BISMARCK - The North Dakota Industrial Commission has approved the first significant pilot test of recycling water for hydraulic fracturing in the Bakken, which could lead to conserving millions of gallons of freshwater and reducing truck traffic.

Statoil received the OK this week to proceed with a test that will use produced water - wastewater that is a byproduct of oil production - for fracking operations at a well site north of Williston.

Reusing the wastewater will save about 6.5 million gallons of freshwater for the two oil wells at the test site, said Russell Rankin, regional manager for Statoil.

Statoil did a small-scale test in 2012 to determine if produced water from the Bakken, which has a very high salinity content, could be used for fracking. The test used Halliburton’s technology known as CleanWave to treat the water.

The next hurdle Statoil had to clear was to develop a plan to safely store about 3 million gallons of produced water in tanks on location to complete a full frac job.

That’s where the Industrial Commission is proceeding cautiously because a tank failure involving produced water could be catastrophic, said Lynn Helms, director of the Department of Mineral Resources.

“We’re very supportive of recycling water and reducing freshwater requirements but we’re also going to be really, really careful about how they do this,” Helms said. “They’re going to have to meet a really high bar in terms of how they move and store this saltwater so that we don’t have a big spill.”

North Dakota’s oil industry used about 5.5 billion gallons of water in 2012 and is on pace to exceed that by 5 to 10 percent this year, said Mike Hove, water resource manager with the State Water Commission. About 70 to 75 percent of that water is used for fracking, Hove said.

The Industrial Commission sent Statoil back to the drawing board more than once before Helms recommended approving the proposal at a meeting last Thursday. And although the commission approved it, it’s contingent on Statoil meeting some additional requirements.

“They’re one of the most environmentally conscious companies we have, so we’re happy to be doing a pilot project with them,” Helms said.

Statoil worked with another company to specially design a “tank within a tank,” so that if one tank ruptures, the second tank could contain the water, Rankin said. Three of the double-walled tanks, each capable of holding more than 1 million gallons, will be used.

Produced water from other Statoil wells will be transported by pipeline to the tanks, a process that is expected to take about two weeks before enough water is on site for fracking operations.

Transporting water by pipeline for use in fracking operations reduces truck traffic by about 600 truck trips per well, Rankin said.

The plan also includes other safety precautions, including a large berm around the entire location designed to contain a spill. Statoil also will be required to have material and earth-moving equipment on site to build an additional dike in a worst-case scenario, Helms said. The precautions take into consideration that the Little Muddy River is about one mile away from the test site.

“I think we’ve got pretty much every base covered,” Rankin said.

Statoil plans to do the test at the end of January, Rankin said. It will take at least six months to see production from the wells to determine results, he said.

“We are excited to get this test underway and see the results,” Rankin said. “We do feel like this is the direction that we want to head to conserve water and to be able to utilize some of the byproducts from the extraction of oil and gas.”

Statoil does not expect to save money by recycling water for this test project, Rankin said.

“It’s more of an investigation for the future,” Rankin said. “Then we’ll have to work on efficiencies.”

Ultimately, companies should be able to save money by not having to purchase freshwater or pay for trucking costs, Helms said.

Eight to 10 companies have asked about the status of Statoil’s proposal and will be watching the results closely, Helms said. Under current rules, companies need to come to the Industrial Commission for approval of these types of recycling projects, he said.

“If this works out and we can begin to do these on a site-by-site basis, it will greatly reduce the demand for freshwater for hydraulic fracturing and greatly reduce the amount of trucking,” Helms said.

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