Ultimate Cost of Water. Permian Basin

Transcription

1 Ultimate Cost of Water Permian Basin

2 Winning the Water Battle As many as 100,000 wells may be drilled in the Permian Basin by Water required for those wells could exceed 30 billion barrels. Water supply is the largest gating item in development planning. Water management and effective planning can provide the greatest savings and competitive advantage for producers.

3 Imagine 4X the Number of Horizontal Wellbores per Unit of Acreage

4 Demand By any measure, the oil and gas industry is using a lot of water

5 Quote from major producer in the Permian Basin: If we hadn t had a pullback in the industry due to low oil prices, we would be out of water today.

6 Current Demand 200 HZ rigs running in Permian Basin peak) 12 HZ wells per year per rig = 2400 wells per year 300,000 BW per well (increasing by > 30%) 720 Million BW per year 1.973MMBW per day 7.2 Billion BW demand over 10 years!

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9 The Source Our industry must seek long term sources of brackish water to preserve our fresh water supplies

10 Quote from prominent Permian Basin rancher and oil producer: If we don t decide to stop using fresh water for oil and gas operations, someone is going to decide for us.

11 Located in West Texas, the Region F Regional Water Planning Area is located in the Edwards Plateau. Reeves County forms the western boundary and Brown County the eastern boundary of the 32-county region. Intersected by the Pecos River to the south and the Colorado River to the north, most of the region is located in the upper portion of the Colorado River Basin and Pecos portion of the Rio Grande Basin; a small portion is in the Brazos Basin. The major cities in the region include Midland, Odessa, and San Angelo. The region's economy relies heavily on healthcare and social assistance, mining, manufacturing, and oil and gas employment sectors. The Hydrology and Water Planning Firms, LBG-Guyton and Associates and Freese and Nichols Engineering, prepared the Region F Water Management Plan for the Texas Water Development Board

12 Major Aquifers Ogalala Trinity/Edwards Cenozoic Pecos Alluvium Sources of Fresh Water for Communities

13 Minor Aquifers Sources of Fresh and Brackish Water Varying Quality and Quantity

14 Source Selection Critical Fresh Water Sources Local Multiple Sources Limited Reserves Politically Risky Brackish Water Sources Water Quality is Key Low TDS Better Reserves Single Source Deeper and Higher Development Costs Economies of Scale Required to Deliver Low Costs Politically Defensible

15 Transportation The key to lowering costs is the delivery system

16 Cost for Truck Transport > $.09 per BBL per mile ($1.50/BBL minimum)

17 Pipeline Transport Costs < $.02 per BBL per mile Economies of Scale Lower Costs

18 Evaporation The longer it takes to fill our pits, the more we lose to evaporation

19 Evaporation from slow fill multiple sources can reach 30%

20 Inverse Relationship Slow Fill 10,000 20,000 BWPD High Evaporation % Fast Fill 50, ,000 BWPD Low Evaporation %

21 Pioneer is installing covers on selected water storage ponds at well sites to prevent evaporation.

22 Conclusion Wouldn t it be great to find a long term, single source brackish water solution that could deliver water to our central distribution points at high rates and low cost?

23 Wolfcamp Water Partners PHASE I and PHASE II with Field Laterals Field Laterals PHASE II Supply Source PHASE I

24 Wolfcamp Water Partners, backed by Hitachi, a Fortune Global 100 company as its financial and technology partner, will provide long-term non-potable water supplies from underground sources via pipeline to the oil and gas industry in the Permian Basin. By delivering savings to its clients of 50% ($300,000 per well) or more, the WWP system should drive well costs down during the current pullback in product prices. More importantly, we can provide reliable supplies on a firm service basis for terms of up to 10 years. Wolfcamp Water Partners is offering to producers and service companies up to 200,000 barrels per day of non-potable water (tested by major service companies) for drilling, cementing, and frac operations. Arrangements can provide for high volume door to door pipeline deliveries to central field operation locations to minimize evaporation losses and eliminate trucking costs.

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26 Water: West Texas "Using Our Resources Responsibly" Utilizing supplies of non-potable underground water for industrial uses, we save and preserve our precious fresh water supplies.