Water management in the oil and gas industry to be focus of OKC conference

The second annual SCOOP and STACK Upstream and Midstream Water Management Conference will be held in December in Oklahoma City.

One of the speakers will be Colby Tiffee, Director of Commercial Development at Alta Mesa Resources in Oklahoma City. The firm’s subsidiary, Oklahoma Energy Acquisitions LP is among one of the most active energy firms in the STACK.

He was recently interviewed by organizers of the conference.

Colby, first of all, it’s excellent to have you as part of the speaker lineup at the 2nd Annual SCOOP & STACK Upstream & Midstream Water Management Congress 2019. With water volumes used in fracs climbing and not a lot of produced
water reuse taking place, induced seismicity and disposal continuing to pose a challenge, the conference is expected to bring together a wide spectrum of attendees as upstream and midstream operators look to ensure they are aware of the most effective ways to implement and apply the most effective water management strategies.
Have you noticed increased activity in the midstream sector for water management? How do you think the growing pipeline
infrastructure is going to affect current and future water transfer industry?

A: There’s no doubt that over the last 3 to 4 years across Oklahoma a major focus of producers and midstream companies has been to invest in water pipeline gathering, storage, recycle and disposal. I think the biggest impact that increased infrastructure has made is that most producers are realizing
lower lease operating expenses (“LOE”). The trade-off has been that it’s at the expense of producers to spend capital to build this
infrastructure. As access to capital has become further restricted by investors, I think the transition from producers building water management assets to midstream companies spending the capital to buy and/or build these assets has started to occur. In conjunction with that transition we’re seeing existing asset sales from producers to midstream companies.

Q: Are you noticing an increasing trend in operators reusing and recycling their produced water volumes instead of disposing it? How do you think this is going to shape the industry going forward?

A: I think across both the upstream and midstream segments of the energy industry we’re seeing more focus on recycling water.
The costs for recycling have come down on a per barrel basis because producers now handle and need more water. I think what
will be interesting to see is if the trend toward recycling will continue with the rig completion activity coming down and having less of a need for water.

Q: Do you foresee any long-term negative
impacts from seismicity?

A: I think the battle for the hearts and minds of the folks with regard to seismicity is just beginning. Erin Brokovich was in Edmond at UCO back in February, 2016 to discuss the impact that
seismicity has on the communities. That kind of national attention on an oil and gas state like Oklahoma almost surely will not be positive. I do however think that Oklahoma is providing
a clear model for how state regulators working in conjunction with private enterprise through cooperation and information can be successful. I know at my house in Edmond we would have had an earthquake about once a day from 2015 to 2017 and all this year I’m not sure I’ve noticed one.

Q: What are the top three challenges you envisage for shale water management in Oklahoma in the coming 12 months?

A: 1. Maintaining the momentum toward recycling now that rig and completion activity have declined. 2. Continuing to drive down water management costs. 3. Economically justifying water pipeline gathering versus trucking now that rig and completion activity have dramatically dropped.

Q: Why would say this congress is important
now for the industry?

A: I think it’s good timing given the state of rig activity in Oklahoma. With limited access to capital, producers will need to double down on their focus to reduce LOE and remain free cash flow positive and I think this event highlights several solid ideas out there to help them accomplish their goals.

Q: What are you looking forward to hearing about at the event?

A: I think as much as anything, I’m interested to hear from producers and midstream companies about their mindset heading into 2020. The state had 148 rigs drilling this time last year and now that number is 51. How is that slowdown shaping production forecasts, development activity, and also M&A activity.

 

The two-day conference will be held Dec. 11 and 12 in Oklahoma City.

 

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