Permian water systems: filtering out the truth Report

Insight 09 October 2015

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Report summary

Operators are turning to new cost saving strategies as service company margins approach their maximum compression. Specifically, onshore water logistics are an area of focus. These costs have remained stubbornly high over the last five years, and longer-term operator investments are emerging in the space. We have studied new water recycling systems in the Midland Basin to demonstrate how operators can improve cash flow, enhance asset value and run more efficient development programmes by investing in cost saving, rather than revenue producing, infrastructure. We propose that the gap in project performance will widen between those operators with infrastructure and those without. In turn, the continued buildout of value-adding water systems in the Permian could eventually drive more consolidation.

Executive Summary
- SWOT analysis: investing in water management systems
Water costs peak at wrong time
- Wolfcamp well cost trend
Summarising the science
- The water recycling process
Valuation modelling
- Upstream project scenarios with and without central water systems - inputs
Model results
- Upstream project scenarios with and without central water systems - outputs
More systems coming
Looking forward