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University Lands starting to award water management contracts

University Lands has begun awarding service contracts for full-cycle water management services on Permanent University Fund Lands…

University Lands has begun awarding service contracts for full-cycle water management services on Permanent University Fund Lands. To date, contract recipients include Fountain Quail Energy Services and a joint venture between H2O Midstream and Layne Water Midstream (known as UL Water Midstream).

University Lands manages surface and mineral rights on 2.1 million acres in the state of Texas. In February 2018 the company requested proposals for water management in the following areas;: increased oil and gas production, decreased operator costs for water-related operations and minimal environmental footprint for services. Revenues for the fund would come from charges for surface use, fresh and recycled water sales, skim oil sales and water disposal fees.

Fountain Quail Energy Services has been selected for a number of water-related services in Andrews county, about 25% of which is controlled by UL. In 2018, over 300 drilling permits were filed for Andrews county and over half of these permits were on UL acreage. Fountain Quail is expected to dispose of wastewater, build pipelines to transport produced water and recycle produced water for reuse. Long being a proponent of produced water recycling for beneficial reuse, it is expected Fountain Quail will recycle a considerable percentage of water in their service area.

UL Water Midstream received the service contract for the Delaware Basin, roughly 167,000 acres in Loving, Ward and Winkler counties. The JV will also be expected to dispose of wastewater, build pipelines to transport produced water, recycle and dispose of produced water in addition to sourcing freshwater. Layne Water Midstream’s and H2O Midstream’s conjoined experience operating in the water midstream environment in west Texas leaves them well positioned for the rapid deployment of infrastructure, which is incentivized in their contract with UL.

A representative from University Lands told Water in Oil that both Fountain Quail Energy Services and UL Water Midstream’s proposals were not available for review. Both entities will be filing quarterly reports which will include water volumes for their operations on UL acreage.

University Lands is still seeking proposals for the Southern Midland Basin region of their acreage, which includes Crockett, Irion, Reagan, Schleicher and Upton counties. University Lands estimates 94 wells were drilled in this region in 2018, 85% of which were horizontal.

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