Layne Water Midstream LLC (LWM) has reached agreement with the Texas General Land Office (GLO) to expand its oilfield water footprint in the Permian Basin.

The agreement amends a previous deal signed by the two parties in November 2017 enabling LWM to develop, construct, own and operate water infrastructure to produce and sell nonpotable water to oil and gas companies in the Permian’s Delaware sub-basin in West Texas.

The amended long-term agreement provides LWM “with additional exclusive rights regarding reuse and disposal of produced water on the GLO’s acreage in Reeves and Culberson counties,” the company said. “These reuse and disposal rights are in addition to the existing exclusive rights for LWM to develop GLO nonpotable water resources for use in oil and gas drilling and completion activities on approximately 88,000 acres” across the two counties.

Infrastructure developed, built and operated by LWM under the agreement “will gather, transport, treat, recycle and dispose of water produced from oil and gas operations in the region.”

A surge in recent years of Lower 48 natural gas and oil production has driven a corresponding explosion in completion and production water intensity, a challenge that “remains not well known or understood,” according to Raymond James & Associates Inc. analysts.

The Raymond James team said current U.S. oil production of around 13 million b/d means upward of 50 million b/d of “associated” produced water, as water is both “a major input to hydraulic fracturing, and an output in the form of produced water.”

Raymond James projected that total U.S. oilfield water spending, currently estimated at around $25 billion, could grow to slightly under $40 billion by 2025.

Bluefield Research said last month it expects U.S. oil and gas companies to spend $174 billion on water management for hydraulic fracturing from 2019-2028, backed largely by private equity (PE) and sovereign wealth funds.

As a case in point, LWM announced last April it had secured $200 million in PE commitments to expand its services.

LWM CEO J. Michael Anderson said the amended agreement with GLO “allows us to invest further in water infrastructure on GLO lands in order to gather produced water from energy producers for treatment and reuse in hydraulic fracturing operations and for disposal...Our GLO partnership is designed to generate water-related revenue streams for the GLO and make it easier for energy producers to operate on GLO acreage.”

LWM has begun marketing the additional water treatment, reuse and disposal services on GLO lands to producers in the region.

The company “is in the process of filing numerous water disposal permits on GLO land and expects that it will construct water infrastructure for recycling and/or disposal during 2020,” LWM said.