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Let’s Take a Step Into The Future: Water Management05/14/2020
Water management in oil and gas operations has become an industry itself. According to Bluefield’s report, “Midstream Water Management: U.S. Hydraulic Fracturing Strategies, Solutions & Outlook,” water management for hydraulic fracturing has been steadily growing from 2017. All indicators, according to the same report, say this trend will be kept for the next few years.
As demands for water management solutions increase, service companies are looking for new ways to optimize their ability to recycle and store this water.
Total Water Management Spent 2011 - 2028
According to Evan Tikka, senior consultant, at Wood Mackenzie, the water midstream sector growth can now be associated with long-term acreage dedications. WaterBridge has acquired almost 10 different systems which resulted in a 10-plus-year acreage dedication. ”From an E&P perspective, it’s been a year of a trust as we’ve started to see some of the larger U.S. independent and supermajors’ views change on the types of contracts and types of relationships that they’re willing to enter into with the water midstream players, characterized by longer-term acreage dedications and some larger divestments.”, Tikka says.
When asked if more E&P companies will be selling their water infrastructure assets to water midstream companies, Matthias Bloennigen, director of upstream consulting at Wood Mackenzie said ”The short answer is yes.” He also said that water midstream companies need to be thorough when researching assets to be purchased because E&P companies are selling ”their less strategic and underutilized water infrastructure assets”. Although these purchases may be risky for water midstream companies, there is a clear opportunity for them if they manage to integrate infrastructure and increase utilization.
From what cost is concerned, Laura Capper, president and CEO of EnergyMakers Advisory Group, stated ”Cost is absolutely a key driver to overall oil and gas profitability.” She also pointed out that for the big players, cost with water management will decrease over time as volume and resource contributes to the effectiveness of the water management programs. Smaller players will however have a more difficult time in keeping the costs low in the long run.
When referring to the challenges that water teams are facing in the year ahead, Rob Bruant, director of products at B3 Insights said ”Things will continue to be challenging on the regulatory front.” As an example, due to current regulations, New Mexico operators will have greater costs to dispose of the water into deeper formations. ”There is going to be a continued net movement of water from New Mexico to Texas, where the regulations are getting stricter but not nearly as strict.”
Andy Adams, director of water management and infrastructure for Select Energy Services, said ”The greatest issue I see is the logistical challenges of managing and sharing water. Everybody wants to share the water; everybody wants to reuse produced water. But the most difficult aspect of this is actually managing the logistics of delivering the water safely and on time.”
SCOOP/STACK Midstream Developments. Pipeline Projects Driving Gas Prices. Challenge of Getting Water for Fracking
Pipeline Projects Continue Influence the Industry: its capacities, pricing and technologies
Williams boasts its Q3 results. With a revenue of $2.48 billion, the company beat the analyst estimate of $2.09 billion and also improved upon its own results over the same period in 2020. Mind you, much of this success was attributed to production in Wyoming's Green River Basin's Wamsutter Field and Williams JV with Crowheart.
Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.
The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.