Water: The New Sand

by Kimberly Wurtz on February 4, 2019

Traditionally, oil and gas development has been centered around vertical drilling. As the industry has grown, horizontal drilling is rapidly replacing the old ways. With the increase in horizontal drilling practices, the industry now finds itself in a hydraulic fracturing boom. To accommodate the needs of horizontal drilling, sand, used as proppant during the fracturing processes, has become a sought-after commodity and the industry has scrambled to keep up with the demands for this particular resource.
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In today’s production climate, water has become the new sand.

Depending on the region of development, the issues surrounding water use and the water supply may vary. However, one constant remains: if you are drilling, you need water.

The oil and gas industry has been rapidly adapting to the demands for water use through increases in recycling and reuse, and the development of advanced technologies to address these demands. The legal side of the industry must also continue to address the battles that are ahead, while developing progressive and reliable legal solutions for the operational hurdles that surround groundwater use in high-volume oil and gas development states.

Oklahoma

The main driving force in Oklahoma for water recycling is the increase of seismicity. Everyone in the state has concerns with injection and disposal, and the link to recent seismic activity. This has created a legal environment for recent regulations impacting the disposal of salt water and an increase of regulatory protests from landowners and operators with the Oklahoma Corporation Commission.

Oklahoma has also had a recent jurisdictional issue in Kingfisher County where Newfield Exploration’s water recycling was faced with shutting down after the municipality passed an ordinance prohibiting transportation of the water through temporary lines. Ultimately, it was determined that the Oklahoma Corporate Commission controls this issue, and not the municipality. But the real concern was how these actions may act to discourage the practice of water reuse and recycling.

Finally, Oklahoma provides little guidance or protection for the water resource with the current Surface Damages Act. When negotiations fail, the Surface Damages Act is designed to step in and help, yet presently fails to give adequate legal guidance for the use of the water.

Texas

The main driving force in Texas is drought and outright industry need. Brine water ownership and statutory developments regarding ownership of produced water have helped water recycling flourish more recently.

In contrast to Oklahoma, in Texas, there is no Surface Damages Act to fall back on. The surface owner is generally the owner of the groundwater supply, and operators must work through contract technicalities which can complicate negotiations. Texas has some regulatory help from the Texas Railroad Commission, but this may not be enough from a legal standpoint. The gaps and holes found in statutory remedies does not provide any additional comfort.

New Mexico

All eyes should be on New Mexico and their recent partnership with the Environmental Protection Agency. The ultimate purpose of the agreement is to achieve a state-wide goal of recycling produced water, focusing not only on allowing the oil and gas industry to thrive, but also to protect the water resource. Only time will tell how this pans out. 

Conclusion

To overcome the hurdles that surround water use with oil and gas development, most states need consistency in water recycling practices, but there is also a need for support and help from the legal side.  The operational side of oil and gas and the legal side should work together to understand the battles that each face. In looking ahead, the hope is that all parties can encourage water recycling and cooperate with one another in order to preserve and protect the resource. 

Topics: Oil, Gas, + Energy, Kimberly Wurtz