The developer of a water supply project for West Texas is hoping that by the time his pipelines are online, commodity prices will have entered recovery mode. STW Water Process & Technologies recently bought a second brackish water lease in the Fort Stockton, TX, area to support its West Texas Water Project.
The project will mainly serve municipalities and could stand on its own with that, even without demand for water from oil/gas operators, STW Resources Holding Corp. CEO Stanley Weiner told NGI's Shale Daily. However, producers are showing a good amount of interest in having an alternative source of water for fracking and other operations.
"They're like anybody else," Weiner said, 'Let us know when you're ready to start selling.'"
Weiner, a 35-year veteran of the oil and gas industry, founded STW Resources based upon a conviction that reclaiming and reusing oil/gas fracking and produced water is an economic and environmental necessity. He also sees technologies that clean up brackish water for municipal and industrial use as the solution to high water demand and drought conditions.
Midland, TX-based STW said it will continue to add water leases to its Fort Stockton portfolio in support of the West Texas project. It is intended to access alternatives to fresh water, process the water to drinking standards and supply it to communities and industrial customers in West Texas.
The newly purchased lease has artesian (free flowing) brackish water flowing from the San Andres formation, which is about 2,500-3,500 feet below the surface. Several of the eight water wells currently flowing have been producing approximately 1 to 2.5 million gallons per day for the last 40 or more years, according to the Pecos County Water authorities.
The water is to be processed with STW's proprietary Hybrid Brackish Reverse Osmosis System prior to sale to customers. STW said it will initially sell three to five million gallons per day within 50 miles of Fort Stockton and Imperial, TX.
STW's previously announced pursuit of the Capitan Reef Aquifer water on the Fort Stockton lease (see Shale Daily, Dec. 10, 2014) is advancing as rapidly as politics and regulations will allow, the company said. Currently, there is a temporary moratorium on the production and sale of Capitan Reef water until the Texas Water Development Board completes ahydrogeologicalreport detailing how much water can be produced from the aquifer.
The company's immediate plan is to finish drilling the currently started well No. 2 and to obtain a production permit and begin sales of water from this lease within current production amounts previously established by the Middle Pecos County Groundwater Conservation District. STW said expects water production up to 1,500 gallons per minute, or about 2 million gallons per day, at a development cost of $3 million per well and a brackish water processing plant at a cost of $1 million.
"The number of wells to be drilled will depend on the amount of water that can be produced from each well. The projected production appears to be approximately 1-2.5 million gallons per day from each well based upon the existing wells on the lease," Weiner said.
"Our business plan for the West Texas Water Project...is to drill wells into the Capitan Reef on the Fort Stockton lease and produce the Reef water and drill wells on additional leases in the area for other communities in West Texas, as well as other benefiting industrial end-users [including oil/gas companies]. This project has the potential to save the West Texas communities from potential drought problems for years to come."
Weiner said he expects anywhere from 20% to 40% of the water provided by the project to support oil/gas activities. He said he knows of two producers in the West Delaware Basin area that would like to have about 25,000 barrels a day each "as soon as we can deliver."
STW will contract with producers and/or service companies, he said. A 90-mile pipeline from Fort Stockton to Odessa and a 189-mile pipeline from Fort Stockton to San Angelo are proposed. The pipelines will range in diameter from 42 inches up to 60 inches or more, he said, at a cost of about $2 million per mile. The trip from Fort Stockton is mostly downhill, which helps reduce pumping costs, Weiner said.
"The [pipeline] from Fort Stockton to San Angelo runs right through the middle of all the stuff that Pioneer [Natural Resources Co.] and Concho [Resources Inc.], Apache [Corp.] all them have over there in Upton County...the Wolfcamp Shale areas...
"There are a lot of companies that have laid down rigs, but the beauty of our deal is it's going to take a while before we get these pipelines to the point where we're ready to sell water..." he said, adding that by that time the industry should be seeing some recovery in oil/gas prices.