A recently announced acquisition by California-based water handling company Heckmann Corp. is intended to expand the range of water and wastewater services available to producers in the Haynesville Shale in East Texas, and there are plans to take the business to other shale plays.
The company being acquired, Carthage, TX-based Complete Vacuum and Rental Inc. (CVR), is planning to expand into the Eagle Ford Shale in South Texas and the Barnett Shale in North Texas and Oklahoma, Heckmann said.
"Our pipeline runs right through CVR's market area and is in close proximity to CVR's strategically located truck terminals, allowing us to take advantage of the volumes of water that currently must be hauled long distances for disposal," said Heckmann CEO Richard J. Heckmann. "CVR's disposal facilities are the perfect complement to our capacity resources and will enable expanded pipeline volumes for CVR customers."
CVR has six active disposal facilities with 125,000 b/d of combined capacity and an additional four permitted sites that could add 80,000 b/d of capacity, Heckmann said. When added to Heckmann's seven permitted wells and 65,000 b/d of disposal capacity, the company believes that the combined potential disposal capacity of 270,000 b/d will be the largest in East Texas and western Louisiana. Heckmann is in the process of permitting additional wells and capacity, the company said
CVR also has more than 175 tractor trucks and 200 trailers along with about 800 frack [fracturing] water tanks. In addition to transporting produced water and other wastewater streams to its disposal sites, CVR transports fresh water for production and provides services for site preparation, water pit excavations and remediation.
"The combined platform integrates [Heckmann's] pipeline with the water handling needs that the region's oil and gas exploration and production customers require for all-inclusive water transport and disposal," Heckmann said. "We now supply everything from tanks and trucks to tractors and trailers to pipeline and deep injection disposal wells -- a full-service model that can be economically replicated in other shale gas regions."
The $66 million acquisition of CVR is expected to close by the end of November. Heckmann expects the transaction to be immediately accretive to earnings.
"Access to Heckmann's pipeline and disposal capacity gives us an undeniable competitive advantage and we believe we can duplicate this advantage in other shale locations," said CVR CEO Steve Kent II.
Earlier this year Heckmann, which is based in Palm Desert, CA, and Energy Transfer Partners (ETP) struck an agreement for a joint venture to develop transportation and treatment solutions for supply, drilling, flowback, produced and other types of discharged water in the Marcellus and Haynesville shales.
"We recently completed and are operating our 50-mile produced water pipeline and disposal facility in the Haynesville Shale in Louisiana and Texas," Heckmann said in February. "We are now looking forward to working with our partners at ETP to deliver solutions for the over 5 billion gallons of produced water per year and demand for over 12 billion gallons per year of frack fluids in the Northeast as well as the area in which we now operate."
However, since then the possibility of Clean Water Act Regulation 93 being put in force in Pennsylvania -- as it has been in West Virginia -- has caused Heckmann and ETP to put on hold plans to acquire three water treatment facilities in the region, Heckmann told financial analysts during a recent earnings conference call.
"The new regulation severely curtails the discharge of brine and would dramatically change the economics and force much heavier [water] treatment than would be possible in the facilities we were looking at, so it wouldn't make any sense at all at this point until Pennsylvania determines what they want to do to walk into a situation where the rules can change on you," Heckmann said.
He noted that a new Republican governor in Pennsylvania -- and a new Republican head of the state's Department of Environmental Protection -- could sidetrack the regulation.
However, a mobile water treatment pilot undertaken by the joint venture is moving forward in the region, Heckmann said. The pilot allows for the recycling of flowback water from hydraulic fracturing so it can be used for subsequent frack jobs. He would not name the producer customer of the mobile treatment pilot or Heckmann's technology partner in the project.