BY COREY PAUL | The Odessa American, TX
Odessa city officials are considering helping Halliburton pay for a nearly three-mile 12-inch pipeline that would pump drinking water to the oilfield services company and other industrial customers in the southern part of the city.
To build the pipeline, the city would pay about $1.3 million in construction costs for the pipeline, which is about half of the initially estimated expense. Total cost could be closer to $3 million, but Halliburton will cover the rest and hire the building contractor, according to company and city officials.
The Odessa City Council still has to approve the project, while company officials say construction could start about 60 days after approval and take up to a year. But the Odessa Development Corporation at its June 5 meeting already approved covering the city’s portion of the project, to be repaid through water usage fees.
“There could be dozens, literally dozens, of buildings that use it, or two or three real large ones,” said Richard “Buz” Browning, president of the ODC board. “The idea is that we put the money out there as an investment in the community.”
The deliberations dovetail with separate considerations about whether to annex three industrial districts through a voluntary process, which would include the Halliburton facilities in the 6100 block of West Murphy Street.
Halliburton, already Odessa’s largest commercial employer, is rapidly growing its operations. They need the water and increased pressure for uses including plumbing and washing heavy equipment, said Todd Cage, the district manager for Halliburton based in Odessa.
How much water the 12-inch pipeline would carry for industrial use was not available on Wednesday. The pipeline would originate in the Maurice Road area of South Odessa.
The water would not be used for hydraulic fracturing, he said, which is generally provided by oil companies.
Halliburton’s operations only need a new 8-inch line in addition to the one running to the facility now but Cage said he approached the city about the bigger line because it would support development in the industrial district and other businesses, such as Baker Hughes, another oil services company.
Halliburton has three new facilities planned to come online through the next year, Cage said. They will focus on artificial lift, completion tools and sperry directional drilling. Halliburton is also in the process of hiring more than 500 people for its Permian Basin operations.
Mayor David Turner said he expected the City Council to discuss the pipeline project at their next meeting, June 24.
“We’ll make money out of water sales but as that continues to develop, any new business that will come in there will have to pay their pro-rated share,” Turner said. “… ODC will get their money back, we’ll get some more money and we’ll get to develop our businesses, because our industrial parks are filling up.”
Odessa, like others in the West Texas drought, struggles with water scarcity. John Grant, the general manager of the Colorado River Municipal Water District, has said the water agency faces running out of surface water by November or December if there is no more inflow, then relying solely on groundwater.
But Turner said the city has enough water through the next year from lakes and the option of turning to about 45 million gallons a day of Ward County supplies.
“Right now you don’t have to worry about water,” Turner said.
The City Council in May approved the beginning stages of annexing districts 2, 3 and 4 along the edges of the city limits. If annexed, the city would see a windfall in sales taxes from booming oil services companies including Halliburton and Baker Hughes.
Halliburton officials do not oppose that debate.
“We’d have to weigh the dollars and cents behind all that,” Cage said. “I’m not completely coherent of how much the city sales tax will impose on us. But our main goal in this whole conversation is to support our water supply.”
The city would also be required, per Chapter 43 of the Local Government Code to “provide the services by any of the methods by which it extends the services to any other area of the municipality” — such as water access.
City Manager Richard Morton was out of town and unavailable for comment. Assistant City Manager Konrad Hildebrandt, who is not working directly on the pipeline or annexation projects, said the effort is in “its infancy” but that generally, annexation of large industrial properties makes sense.
“Having a good, solid industry in a city is always positive…” Hildebrandt said. “And it brings money into the city.”
Contact Corey Paul on Twitter @OAcrude on Facebook at OA Corey Paul or call 432-333-7768.