On Tuesday, June 19, Midland City Council approved amendments to their 2016 contract with Pioneer Water Management (Pioneer), a wholly owned subsidiary of Pioneer Natural Resources. The two amendments detail the terms and costs for engineering, procurement, and construction.
In 2016, the City and Pioneer entered into agreements that will allow the company to make improvements to the City’s wastewater treatment plant in return for a supply of reclaimed water from the plant for use in oil and gas development.
Under the amended agreements, the total cost of the upgrades to the Plant is $133.5 million with $14.7 million already having been spent by Pioneer. These upgrades will put wastewater through additional treatment processes which will make it suitable to use in hydraulic fracturing operations. In return, the City of Midland will provide Pioneer reclaimed wastewater for reuse. The water will be transported utilizing Pioneer’s water distribution system and used for hydraulic fracturing. Utilizing effluent water for this purpose significantly reduces Pioneer’s need for freshwater and makes productive use of a non-potable resource at a lower overall water cost. The use of the water distribution system also means fewer water-hauling trucks on the road, overall.
The original price of the project was estimated to be less than $125 million dollars in 2016. Due to increases in the costs of the labor and construction and design improvements, additional resources were deemed necessary to complete the project. To meet the difference, the City will contribute $4.25 million from the unappropriated Water and Wastewater Fund, and Pioneer will increase their contribution to be paid back in water credits up to $9.25 million dollars. Pioneer has a volume-based contract whose primary term is expected to last for the next 20 to 28 years, depending on flow rates. The City retains the right to sell unused or excess reclaimed water to other entities for water quantities not taken by Pioneer.
"This agreement represents a significant milestone for the City of Midland. With approval of these amendments, construction can begin,” said City Councilman Spencer Robnett. “We are fortunate to have responsible and dedicated corporate partners in Midland; Pioneer is a shining example of that," he added.
“We recognize one of the best things we can do for Midland is limit the need for freshwater in our operations, and thanks to this innovative partnership we have created an affordable, reliable, long-term source of water for Pioneer while at the same time providing the city with necessary infrastructure upgrades,” said Tim Dove, president and CEO of Pioneer Natural Resources.
City of Midland Media Contact: Elana Ladd, (432) 685-7593
Pioneer Media Contact: Robert Bobo, (972) 969-4020, firstname.lastname@example.org