Western Midstream (WES) has sanctioned the Pathfinder pipeline as part of a $400-450MM investment in produced-water infrastructure in the Delaware Basin. The commitment is one of the largest ever by a midstream company to manage the water produced along with oil and gas from Permian wells.
Pathfinder is a 30-inch pipeline that will transport produced water 42 miles from WES’ gathering system to designated disposal facilities. Pathfinder will have an initial capacity of 800 Mb/d and can be expanded up to 1.2 MMb/d. WES will also construct nine saltwater disposal facilities in eastern Loving County, TX to receive water from the pipeline, as well as build several produced-water gathering facilities in the region. The disposal wells will have a combined capacity to handle 220 Mb/d of produced water.
The project is underpinned by a long-term water agreement with Occidental Petroleum (OXY) for 280 Mb/d of firm gathering/transportation capacity and 220 Mb/d of disposal capacity. WES plans to begin service on Pathfinder in 1Q27.
The Pathfinder announcement comes at a pivotal moment for water management in the Delaware. Water-to-oil ratios are rising from upstream operations, and water disposal in deep formations is increasingly limited by induced seismicity concerns. With Pathfinder, WES can efficiently transport produced water out of the Delaware's core into shallower, underutilized injection zones with lower pore pressure, effectively mitigating many of these issues. So far, OXY is the only announced customer on the system.
The figures above, available in the Peer Comparison Tool in East Daley’s Energy Data Studio, break down our WES 2025 EBITDA forecast by commodity, asset and basin. Water disposal is a big business for Western, accounting for ~12% of company earnings.
WES anticipates investing $400-450MM in the Pathfinder project, with $65MM earmarked for 2025 and the remaining funds to be spent in 2026. Assuming a 5x build multiple, the Pathfinder system could contribute $85MM in additional EBITDA. – James Taylor Tickers: OXY, WES.
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