Independent oil and gas producer WildHorse Resource Development has announced plans to construct a $50 million crude oil and produced water gathering system on its Eagle Ford Shale play acreage.
The project will be constructed and operated by WildHorse, with completion expected in mid-2019.
“The construction of an in-field oil and produced water gathering system will be the first phase in developing a midstream opportunity which can further improve our already superior realizations,” said Jay Graham, WildHorse chairman and CEO.
Graham added with an in-field oil gathering system, WildHorse can reduce trucking by delivering barrels from the wellhead to a central point in the field. The crude and produced water gathering system will lower lease operating expense on a barrel of oil-equivalent (Boe) basis and allows WildHorse to facilitate completions using recycled water.
The initial phase of construction consists of roughly 50 miles of oil gathering pipeline and approximately 55 miles of water gathering pipeline, Kallanish Energy reports.
The oil and produced water gathering lines will utilize the same right-of-way where practical to reduce costs. WildHorse estimates the oil gathering system will cost $35 million, and the water system another $15 million.
The proposed water gathering line is expected to reduce produced water transportation and disposal costs by approximately 50%, which equates to an expected $0.25 per Boe improvement to lease operating expenses.
WildHorse expects the gathering system, once additional takeaway is complete, will deliver roughly $1.00 per barrel improvement in realized oil pricing.