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Permian Shale Water Management: The Hidden Costs

Water management in shale plays is an extremely competitive business. Every cent counts. This is most evident in the Permian Basin where companies work tirelessly to minimize operating costs in order to contract new capacities and fill their capital-rich infrastructure. These players are under enormous pressure to evaluate every component of costs and wring out excesses. While traditional operating expenses (OPEX) are heavily scrutinized, a full picture of profitability in water management is gained only after comprehensively examining the unique aspects of their overall business model.

Traditional OPEX components in produced water management include labor, chemicals, consumables, infrastructure maintenance, transportation, disposal, solids handling, and power and other utilities.

Capital expenses (CAPEX) must also be considered in light of tradeoffs between CAPEX and OPEX. Water CAPEX is generally composed of infrastructure, including pipelines, disposal wells, ponds/storage treatment facilities, and associated utilities infrastructure; equipment; engineering, project management, and permitting costs; and land.

While all companies focus on these key expenses, another very significant cost driver emerges when the business model is more closely examined.

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Permian Shale Water Management: The Hidden Costs

Lisa Henthorne, Senior Vice President and Chief Technology Officer and Buddy Boysen, Engineering and Technology Director, Water Standard and Monarch Separators

01 January 2020

Volume: 72 | Issue: 1

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