Baker Institute expert: Investing in oil field water management a major savings opportunity


David Ruth

Jeff Falk

Baker Institute expert: Investing in oil field water management a major savings opportunity

HOUSTON – (Feb. 28, 2018) – Increasingly sophisticated water management helps U.S.-focused oil and gas operators drive their economic break-even oil price below the social break-even price — the minimum price needed by many producers abroad to pay bills and fulfill obligations to citizens, according to an expert in the Center for Energy Studies at Rice University’s Baker Institute for Public Policy.

Credit: University

The strategic ramifications of this process will likely unfold for years to come, said Gabriel Collins, the Baker Botts Fellow in Energy and Environmental Regulatory Affairs. Collins recently shared his insights in a keynote address at a Produced Water Society seminar. He is available to discuss oil field water-management issues with the news media.

“Each cent that your technical skill shaves from full-cycle water-management costs makes the molecules your company produces more competitive in the global marketplace,” said Collins, who focused his address on the West Texas Permian Basin. “The Permian could be producing as much crude oil as Kuwait by year-end 2018 and already produces more natural gas than Australia, the world’s second-largest liquefied natural gas exporter.”

The numbers strongly suggest that operators value water more highly with each passing year, Collins said. “Capital deployments by exploration and production companies, water-focused midstream groups and other parties in the Permian Basin likely exceed $500 million per year even under a conservative estimate and could approach $1 billion annually of investment directly attributable to oil field water sourcing, transportation, treatment and disposal,” he said. “This includes greenfield infrastructure and consolidation/expansion of existing assets. Part of the motivation for these significant investments comes from the up-front cost reductions in water procurement, transport and disposal/recycling.”

The Baker Institute’s initial research on the potential savings from integrated water management suggests that going to pipelines and recycling a greater share of produced water could reduce completion operating costs by at least $1 million in a well’s first year of economic life, Collins said.

Hydraulic fracturing, or “fracking,” uses millions of gallons of water combined with chemicals to shatter underground rock formations and release the oil and gas trapped inside. Large volumes of water are also often produced once an oil or gas well comes online. This water is called “produced” water, and also generally includes some or even all of the water injected during the fracking process.

Previously, this water frequently could not be economically reused because it contained dissolved solids, chemicals, oil droplets and other contaminants that were expensive to remove, and the water was disposed of in deep underground wells, Collins said. However, technical and economic advances have made it increasingly feasible for the operators to recycle produced water.

Collins conducts a range of globally focused commodity market, energy, water and environmental research. His current research focuses on oil field water issues, groundwater valuation in Texas, evolutions in the global gasoline market, shifts in China’s domestic oil consumption structure, Texas water governance and the food-water-energy nexus.


For more information or to schedule an interview with Collins, contact Jeff Falk, associate director of national media relations at Rice, at or 713-348-6775.

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Founded in 1993, Rice University’s Baker Institute ranks among the top three university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at or on the institute’s blog,

About Jeff Falk

Jeff Falk is associate director of national media relations in Rice University's Office of Public Affairs.