NGL Energy Partners subsidiary expands water disposal pipeline in Permian Basin

Pipeline needs in the Permian Basin grew in step with oil and gas production, leading a midstream to expand its water transmission line in southeast New Mexico to meet the demand for wastewater disposal in the region.

Oklahoma-based NGL Energy Partners said its subsidiary NGL Water Solutions was expanding the capacity of its Lea County Express Pipeline System, more than doubling the line’s capacity from 140,000 to 340,000 barrels of water per day.

The project will add a second pipeline to the system, along with additional disposal wells and facilities intended to add more capacity to meet growing water disposal needs in the Delaware Basin – the western edge of the greater Permian Basin in southeast New Mexico.

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The 27-mile line will be used to move produced water out of the basin’s core area for disposal.

The company said the Lea County system was expandable by up to 500,000 barrels of water per day and will be incrementally increased both in capacity and acreage.

The need for water management in the Permian will likely grow as fossil fuel operations expand, as up to 10 barrels of wastewater, known as produced water in industry terms, is generated for every barrel of oil extracted in the region.

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The fluid is a combination of flow back from hydraulic fracturing and formation water brought to the surface with crude and natural gas.

NGL Water Solutions Executive Vice President Doug White said the expansion was indicative of expected growth and thus more investment in the basin.

“NGL remains focused on our commitment to deliver reliable produced water management for our customers while remaining focused on the environment and the sustainability of our operations,” he said.

“Today’s announcement highlights our investment in the long-term future growth and reliability of our infrastructure which provides our customers with confidence to plan their long-term developments in the Delaware Basin.”

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Unlike the rest of the U.S.’ major shale regions, the Permian Basin’s oil production was expected to grow next month by about 5,000 barrels of oil per day (bopd), according to the latest data from Energy Information Administration.

That meant the region would have a total of about 5.97 million bopd in February, the report read, followed by 1.3 million bopd in the Bakken region of North Dakota and 1.14 million bopd in Eagle Ford of southern Texas.

Those regions were expected to decrease oil production by 1,000 bopd and 1,303 bopd, respectively in the next month, the EIA reported.

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The Permian was also one of the few regions expected to grow in oil production in February, adding about 122 million cubic feet per day (cf/d), for a total of 24.4 billion cf/d – the second most in the nation.

The nation was led by the Appalachia region at 35.5 billion cf/d in February, the EIA reported, but that region was expected to drop by 156 million cf/d.

Increased oil production in the Permian was likely tied to higher oil prices in recent weeks than throughout 2024.

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Since the year started at about $70 a barrel, according to Nasdaq, the price of domestic oil climbed steadily to the year’s peak of $78 a barrel on Jan. 26, before dipping slightly to $77 a barrel Monday morning.

The EIA foresaw little growth or declines in crude oil prices in 2024 and 2025, read a Jan. 10 report, averaging $82 a barrel in 2024 and $79 a barrel in 2025.

This is still significantly higher pricing than the oil prices reported in the $60s ahead of the COVID-19 pandemic when prices fell to historic lows, signifying a solidification of the market’s recovery from the health crisis.

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Prices were likely to “rise somewhat” in early 2024, due to potential production cuts by the Organization of Oil Exporting Countries (OPEC+), a group of foreign oil-producing countries not including the United States.

Prices were likely to rise from the average of $78 a barrel reported in December 2023 to $85 a barrel by March, but then drop after April as production outpaces demand.

“The growth of global petroleum consumption over the past two years was driven by economic growth and a return to pre-pandemic travel patterns, especially for international flights,” the report read. “We attribute the relatively small crude oil price changes in our forecast to continued reduced OPEC+ production.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.

This article originally appeared on Carlsbad Current-Argus: Pipeline to dispose of Permian Basin wastewater expands