How much is water worth in the Permian?


#1

Well here is another one for the experts: I found a couple of producing wells on our lease today up around Caprock New Mexico, and in checking them out found that one had produced 19,509 barrels of oil in 2017, and surprise: 162,027 barrels of water!
I had read about a shortage of water in the Permian, but obviously not from this well. My question is since they could not drink that much water, does it have a value Do they sell the excess? How much is needed for production?


#2

The water produced along with the oil is brackish, and unusable. Oil and gas wells almost always produce water - generally more water than product. The ratio can be as low at 1:1 or as high as 50:1. The produced water is a logistical nightmare for energy companies as there is usually nothing useful they can do with it. Generally, they have to pay to dispose of it by hauling it off to a disposal facility unless they happen to have a Salt Water Disposal well on the lease, where they can inject it back into the ground (google salt water disposal and injection wells for more on the topic). While it usually only costs them a few cents per barrel to use an injection well, the cost can significantly increase if they have to truck it off the lease premises.


#3

Well you sure shattered my dream of getting rich selling water in the desert! Thanks for all that interesting information, I had no idea about that, just supposed the crude was pure oil since it would float on top of the water, not so I see.
Thanks for the references, I will get smart on this yet.


#4

The produced brine in these oil and gas wells is rich in minerals. Bromides, carbides,ā€¦one that is in demand in some places is Lithium Carbonate.

ā€œPetrolithiumā€ is produced by separating the oil from the lithium-bearing brine, yielding a precipitate with concentration of lithium carbonate 95 percent or greater. The Lithium Carbonate is further reduced after
extraction and used in making Lithium Ion batteries.

So, expect many more extracted minerals projects in the Delaware Basin and many diversified products
from the brines exported from this area.

olā€™ Lawrence in Verhalen


#5

I find that information quite interesting, and you may have just indirectly solved another puzzle of mine. I have been trying to track down mineral rights that were not properly transferred, resulting in the checks going to the estate and being kept by the executor as personal enrichment for the last 21 years! I have tracked down a number of them, with absolutely no help from the producers. One that puzzled me were checks from Navajo Refining, who apparently does not lease mineral rights from owners. It would seem that perhaps they were paying for such byproducts at the refinery? I had noticed that Navajo was in fact listed as a ā€œtransporterā€ for at least one of the wells.


#6

Donā€¦Navajo Transports is an OIL transport company. Skimmed oil at the Saltwater Disposal Wells
is picked up by them IF it is pipeline grade crude (less than 2% BS&W (basic sediment and water) and
transported to an oil sales terminal like on the southwest side of Odessa where it is sold on line. There
should be run tickets copies for the loads of oil they transported off your lease in the pastā€¦so you can
trace how much oil was transported and they should have records of who the money proceeds went to.

olā€™ Lawrence in Verhalen


#7

On your other water questionā€¦thereā€™s produced brine/saltwater, manufactured 10 pound brine for drilling/kill operations, and FRESH water for fracking, SWD treating, etc.

Produced brine water COSTS 60 cents to $1 a barrel to dispose of in a SWD well. Some places have a fresh water well with a salt zone isolated near it where they pump fresh water from the well into a U tube
in the salt zoneā€¦where the fresh water saturates with salt and becomes 10 pounds brine pumped back to the surface and stored in tanks to be transported to drilling locations or to producing gas wells where it is used in drilling operations and to ā€˜killā€™ a gas well that is blowing out. In that case, they pump enough 10 pound brine into the blowing out gas well to over balance the bottom hole pressure by the weight of the column of brine water so the well quits blowing outā€¦then they can ā€˜workoverā€™ the well
for whatever ails it. In my youth I did all thatā€¦killing and working over wells that blew out.
Ten pound brine water sells for over $1 a barrelā€¦$1.50 in cases of emergency need.
Fresh water for fracking sells for around 50 cents a barrel.

olā€™ Lawrence in Verhalen


#8

You cannot imagine how much I appreciate your taking the time to share that knowledge with me! I kinda feel like I am trying to drain an ocean by sucking thru a straw, but it keeps adding up.


#9

Fracking water is needed but the Brackish water has to be desalinated, sot the processor and shipper make the money and the user of Fracking water and producer of Brackish water pay.