LNG pipeline grid via the 69-mile-long Golden Pass Pipeline. The conversion project also proposes reversing some pipelines.

Although the converted facility would be intended primarily for exports, the proposed project would actually allow Golden Pass to become bi-directional, with the flexibility to import and export natural gas in response to market conditions. In other words, ExxonMobil and Qatar Petroleum are doing what they can to make sure their investment is never rendered obsolete again.

Catching Up to Houston Ship Channel

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The 63-mile Sabine-Neches Waterway where the Golden Pass LNG Terminal is located is one of only a few deepwater ports along the Gulf Coast suitable for LNG carriers.

Although it’s not as well known as the nearby Houston Ship Channel, the Sabine-Neches waterway is not only the nation’s fourth largest waterway, it actually tops the list for transiting bulk liquid cargo and crude oil imports. The waterway handles about 100 million tons of cargo each year (about half the load handled at the Houston Ship Channel) and supports about 288,000 regional jobs. Refineries along its shores produce a minimum of 13% of America’s daily fuel consumption, 60% of the nation’s commercial jet fuel, and most of the U.S. military jet fuel.

The Sabine Pass area is also home to the LNG terminal that kicked off the export frenzy – Cheniere’s Sabine Pass facility, which is the only fully permitted new liquefied natural gas export project. It’s located on 1,000-plus acres along the Sabine Pass River in Cameron Parish, LA, on the Texas-Louisiana border.

Back on the Texas side is Sunoco’s Nederland LNG terminal. This facility receives, stores, and distributes crude oil, feedstocks, lubricants, petrochemicals, and bunker oils (used for fueling ships and other marine vessels), and also blends lubricants.

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Environmental concerns cloud blue skies?

Although the economic benefits to the community seem clear, environmental concerns may be clouding the outlook: Sierra Club has filed a protest with the US Federal Energy Regulatory Commission (FERC) against the proposed project.

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The Sierra Club is concerned about both direct and indirect impacts, such as emission of air pollution, discharge of water pollution, disturbance of wetlands, impacts of increase shipping traffic and the effects these issues may have on endangered species.

The organization is also concerned about the increase in domestic natural gas production that will result from exports from the LNG facility as well as indirect impacts caused by combustion of LNG in end-use or importing markets.

Sierra Club concluded that the Golden Pass LNG project will not deliver benefits that outweigh these impacts. However, the FERC has found Sierra Club’s previous protests against LNG export terminal projects to be unpersuasive.

Keeping Qatar’s hand in the global LNG market

Worldwide, the market for natural gas is enormous and growing. Global energy demand is expected to be 35 percent higher in 2035 than it was just three decades earlier, and natural gas is projected to be the fastest growing fuel source to meet those needs. It’s believe that much of the demand will be met by supplies from North America, Australia, and East Africa, which together will put downward pressure on prices.

Right now, however, Qatar is hamstrung when it comes to taking advantage of the opportunity to meet rising needs, and geography is to blame. Although the nation sits atop the world’s third largest gas reserves and has been the world’s largest LNG exporter since 2006, it may be dethroned by Australia as early as 2017. The problem is that in order to keep the peace with neighboring Iran, with whom it shares its main offshore field, Qatar has self-imposed a gas production moratorium.

But by keeping its hand in the US natural gas market, Qatar can overcome that roadblock. The Golden Pass Products LNG Terminal would give the Qataris more gas to sell while maintaining their home-field moratorium. What’s more, they’d be able to sell American gas at the low American price.

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Although the project has received US Department of Energy authorization for exports to Free-Trade Agreement countries and is awaiting DOE approval to export to non-FTA nations, its formal application with the FERC for construction and operation has yet to be approved.

Endless Opportunity 

Whatever the future holds for the Golden Pass LNG terminal, the project has maintained a goal to commit to the Port Arthur, Sabine Pass and greater Southeast Texas areas to build a mutually beneficial LNG terminal. Golden Pass LNG is also driving the business economy in the Southeast Texas area in attracting new business and retain existing jobs, as well as generating tax revenue. With such promising economy and community, it may be hard to argue the advantages of bringing the Golden Pass back to life.

Some questions for the readers to consider:

  1. Is it possible that Golden Pass could one day exceed Houston’s Ship Channel success?
  2. Do you see any truth behind Seirra Club’s view on the impacts of LNG projects?
  3. What does LNG mean to America’s future?

Chris Sutton has a sound foundation in the energy sector contracting from both Client and Contractor sides with specific expertise in building alliances to facilitate service capabilities. To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com. 

Posted in Uncategorized

The Big Payback: Companies Owe Millions for Misclassifying Workers

Chris Sutton, Partner – Clover Global Solutions, LP

For generations, the American workforce was comprised primarily of full-time employees who received all of the benefits – overtime pay, health insurance, paid vacations, etc.,– that their statuses conferred. Yet in recent years, a rising tide of independent contractors has saturated businesses from coast to coast.  The financial incentive to employers for hiring contractors is easy to understand:  Independent contractors aren’t covered by federal or state wage and hour laws, for instance, and are ineligible for employee benefits such as health insurance and participation in company retirement plans. In addition, employers aren’t required to pay Social Security, Medicare and unemployment taxes for independent contractors.

