Houston Chronicle by Sergio Chapa Aug. 2, 2019
New laws could pump billions of dollars into Permian Basin’s rapidly growing water recycling industry
Whether by pipeline tanker, truck or hose, more water is moving around the arid Permian Basin than crude oil at any given moment.
Water has become the lifeblood of the modern energy industry with hydraulic fracturing using high-pressured slurry of water, sand and chemicals to unlock oil and gas from shale formations in Texas and across the country. In the arid Permian Basin, the nation’s most productive oil field, drilling and fracking operations consume more than 195 million gallons of water per day in West Texas and southeastern New Mexico — enough water to fill nearly 300 Olympic-sized swimming pools.
All this has made water and water management in the Permian a big business that’s only expected to get bigger, following the recent enactment of three laws in Texas and New Mexico, the two states encompassing the sprawling oil basin. The laws, which essentially clarify water rights issues and encourage the reuse of water, could pump billions more dollars of investment into the region’s rapidly growing water recycling industry.
At least a dozen water recycling companies operate in the Permian Basin, according to the Houston research firm Simmons Energy, and they are attracting increasing interest from from private equity firms and other investors. In December, Houston oilfield water company WaterBridge Resources secured up to $800 million in private equity money to add more water pipelines and disposal facilities.
So far this year, companies have made more than $2.5 billion of water-related mergers, acquisitions, private equity investments and other deals in the oilfield, according to the global energy research firm Wood Mackenzie.
Those deals only expected to accelerate as the new laws take effect. Last week, the Midland oil company Concho Resources entered into a joint venture with the Houston water management firm Solaris Water Midstream with the aim of recycling more wastewater from the oil field. Financial terms were not disclosed.
“Encouraging recycling makes sense,†said Mark Patton, president of the Conroe oilfield water recycling company Hydrozonix. “Everything you recycle is that much less water that goes into disposal wells. You’re keeping it in the hydrological cycle on the surface for a lot longer.â€
Three New LawsWastewater is produced in the oil field in two main ways, through fracking, which uses millions of gallons of water for each well, and drilling, which brings up brackish water left behind by the ancient inland sea that covered central North America in the days of the dinosaur. As many as 15 barrels of water are produced for each of the 4.2 million barrels of oil per day that come out of the Permian.
What to do with all that water has become a problem, particularly in the Permian, where the vast amounts of wastewater — most of it pumped underground into deep disposal wells — are testing the geological limits of the basin. Disposal wells also are blamed for the increase in earthquakes in areas near oil and gas fields, particularly in a 50-mile corridor between Fort Stockton and Pecos.
Texas and New Mexico legislatures began addressing water issues in the oilfield this year. Although the states share the Permian Basin and various aquifers, they vary greatly on water laws.
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