Jordan Blum, editorial director, Hart Energy: We are here at the DUG Executive Oil Conference in Midland. I'm joined by Amanda Brock, the CEO of Aris Water Solutions. Thank you so much for being here having a very timely discussion. Just to jump into it, I wanted to get your take on just how water management has become kind of quickly one of the biggest headwinds to Permian production now and in the future.

Amanda Brock, CEO, Aris Water Solutions: Certainly, I think everybody has begun to realize over the last year with just the sheer volume of water that people are having to handle, that water management and where all this water is going to go is a significant challenge, both cost-wise logistically, and then also from a geology perspective. And so it is a very important headwind for the industry and I think it has the intention of the operators and management at very high level as people try and look forward to make sure that solutions are identified or opportunities are investigated or researched that can help people manage this wall of water that is being generated in the Permian Basin.

JB: Very good. And can you elaborate maybe just on some of the solutions that are in the works in terms of technologies, pipelines to solve for all the volumes of water, the seismicity challenges and just the diminishing pore space?

AB: Yeah. I think first of all, you've got to understand how much water there is, and I think the sheer volume of water and how rapidly it has grown as production has grown. So if the water oil ratio on average is one in five, in 2017, 7 million barrels of water produced a day. In, we finish out this year, it'll be close to 21 million barrels of water a day that has to go somewhere.

Disposal, reuse, evaporation, really little bit at the margin, looking to beneficial reuse in the future or now talking about still disposal, but rather than in-basin, long haul pipelines that take volumes out of the basin for disposal to areas that potentially don't have the same seismic challenges or subsurface pore space constrictions.

JB: Very good. So yeah, a lot on their minds.

AB: Well I mean, if you don't have a place to take it, you're going to shut in. And so it is as stark as that, which means it has to be an enterprise risk that you are going to have to deal with. You're going to have to make investments and technology, you're going to have to dedicate staff to trying to address the issue and even assess what the potential impact might be.

JB: So obviously a lot to happen in terms of infrastructure and cost challenges. But on the regulatory and legislative side, what needs to happen in both Texas and New Mexico to kind of solve for some of these transportation issues, but also beneficial reuse when it comes to potential agricultural uses and other uses.

AB: So to solve the problem, it is going to be a combination of all solutions. Beneficial reuse is not the answer. All of the above, and some of which we haven't identified yet, will be the answer to deal with this huge scale challenge.

Regulatory certainty would be good. We have a lot of differences between the Railroad Commission and between the OCD and the state land office and regulators in New Mexico. You have regulation that deals with seismicity, deep wells versus shallow wells, more regulation as it relates to pressure gradients for shallow wells. In New Mexico, there is not a clear path forward as to how you are going to be able to land apply or beneficial reuse. Earlier this year, Texas did indicate and provide guidelines for pilots and for discharge. It is a function of having enough regulatory certainty as to how this will work so that you have the ability to shape both the technology and the projects to begin to actually make beneficial reuse viable.

Now, if it's viable, the technology is there, and we've been piloting with the consortium of Chevron and Conoco and Exxon and Coterra for over a year. With post-treatment, pre-treatment, we can treat this water. We've spent a tremendous amount of time figuring out how you can do it safely, and we will be providing all of the toxicology data to the regulators to help them regulate. So we can grow cotton, we can grow biofuels, we can recharge aquifers, it can be environmental water, it can be waterfall industry, beneficial reuse, truly where it's going to go and what this new water can be used for. Because it's new water. This water has not belonged to anybody before. It is water that came up to the surface as part of the extractive process, and it's a wonderful resource. We just need to figure out how to use it.

JB: Very good. There's certainly a lot going on to keep you very, very busy.

AB: There is.

JB: But thank you so much for joining us here at the DUG Executive Oil Conference. To read and watch more, please visit online at hartenergy.com.

AB: Thank you for having me.

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