In the dry, dusty plains of West Texas, home to America’s most prolific oil play, the problem isn’t too little water, it’s too much, Bloomberg reports.
Just ask Will Hickey, the 31-year-old CEO of Colgate Energy. Standing on a 26-foot-high rig platform in Reeves County, Hickey watches as contractors maneuver drilling pipe almost 10,000 feet underground in search of oil.
Just a half-mile away, another rig is equally hard at work. But this one, operated by WaterBridge Resources LLC, isn’t seeking oil. It’s making a hole to dispose of the vast amount of water generated from local wells.
‘‘If we don’t have a water solution we can’t produce the well, it’s as simple as that,’’ Hickey said. “It used to be that each operator handled water themselves. But the sheer volume of what’s now being produced has created an opportunity for specialized water companies to step in.”
As fossil fuels are pumped up from underground, so is the water used in fracking, combined with salt-laden water from underground reservoirs to create a toxic mix that would devastate farmland if released on the surface. With as many as four barrels of water produced for every barrel of oil, it’s a disposal nightmare that could add as much as $6 a barrel to company break-evens by 2025, according to a recent Wood Mackenzie study.
Overall, the region will pull up enough water this year alone to cover all of Rhode Island nearly a foot deep. Wall Street is well aware of the threats posed by the Permian Basin’s pipeline and labor shortages, key side effects from the region’s rapid buildup. But investors “aren’t as well apprised of some of the other risks and challenges that could be just as material, if not more so,” said Gabriel Collins, a fellow in energy and the environment at Rice University.
“I’d put water right at the top of that list,” he said
How material? Spending on water management in the Permian Basin is likely to nearly double to more than $22 billion in just five years, according to industry consultant IHS Markit.
