Probably not a space where you want to be half pregnant.
“A lot of it comes down to what level of control that the exploration and production company wants to have over water,’ Duman said. “There are extreme cases where some operators want to wash their hands clean of it and let a third-party company take care of it all. On the complete other end of the spectrum, you have companies like Pioneer Natural Resources that have their own water subsidiary that handles their volumes with dedicated resources.”
Water has become such a large business in the oilfield that it now has its own conferences. Earlier this month, hundreds of industry professionals attended the Produced Water Management Conference at the Westin Galleria in Houston where recycling was a frequent topic of conversation.
Looking ahead, the industry is ripe for consolidation. Midland oilfield water management company XRI bought the water recycling arm of Dallas-based Fountain Quail Energy Services in April. Financial terms of the deal were not disclosed but XRI CEO Matt Garbiel said the industry is looking to become more sustainable.
“Our customers are realizing very quickly how cost-effective our technology is compared to more costly saltwater disposal infrastructure and services,” Gabriel said. “It is an exciting time for our company to be at the forefront of reshaping water management in the energy industry through sustainable and economic water reuse solutions.”
In the 1920s, an oilfield accident near Big Lake, Texas sent billions of gallons of produced water to the surface, making the land unsuitable for vegetation and animal life. Known as the “Texon Scar,” the damage can still be seen from outer space nearly 100 years later.
“Any landowner will tell you that they’d rather have an oil spill on their land than a produced water spill,” Leyden said. “It’s much easier to clean up an oil spill. Produced water has salts and other compounds that are difficult to remove.”
Full Bloomberg article linked above.
An obscure Texas company has bid $450 million to acquire the Hanging H Ranch in one of the state’s most desolate corners, aiming to make a big splash amid booming demand for water in the world’s busiest oil patch.
RRIG Water Solutions LLC has signed a letter of intent with the family that owns the 67,500-acre ranch located in West Texas, according to marketing materials from Jefferies Financial Group Inc., which is arranging financing for the deal. A representative for RRIG did not return messages seeking comment.
Drillers spent $11 billion on water management in the region last year and that’s set to grow to $18 billion in 2021, according to research firm Oilfield Water Connection LLC. RRIG already owns a 475-mile (764-kilometer) water pipeline in the Permian area that it acquired for an undisclosed sum in 2017.
The ranch is actually made up of a patchwork of parcels straddling three Texas counties: Reeves, Jeff Davis and Loving. Reeves and Loving counties alone produced about 600,000 barrels of crude a day last year, according to GlobalData Plc, more than OPEC member Ecuador.
One of the ranch’s most attractive assets is its location right up against the New Mexico border. Texas has less-stringent water-sale rules than its neighbor. In order to confirm that the ranch is rich in water, Lindsay said he had to drill wells.
Singapore sovereign-wealth fund GIC has bought a stake in WaterBridge Resources LLC in a deal that values the Houston-based handler of oil-drilling wastewater at nearly $3 billion including debt, according to people familiar with the matter.
GIC bought 20% of the company from Five Point Energy, a Texas investment firm that started WaterBridge in 2016 with $200 million of seed money, one of the people said.
The deal—and the lofty valuation for the three-year-old company—highlights the rising importance of businesses that handle the lakes worth of briny, polluted water that energy producers extract along with oil and gas when they hydraulically fracture shale and other rock formations. While big investors have flocked to West Texas for its prolific oil wells, they are now scrambling to manage the cruddy water spewing out of the wells at much greater volumes than crude.
You’ll recall that this blog started as a scrapbook of sorts. Fun/interesting read here.