Economics PhD Candidate
University of New Mexico
Presentation Date: September 14, 2023
The western United States faces the irony in many of its oil- and gas (O&G) producing regions of “water, water everywhere, but none to drink.” Excess volumes of produced water (PW) – a byproduct of production from O&G leases – exists alongside severe freshwater shortages. This paper examines when it would be feasible for an O&G operator in southeastern New Mexico (SENM) to address both problems at once by treating some portion of its PW for offsite reuse. To do this, a profit-maximization model with a production and expenditure function is developed in which an O&G operator only sends PW volumes to a multiple effect distillation (MED) unit for treatment when doing so will cost them less than sending the same volumes to an underground saltwater disposal (SWD) well. The model is run with numerical parameter values that are based on empirical observations. It indicates that the most important factor in determining how much, if any, PW that an operator will treat at an MED unit will be the degree to which they see recoverable liquids decline at greater treated volumes.