Texas ranch­ers, oil­men in wa­ter feud

Tap­ping aquifer for frack­ing hits some wrong way

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - DAVID HUNN Hous­ton Chron­i­cle

VAN HORN, Texas — A west Texas land baron and oil­man is on the verge of pump­ing 5.4 mil­lion gal­lons of wa­ter a day from far un­der the desert moun­tains and pip­ing it 60 miles to the na­tion’s most boun­ti­ful oil field, the Per­mian Basin, where hy­draulic frac­tur­ing has fu­eled a re­nais­sance of U.S. oil and gas pro­duc­tion.

The re­ports that with wa­ter in short sup­ply and de­mand high, Dan Allen Hughes Jr., one of the largest landown­ers in the United States and pres­i­dent of his father’s epony­mous oil com­pany, plans to tap an aquifer un­der his 140,000-acre Apache Ranch.

But Hughes has run into a wall of op­po­si­tion from west Texas farm­ers, ranch­ers, res­i­dents and en­vi­ron­men­tal­ists, who worry that he will steal wa­ter from their cat­tle, dry up their crops and de­plete the spring that feeds the fa­mous pool at Bal­morhea State Park.

“That’s a lot of wa­ter,” said Bill Ad­ding­ton, a rancher and con­ser­va­tion­ist from neigh­bor­ing Sierra Blanca. “Be­lieve me, there’s many peo­ple who have plans to sue if this goes for­ward. We will sue.”

Hughes’ project may well just be the start of a much larger fight — over the own­er­ship of west Texas wa­ter, the fu­ture of oil and gas pro­duc­tion, and the fate of agri­cul­tural lands and eco­log­i­cally sen­si­tive habi­tats. It’s a con­flict that runs through­out the his­tory of the West, be­tween farm­ers and ranch­ers, conser-

va­tion­ists and in­dus­try, neigh­bor­ing cities, ad­ja­cent states. Whiskey is for drink­ing, they say. Wa­ter is for fight­ing.

Tex­ans have fought over wa­ter for many decades, said Larry French, ground­wa­ter direc­tor for the Texas Wa­ter Devel­op­ment Board. Oil and gas pro­duc­tion is an­other com­peti­tor for a scarce re­source.

“The Per­mian Basin is ba­si­cally a desert, and that im­me­di­ately presents chal­lenges in find­ing ad­e­quate wa­ter,” French said. “You can do with­out a lot of things. But you can’t do with­out wa­ter.”

At least three other com­pa­nies in the re­gion are sell­ing or plan­ning projects to sell wa­ter to en­ergy com­pa­nies that use it by the bil­lions of gal­lons to crack shale rock, and re­lease oil and gas. Wa­ter use in the Per­mian Basin has in­creased six­fold since the start of the shale oil boom, from more than 5 bil­lion gal­lons in 2011 to al­most 30 bil­lion last year. En­ergy re­search firm IHS Markit pre­dicts that de­mand will dou­ble by the end of this year, to 60 bil­lion gal­lons, and more than triple by 2020, to al­most 100 bil­lion.

But west Texas’ net­work of aquifers is in­ter­con­nected; wa­ter pumped from one can re­duce flow in an­other. Some worry that all of these pro­posed wa­ter wells could dry up aquifers that sup­ply west Texas ranches, farms and cities.

It’s not an un­rea­son­able fear. Few in west Texas for­get when oil­man Clay­ton Wil­liams Sr. and west Texas farm­ers pumped the prodi­gious Co­manche Springs, just east of Bal­morhea, to barely a trickle.

Hughes, a former chair­man of the Texas Parks and Wildlife Com­mis­sion, and his team were seek­ing ap­proval of their plans from the Cul­ber­son County Ground­wa­ter Con­ser­va­tion District. Of­fi­cials there ex­pected many others to ap­ply to pump lo­cal aquifers.

“Wa­ter,” said district gen­eral man­ager Sum­mer Webb. “It’s the next oil.”

A PLACE TO MAKE MONEY

More than a decade ago, U.S. drillers be­gan cou­pling two long-used oil pro­duc­tion tech­niques, hor­i­zon­tal drilling and hy­draulic frac­tur­ing, to rev­o­lu­tion­ize oil pro­duc­tion, trans­form­ing the U.S. from an en­ergy has-been to a key global pro­ducer.

Com­pa­nies slowly re­al­ized that the Per­mian Basin held great prom­ise. Its mul­ti­ple un­der­ground lay­ers of rock hold un­fath­omable quan­ti­ties of oil. With crude prices still low, the Per­mian Basin has be­come one of the few places where drillers can make money. The num­ber of drilling rigs there has al­most tripled, from fewer than 140 last spring to al­most 380 by late July.

Com­pa­nies ha­bit­u­ally bore hor­i­zon­tal shafts that run at least 10,000 feet — dou­ble the dis­tance drilled four years ago — and pump 20 mil­lion gal­lons of wa­ter, or more, into each to pro­duce longer, wider frac­tures in the shale. Ex­plor­ers, mean­while, have ven­tured south and west, into a more re­mote sec­tion of the Per­mian Basin, called the Delaware Basin, with thicker, deeper veins of oil and gas, but less ground­wa­ter. That cre­ated a mar­ket for wa­ter like no other U.S. shale field.

“There are go­ing to be lit­er­ally tens of thou­sands of wells drilled in the south­ern Delaware,” said Toby Dar­den, CEO of one of the wa­ter star­tups, Wolf­camp Wa­ter Part­ners of Fort Worth. “Wa­ter is a crit­i­cal re­source. It’s one of the ma­jor lo­gis­ti­cal con­sid­er­a­tions for devel­op­ment in shale.”

