Private-equity firm Blackstone Energy Partners LP said Feb. 5 it has set up a midstream unit in the Permian Basin to build facilities that treat water in one of the world's largest oil fields.
Huge levels of dirty water produced by U.S. shale firms are driving up investment in water-handling facilities, as cash-conscious oil and gas companies try to cut costs.
Blackstone said it has made an equity commitment of $500 million in Waterfield Midstream.
The Permian Basin of West Texas and New Mexico is at the center of the U.S. shale boom, where Waterfield will focus.
Waterfield is led by Co-CEOs Scott Mitchell and Mark Cahill, who previously built and led Anadarko Petroleum Corp.’s (NYSE: APC) and Western Gas’s Permian Basin commercial water infrastructure platform.
Recently, Waterfield signed a 15-year contract with Guidon Energy to construct a new system to handle Guidon’s water gathering and disposal needs across its about 40,000 acre position in Martin County, Texas. In Martin County, Waterfield is targeting deeper disposal zones, as opposed to shallow disposal zones, to provide long-term flow assurance and to support optimal drilling conditions for its upstream customers.
Additionally, Waterfield has entered into an agreement with EagleClaw Midstream to operate the company’s water assets in Reeves County, Texas. These assets consist of 58 miles of gathering lines and 390,000 barrels per day of permitted water disposal capacity.
The additional minerals investment comes less than a week after EnCap agreed to sell its stake in Phillips Energy Partners to Kimbell Royalty Partners.
Rice brothers, Toby and Derek, reiterated their plan to turnaround EQT and realize the potential promised from the Rice Energy merger.
Devon Energy had been actively shopping the Permian Basin assets, and others in the Rockies, the past several months.