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Permian produced water: slowly extinguishing a roaring basin?

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Report summary

Permian operators are pushing oil growth higher than we've seen in any other unconventional basin. Each incremental barrel of oil, however, also results in the production of several barrels of associated water. All of that fluid brings with it significant costs. Water-to-oil ratios not only increase over time, but can easily exceed 7:1, making it one of the highest water cut plays in the Lower 48. All-in water management costs can reach US$3/bbl. Produced water has created an impending supply risk to the overall Permian region because escalating costs will raise breakevens. The total volume of produced water is expected to grow by several million of barrels over the next five years and the low cost, simple solutions will become exhausted. What specific impact does produced water have on Permian economics and how does that influence growth potential as the cost curve shifts? What are operators doing to manage this ever-growing risk?

What's included

This report contains

  • Document

    Permian produced water: slowly extinguishing a roaring basin?

    PDF 783.82 KB

Table of contents

  • Executive summary
  • Background on Permian water challenges
  • Modelling the problem
  • Costs to handle the water
  • Translating water risks into macro takeaways
  • Production growth impact
  • Combating the challenge

Tables and charts

This report includes 7 images and tables including:

Images

  • Water data: Lea County, New Mexico vertical and horizontal wells
  • Average oil and water production for New Mexico Delaware Basin Wolfcamp wells drilled since 2014
  • Water saturation in the Delaware and Midland basins for Wolfcamp B bench wells
  • Water-to-oil ratio assumptions used to generate water curves for Permian sub-plays
  • Future water cost assumptions and escalating impact plot
  • Permian tight oil cost curve comparison: two water scenarios
  • Permian oil supply outlook under aggressive water cost scenario

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