There may be moments in the midstream sector that seem typical or “business as usual,” however, there are times that a common project update takes on a different feeling. The new approval of a Western Midstream project within the sector has begun to create an underlying sense of unease related to what might truly be occurring below the surface of the project.
The North Loving II expansion is being considered a typical capacity addition
The fact that Western Midstream has chosen to develop yet another phase of the North Loving area is indicative of the company’s larger-scale effort to construct a West Texas complex through the sanction of a new 250 MMcf/d cryogenic processing unit (CPU) in the same region; therefore, this is not an incrementally sized project.
Further adding to the significance of this project is how the expansion is directly tied to Western Midstream’s rapidly expanding produced-water infrastructure. Recently, the company has sanctioned several significant produced-water pipeline and disposal projects designed to remove large volumes of produced water from pressure-constrained regions of the basin and relocate those volumes to areas of the basin with higher injection capacities.
Additionally, the long-term nature of the operator agreements associated with many of these projects indicates a desire to stabilize and add redundancy to the basin-wide produced-water system, which has experienced continued increases in produced-water volume each year.
Accelerating development and the forces driving the need to accelerate
The expansion of the North Loving II is beginning to take on a larger form as the other components of Western Midstream’s produced-water expansion become apparent. Rather than an individual project, the North Loving II expansion seems to be indicative of a coordinated effort by Western Midstream to meet the long-term produced-water needs of the Delaware Basin.
The expansion is a larger form as the other components of Western Midstream’s produced-water expansion become apparent. Rather than an individual project, the North Loving II expansion seems to be indicative of a coordinated effort by Western Midstream to meet the long-term produced-water needs of the Delaware Basin.
While the timing of the North Loving II expansion approval is notable, the timing is equally important given the rapid expansion of Western Midstream’s produced-water-related investments across Loving County. Many of Western Midstream’s current slate of produced-water-related investments include long-haul pipelines, additional gathering systems, and the construction of new disposal facilities. All of these projects were developed in direct response to increasing regional pore-pressure and increasing water-to-oil ratios (WOR).
These types of projects require a longer lead time to plan and execute
The simultaneous completion of so many of these projects in such a short period of time represents more than simple operational planning. Instead, these efforts represent an escalating need for Western Midstream to remain in front of the rapidly accelerating development cycles in the Delaware Basin. Together with the previously mentioned North Loving II processing expansion, this creates a more complex picture: increased gas-processing capacity, dramatically enhanced water-handling capabilities, and a pattern of approvals that are arriving sooner than anticipated.
Collectively, all of the above-mentioned coordination suggests a larger-scale strategic pivot by Western Midstream. In essence, the company is positioning the North Loving II expansion as a key component of a larger regional strategy focused on developing a more robust, scalable midstream platform prior to the onset of the next round of drilling activity.
Ultimately, the combined momentum of these developments is indicative of Western Midstream’s desire to position the North Loving II expansion as a critical component of its long-term Delaware Basin strategy. Specifically, the combination of added gas-processing capacity and a more extensive network of produced-water pipelines points to a specific goal of Western Midstream: creating a more sustainable, scalable midstream platform in anticipation of the next cycle of accelerated drilling activity.
