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Pioneer Natural, Midland, TX, to Upgrade City's Water System, Fuel Permian Operations

Pioneer Natural Resources Co. and officials in Midland, TX agreed Tuesday to a groundbreaking private-public partnership that would provide citizens with a steady source of freshwater and give the producer a ready supply of reclaimed water for its extensive oil and gas operations in the Permian Basin.

The Midland City Council approved the unique contract, allowing Pioneer to upgrade the city's wastewater treatment plant. In return, the city would provide Pioneer with the plant's reclaimed water, which it plans to use in the Midland sub-basin, one of its biggest areas of operation.

"Our agreement with Pioneer is a perfect example of how public and private entities can maximize their resources by working together,” said City Manager Courtney Sharp.

The Dallas-based independent was selected for the project through the city's proposal process. Under the contract, Pioneer is to provide $110 million in upgrades to the plant, which otherwise would have been provided by the city's utilities fund.

In return, the city would provide the reclaimed wastewater via Pioneer's water distribution system in the Midland sub-basin to use for hydraulic fracturing operations. Using the effluent is expected to reduce Pioneer's need for freshwater supply at a lower overall cost. The volume-based contract is expected to last for 20 to 28 years, depending on flow rates. Once Texas legislators validate the plan and the design is completed, construction is expected to take about two years.

"Pioneer is focused on efficiency in every aspect of our business, and water use is no exception," said COO Tim Dove. "Our agreement with Midland moves Pioneer toward its goals of significantly reducing the use of freshwater in our operations and creating a reliable, long-term source of water."

Pioneer already has a deal in place to receive effluent from Odessa, which is Midland's sister city in West Texas. Odessa delivers effluent via a 20-mile pipeline to some of Pioneer's Midland County locations. That agreement is estimated to save Pioneer about $100,000 per well.

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