American Oil and Gas Reporter - June 2020 - 44

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SpecialReport: Water Management
early days, it made sense for producers
to build their own systems because high
oil prices put a premium on speed to
market. Today, we are seeing many producers divest those assets and dedicate
new acreage to midstream firms.
"Midstream companies benefit from
economies of scale," Summers notes. "We
are putting multiple producers on a single
system, so we can build 16- or 20-inch
pipe in areas where individual producers
may only be able to justify 10-inch pipe."
Automation is helping midstream firms
maximize scale's benefits. "On our system,
which serves seven producers in Howard
County, Tx., we have 15 disposal wells
with varying capacities and operating
costs. Automation lets us divert water to
different wells as their costs change from
day to day," Summers illustrates.
"Automation also makes it much easier
to adjust to demand spikes," he continues.
"When a well pad begins producing at
20,000-30,000 bbl/d, we can spread the
water across multiple disposal wells to
handle it without exceeding maximum
allowable pressures. This helps us keep
trucks off the road."
Summers stresses that the midstream
model will only continue to grow if water
management companies maintain a strong
track record. "We have to provide flow
assurance," he says. "The capital efficiency
midstream firms provide will mean little
to producers if partnering with us endangers their ability to frac new wells or
move the water associated with their existing production."

H2O Midstream's system has 99.98%
uptime, Summers says. "Our customers
have only experienced a few hours of
downtime since our inception in 2016,
and that was from unusual weather," he
says. "We make the upfront investment
in redundancy to ensure our system will
stay reliable over the long term."
As the water midstream industry matures and best practices evolve, Summers
says well-built systems are becoming
even more reliable and efficient. "We
also are finding ways to reduce the risk
of spills and the amount of emissions associated with our operations," he adds.
Minimizing Costs
Controlling costs has become the top
priority for many producers, observes
Trace Hight, chief commercial officer of
water infrastructure at Gravity. "Water
companies only grow if their customers
can drill at prevailing prices, so we are
doing everything we can to help our customers source fresh or produced water
efficiently and drive their gathering and
disposal costs down," he reports.
Supporting multiple phases of the
water supply chain helps Gravity control
costs while limiting producers' capital
exposure, Hight adds.
Investment banks' estimates put the
breakeven price for Wolfcamp A and
Lower Spraberry wells in Howard County
around $35 a barrel, Hight notes. "Our
goal is to help our customers get that price
even lower by streamlining our systems
and operations," he says. "Our biggest

Gravity's newly drilled Hull saltwater disposal well in Howard County, Tx., benefits from
an upgraded wellbore design that allows it to inject 45,000 barrels a day of piped-in produced water at low pressures. Gravity says the well is part of a broader effort to reduce
customers' gathering and disposal costs.

44 THE AMERICAN OIL & GAS REPORTER

variable costs are electricity and chemicals,
so that is where we are focusing."
To reduce labor costs, Hight says Gravity
is automating more tasks and working
with equipment vendors to improve communication capabilities and uptime.
"To keep our utility costs down, we
are using more efficient pumps," Hight
continues. "We also are making the investment to construct larger pipeline
systems all interconnected with maximum
redundancy to our new deep Ellenberger
disposal wells. These wells are designed
with larger casing and tubing, which reduces friction and allows us to inject an
extra 5,000, 10,000 or 15,000 bbl/d of
water deep without significantly increasing pump pressure and therefore electricity costs.
"These improvements in our gathering
and disposal system's efficiency will help
ensure our customers can safely and reliably dispose of large produced water volumes at the lowest possible lease operating
expense," he says.
❒

Macquarie Buys Stake
In Multifuels Midstream
NEW YORK-Macquarie Capital Principal Finance announces it has acquired
from Warren Equity Partners a majority
stake in MultiFuels Midstream Group
LLC, a differentiated power and utility
infrastructure platform focused on lateral
natural gas pipelines and related assets
in the United States.
Multifuels Midstream serves utilities,
power generators and large commercial
and industrial customers. Macquarie says
its more than 150 miles of owned and
operated pipelines transport gas to 18
utility service areas across Central Texas.
The company adds it intends to actively
support Multifuels Midstream's continued
development and redevelopment of customers' critical gas infrastructure, allowing
it to provide fully financed solutions to
new and existing customers.
"We are proud of the unique technical,
structuring and financing expertise we
have built in lateral natural gas pipelines
and related infrastructure, and are thrilled
to partner with a global leader like Macquarie Capital, whose expertise and experience will be instrumental to our next
phase of growth," says Richard Robinson,
chief executive officer of Multifuels
Midstream.
❒



American Oil and Gas Reporter - June 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2020

Contents
American Oil and Gas Reporter - June 2020 - Intro
American Oil and Gas Reporter - June 2020 - 1
American Oil and Gas Reporter - June 2020 - 2
American Oil and Gas Reporter - June 2020 - Contents
American Oil and Gas Reporter - June 2020 - 4
American Oil and Gas Reporter - June 2020 - 5
American Oil and Gas Reporter - June 2020 - 6
American Oil and Gas Reporter - June 2020 - 7
American Oil and Gas Reporter - June 2020 - 8
American Oil and Gas Reporter - June 2020 - 9
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