A number of Permian producers and their contractors are working to rein in well-completion and operating costs by developing extensive pipeline networks to efficiently deliver fresh, brackish or treated water to new wells for use in hydraulic fracturing — and deliver produced water from producing wells to treatment and disposals sites. This water-related infrastructure build-out is driven by a combination of necessity and economy, and is made possible in part by the trend among producers to assemble very large, contiguous leaseholds so they can drill longer horizontal wells. Today, we continue our series on water-related pipeline, storage and treatment infrastructure.
The Permian is now producing more than 2.6 MMb/d of crude oil, 7 Bcf/d of natural gas and 800 Mb/d of natural gas liquids — extraordinary numbers by any measure — and under almost any price scenario, the region’s hydrocarbon output is going to continue rising. Permian production growth is driven by what you might call supersizing (see Faster Horses). Producers are piecing together ever-larger leaseholds in the parts of the Permian they have determined to be the most promising, and filling in gaps so their holdings are contiguous and are not “checkerboarded” (interspersed with leaseholds held by other producers). That is enabling producers to drill longer horizontal wells or laterals (now often 7,500 to 10,000 feet, and sometimes longer). And they are intensifying their well completions with the use of more pressure, more water, more frac sand per linear foot of lateral and more frac stages. One other thing: With their large, uninterrupted acreage, many producers are making long-term plans for the phased, sequential development of their leaseholds, an approach that — like Henry Ford’s Model T assembly line –– helps to optimize operational efficiency and minimize costs.
This supersizing and “assembly-lining” of Permian production also lends itself to the build-out of pipeline-and-storage networks to (1) deliver large volumes of water to newly drilled wells for use in hydraulic fracturing and (2) gather even larger volumes of produced water that emerges from wells with crude and associated gas.
As we said in Part 1 of this series, it can take several hundred thousand barrels of water to frac a typical horizontal well in the Permian (or elsewhere), and water volumes consumed in the play have been increasing with the length of laterals and the intensity of well completions. The water used in hydraulic fracturing needs to meet certain criteria so as not to foul up the production area. The most common types of water used in well completions are fresh water, treated water, brackish water or, in some cases, recycled produced water. (Treated water is effluent from municipal wastewater treatment plants, while brackish water is less salty than seawater but too salty to use for drinking or agricultural irrigation.) Fresh water is in relatively short supply in the Permian region — only a foot or so of rain falls there in a year’s time, on average, or one-quarter as much as Houston sees in a typical year. There is a good bit of brackish water available in the Santa Rosa Aquifer and other underground sources within or near the basin’s footprint; another reliable source of water is municipal wastewater authorities, which are happy to make their treated effluent available to the oil and gas industry (for a price). Recycled produced water, finally, is as available as the capacity of recycling facilities will allow.