Dar­den’s Wolf­camp Wa­ter has leased 31,000 acres in the foothills of the Davis Moun­tains, drilled into the Cap­i­tan Reef aquifer and gath­ered in­vestors. The seven-em­ployee com­pany plans to break ground on wells, catch basins and a 65-mile pipe­line by the end of the year, and pump more than 8 mil­lion gal­lons a day for 20 years, about 2 per­cent or 3 per­cent of the es­ti­mated 2.3 tril­lion gal­lons in the aquifer.

Layne Chris­tensen, The Wood­lands wa­ter and well com­pany, has pur­chased an old cot­ton farm on 800 acres out­side of Pe­cos, tapped the Pe­cos Val­ley aquifer, and by the end of July, fin­ished a sixwell, 4.2 mil­lion-gal­lons-a-day pipe­line that runs 20 miles to the heart of the Delaware Basin. And, last month, east Texas con­sul­tants Ape­rion En­ergy Group asked the city of Bal­morhea to lease a small moun­tain lake and pipe­line for $50,000, in to­tal, for 50 years, start­ing in mid-Au­gust. The com­pany de­clined to com­ment.

Many in the area sup­port the wa­ter com­pany ef­forts. “It’s good for com­mu­ni­ties,” said John Davis, the mayor of Bal­morhea and an oil­field con­struc­tion su­per­vi­sor. “Es­pe­cially com­mu­ni­ties that don’t have a lot of rev­enue com­ing in.”

AN UN­USUAL PLACE

Hughes’ father, Dan Allen Hughes Sr., started prospect­ing for oil more than 60 years ago. His firm, Dan A. Hughes Co., worked from New Mex­ico to Aus­tralia. It was an early ex­plorer in the Bar­nett Shale gas field around the city of Denton, and later south Texas’ Ea­gle Ford.

Hughes Sr. saw land as a good in­vest­ment and started buy­ing ranches, es­pe­cially on good hunt­ing grounds. The fam­ily now owns 390,000 acres in Texas and Mon­tana, in­clud­ing Apache Ranch, an ex­panse of white dirt, prickly pear and thorny mesquite sur­rounded by the rocky Apache Moun­tains north­east of Van Horn, and home to game, in­clud­ing elk, pronghorn an­te­lope and ex­otic aoudad sheep.

Apache Ranch is un­usual. The heart of the Delaware Basin is largely a bath­tub of clays and salt, per­fect for hold­ing oil, but with lit­tle ground­wa­ter. The ranch is out­side of that clay tub, formed by lime­stone and dolomite, por­ous rocks that hold about 1.6 tril­lion gal­lons of wa­ter in the Cap­i­tan Reef.

In March, Hughes sub­mit­ted an ap­pli­ca­tion to the Cul­ber­son County Ground­wa­ter Con­ser­va­tion District in the name of his new com­pany, Agua Grande, ask­ing to drill seven wells on the ranch and build a 60-mile pipe­line north­east to the heart of Delaware, where 20 com­pa­nies, in­clud­ing Anadarko Pe­tro­leum Corp. and EOG Re­sources of Hous­ton and Con­cho Re­sources of Mid­land, are in­ter­ested in buy­ing the wa­ter, ac­cord­ing to the ap­pli­ca­tion.

Agua Grande made its pitch to Cul­ber­son County of­fi­cials on June 7. The com­pany’s hy­dro­ge­ol­o­gist Steve Finch, from the New Mex­ico en­vi­ron­men­tal firm John Shomaker & As­so­ciates, tried to per­suade the board that the Cap­i­tan Reef aquifer pro­vided rel­a­tively lit­tle wa­ter to Bal­morhea’s fa­mous San Solomon Springs. Finch has stud­ied ground­wa­ter there for 17 years and spent six months ex­am­in­ing it anew for Agua Grande. He cre­ated a com­puter model to an­a­lyze the ef­fect of the pump­ing on the San Solomon Springs. The re­sult: “I see zero im­pact,” he said.

But he also ac­knowl­edged that no one knows quite how the aquifers in­ter­act in the Delaware Basin. “It’s prob­a­bly one of the most stud­ied basins in the world, for oil and gas,” he said. “But the ground­wa­ter por­tion, we’re still fig­ur­ing the pieces out.”

Op­po­nents of the project ar­gued that the size of the with­drawals, al­most 2 bil­lion gal­lons a year, and po­ten­tial im­pact on the net­work of aquifers threaten their liveli­hoods. They rely on the wa­ter to feed cat­tle, grow crops, fill the nat­u­ral swim­ming pool at Bal­morhea State Park and at­tract tourists. Sev­eral area springs have al­ready dried up, they said, or pro­duce less wa­ter.

“Mr. Hughes in­her­ited Apache Ranch. He is very well-off,” said Ad­ding­ton, whose grand­fa­ther ar­rived to farm and ranch at Sierra Blanca more than cen­tury ago. “When are they sat­is­fied that they have enough money? It’s of­fen­sive to us. It af­fects the fu­ture health and sus­tain­abil­ity of the en­tire re­gion.”

Hughes’ team re­mains hope­ful, but its mem­bers also un­der­stand the wor­ries.

“Wa­ter,” said Will Hughes, Dan Jr.’s son and a land man­ager for the oil com­pany, “is the key to ev­ery­thing out here.”

The Hous­ton Chron­i­cle/MICHAEL CIAGLO

Ranch man­ager Will Hughes (left) and Apache Ranch man­ager Ge­orge Strick­hausen walk past a tank hold­ing wa­ter pumped from a well on the Apache Ranch in Van Horn, Texas, in mid-July.

Hous­ton Chron­i­cle/MICHAEL CIAGLO

Ranch man­ager Will Hughes stands on a retention pond filled with wa­ter from a well on the Apache Ranch in Van Horn, Texas, last month.

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