The Positive Impacts of Water Recycling: Interview with Pete Hollis

Hi Pete! Thank you for your time today. When it comes to the oil & gas industry, you’re a subject matter expert so I’m very interested to hear all about your experience and your thoughts on certain issues. Can we start by you just telling me a little about your background?

Answer: I've been involved in the oil and gas industry for the past 10 years. Before starting S&E Consultants in late 2019 to help water midstream operators evaluate acquisitions, I was the COO of Lagoon Water Solutions—a water midstream, disposal, and recycling company focused on the Anadarko basin.  Prior to Lagoon, I held various leadership positions with Marathon Oil Company's Supply Chain group and before that I started my career at NASA Johnson Space Center as a contracting officer in 2008. I have a passion for improvement and pushing companies to adopt new ideas and technologies.

Thank you for that. You mentioned your experience in water recycling. A big topic right now is seismic activity caused by oil and gas operations. Do you think water recycling can reduce the risk of seismicity?

Answer: Induced seismicity is a very complicated geologic issue that the oil and gas industry must resolve in order to continue to operate. Oklahoma is a great example of how the industry has to develop cost-effective, scalable options for recycling produced water, otherwise multiple geologic problems with injection will continue and the regulatory bodies will step in and reduce activity.

As we saw in Oklahoma, the seismic activity continued to climb in frequency and intensity from 2010 through 2015, which was a perfect correlation to oil and gas activity in the state. As the downturn started and produced water injection began to fall, we began to see a reduction in the seismic activity.

Texas is beginning to see the same type of issues related to seismicity along with increased regulatory scrutiny. Implementing recycling on a large scale will not only resolve these issues related to seismicity, but it will also provide the added benefit of reducing the industry's freshwater usage.

There are technical issues related to implementing recycling in a cost-effective manner and there are logistical issues with the water being available in the right place at the right time, but as an industry, this is something we can work through with better planning and coordination.

There’s a lot of talk about ways the oil and gas industry can become more eco-friendly. Water recycling of course being one of those ways. How can oil and gas go “green” and decrease its carbon footprint all without increasing costs?

Answer: The best way to "green" our industry and lower costs is to reduce the industry's reliance on trucking. Our industry has to work as a whole to reduce our carbon footprint in order to attract more investment. Investors across the globe are shying away from investing in what they see as carbon-heavy industries. Improving the industry's ability to plan for field development and work together will move more water to pipe and therefore reduce the need for trucks.

Even with the lack of investment in drilling and completions, there will still be produced water flowing. How has that impacted investment in the Water Midstream Industry?

Answer: A short downturn in activity might actually provide a benefit to the midstream companies as they are able to catch up with projects currently underway. A prolonged downturn has a negative effect on investment and a negative effect on costs to handle water.

In order for these infrastructure projects to attract investment and keep the costs of handling low, they require the initial flowback volumes from new wells to bring in cash flow. If these projects are only underwritten by existing production that is well down its decline curve, then the costs to handle will increase substantially.

What is a key area of improvement the industry needs to make in order to grow?

Answer: Automation of pipeline, disposal, and recycling systems is critical to the continued expansion of the water midstream industry. Automation will provide 24/7 situational awareness and allow these systems to be operated remotely from properly staffed and equipped operation centers. Not only will automation lower costs through the optimization of manpower in the field, it will also facilitate real-time emergency response to issues that arise.

You summarized earlier all of your years of experience in the water midstream industry and you've obviously had a lot of success. Since it’s such a niche field, can you tell me what the top technical and/or soft skills are that would make one successful in this industry?

Answer: There are two skills that are very important in the water midstream space. First, one must be able to not only speak intelligently about their area of expertise, but also have a broad understanding of the business as a whole. Engineering staff must be able to speak to the economics of projects and business development staff must understand what is technically feasible for pipeline and disposal construction. Without a full understanding of the business, projects will be over budget, off schedule, or technically impossible.

In addition to having a broad based understanding of the business, individuals must also develop communication skills that allow them to be effective across multiple levels of leadership. The ability to speak to investors just as effectively as field level staff is critical. Typically, water midstream companies have small management teams and those dynamic individuals that can lead both up and down the management chain and cross functionally are essential.

Key Takeaways:

Takeaway #1: Recycling can resolve issues related to seismicity.

Takeaway #2: Working together to reduce the industry's carbon footprint will attract investors.

Takeaway #3: A short downturn may benefit midstream companies, allowing them time to catch up with projects currently underway.

As the water midstream industry continues to grow, companies are facing unique staffing challenges. Progressive has been partnering with many of the top water midstream operators and private equity firms in the U.S. by providing talent with proven saltwater disposal and true produced water experience. Whether you're a business looking to hire or a professional seeking work in the water midstream industry, contact us today to learn more.

Mr. Hollis is currently available for business opportunities. If you’d like to get in touch with him, please contact Michelle Dutemple at (832) 900-5973 or [email protected].