shale gas and mining: much ado about process
TRANSCRIPT
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“Water issues are front and center for two environmentally
challenging processes… Pumps are part of the solution.”
Shale Gas and Mining: Much Ado About Process
An Industry Overview for Empowering Pumps
November, 2012
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FOCUS ON SHALE: U.S. shale plays drive opportunity…
and take a heavy water toll.
Natural gas glut in the U.S. is pushing operators to
focus on liquid rich shale.
Due to the presence of oil, gas, and water; multi-phase
pumping systems are required.
The need for oil and gas separation systems and water
treatment systems will spur the growth of multi phase
screw pumps and progressive cavity pumps.
Short Term
Liquid Rich Shale
‘12 – ‘14
Source: Frost & Sullivan’s Idea Labs Oil and Gas Scorecard.
The total volume of water required for hydraulic
fracturing is more than 100 billion gallons per year.
This requires a large infrastructure to transfer, process
and recycle water.
This is expected to positively impact centrifugal
pumps, reciprocating pumps, PC pumps, diaphragm
pumps and gear/vane pumps.
Hydraulic Fracturing
Short Term ‘12 – ‘14
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Shale exploration and production require unique and innovative water management solutions…
This significant demand for varied mobile infrastructure will drive the market for
process equipment, including pumps, valves and compressors. Source: Frost & Sullivan Analysis
gallons of water
per well # of Rigs # of wells drilled
per rig in a year gallons of water per year
Processing
Drilling
Recycling and Disposal
Transfer and Storage The challenge lays in moving the necessary
infrastructure every 3 weeks to a new well
location for drilling a new well.
This needs a huge mobile infrastructure –
trucks, mobile water treatment equipment,
pipelines, mobile pumps.
Moreover, handling, treatment and disposal
of produced water is also a major issue.
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Recycling and
Disposal
Onsite Processing
Drilling
Transfer and
Storage
Opportunities Galore for Pump Manufacturers in the Shale Gas/Oil Industry
Each of the four major segments offer different opportunities and require
strategy to capitalize on those opportunities.
Recycling and disposal is the most important segment.
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Environmental Mandates are the Key Reason for the
Explosive Growth of Produced Water Market
Construction 20.0%
Equipments 25.4%
Engineering 13.4%
Services 41.2%
35.1%
17.2%
18.3%
8.8%
5.7%
15.0%
Materials
Piping, valves and controls
Pumps
RO membranes
Energy recovery devices
Others
“The shale gas produced water market was approximately a $1 billion market in 2011.”
10.0 – 12.0%
$42.0 Million
Low to medium
Slightly increasing
Low estimate : 8.0% Base case : 10.0% High estimate : 14.0%
2011 Growth Rate*
2011 Market Size*
Market Concentration
Pricing Trend
Estimated CAGR (2011- 2018)*
Pumps in Produced Water Market:
Consolidated Market Characteristics (NA), 2011-18
*Note: Initial analyst estimates and may vary as research progresses.
Source: Frost & Sullivan
As pumps are the key process equipment for the water treatment systems, the
produced water market will be an attractive market for pumps suppliers.
2011 Market Size ~$250 Million
CAGR (2011 – 2017) 8 ~ 10%
Wastewater Treatment Equipment Market in the
Shale Gas Industry (NA), 2011
All figures are rounded; the base year is 2010. Source: Frost & Sullivan
Shale Gas Produced Water Market (NA), 2011
2011
$1 billion
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Shale Gas Value Chain – Where the Money Is….
The many demands of shale plays – topology, proximity to water, geology, proximity to human habitation,
and so on – mean that needs and solutions can vary significantly from site to site. Innovation across the
value chain has been a huge enabler of efficient, profitable exploitation of shale oil and gas.
Pu
mp
Man
ufa
ctu
rers
OF
SE
Oil a
nd
Gas O
pera
tors
This innovation is driven by strategic partnerships across the value chain, and are an important reason
that many relatively smaller suppliers have been able to carve out significant success in the space.
