University Lands has selected a new joint venture (JV) to serve as the exclusive preferred water services provider on its 167,000 Delaware Basin acreage position through a “win-win-win” agreement with H2O Midstream and Layne Water Midstream, the companies said in a joint statement on Jan. 22.
The JV, known as UL Water Midstream LLC (ULWM), was formed by H2O Midstream and Layne Water Midstream to develop and operate water infrastructure on the University Lands acreage located across West Texas in Ward, Winkler and Loving counties within the Southern Delaware Basin. Under its agreement with University Lands, ULWM will source groundwater and gather, store, transport, recycle and dispose of produced water from oil and natural gas wells.
The agreement with University Lands also includes an incentive sharing structure that encourages the rapid development of full-cycle water midstream infrastructure with a long-term goal of reducing water logistics costs for operators, increasing revenue for the Texas Permanent University Fund, reducing the environmental impact of water handling, and enhancing the sustainability of University Lands acreage, according to the companies’ press release.
Producers that enter into long-term contracts with ULWM are expected to realize lower costs and improved flow assurance by leveraging ULWM’s full-cycle water midstream platform, proven operating capability and advantaged cost structure, the release said.
Mark Houser, the CEO of University Lands, said in a statement: “Our goal is to drive the adoption of a more economic and holistic approach to oilfield water management. The choice is the operator’s, but we believe that there are economies of scale and benefits to connected systems and that with time, these benefits will become more and more evident. The key is to find reliable third-party service providers that operators can trust, like H2O Midstream and Layne Water Midstream. The University Lands and UL Water Midstream agreement is a win-win-win benefitting University Lands, the oil and gas industry, and the environment.”