WHAT ARE SWDs?
WHY ARE THEY IMPORTANT
Saltwater disposal wells are highly regulated facilities designed to receive and dispose of oil field waste water generated from oil and gas drilling, completion and production operations.
THE WATER MGMT
There is no denying the water sector plays a vital role in the energy lifecycle. Operators today are not only producing more water than ever before, but also using more to drill and complete longer laterals making disposal wells a hot product.
Water management spending in the Permian basin alone is projected to nearly double over the next 5 years from $12.5 to $22.2 billion. There's no better time than now to capitalize on this growing industry.
SWD REVENUE STREAMS
SWD's Generate Revenue From Multiple Sources
In the Permian Basin, oil and gas wells produce up to ten (10) barrels of water for every one (1) barrel of oil produced.
Saltwater disposal wells are in high demand because oil and gas wells in the Permian Basin generate an estimated 24 Billion barrels of wastewater each year. That number is expected to grow to 50 Million by 2023. As more oil & gas wells are brought online, the produced water volumes will continue to grow and will need to be trucked or piped to nearby disposal wells.
According to IHS Markit, more than 42,000 new oil & gas wells will be drilled in the Permian basin over the next five (5) years.
The average frac job will require 300-400,000 barrels of water per well completed. This equates to more than 20 Olympic sized swimming pools.
Approximately 25% of this fluid is produced in the first few weeks of production and is transported to nearby saltwater disposal wells. This “flowback” water is another significant revenue generator for disposal wells due to the high concentration of oil contained in the waste stream.
SWD's also generate revenue by separating and selling any residual oil contained in the water received for disposal.
On average, 0.3-1.0% of the waste water received is oil that can be collected or "skimmed" and sold. If a disposal well receives 10k bbls/day of water, approximately 900-3,000 barrels of oil will be sold generating an additional $50-150k per month in revenue.
Combined with the revenue generated from disposal fees ($0.40-0.50 per barrel), SWD's can produce impressive returns for investors.