Frack Water Demand Forecasted to Drop Due to Oil Price Collapse

IHS Markit, an industry research firm, forecasts that demand for fracking water in the United States will drop by 47 percent in 2020 due to lower demand for oil.

Governments worldwide responded to the new coronavirus pandemic by shuttering businesses and restricting travel. Those actions caused the market price of oil to collapse. A barrel of West Texas Intermediate is down by half in the last six week, currently trading at $26.

Oil companies are expected to pull back drilling operations this year, especially in the Permian basin, a region of New Mexico and Texas that had been the epicenter of drilling activity.

IHS Markit expects that produced water volumes will see less of a dip. Produced water is the salty, chemical-laden water that comes to the surface along with oil and gas. Because disposing produced water — usually by injecting it underground or reusing it for fracking — is one of the biggest operating costs, IHS sees potential for more industry collaboration to streamline the process.