Aris Water Solutions, Chevron announce long-term deal
May 16, 2022
Aris Water Solutions has announced a long-term contract with Chevron, helping the company expand its water handling infrastructure not only to serve Chevron but new clients.
Chevron is turning up the tap on its business with Aris Water Solutions.
The two companies this week announced a long-term full cycle water management agreement under which Aris will provide produced water handling and recycling services in a portion of Chevron’s core position in the Delaware Basin, including acreage in Eddy and Lea counties, New Mexico, and Culberson and Reeves counties, Texas.
“This is a meaningful expansion and extension of our relationship with Chevron,” said David Tuerff, senior vice president, finance and investor relations at Aris.
Speaking with the Reporter-Telegram by telephone, he said he believed the company’s relationship with Chevron made the multinational giant more comfortable expanding its work with Aris.
Chevron’s Mid-Continent General Manager of Operations Brent Gros told the Reporter-Telegram by email, “Chevron is pleased to continue working with Aris Water Solutions, Inc. This agreement is a key enabler to help us deliver on our growth aspirations in the Permian while we continue to prioritize and protect people and the environment.”
He continued, “The agreement, which will help us increase our use of recycled water in the Delaware Basin, is in line with our surface water use philosophy of maximizing the use of recycled water in our operations, whenever possible. In fact, Chevron’s 2021 water demand in the Permian Basin was satisfied with 99% brackish or recycled sources, which included utilizing no fresh water for hydraulic fracturing.”
Tuerff said growth in demand for water recycling has been growing over the last couple of years. In fact, he said, Aris recycled four times as much water in the first quarter of this year than it did in the first quarter of 2021.
“We’ve seen explosive growth,” he said, as clients seek more sustainable, reliable water sources.
Tuerff said the company is increasing its capital expenditures for building out its recycling facilities, water lines and water handling capabilities – in part to service the Chevron contract but also other existing and new clients.
While Aris’ clients include multinational giants like Chevron and large independents, he said the company also serves smaller operators, some backed by private equity. He cited one producer with operations about a mile and a half from Aris’ infrastructure. It made more sense, Tuerff said, for that operator to tap into Aris’ infrastructure than going to the expense of building its own.
“We build out our backbone, our infrastructure, for big clients like Chevron, but also smaller clients who will also benefit,” he stated.
As it builds out its infrastructure, Tuerff said the company is seeing extended lead times for certain pieces of equipment as well as inflationary pressure, “both of which we planned for. We are seeing lead times pushed out, but it’s nothing that wasn’t anticipated and that we can’t accommodate.”
Approximately 90 percent of Aris’ business is in the Delaware Basin, but the company has a smaller footprint in the Midland Basin, primarily in Midland and Martin counties.
Mella McEwen is the Oil Editor for the Midland Reporter-Telegram.