University Lands is inviting qualified companies to submit their design, construction, operation, maintenance, and eventual decommissioning of water-related infrastructure on Permanent University Fund (PUF) lands. Please refer to the attachment for proposal details.
Answers to questions asked concerning the water proposal are listed below:
Q: Will companies have an opportunity to fill in gaps during the analysis period (after March 19th deadline)?
A: Yes, University Lands (UL) will contact companies should questions arise about the content of their proposal.
Q: Does UL have a timeline in mind for when selections will be made based on proposals received?
A: As soon as possible.
Q: Does UL have an estimate of frac water demand or produced water over the next 2-5 years?
A: Current estimates indicate that 300 – 400 wells will be drilled on UL acreage in 2018. UL conservatively estimates the current annual water demand for drilling and completion water at approximately 125—150MM Bbls/Yr.
Q: How many wells on a year by year basis are drilled in each region? What is the estimated drilling cadence on UL?
A: In 2017: 313 Wells drilled (36 vertical & 277 Horizontal)
- Northern Midland Basin, Andrews, Gaines, & Martin Counties, 40 wells
- Southern Midland Basin, Upton, Reagan, Irion, Schleicher, & Crockett Counties, 144 wells
- Central Basin Platform, Andrews (western), Ector, & Crane Counties, 48 wells
- Delaware Basin, Loving, Winkler, Ward Counties, 73 wells
- Orogrande Basin, Hudspeth County, 1 well
For 2018: 300 wells projected (mostly horizontal ≈85%)
- Northern Midland Basin, Andrews, Gaines, & Martin Counties, 50 wells
- Southern Midland Basin, Upton, Reagan, Irion, Schleicher, & Crockett Counties, 94 wells
- Central Basin Platform, Andrews (western), Ector, & Crane Counties, 50 wells
- Delaware Basin, Loving, Winkler, Ward Counties, 82 wells
- Orogrande Basin, Hudspeth County, ? well
A: UL has no data regarding future produced water volumes.
Q: Pertaining to disposal capacity, does UL believe that there is a short fall or need for more disposal on UL.
A: UL anticipates a need for more disposal capacity and prefers deep disposal wells which are well-maintained and attended preferably associated with produced water recycling i.e full-cycle water management.
Q: Regarding water recycling and recognizing that E&P companies have different chemical programs; what types of water storage tanks are permissible?
A: The types of water storage tanks anticipated are:
- Above ground steel tanks with berms, including the “Poseidon” style
- In-ground earthen pits which include:
- Fresh Water Earthen Frac Pits – limit 3000 ppm TDS
- Produced Water Earthen Frac Pits – Must be designed and operated using the UL Produced Water Frac Pit Specifications & Applications guidelines which are available for review at: http://www.utlands.utsystem.edu/Content/Documents/Operations/Prod_Water_FracPit_Specifications.pdf
Q: Would UL allow multiple tanks, including concrete tanks.
A: Yes, as long as the tankage is configured and operated to eliminate or control leakage
Q: Is UL open to proposals that are partnered or have a joint venture with an operator currently existing on UL?
Q: Can there be multiple successful participants in the same area or are we looking for one participant with an exclusive ability to operate (midstream)?
A: UL does not anticipate authorizing multiple water management entities within a small geographically service area. Exceptions could be made for multiple service providers who have coordinated their services to be complimentary and supportive of one another in an effort to enable full cycle water management possibly by means of joint ventures or other structures.
Q: Will UL mandate or require operators to use a certain water management company?
Q: Have we had a similar management for other commodities on UL?
A: Yes, caliche is managed in some counties by a single service provider.
Q: Does UL have any kind of volume or size expectation in the initial phase?
A: No, UL’s expectation is that a company needs time to grow and expand as business develops.
Q: Has UL considered Naturally Occurring Radioactive Material (NORM) issues which could occur at recycling operations?
A: No. Management, proper handling and disposal will be the responsibility of the company performing the recycling or water handling.
Q: The proposal refers to projections of revenue; can UL characterize the types of revenue from disposal or water supply?
A: For each proposed service area, respondents should include a detailed business plan and economic analysis which forecasts UL revenue projections. Projected UL revenue could come from a variety of sources including but not limited to:
- Use of surface – easements & facilities sites
- Fresh water sales
- Produced water recycling
- Skim oil sales
- Produced water disposal fees
The current University Lands Rate and Damage Schedule can be reviewed (link below) as a basis of UL pricing in normal business.