Issue #52 | Introducing Downturn Dialogues With Oilfield Water…

This is Issue 52 of our weekly newsletter. That means it’s our one-year anniversary! We hope you’ve enjoyed reading this publication as much as we enjoy building it each week. For some reason, we just don’t feel like celebrating our birthday today, so we are keeping the champagne on the shelf for better days ahead… and many more!

As promised in last week’s newsletter, we have started reaching out to key stakeholders in our postponed Oilfield Water Markets conference (including speakers, sponsors, and attendees).

Until we are able to convene in person, we want to give you a platform to share quick thoughts on the state of the oilfield water market. Our widely-read weekly email, before the news digest, is the perfect platform!

So each week going forward as long as the disruption continues, you’ll be able to read a quick word or two from an oilfield thought leader involved with our events. Some of your peers will share how they are coping in the crisis. Some will share market analysis and thoughts on the state of business. Some will share a word of encouragement. And some, like today’s, include all of the above.

Thanks to Jesus Espinoza for kicking things off for us with this thoughtful take.  Unfortunately, Jesus was part of the recent workforce reduction at Gradiant Energy Services, but we have no doubt he’ll land on his feet – he is a strong leader in this sector and no stranger to downturns as you’ll see below. 

“My first downturn was in 1998, and I was transferred somewhere to ride out the storm. The first few that I went through were similar, I was protected/protecting people in the organization that were going to help us when it turned around. Things changed in 2018 and again a couple weeks ago, and I was on the other side of the desk. It’s not fun either side of the desk you sit on, and the uncertainty isn’t any different, only the security of a paycheck.

The current situation is as much our industry’s fault as anything, but we can point to Russia, OPEC and the coronavirus because it’s easier than looking in the mirror. Frac is not a new technology, but the use of efficient and economic horizontal drilling changed the landscape of the industry and the formations people targeted. Every downturn, I can point to a market shift that helped pull us through the next cycle, except for the last one that started in 2014. Supply was the issue, because we excel at excelling. Capacity in US refineries isn’t changing, and for better or worse, most are not set up to run our light oil that our prolific fields produce. Fast forward 6 years, and those same refineries run the same amount of oil as 2014, but now we pretend to be oil exporters with the extra 3 MMbopd we are producing from 2014, competing with a production cutting cartel for marketshare. That’s not a recipe for success.

Most businesses that I’ve worked with always try to create a market for their products, yet we think producing a fluid from underground is enough. Well, we have enough. It takes innovation if you are a hot dog vendor in a hamburger market, and that’s where we find ourselves. I see potential for that needed innovation during the last few years as companies embrace their ESG initiatives, and watching as the produced water recycling capabilities increase, for instance. Yet it is that innovation that will pull us through, where can we improve industry messaging, well development, produced water for beneficial reuse, etc. Produced water challenges exist regardless of the number of rigs, and it’s an absolute opportunity during times of heavy activity. The question remains if we are going to be smarter with our decisions. Landowners, operators, service companies and suppliers all need to revaluate how to do business going forward. Let’s use our vendor partners to their full potential, not just the cheapest or the easiest, but the people that are there to help you get the most bang for your buck. We are all in this together, and together we make it through, as an industry.

My last bit of advice, please be kind to each other. Everyone has a job to do, even if stuck at home, but we can still be professional. Not every call needs to be a sales call, and you’d be surprised how many people want to talk about anything other than work right now. Pick up the phone and call someone to talk about the weather, your products can wait. Good luck, and be safe!”

-written by Jesus Espinoza, April 1, 2020. Contact Jesus at Jesus.espinoza@me.com

And now for this week’s top oilfield water industry headlines…

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