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University Lands challenge

In 1838 the country of Texas donated 200,000 acres of scrub land in the west to the university system. The State of Texas donated another 2 million acres to help finance colleges. Today…

In 1838, the country of Texas donated 200,000 acres of scrub land in the west to the university system. The State of Texas donated another 2 million acres to help finance colleges. Today University Lands (UL) manages surface and mineral rights on 2.1 million acres. On February 5 of this year UL requested proposals for “full cycle management” with three primary goals:

  • Support an increase in oil and gas production
  • Decrease operator costs for water-related operations
  • Minimize the industry’s environmental footprint

Bottom line: Generate more revenue from the University Lands surface and mineral rights. Establish an economy of scale to compete with other parts of the Permian Basin. Revenue would come from:

  • Charges for use of surface – easements & facilities sites
  • Fresh water sales
  • Resale of recycled produced water
  • Skim oil sales
  • Produced water disposal fees

The invitation is a test for the new midstream water business models. Proposals were due on March 19. Midstream water companies joined other companies with narrower offerings of disposal and recycling. It is unclear who partnered with whom in the eight proposals received. UL has since reduced the list of viable options to four. The respondents focused on development in a specific area, not complete UL solution. UL anticipates more than one contract in different blocks to span the UL land footprint. They hope to finalize agreements in the next couple of months. This seems optimistic given the complexity of the request.

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