Oilfield wastewater disposal volumes are expected to double in the Permian Basin within the next two to three years, a new analysis from global energy intelligence firm Wood Mackenzie shows.
As drilling activity continues to expand in the arid region between West Texas and southeastern New Mexico, hydraulic fracturing has resulted in growing challenges in sourcing water and what to do with wastewater from completed wells.
Wastewater disposal costs can account for a third of total lease operating expenses in the Permian Basin, Wood Mackenzie Director of Upstream Consulting Matthias Bloennigen said in a statement. "Even with 100 percent water reuse for further completions, which is unlikely, the current saltwater disposal infrastructure is expected to hit capacity in the near future," Bloennigen said. "As Permian operators continue to focus on boosting production output, they will need to develop and refine their water strategies."
While exploration and production companies scramble to avoid bottlenecks and well shut-ins, water midstream companies are providing various solutions as the water management challenges grow. More than a dozen water-related infrastructure deals have taken place in the Permian over the last three years, and the pace of transactions is expected to pick up considerably in 2019.
"We've seen a lot of interest from private equity, as there's still a huge need for water infrastructure," Bloennigen said. "But it's important that people understand the factors at play in the Permian before they invest."
With more than 460 drilling rigs in operation in the Permian Basin, the arid region accounts for nearly half of the exploration and production activity in the United States.
Some 246 operators have filed more than 2,400 drilling permits for projects on the Texas side of the Permian Basin, accounting for nearly two-third of drilling permits in the Lone Star State, Railroad Commission of Texas show.