Top shale oil producer Pioneer Natural Resources Co. has found an unusual way to both save water and cut costs for its wells: tapping the treated runoff from toilets, sinks and showers in west Texas.
Pioneer has signed an 11-year, $117 million deal with the city of Odessa, Texas, that will guarantee it access to millions of gallons of treated municipal wastewater each day, for use in nearby oilfields. Deliveries of the so-called effluent, are expected to start at the end of the year.
As crude oil has slid to its lowest level in six years – currently about $40 a barrel – oil and gas companies pumping from shale rock have tried to cut every unnecessary penny from their operations. Water acquisition and transportation can be up to 10 percent of the cost of drilling and fracking a well, according to consulting firm IHS.
Producers are also trying to mitigate long-term risks of water scarcity in the arid Permian Basin of west Texas, where the top U.S. oilfield is situated. Oil and gas companies operating in the area, including Pioneer and Apache Corp. have long sought cheaper, more environmentally sound sources of water to use for fracking.
For example, both companies have drawn some of the water they use in their operations from the Permian's brackish aquifers, which contain water unfit for drinking. Both companies also have worked to recycle water that is used for frac jobs or found in the ground while drilling.
Pioneer is reportedly the first oil and gas company to sign a long-term wastewater supply contract with Odessa, a city of about 110,000 people. The Dallas-based company recently began construction on a pipeline network that will transport the treated water from the city's sewage plant to one of its oilfields about 20 miles away.