Water management has emerged as a critical issue for continued growth in unconventional production, especially in the Permian where frac water costs have ballooned from about 2% of completion costs to as much as 20%. Produced water disposal can be as much as half the operating cost of a well.

On Feb. 8, two companies that are growing their midstream water business announced expansions in their Permian operations. In an unplanned bit of balance, one was for water supply, the other for disposal.

Layne Christensen says it has completed the 6-mile extension of its Hermosa water-supply pipeline. The 26-mile Hermosa system extends from company-owned land near Pecos, Texas northward in Reeves County. It can deliver 175,000 barrels of water per day (bbl/d) through 18 different delivery points along the route for use in drilling and completion.

Layne claims primacy as “the largest water-well drilling company in the United States.” It maintains exclusive water rights on approximately 88,000 acres owned by the Texas General Land Office in Reeves and Culberson counties to develop non-potable uses.

“The extended pipeline expands our water-midstream business farther north into Reeves County where access to water is more limited for oil and gas producers,” said J. Michael Anderson, president and CFO of Layne Water Midstream. “We expect to see continuing demand growth for water in the energy sector, especially in the Delaware Basin, due to attractive producer economics, longer horizontal drilling lengths, and more use of water per foot of lateral.”

Separately, Goodnight Midstream Permian is conducting a binding open season for producers to enter long-term contractual commitments for its Llano produced-water pipeline system. That line is to be built in Lea County, N.M. The open season will conclude on March 30, and the company hopes to have the line in service by the end of the year.

The high-pressure line will have an initial capacity of 200,000 bbl/d of water and is already supported by a long-term dedication from a key producer. Goodnight plans to build multiple receiving points along the line, each operating at 50 psi. The Llano Pipeline will move produced water from the central Delaware Basin to Goodnight’s saltwater disposal well system on the Central Basin Platform (CBP) in the Eunice area. Goodnight’s system will use the depleted oil fields on the CBP as a geologic alternative for sustainable disposal into multiple formations.

Tariffs will vary depending on the structure of dedication and a producer’s input point. Up to 80% of initial capacity will be reserved for producers entering long-term commitments during the open season. The balance will remain open for uncommitted producers accepting interruptible capacity.

Goodnight owns and operates a network of water gathering pipelines and saltwater disposal wells. Beyond the Permian it also operates in the Bakken, and has an emerging presence in the Eagle Ford and Powder River Basin.

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