University Lands has awarded a contract to a Houston-based joint venture to provide water services to oil and natural gas operations on 167,000 acres of state-owned lands in the Permian Basin of West Texas.
Houston-based UL Water Midstream LLC will source groundwater for new hydraulic fracturing projects as well as gather, store, transport, recycle, and dispose of wastewater produced by oil and natural gas wells on university-owned lands in Ward, Winkler and Loving counties.
UL Water Midstream LLC is a joint venture of two Houston oil field water companies — H2O Midstream and Layne Water Midstream.
Financial terms were not disclosed but University Lands officials said the joint venture was selected based on the track record of H2O Midstream and Layne Water Midstream in the Permian Basin and their ability to manage water throughout the life cycle of oil and natural gas projects.
Acquiring and moving water has become a growth industry in the arid Permian Basin where it is needed to drill new wells and for the hydraulic fracturing process. Recycling and disposal of wastewater from oil and natural gas operations has also created a boom in saltwater disposal wells throughout the region.
“Our goal is to drive the adoption of a more economic and holistic approach to oilfield water management,” University Lands CEO Mark Houser said in a statement. “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.”
University Lands manages the mineral and surface rights for 2.1 million acres of land in West Texas with proceeds going to the Permanent University Fund, or PUF.
Founded in 1876, the fund supports both The University of Texas System and the Texas A&M University System. PUF received more than $1 billion of income from mineral rights during fiscal year 2018, state figures show.