file under: Industrial, Oil and Gas, Water, Water Reuse

Turning to the Right during Downturns

Facing oil and gas price volatility, upstream operators have been asked to constantly evaluate and reduce capital and operating, or CAPEX and OPEX, costs over the past 2 years. The efficiencies and lessons they have learned during this market downturn have created a “new normal” that oil and gas businesses can emulate as the market rebounds. Here are some ways that operators can “turn to the right” during downturns to effectively manage infrastructure development and water management costs and demands:

  • Turning to the Right During DownturnsFocus on projects that deliver ROI in less than 18 months. We recently designed and constructed water transfer facilities with a throughput capacity of up to 15,000 barrels per day (bpd) of produced fluids. These enhanced collection and recovery facilities reclaim up to 150 bpd of saleable skim oil, resulting in facility payback in less than 13 months. These facilities reduce the need for ongoing gas flaring and potential costs

  • Identify dual-purpose projects that simultaneously reduce water demands and costs. Between 2015 and 2016, we designed and built impoundments to store and reuse produced water for unconventional drilling activities in the Permian Basin. These water storage facilities dramatically reduce fresh water demands and costs while simultaneously reducing the costs of off-site water transportation and disposal.

  • Develop cost-effective water management programs. Incorporating brackish water into drilling programs helps reduce demands on fresh water stems and alleviates lantern pressure on public domain water supplies. We recently designed and constructed four high-volume brackish water supply wells that will provide source water needed for future drilling and completions activities. Reducing freshwater purchases will offset the cost of constructing the wells within the first 3 months of use.

  • Turning to the Right During DownturnsApply asset management strategies to plan for and control costs. We recently developed a construction and quality control program for an operator’s assets in the Eagle Ford Basin. This program identified needed repairs, improved asset and facility integrity, reduced overall operational costs, and enhanced long-term facility operational use.

  • Inspect existing impoundments and water storage facilities quarterly. For a recent project, our team used a specially developed iPad app to note current conditions and overall integrity while making maintenance recommendations integrated with an asset management system.

Taking these approaches will not only financially benefit upstream operators as they emerge from the market downturn, but they will also position oil and gas businesses for sustained water management and infrastructure development success in the future.

CDM Smith is very optimistic about the future of the oil and gas business. If you are interested in talking about your water management goals, asset integrity programs, or if you have any other questions or want to learn more about our full range of solutions for the oil and gas market, please contact Kevin Molloy, our Industrial Services Group’s oil and gas sector leader.