Produced Water Market: Value Chain Analysis (North America), 2011
Eq
uip
men
t M
an
ufa
ctu
rer
Partnerships with small and innovative water treatment providers is a core strategy
for success in this market.
Source: Frost & Sullivan
Including:
Weir
Flowserve
Netzsch
Including:
Fountain
Quail
Ecosphere
Layne
Including:
Schlumberger
Calfrac
Baker Hughes
Including:
Exxon
Mobil
Shell
Chevron
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FOCUS ON MINING: Declining ore grades mean greater
mineral ore volume will need to be processed.
Source: Frost & Sullivan analysis, Idea Labs Mining Scorecard.
•The main sustainability issue and
driver facing the mining industry is that
of declining ore grades. This implies
that over time, more mineral ore will
need to be extracted in order to yield
the same returns of metal.
•This will likely exacerbate many of the
environmental and social issues
currently facing the mining industry
going forward, including water
management.
Key Sustainability
Issues
Mineral Waste
Management
Energy Water
Pollution Management
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Mining Scorecard: Cumulative Total of Tailing
Dam Failures (World), 1960 - 2012
Protecting the environment – from development to
closure – is under greater scrutiny.
Source: Wise Uranium Project
•Between 1970 and 1999,
there have been two to five
major dam tailing failures
per year. This rate has not
changed.
•The impacts of these
failures can have severe
ramifications including toxic
floods that negatively affect
people, wildlife, and critical
natural resources.
2
17
24
33 37
48
59
70
82
92
0
10
20
30
40
50
60
70
80
90
100
1960 - 1964
1965 - 1969
1970 - 1974
1975 - 1979
1980 - 1984
1985 - 1989
1990 - 1994
1995 - 1999
2000 - 2004
2005 - Present
Cu
mu
lati
ve t
ailin
g d
am
failu
res
Cumulative number of tailing dam failures
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Water pollution as a result of mining activities is
increasing globally.
Source: World Bank, Frost & Sullivan Idea Labs Mining Scorecard
Region Incidence
Developing
Countries
70% of untreated industrial wastes in developing countries are
disposed into water where they contaminate existing water
supplies.
United States
An estimated 500,000 abandoned mines will cost roughly $20
billion in management and remediation of pollution – many of
these sites will require management in perpetuity.
United States In Colorado alone, some 23,000 abandoned mines have
polluted 2,300 km of streams.
Japan
Chlorinated solvents were found in 30% of groundwater
supplies in 15 Japanese cities, sometimes ending up as much
as 10 km from the source of pollution.
Global
Roughly one unit of mercury is emitted into the environment
for every unit of gold produced by small-scale miners. A total
of as much as 1,000 tons of mercury is emitted each year.
Water Pollution from Mining and Industry (World), Selected Incidences, 2012
Source: UN
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Pumps that can move mining slurry with lower
water content through closed-loop water hydraulic
drills can help mitigate this challenge and reduce
water use.
Key global drivers for water reduction and greater water recycling, 2012
Reduced water use and proper management can equate
to reduced costs…Pumps are part of the solution.
Source: Frost & Sullivan analysis
Increasing price of water
Increasing water scarcity
Intake water must be
conditioned
Effluent water must be treated
Environmental responsibility
Peristaltic Pumps
Crushing and grinding of ore
Mixed with water to extract the mineral
Thickened in sedimentation tank
Filtering stage to dry the mineral
sludge
Pumped away for further processing
Peristaltic pumps address key
challenges:
•Reducing downtime
•Reduced operating costs
•Managing and reducing water inventory
•Reduced chemical usage
•Lower maintenance costs
•Conforming to environmental regulations
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Contact Frost & Sullivan for Further Information
Britni Myers Executive
North America Corporate Communications
(210) 477-8481
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