Analyst: Water issues could extinguish Permian's surging output
The volume of produced brine to oil and gas production is significantly higher in the Delaware Basin than in the Permian Basin…as high as 10 barrels of brine to every barrel of oil.
All that produced water has to be reinjected or cleaned and used for more drilling…or cleaned and made into fresh water. All options are expensive and storing the volumes of water for whatever path of water management a company takes translates into ever larger tracts of land with man made reservoirs. Basically, we are transferring an Ocean long trapped underground to the surface where we have to deal with it in an environmentally beneficial manner. Whatever we do, it’s expensive unless a way could be found to produce energy from the produced brine that makes if economically attractive.
Hey Lawrence, Mary here.
Are the water management companies looking for leases to erect the salt water drills? As previously stated, my property is located next to the new cryo factory in Pecos. What is the going rate for a lease for a swd? Can I solicit for the swd’s for my property? I have heard they pay a percentage? What is the average payout for the percentage? Mary
Sorry, this new format complicated things and I didn’t see your question on July 24 until now 10/9/18.
Produced water disposal management companies are always looking for good places to put in another SWD. They will typically want to BUY your surface property outright so they don’t have to pay you a royalty on the water disposed. However, there are still some who will lease the surface from you and pay a royalty each month for water disposed as their lease rental. That typically runs from 8% to 15% depending on the company and the location. You want to get a good lawyer to negotiate for you and be sure he/she negotiates your royalty based on GROSS REVENUES from disposed water and skimmed oil sales each month. IF you let them put NET REVENUES in the contract, they will run up their operational charge offs to where you have nothing left net.
So, stick with Gross Revenues on disposed water and skimmed oil sales included for your royalty percentage determination…and another thing…get your lawyer to specify in the contract that you are to be paid every 30 days for the previous month…none of this 90 days net pay BS they will try. Have your lawyer specify in the contract that you, the surface land owner are indemnified against any damages or equipment/facilities maintenance charges…and at cessation of operations, they have to plug and abandon the well and return the land to its original state AT THEIR EXPENSE. You should have an income from the property for as long as it operates… 10-20-30 years or more.
Hope that helps…
, Reeves county, Tx