OILMAN Article: Reducing Lifting Cost with End-to-End Commodity Transportation Management

Oil and gas producers may not have control over the direction of their commodity prices, but lifting cost is a lever that can be applied to lower breakeven and improve profitability. One area that may not immediately come to mind to reduce lifting cost is the expense associated with safely disposing of produced water. Permian operators face increasing water production in the Midland Basin – as much as seven barrels per barrel of oil produced – and 10 barrels in the Delaware Basin. Produced water transportation is arguably a bigger business in many basins than moving crude oil. The hauling costs come back to an operator’s balance sheet adding something north of $3 to a barrel of oil’s lifting cost in the Midland Basin. Boom or bust, oil producers are sure to take a five percent or more boost to their cash flow any day. New technology is enabling a step change in how efficiently produced water is moved, which in turn is lowering the cost of doing business for haulers, translating to lower lifting cost, and enabling producers to get out of the transportation management business.

A 30 cent per barrel reduction in water disposal, is a $3.00 per barrel lifting cost savings on a 10 to one cut. The dollar cost savings are significant, but the ESG impact can be even greater. Technology brings better data, and better data leads to better, more efficient planning and field operations. That’s good for haulers and good for the environment.

The energy industry has always pulled more out of the ground than oil, gas and natural gas liquids. There are often other commodities that can be sold or must be disposed of, including sulfur, CO2, and even lithium, that are now being extracted from a well’s petroleum brine. This puts energy companies in the business of tracking multiple streams of molecules produced at the wellhead. Those who do it well can dramatically reduce costs while gaining a deeper view into where, when and how commodities are flowing through the energy value chain.

 

To read more, click here to visit the featured interview in The Oilman Magazine’s April 2021 digital publication.

 

About W Energy Software

Headquartered in Tulsa, Oklahoma, W Energy Software offers the oil & gas industry’s only unified ERP solution built for the cloud that is relied on by more than 100 upstream and midstream companies to accelerate business performance, improve operational efficiency, and drive costs down.  W Energy Software combines precision-built software in one extendable cloud-based workspace with an intimate understanding of the oil & gas business to deliver solutions that offer flexibility, affordability, and continuous upgrades.  Unlike other ERP software that loosely ties together a mix of legacy solutions and fragmented technologies, W Energy Software designed a unified upstream and midstream ERP platform to seamlessly track oil, gas, and NGL from the wellhead through transportation and marketing, eliminating data silos as well as the burden and costs of maintaining multiple systems.  With W Energy Software, oil & gas companies stay lean and agile with the tools they need to adapt to market changes and meet evolving customer needs head-on, all while gaining the confidence that their business is running on the latest technology. For more information, please visit www.wenergysoftware.com.

 


 

Jeff O’Block, Chorus Logistics Founder

Jeff O’Block is the founder of Chorus Logistics, the leading provider of cloud-based and mobile transportation management solutions, now a W Energy Software company. Prior to that, Jeff co-founded Confirmation Corporation, a developer of software that provides confirmation services to subscribed trading companies which was acquired by the New York Mercantile Exchange in 2002. He also founded PSC Energy, a successful energy trading platform that became a popular trade capture, scheduling, and accounting system (now supported by Sungard).

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