Anyone who’s been in the gas patch for a day knows that with hydrocarbons comes brine. There’s always that little problem of what to do with produced fluids. Unfortunately, that little problem is not cheap. The difference between an economic well and an uneconomic well can be the cost of handling the fluids. In an attempt to mitigate the impact, many operators try to manage the cost of brine disposal by establishing a fixed price per barrel for hauled fluids. Certainly a fixed cost per barrel would be good thing, right? But do you really know what’s in that cost per barrel? How much is your haul costing you?
What’s the Difference?
The cost of disposal includes many factors, many of which are based upon time. With trucking costs hovering around $120 per hour, time truly is money. One has to look at cycle times, haul distances, and unloading times before one can even begin to consider disposal cost. This is where paying a turnkey price per barrel to a hauler for disposal can be a double edged sword. Certainly fixing a price per barrel solves the problems associated with loading and travel, but it does not recognize that they hauler may have a vested interest in the haul, maybe even a longer haul. Further, with hauling being a large component of the cost, the hauler may or may not be negotiating the lowest cost of disposal. Or, worse yet, the hauler may be obtaining the lowest cost per barrel at the plant, which may not result in the lowest cost per barrel to the operator at the wellhead.
What should the prudent operator do?
Take some time to disaggregate your haul cost from your disposal cost. The cheapest disposal price may not be the cheapest destination price. Consider a fixed price hauled, but take a look at the total cost of haul plus disposal. You may find that a shorter haul with a higher disposal cost reduces your total cost of operations – by dollars per barrel.
At today’s natural gas prices, there is zero room for excess costs. Taking an active role in calculating the total cost per barrel of fluid disposed could save you thousands, or tens of thousands, of dollars per month. These are the same dollars that can flow straight to the bottom line or be put back into rework for increased production. Overlooking the cost of hauling and the cost of disposal combined is a recipe for inflated costs. There is no benevolence in well service work. Just because someone tells you that you’re getting the lowest price per barrel at the disposal destination, does not mean that you are paying the lowest total cost. Know your figures.
To get the best ROI for your business you need a service that is faster, cheaper, and better. Penneco Environmental offers just that. We specialize in environmentally safe Class II Injection disposal services to both shale and conventional operators.
We are accepting water TODAY in West Virginia. Further, we are in Open Season for our newest facility opening in 2019 in the heart of the Marcellus Utica – in Allegheny County Pennsylvania. Reserve your capacity today. Let us show you the difference that Penneco Environmental can make to your bottom line.