Category Archives: Saltwater Disposal

Russia Cutting Oil Production As US Shale Escalates

Massive Oil Discoveries In Texas

Introduction…Russia plans to fulfill its obligations to cut oil output in line with the agreement between oil producing countries by the end of April, while more broadly assessing longer-term structural developments in the market, according to the country’s energy minister.

“Russia is reducing its oil production in stages, in accordance with the plans that we worked out voluntarily with our production companies,” Alexander Novak told CNBC during an exclusive interview in Arkhangelsk, Russia.

“The decrease in production in January and February were ahead of tempo with regards our initial plans. Currently, in March we have already reached a reduction level of 200,000 barrels a day. We anticipate complying with the figure set forth in the agreement by the end of April,” he revealed, noting this would constitute a reduction of 300,000 barrels of oil per day.

US Shale Escalates...The Russian energy minister’s comments come amid changes in U.S. policy under new President Donald Trump who has pushed forward the idea of energy independence for the country by executive order. This as recent months have seen a resurgence in activity by U.S. shale producers who have been encouraged to return to supplying the market given a rebound in the oil price.

“It’s clear that we are all assessing the situation in a sober fashion, we understand that there will be a rise in the production of shale oil” …Novak, “acknowledging that the rise in shale oil production could be up to 400,000 barrels a day this year.”

In summary…The oil producers are acknowledging that U.S. oil independence is not new.  Now President Donald Trump is pushing forward with executive order to that goal with his “America First Energy Plan.”

Source: Gemma Action, “Amid surging US shale, Russia is quietly cutting production and looking at bigger picture,” CNBC, 30 Mar 2017; “An America First Energy Plan,” WhiteHouse.gov.

Injection Versus Disposal Wells

Saltwater Disposal Well

Straightforward Operation- Saltwater Disposal Wells

Introduction…Due to our current opportunity in acquiring Saltwater disposal Wells, further discussion of the topic is appropriate.  So, what is the difference between injection wells and disposal wells?

Disposal wells may be used to inject mineralized water produced with oil and gas into underground zones for the purpose of safely and efficiently disposing of the fluid. Typically, the underground interval is one that is not productive of oil and gas. In some cases, however, the disposal interval is a productive zone from which oil or natural gas has been produced or is currently produced. In either case, the disposal interval must be sealed above and below by unbroken, impermeable rock layers.

Injection wells inject fluids into a reservoir for the purpose of enhanced oil recovery from the reservoir. The vast majority of wells in Texas are injection wells. Operators use injection wells to increase or maintain pressure in an oil field that has been depleted by oil production and also to displace or sweep more oil toward producing wells. This type of secondary recovery is sometimes referred to as waterflooding.

Why Texas is so great…Texas is the nation’s number one oil and gas producer with more than 294,543 active oil and gas wells statewide according to oil and gas well proration schedules (as of September 2016). Injection and disposal wells are also located throughout the state to improve oil and gas recovery and to safely dispose of the produced water and hydraulic fracturing flowback fluid from oil and gas wells.

Texas has more than 54,700 permitted oil and gas injection and disposal wells with approximately 35,915 currently active as of September 2016. Of these 35,915 active injection and disposal wells, about 7,482 are wells that are used for disposal, the remainder (about 28,433) are injection wells.

Operators requirements...Operators are required to follow the Texas Railroad Commission (Commission) disposal regulations administered by the agency’s Technical Permitting Section – Underground Injection Control (UIC) Program. Underground Injection Control is a program that is federally delegated by the U.S. Environmental Protection Agency (EPA) to Texas, and it follows national guidelines under the federal Safe Drinking Water Act for surface and groundwater protection. EPA awarded the Commission primary enforcement responsibility over oil and gas injection and disposal wells on April 23, 1982.

In conclusion…Disposal wells ( our current focus)  are not terribly complicated as compared to oil and gas exploration and development.  Nevertheless, certrain requirements of the Texas Railroad Commission are required.  The Commission is oneof the first agencies our team contacts during due dilegence on any future saltwater well purchase is the Commission.

Source: “Injection and Disposal Wells,” Texas Railroad Commission, rrc.state.tx.us

Three Keys To Successful CSWD Facility

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CSWD Facility

Introduction...Last week we discussed here The Surprising Discovery Of One Oil Executive.    This week we want to continue that discussion by getting into the Three Keys To Successful Commercial Salt Water Disposal (CSWD) Facility.  The ATM of the oil patch as described by insiders.

  • Location – The proximity of the CSWD to producing fields is critical, as the cost of transporting produced water to a disposal facility is one of the larger recurring expenses that an operator incurs. Our next facility is located approximately three miles from one of the larger producing fields in area. This producer disposes of approximately 325,000  barrels of water per month in the county. A larger portion of this producer’s water is produced in close proximity to our next facility, as way of illustration.  This producer wiill commit a large portion of their produced water to us.
  • Water Commitment – The commitment of water directly from the operator / producer is important to the our next facility. This allows the management to contract the water either directly with our preferred trucking company. Our preferred trucking company will base a number of their trucks at the facility and haul all water they have access to within a 20-mile radius.
  • Commitment to the Customer – The management of our next facility also operates producing properties.  The management understands  the other issues that concern an operator as it relates to choosing their disposal partner.  These Issues such include safety, ease and speed of off-loading.  Accurate and readily available reporting is important to the trucking company.  The facility will aslo provide driver amenities such as clean restrooms, cold water, and snacks.

Conclusion: The steady cash flow that is not dependent on oil pricing or new discovery makes prime CSWD properties a valuable asset.  That is one reason these ATM’s of the oil patch rarely come up for sale.  However, we have found a seller that has good facilities that can be acquired.  Drop me an email if you desire additonal information on this discovery.

This has been Bill Moist, MS, CPA reporting today Three Keys To Susccessful CSWD facility.

Time To Acquire Salt Water Disposal Properties?

Salt Water Disposal Wells Trucks Delivering Saltwater

Some oil producers are trying to sell parts of their lucrative saltwater disposal businesses in effort to raise cash due to low crude prices.

Many oil companies rely on outside contractors, which tend to be small, privately-held companies, to inject their salt water by product of oil production thousands of feet deep into the earth below the water table.

But for some producers which own such facilities, the high margin business,  also makes them appealing to investors seeking  high yields.

Putting such businesses up for sale suggests that some energy executives are coming under increasing pressure to part with good, albeit non-core, assets to ride out the crude market slump.

The U.S. Environmental Protection Agency figures show more than 9.5 million barrels of brine and other liquid byproducts get pumped into 28,000 saltwater disposal wells around the country.

Disposal fees range from 25 cents to $1 per barrel generating hundreds of millions of dollars in annual revenue for investors.

The volume of water extracted along with oil tends to increase as wells age, in some cases reaching as much as five barrels for every barrel of crude produced.  This may be a factor of why rates for saltwater disposal wells has held steady even as crude prices have tumbled.

So, is it time to acquire salt water disposal properties?  Maybe.

Source: Oil Producers Try Selling Parts of Salt Water Disposal Businesses, Oil And Gas Investor, September 11, 2015