Is Produced Water Really Water?

Abstract

Is produced water flowing out of an oil/water separator actually water? Before answering, consider the fact that this question has set off a high-stakes legal battle over who owns produced water—landowners or oil companies—which is likely to end up before the Texas Supreme Court. An appeals court ruling recently confirmed the oil industry’s control over produced water. The majority opinion supporting that decision said this noxious fluid is distinctly different from the groundwater that Texas law says is controlled by landowners. However, one member of the three-judge panel dissented, saying that however chemically complex produced water is, it is not on the list of hydrocarbons covered by the oil lease. The fact that anyone is fighting to own produced water, and the potential environmental and health liabilities that come with it, is a sign of how unconventional exploration and production has changed the Texas oil business. “Questions about whether landowners owning produced water were sort of meaningless not that long ago because produced water was nothing more than waste,” said Stephen A. Cooney, a real estate attorney who closely follows developments in oil and gas law. He is one of several attorneys who has written online about the case that multiple lawyers say has “huge implications.” The suit was originally filed in Pecos, Texas, which is the home of most of the people who live in Reeves County where the local facts of life help explain how produced water has become something worth fighting over. The top tourist attraction in the area is the Balmorhea State Park which features a large “spring-fed swimming pool.” It’s an oasis of clear, cool water where only 0.3% of the 2,642-square-mile county is covered with water, according to the US Census Bureau. Pressure to conserve fresh water has made fracturing with produced water increasingly the norm in the Permian Basin. Water reuse has spawned a growing network of produced water pipelines, water processing facilities, and injection wells to provide the millions of gallons needed for fracturing and disposal of the rest. Reeves County is also in the heart of the Delaware Basin, where wells typically produce four times as much water as oil early on, and that ratio rises quickly as oil production plummets. Reusing produced water reduces the amount of water that the operator must dispose in injection wells and provides a relatively cheap source of frac water. And, most importantly, Reeves County is where two major landowners agreed to do something nobody had ever done before: sign a produced water lease. The contract gave Cactus Water Services ownership of what lawyers refer to as the “produced water estate.”