In other words, companies can save substantially on wages and other associated costs by hiring contractors instead of full time employees. Some businesses are even trying to capture those savings by misclassifying their workers.

There’s No Outsmarting the FLSA

Despite strict IRS guidelines intended to help employers distinguish between employees and independent contractors for tax purposes, some 20% of businesses have made what are known as 1099 misclassifications – classifying a worker as a contractor when he or she is really an employee  (1099, of course, refers to the IRS form used to report payments to an independent contractor).  Some of these misclassifications are honest mistakes. But in other cases, employers have deliberately misclassified employees as independent contractors in order to dodge taxes and avoid providing benefits mandated by the Fair Labor Standards Act (FLSA).

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According to the IRS, misclassifying employees as independent contractors and failing to provide W-2 forms can subject an employer to back taxes of as much as 41.5% of the contractors’ wages (a figure that includes Social Security tax, federal income tax and unemployment insurance), with penalties going back three years.

As a result, companies who’ve been caught by the U.S. Department of Labor (DOL) violating FLSA provisions by misclassifying employees have paid millions of dollars in fines, penalties and remuneration of employees’ lost wages. In the most costly misclassification case in recent years, FedEx in 2007 learned it owed the IRS $319 million in back taxes for misclassifying FedEx Ground drivers as independent contractors. Since then, two California newspapers also paid considerable sums – the San Diego Union Tribune $11 million and the Orange County Register $22 million – when they were found guilty of misclassifying paper carriers as independent contractors.

Rough times for misclassifying roughnecks

Oil and gas companies have also been investigated for FLSA violations, although so far the paybacks have been smaller than those higher profile cases.

In 2012, HongHua, a Houston-based equipment manufacturer and drilling service provider, had to pay more than $687,000 in overtime back wages to 133 roughnecks and crane operators after an investigation by the US Department of Labor’s Wage and Hour Division. The government determined the company had misclassified the workers as contractors then paid them straight time instead of overtime for the hours they worked beyond the regular 40 per week.

In Carlsbad, NM, Morco Geological was also found in violation of various provisions of the FLSA. The company was forced to pay more than $597,000 in back wages to 121 current and former mud logging technicians, many of whom were working more than 100 hours per week but weren’t being paid any overtime. Earlier this year, two oilfield services companies were ordered to pay back lost overtime to misclassified workers. Oklahoma-based Rigid Oil Field Services settled its case for nearly $52,000 while J&A Services LLC agreed in Colorado federal court to pay $2 million to its misclassified workers.

Oil field service personnel – many of whom easily put in 80-hour weeks – are among the most frequently misclassified oil and gas workers among a list that includes:

  • Electricians
  • Mechanics
  • Oilfield delivery specialists
  • Directional Drillers
  • Wireline Operators
  • Roustabouts
  • Toolpushers
  • Well Testers
  • Rig Clerks
  • HSE/Safety Advisors
  • Wellsite Advisors

Misclassification might cost you more than money

In addition to the hefty fines the IRS can assess on a company, the agency can also levy criminal penalties of $1000 and/or one year in prison for failure to properly classify workers. If the IRS obtains a felony conviction against a person or company for tax evasion due to 1099 misclassifications, the fine can be as much as $100,000 for an individual or $500,000 for a corporation. But that’s not all:  felony convictions can also come with a prison sentence of up to five years.

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Furthermore, individuals such as corporate officers or those who have authority over the financial affairs of a business may be personally liable for up to 100 percent of any uncollected taxes relating to misclassification and may also be subject to criminal prosecution.

Cracking down even harder on violators

Worker misclassification is increasingly the subject of state and federal legislation. On the federal level, the DOL and IRS both have misclassification task forces dedicated to investigating use of independent contractors, including conducting random and focused audits of employers.  The agencies hope to raise $7.3 billion for the federal coffers by cracking down on misclassifications.  The DOL has even awarded $10.2 million to 19 states to help them upgrade their worker misclassification detection and enforcement.

Late last year, Sen. Bob Casey (D-PA) introduced the Payroll Fraud Prevention Act of 2013 at a hearing of the Senate Subcommittee on Employment and Workplace Safety. The bill takes aim at curtailing the misclassification of independent contractors, which the sponsors equate with “payroll fraud.”

Moreover, the IRS, which began its crackdown a few years ago, is promising to be even more vigilant. Those in favor of stricter rules on misclassification say they are protecting not only workers, but companies who already play by the rules. However, since the passage of the Patient Protection and Affordable Care Act (also known as the ACA or “Obamacare”), advocates of stricter regulations fear that employers will be further motivated to keep workers off the books as official employees.

ACA red flags:  What the feds are looking for

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The employer mandate portion of the ACA will require employers with 50 or more full-time employees to provide healthcare coverage to those employees starting in 2015. Some employers have already been cutting employee hours as one tactic to reduce their full-time headcount, while others have instituted layoffs, hiring freezes, or simply hiring independent contractors instead of full-time employees.

