Water management is still a hot topic in shale plays all over the United States, and a pair of deals announced this week underscored the desire for emerging water midstream companies to grow their market shares in popular areas.
One deal saw Concho Resources and Solaris Water Midstream team up on a strategic joint venture (JV) focused on optimizing produced-water logistics at scale in the northern Delaware Basin.
The JV includes a long-term produced-water management agreement between the two companies. Solaris will manage Concho’s produced-water gathering, transportation, disposal, and recycling for an area covering approximately 1.6 million acres located primarily in Eddy County, New Mexico. Concho will contribute 13 saltwater disposal (SWD) wells and approximately 40 miles of large-diameter produced-water gathering pipelines in exchange for cash and an equity ownership in Solaris Midstream Holdings, the parent company of Solaris Water Midstream.
Solaris will incorporate Concho’s assets into its integrated Pecos Star System, which currently includes more than 300 miles of large-diameter gathering pipelines, more than 500,000 B/D of disposal capacity, storage, and recycling facilities, and water supply pipelines that serve nearly 20 oil and gas operators. The companies said in a statement that the Pecos system “brings significant scale to producers that lowers operating and well completion costs.” Solaris Water will deliver blended reuse source water to Concho, enabling an increase in recycled water use.
“Our joint venture with Solaris will provide effective and responsible water management and recycling solutions across our core position in Eddy County,” said Concho President Jack Harper.
In another deal, Lagoon Water Solutions closed on an $85-million purchase of Continental Resources’ eastern STACK water recycling facility, gathering system, and three related disposal wells in Blaine County, Oklahoma. The deal makes Lagoon the first midstream company to provide recycled water for completion operations in that state.
“We are excited about our management team securing such a significant deal with a respected, top-tier operator like Continental,” Lagoon President and CEO Kevin Lafferty said in a statement. “This acquisition expands our network of reliable gathering and disposal assets in the core of the STACK play and further guarantees reliable takeaway water solutions for STACK operators.”
Water management logistics have become a greater concern in Oklahoma, as freshwater shortages, rising transport costs, and limited options for economic water disposal in the region have fueled a recent upswing in recycling efforts.