Frac Ranching vs. Cattle Ranching
Gabriel Collins
I help Business, Government, and Civil Society Solve Energy, Food, and Water Challenges
Exploring the Economic Motivations Behind Operator-Surface Owner Conflicts Over Produced Water Recycling Projects
--To put the ranch-level economic impacts of oilfield water sales into perspective, consider the following: a ranch that fills a 500,000-barrel frac pit twice per month with fresh water and only collects a royalty of $0.25/barrel (bbl) could realistically generate $3 million per year in profit. That is the same profit it would likely clear selling nearly 11,000 feeder steers annually at the average price over the past five years. And the ranch could make that money by selling only 33,000 to 34,000 barrels per day, or roughly enough to fill two Olympic swimming pools.
--In contrast, a 50,000 acre cattle ranch in the Delaware Basin would likely yield closer to $160,000 per year in profit. In other words, the medium-sized water sales operation would yield close to 19 times the annual profit of what the cattle operation likely could.
Certified Public Accountant - Retired
7 年Will written and highly pertinent article, Gabe!
E-commerce - Energy - Oil & Gas
7 年Gabriel, thank you for sharing this very informative analysis! One question...what is roughly the footprint of a 500k barrel frac pit? What is the minimum sized land position required for 2 of these on the same property?