MIDLAND, Texas—The midstream water space is a bright spot for growth in an otherwise bleak oil and gas environment, said speakers at the Executive Oil Conference’s Water Forum on Nov. 5.
Karr Ingham, petroleum economist executive vice president of the Texas Alliance of Energy Producers, described a transition underway in the disposal of produced water as he kicked off the event.
His organization’s goal is to significantly shift the disposal of produced water in Texas from salt water disposal injection to primarily recycle and reuse, he said.
“It’s our job to … create policy and figure out what we need to do with water management,” Ingham said.
Texas shale operators and producers don’t want to be in the water business, he added. “They want solutions.”
‘What Will Happen If Warren Wins?’
Kelly Bennett, co-founder and president of B3 Insight, an oilfield water data analytics and intelligence company, followed Ingham’s talk with his perspective that the Permian Basin’s Delaware Basin is the central driver for growth in demand for water-related services.
Bennett, who spoke during the panel entitled “How Wall Street Views the Business of Water Midstream,” addressed potential headwinds facing the industry.
“I have not had a single conversation without someone asking what will happen if Warren wins,” he said, referring to Sen. Elizabeth Warren (D-Mass.), one of the leading contenders for the Democratic nomination for president.
But he noted that the industry needs to be thinking beyond 2020 to support the needed buildout in the Permian’s midstream water space.
J. Marshall Adkins, head of energy investment banking at Raymond James, joined Bennett on the panel and presented two contrasting views.
“Water is one of the true bright spots in the industry today and it’s only going to get better,” he said, though he added that he’s never seen investor sentiment as bad as it is now.
Still, he sees growth in the midstream water space.
“We’re going to have to put that water away,” he said. “I don’t see any way around not needing a lot more water infrastructure.”
Water recycling and reuse will be a mandate in the future, said Kevin Lafferty, president and CEO of Lagoon Water Solutions, during the “Case Studies in Water Solutions” roundtable.
Joining Lafferty on the roundtable was Brian Kuh of WPX Energy Inc., who has observed a lot of collaborative work to reduce costs in the midstream water space. Operators are not only looking at what they can do with their water but at what their neighbors are doing, he said.
Erik Waters, vice president of operations at SitePro LLC, pointed to the integral position of the water sector: Operators can’t produce oil if they can’t put away those billions of barrels of water.
During the water solutions roundtable, John Durand, president of XRI Holdings LLC, said his Midland, Texas-based company expects to more than double its water treatment and recycling capacity of 150,000 barrels per day (bbl/d) by this time in 2020.
XRI acquired the water treatment and recycling division of Fountain Quail Energy Services LLC earlier this year.
“By doing that, we took a first-mover stance,” Durand said.
Consolidation in the space will likely continue but he noted that “there’s a spirit of collaboration in the midstream water market that I’ve never experienced in my career in the energy business.”
Also on the roundtable was Jim Newman, senior vice president of operations at Agua Libre Midstream, which was created by Basic Energy Services in August.
“As you well know, water has changed tremendously in our industry,” Newman said.
Sourcewater Inc. CEO Josh Adler describe the mission of his company as showing where every drop of water in the basin comes from and goes to.
“We’ve been trying to do more and more to help our clients see deeper into the future and the ground,” he said.
The head of the oilfield water technology company also shared details of a new product that he said will “predict where the supply and demand is going to be before the permit comes out because by the time the permit comes out it’s too late to do anything about it.”
A modeling suite addresses key knowledge gaps to improve the prediction and evaluation of offshore systems for improved spill prevention and more.
Service providers and operators innovate to ensure record production continues.
The booming Permian Basin is a new technological proving ground for America’s energy industry. How can it set itself up for success?