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Projects to address water, air pollution in Permian Basin grow along with fuel demand

·4 min read

As oil and gas markets continued to grow along with operations in the Permian Basin early this year, so too did efforts to mitigate the environmental impacts of the industry.

Expansions in both management of wastewater from the industry and mitigation of air pollution in the basin were set to grow as production rose to meet increased demand during the world’s recovery from the COVID-19 pandemic.

NGL Energy Partners announced a partnership with XRI Holdings to increase produced water management throughout the western Delaware Basin which covers southeast New Mexico’s portion of the Permian.

More: 2022 Eddy County oil and gas tax collections reach milestone in December

The project would see a combination of NGL’s pipeline system with a capacity of 1.8 million barrels per day and XRI’s recycling capacity of about 1.2 million barrels per day at 30 recycling facilities in the Permian Basin.

Produced water is a combination of flowback from hydraulic fracturing operations and formation water brought to the surface with oil and natural gas. It is high in brine and toxic chemicals and is either disposed of through underground injection or recycled and reused in subsequent drilling.

Recently, companies began favoring recycling and reusing the water as the traditional use of disposal wells was opposed for fears of environmental contamination and induced seismicity.

More: New Mexico groups pressure Biden administration to crack down on oil and gas pollution

Company officials said the joint venture between NGL and XRI would allow both companies to capitalize on the increased demand for new water management and recycling practices.

“NGL remains steadfast in our commitment to delivering full-lifecycle water management for our customers while remaining focused on the environment and the sustainability of our operations,” said Doug White, NGL executive vice president. “We have created a set of capabilities unmatched in the industry.

“As a leader in produced water management, we believe this approach will be the best way for us to continue to provide safe, efficient, reliable, and environmentally friendly solutions for our customers.”

More: Funds to plug abandoned oil wells headed to to New Mexico via Biden's infrastructure bill

Companies in the region also responded to demand for better carbon capture operations reducing the amount of air pollutants released by oil and gas operations.

Lucid Energy announced it received approval from the U.S. Environmental Protection Agency to sequester carbon dioxide (CO2) emissions at its Red Hills natural gas processing facility in Lea County.

The EPA approved Lucid’s submitted monitoring, reporting and verification (MRV) plan as to how it the company will dispose of CO2 via injection underground.

More: Oil and gas industry resisting New Mexico bill aimed at limiting greenhouse gas emissions

The plan documented how Lucid will capture and permanently store the CO2 which is removed from natural gas during processing, which is intended to provide Lucid’s customers with a more “sustainable” production, company officials said.

“Since our entry to the Delaware Basin five years ago, Lucid has targeted investments in large-scale gas treating assets, which empower our customers to develop highly economic drilling locations with associated off-spec gas,” said Lucid Chief Executive Officer Mike Latchem.

“This strategy has proven beneficial for all stakeholders, as Lucid currently removes more CO2 from Permian Basin shale production than any other midstream operator.”

More: 420,000 gallon oil, water spill reported east of Carlsbad. State works to clean up the site

Oil prices could continue rise, but as production grows so does supply, meaning energy prices could begin to decline and stabilize this year, read a recent report from energy industry analytics firm Enverus.

When COVID-19 hit the U.S. in March 2020, travel and business restrictions cause fuel and oil demand to plummet to historic lows, leading to decreases in production.

As COVID-19 vaccinations were lifted, demand recovered and quickly outpaced fuel supplies as companies struggled to re-up their production.

More: New Mexico to get $43 million to clean up abandoned oil wells. Is it enough?

The price of domestic oil as of Monday morning was reported at about $93 per barrel, well above pre-pandemic levels in the low-to-mid $60s.

Meanwhile, Baker Hughes reported the Permian Basin added seven rigs in the last week, as of Friday, while New Mexico held steady at 92 rigs and Texas added 13 for a total of 300 rigs.

Enverus predicted U.S. oil and gas production could grow to more than 900,000 barrels per day in 2022, but then decline in 2023 to 300,000 barrels per day as demand is met.

This year's expected to see supply increases, but would also depend on geopolitical events and extreme weather events, said Farzin Mou, Enverus vice president.

“U.S. supply growth should weigh down both commodity prices through 2022, but the timing for this correction depends on geopolitics for oil and weather for natural gas,” Mou said. “The added supply will allow a global build in stockpiles through the first half of the year.”

Adrian Hedden can be reached at 575-618-7631, achedden@currentargus.com or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: Projects to curb pollution in Permian Basin grow as does oil demand