Permian Basin Operators Find Savings In Recycling Water

FORT WORTH, Texas—Operators in the Permian Basin are pouring money into water management in an effort to cut down on drilling costs. At the pre-conference water forum at Hart Energy’s DUG Permian Basin conference on April 3, leaders from Approach Resources and Matador Resources explained how investments in constructing on site, full-cycle water management facilities have helped their companies drastically reduce operating expenses.

Qingming Yang, president and COO of Approach Resources, said his company has saved or created more than $7 million of value by investing in permanent water recycling infrastructure in the Permian Basin, rather than purchasing water for its fracking operations and spending on transporting disposal water.

Through its improved efficiencies in water maintenance, Approach Resources reduced its drilling and completion costs by 22% to $3.5 million per well in 2016, and its lease operating expenses by 19% to $4.24 per barrels of oil equivalent.

“We can source, transport and dispose our water in place,” Yang said. “This is a unique attribute for Approach assets and gives us unique competitive advantages going forward.”

Bradley Robinson, senior vice president of reservoir engineering and chief technical officer for Matador Resources, said his company has recycled more than 5 million barrels of water since its operations began in May 2015, saving the company $4.8 million. Matador Resources operates two water recycling facilities in the Delaware Basin, one at its Dorothy White location in Loving County, Texas, and the other at its Rustler Breaks Tiger facility in Eddy County, N.M.

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My View: Constantly improving efficiency to conduct petroleum operation will continue decrease cost of production. Lower costs coupled with huge U.S. shale resources suggest that crude oil price, probably, would remain low for quite some time. Slightly improved price due to geopolitical risk is rather temporary.