While it may seem tempting to begin classifying workers as independent contractors, the cases just described show the danger inherent in that move. As the IRS continues its efforts against worker misclassification, the agency is looking for red flags such as a W-2 employee suddenly showing a 1099 classification instead.

One solution is for companies to utilize contractors who are the legal W-2 employees of a staffing firm. In that case, the worker counts toward the staffing firm’s headcount, not the company’s, and the company remains in compliance with FSLA, IRS and ACA. In today’s new generation of American business, that’s a smart and safe way to proceed.

A few questions come to mind for the readers:

  1. Can a clear, concise statement of work minimize the number of  1099 misclassifications?
  2. What other solutions might help companies to meet compliance requirements?
  3. Other than the oil & gas industry, what industries are notorious for worker misclassification, if any?

Chris Sutton has a sound foundation in the energy sector contracting from both Client and Contractor sides with specific expertise in building alliances to facilitate service capabilities. To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com. 

Posted in 1099 Compliance, Contingent Workforce, Risks | Tagged , ,

A Solution to Fracking’s Water Problems?

Chris Sutton – Partner, Clover Global Solutions, LP

Hydraulic fracturing, or fracking has helped spark U.S. oil and gas output in the past five years, but the practice also uses massive amounts of fresh water.  Millions of gallons of water are needed to frack just one well.  A lack of water can easily hinder fracking, which would in turn slow oil and gas output.

To ensure a continuous water supply for fracking, some drillers – especially drillers in parts of the country affected by droughts and water shortages — are exploring the use of recycled water.  Drought has become an issue in Texas over the last few years, and although the recycling practices are slow to catch on there, some of these new methods are proving to be very beneficial.

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The Apache Solution

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Apache Corporation has more wells in the Permian Basin of West Texas than any other drilling company.  In fact, in the Permian Basin’s Wolfcamp shale play, Apache is a water recycling pioneer.  The production manager for Apache says that the company recycles 100% of “produced” water, a byproduct of oil and natural gas drilling.  Moreover, the company recycles “flowback” water, the water that is pushed out of the well during the fracking process.  

In addition to the recycled, produced and flowback water, Apache uses brackish water  from the Santa Rosa aquifer, and   has completely eliminated the need for a fresh water supply from at least one of its oil wells in Wolfcamp.

Apache treats produced and flowback water with chemicals to remove bacteria and unwanted minerals such as iron.  Once treated, the water is stored above ground and piped to a well to use in fracking.  Recycling has turned out to be an economical solution for Apache: treating flowback water costs an average of 29 cents a barrel. If the flowback water isn’t recycled, Apache has to pay $2.50 per barrel for a third-party company to dispose of it. 

Slowly Catching On

Despite Apache’s successes with reusing water, recycling has been slow to catch on in most of Texas. Although a recent drought caused a shortage of water, in general, fresh groundwater is low cost and plentiful. Furthermore, waste disposal is relatively easy in Texas compared to other states.  For example, in the Marcellus shale play in Pennsylvania, operators must drive their waste to Ohio because the geography around the play doesn’t allow for disposal wells. 

Although slowly, water recycling is catching on in the Lone Star State and Apache isn’t the only company to reuse fracking water.  For example, Fasken Oil and Ranch, operating near Midland, recycles close to half of the water it uses for fracking.  However, unlike Apache, which has saved money by recycling, Fasken says that recycling is actually adding to their cost—about $70,000 for each hydraulic fracture.  In this specific case, recycling is costly for Fasken because access to fresh groundwater from the 165,000 acres owned by the company bears almost no cost.

Permit applications show further evidence that water recycling is catching on in Texas:  Applications for oil field water recycling have gone up from just one or two per year to 9 so far in 2013, and 13 last year.  However, there may be more even more recycling going on because the state does not require “mobile recyclers,” which recycle water on or near a fracking site, to get permits.

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Conclusion: The Future of Water Recycling

Although water recycling hasn’t eliminated the demand for fresh water in fracking, there has been a shift in attitudes in recent years.  Because of factors like droughts and community concern over water usage, companies are beginning to see produced water as an asset instead of waste that needs to be disposed of.  If water recycling becomes fully adopted by oil and gas companies, then it’s likely that more money will go into future development.  The possibilities go beyond fracking, too – water is already used for other purposes, such as cooling water in power plants.  If water recyclers can get water clean enough that it can be used for drinking and household purposes, we could see considerable value.

A few questions come to mind for the reader:

  • What do you think is stopping other operators from recycling their produced water?
  • Is it too late to apply solutions with fracking’s water problems or getting a justified ROI on a fracking water recycling program?
  • Do you think that there are some parts of U.S. shale play where recycling won’t work?
  • What are other uses for produced water?

Chris Sutton has a sound foundation in the energy sector contracting from both Client and Contractor sides with specific expertise in building alliances to facilitate service capabilities. To contact Chris with any questions or comments, please send an email to Chris.S@clovergs.com. 

Posted in Uncategorized