Permian Basin oil market slips slightly as companies tackle wastewater management

As Permian Basin oil production continued its decline, more companies sought to help manage wastewater resulting from remaining fossil operations in southeast New Mexico and West Texas.

Oil production was forecast to drop by 11,000 barrels of oil per day (bopd) in August, according to the Energy Information Administration (EIA).

And active drilling also declined weekly with the basin dropping two rigs in the last week, reported Baker Hughes, for a basin-wide total of 327 rigs as of Friday.

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That was still the highest rig count among U.S. shale region, records show, with Texas dropping two rigs for its total of 312, while New Mexico held steady at 113 rigs – the first- and second-highest rig counts among U.S. states.

This came as oil prices held steady above the $80 per barrel mark, after the highest price of the year was reported at $84 a barrel on Aug. 9, according to Nasdaq.

On Monday morning, the price took a minor dip to $82 a barrel, according to the Chicago Mercantile Exchange.

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Domestic prices were trending upward in recent weeks as crude oil demand was expected to increase, along with production cuts extended by Saudi Arabia, read an EIA report.

“We expect the production cuts, combined with increasing demand, will cause global oil inventories to fall and put upward pressure on oil prices through the end of this year,” read the report.

The slight declines in the oil market did not deter some of the largest fossil fuel companies in the Permian from expanding partnerships with water management companies to aid in extraction operations.

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Devon Energy on Aug. 7 announced its subsidiary WPX Energy entered into a partnership with WaterBridge NBD to form a new company NBD Midstream to process all of Devon’s produced water in the Delaware sub-basin area on western side of the Permian.

The joint venture initially dedicated about 52,000 acres, along with 18 saltwater disposal wells with 375,000 barrels per day (bpd) of capacity and 210 miles of produced water pipelines to gather, transport, dispose and reuse the water.

Devon Vice President of Marketing and Midstream Greg Horne said the deal would help increase the company’s water capacity to account for future planned growth in its Permian Basin operations.

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"We are excited about this partnership which will provide Devon with a significant increase in permitted water handling capacity, delivering both reliable flow assurance and access to abundant resources and infrastructure to support Devon's future drilling plans and the company's produced water reuse and recycling operations,” he said in a statement.

WaterBridge Chairman David Capobianco said the company was working to help reduce the oil and gas industry’s pressure on freshwater resources in drilling operations, pushing for more use of brackish and recycled water, and potentially desalination facilities.

“Since WaterBridge's founding in 2016, we have been pioneers of midstream water management, progressively addressing the produced water needs of our blue-chip clients and reducing reliance on freshwater sources for drilling and completion activities,” he said.

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To the east in the Permian’s Midland sub-basin, Select Water Solutions and oil producer Endeavor Energy Resources announced Aug. 14 a project that recycled and delivered 300,000 barrels of water per day.

This meant a total of 8.2 million barrels or produced water were recycled during the month-long project at Select’s Big Spring Recycling System in Howard County, Texas sourced from six operators within a 10-mile radius of the facility.

The system used a 24-inch pipeline to transport the water from Howard to Martin County, Texas.

"Sustainable recycling and transportation of produced water is an integral piece of the future of water stewardship in the Midland Basin," said Select Chief Executive Officer John Schmitz. “We are proud to work with Endeavor to achieve one of the largest and most technically-challenging recycling projects ever performed in the Permian Basin."

These projects followed an agreement between Chevron and Pilot Water Solutions in June to move the oil giant’s produced water away from Culberson County, Texas – an area known for recently-increased seismicity tied to water injection – to Reeves County, Texas for shallow disposal.

“Our goal is to be the most reliable and sustainable water midstream provider in the energy sector. A key pillar of our operations is to offer best-in-class services that effectively manage produced water, protect the environment and improve water sustainability in the Permian Basin,” said Pilot Water Solutions CEO Anuj Sharma.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: Permian Basin oil market slips slightly as companies tackle wastewater