OXY transloading facility opens in Carlsbad, marks regional expansion

A multinational oil and gas company is the latest to expand in the Permian Basin region, opening a frac sand transloading facility just about 15 miles south of Carlsbad.

Occidental Petroleum (OXY) plans to begin operations at the facility next week, known as the Aventine Logistics and Maintenance Hub, able to unload 25 tons of sand in about eight minutes.

The sand is transported via truck for use in hydraulic fracturing throughout the area.

Occidental President and Chief Executive Officer Vicki Hollub said the facility is essential to the company’s ongoing expansion in southeast New Mexico to draw crude oil and natural gas from the highly-active Delaware Basin in the southern tip of the Permian.

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“This is a critical event for us,” Hollub said at a Thursday ribbon cutting at the facility off U.S. Highway 285 near Brantley Road. “This will be part of our continued expansion in this region. The Permian Basin is one of the most active in the world. We know the hydrocarbons are there.”

Hollub said several areas within the basin remain undeveloped, and the area suffers from a dramatic boom and bust cycle as oil prices shift and the local economy struggles to steady.

She said OXY’s expansion efforts could mitigate the local economic concerns.

“There are many intervals that aren’t being developed. Some need to be engineered to get the hydrocarbons out,” she said. “The Permian has been a boom and bust. We’re hoping to keep it consistent. Enhanced oil recovery is the way to do that.”

Carlsbad Mayor Dale Janway said the local oil and gas operations are essential to the greater international market, with expansions continuing to strengthen America’s independence from trade with other oil-producing nations.

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And it all starts in Carlsbad.

“The U.S. is achieving its energy independence with the men and women that work out here,” he said. “We’re also paying a large portion of the state’s bills.”

In addition to the transloading facility, OXY is also completing construction on a sand storage facility, which could hold up to 30,000 tons of storage capacity.

Opening March 12, the storage facility provides a source of sand onsite.

Both facilities will help cut back transport traffic due to the proximity to the basin, said Jody Elliot, OXY president of domestic oil and gas.

He said the new facility is located just 15 miles from the Delaware Basin, compared with OXY’s next-nearest facilities in Odessa, Texas, more than 100 miles away.

“It’s the innovation. It’s the collaboration. We’re excited about the future of the New Mexico hub,” said Jody Elliot, OXY president of domestic oil and gas. “We believe Aventine will be a game changer for us. It will allow us to reach our cash flow goals, but Aventine goes well beyond cost savings.”

Elliot estimated the facilities could cause a 60 percent reduction in transport miles traveled by the company, from 20 million to 8 million miles per year.

He said that reduction in travel also could reduce transport-related emissions by 11,000 metric tons.

The facilities could also benefit the State of New Mexico’s bottom line, as Elliot estimated it could draw up to $33 million in state tax revenue, and create more than 200 area jobs.

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New Mexico State Rep. Cathrynn Brown (R-55) said she supported the facility due to the increase in state revenue and local employment.

“The prospect of $33 million in tax revenue is tremendous,” she said. “We’re also very thankful for the jobs it will create. It’s also going to spare our roads some stress. We’re thankful for that.”

New Mexico State Land Commissioner Aubrey Dunn said such investment would be a powerful advantage to the State Land Office and its beneficiary: New Mexico public schools.

The reduction in truck traffic, he said, supports the Land Office’s agenda to protect the environment.

“It’ll really help generate additional revenue for our beneficiaries: school children,” Dunn said. “It will also help with the trucks by being more efficient. It’s going to have less of a footprint on the environment.”

OXY is also constructing a water cleaning and distribution facility nearby on about 80 acres of State Trust Land.

Dunn said the “Chorale Unit” would help reduce the burden on the Ogalla Aquifer and other freshwater sources, by cleaning and reusing produced water resulting from hydraulic fracturing.

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The State Land Commissioner recently issued a directive, calling on producers to avoid drilling for water from the Ogallala. He suggested requiring any company that does take from the Ogallala submit documentation on the operation, to be evaluated by the Land Office on a case-by-case basis, or drill from the nearby brine-heavy Capitan Reef.

“It will help on freshwater uses,” Dunn said of the Chorale Unit. “When you tie it all together, (OXY) is doing a lot for the environment and safety as well.”

Jeff Bennett, president and general manager of OXY's Permian resources in the Delaware Basin, said recycling produced water not only benefits the environment, but is more economical for the company and other oil and gas producers.

By pumping the water via pipe instead of transporting it via truck, Bennett hoped to reduce local traffic even more.

“We’re doing everything we can to recycle the water,” he said. “We want to move as much as the water as we can via pipe. To the extent where we can take fresh water out of the system, we’re working very diligently in the area.

“Reusing water is more economical. We’re preserving a natural resource. By moving things by pipe, we’re reducing truck traffic.”

Bennett said OXY is engaged in similar efforts on federal land.

“That strategy is the strategy of the Permian Basin as a whole,” he said.

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Ryan Flynn, president of the New Mexico Oil and Gas Association touted the facility’s use of new technology and concepts as mitigating environmental and economic concerns across the state.

“The is just the latest example of some of the world’s most innovative companies investing in New Mexico,” he said. “We’ve had a series of these announcements. People spend a lot of time and energy chasing proposals without realizing you have some of the best and most successful companies already here and continuing to increase their presence.”

Brown said the new facility is one of many signs that oil and gas could be booming again soon in southeast New Mexico.

“It’s definitely going to continue,” she said of the industry’s growth. “We had a pause, and now we’re moving forward at a pretty good clip.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.