Coalbed Methane Produced Water In The Western Us

impair the water quality with respect to other uses. Each beneficial use has a potentially different acceptable quality—and not necessarily the quality of CBM produced water.

Each beneficial use also aligns with a set of criteria, and acceptable or appropriate criteria for one beneficial use may be in direct conflict with the criteria for another beneficial use. For instance, in the case of discharging CBM produced water for wildlife habitat enhancement, research has shown that the chemistry of impounded water changes over time and, consequently, that such water may become deleterious to wildlife health over time. In the case of discharge to a stream to supplement downstream irrigation, existing stream channels reflect a geomorphological evolution, which may be substantially altered by flow augmentation. Additional complications and hindrances are introduced when consideration f

BOX 4.3

First-Order Estimation of the Market Value of CBM Produced Water Since Production Began in Wyoming

Water for domestic use in Denver (as an example) costs on the order of $4,000 per acre-foot0 for a water right. Lease rates for water with at least a 10-year guaranteed supply sold to urban Denver buyers averaged $5,000 per acre-foot (in 2009 dollars).' As shown in the figure below, the potential value of CBM produced water today, if shipped to Denver, would be on the order of hundreds of millions of dollars per year at current market value. The cost of a 10-inch pipeline needed to move water from Wyoming to Colorado would be about $500,000 per mile. For roughly 400 miles of pipeline (the distance from the CBM producing areas of the Wyoming Powder River Basin to Denver), the approximate cost would be on the order of $200 million. At a supply of 75,000 acre-feet per year, the cost of the pipeline and other related business expenses would be covered inside of one year. These calculations do not include water treatment costs that would have to be borne if the water did not emerge from the well head in the Powder River Basin (or another basin) within regulatory standards for potable water. The energy cost of pumping water at 1,000 gallons per minute (with a lift of about 1,000 feet from the Powder River Basin to Denver would be about $20 per acre- foot assuming a lift cost of 1 cent per kilowatt-hour and 90 percent pump and motor efficiencies).c Even assuming much higher power rates and the construction of pump stations, the power costs appear relatively small.

While this type of calculation is intentionally simplistic, it illustrates the value or potential value of a resource, water, which is otherwise largely disposed of in a part of the country that historically suffers from water stress. The complications of this issue are significant and include effects of CBM produced water on groundwater and surface water resources (as discussed in Chapter 5); costs at various parts of the beneficial use chain, including production of the water, water treatment, and any storage or transportation of the water (Chapter 6); the consistency or sustainability of the produced water resource supply (Chapter 2); and the regulatory constraints both within and between states (Chapter 3). Of relevance to the discussion is also the fact that CBM produced water has never been considered available for a water right since CBM produced water is not available on a permanent basis. Therefore, CBM produced water at present has no legal ownership that can be assigned or transferred to a vendor which is the current basis for the situation that an operator can treat CBM produced water, but cannot sell it.

is given to liability, water rights regulations, and sustainability of supply issues. These circumstances, in addition to the general decrease in volume of CBM produced water over the lifetime of a well, make CBM produced water an uncertainty and only a temporary source of water for beneficial use. This uncertainty contributes to the difficulty of addressing opportunities for beneficial use.

For the purposes of adding some quantitative value to this discussion, the committee attempted to generate a simple answer to the question "What might be the economics of using high-quality CBM produced water as a commodity?" The resulting Fermi calculation illustrates the potential value of the total amount of CBM water produced per year now in the Powder River Basin in Wyoming (see Box 4.3). Fermi-type calculations, even

Year of Production

FIGURE The blue curve shows to the total acre-feet of CBM produced water from the Wyoming portion of the Powder River Basin from the mid-1 980s through 22009* (corresponding to the vertical scale on the right-hand side; see Chapter 2). The red curve, corresponding to the vertical scale on the left-hand side of the diagram, shows the calculated potential market value of CBM produced water, if shipped to Denver, using the conservative value of $4,000 per acre-foot for domestic use in Denver for each year. In other words, if all of the produced water from the Wyoming portion of the Powder River Basin in 2009 (about 78,000 acre- feet) was shipped and sold to Denver, the market value of the water would be 78,000 acre-feet x $4,000 per acre-foot = $312 million. This "market value" for the water is greater than the estimated cost of building the water pipeline.

°See www.waterexchange.com/Deepwater.aspx (accessed March 10, 2010).

bSee www.bren.ucsb.edu/news/water_transfers.htm (accessed April 27, 2010).

cSee www.engineeringtoolbox.com/water-pumping-costs-d_1527.html (accessed April 27, 2010).

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