Permian hits record number of temblors
Oil regulator adds rules for saltwater disposal
Oil companies operating in West Texas — a thousand miles from the nation’s most active fault lines — are becoming more concerned about earthquakes, which reached a record number last year and are growing ever stronger.
The Permian Basin, the 86,000square-mile oil-rich land stretching from Lubbock to Marfa and San Angelo to Carlsbad, N.M., has no major geographic faults like those that slice the West Coast. But the nation’s most prolific oil field and the cities and towns within it were shaken by almost 2,000 earthquakes last year, a record number for the area.
Earthquakes measuring stronger than 2 on the Richter scale — enough to crack walls and foundations — have become an almost daily nuisance. The number of temblors has risen 74 percent from 2020 and is eight times more than in 2017, ac
cording to data from the University of Texas at Austin’s TexNet Seismic Monitoring and analyzed by Norwegian energy research firm Rystad.
The rising number of quakes is putting pressure on shale oil companies, which face the prospect of more restrictions on saltwater waste that could force them to move larger amounts of it to more distant disposal wells or recycling facilities — or to even halt operations in some areas.
“Over the last two years, there’s just been an explosion in the frequency of these earthquakes,” said Ryan Hassler, Rystad’s senior shale analyst. “In recent weeks and months, the concern has been not only the frequency of seismic events rising at incredible rates, but it’s the size of these earthquakes. We’re starting to see more and more 3.5 to 4.0 earthquakes. People in Midland and Odessa are starting to feel these earthquakes almost on a daily basis.”
Seismologists attribute the increasing frequency and intensity of the region’s earthquakes to the oil industry’s routine practice of injecting saltwater — a byproduct of oil production — into deep disposal wells. A decade of the injections into disposal wells 10,000 feet deep has built intense pressure and caused movement along ancient fault lines.
As a result, producers could face delays and potentially higher costs to dispose of the water by trucking it out or by building pipelines to move it from the seismic areas. Industry experts say the value of oil and gas properties under disposal restrictions could be diminished if oil and gas producers decide to avoid the earthquake-prone fields.
“It’s a little early to tell what (the impact of saltwater disposal restrictions) might be,” said Todd Staples, president of the Texas Oil and Gas Association, the state’s largest oil trade group. “I haven’t heard from operators of any specific impacts yet, but I think those are the types of operational questions that companies are looking at how to manage during this time.”
Bigger, stronger
Scientists fear the size and strength of these earthquakes will continue to rise in the coming years as Permian crude production increases after the pandemic-driven oil bust slashed operations amid a historic drop in demand for petroleum products.
For each of the roughly 4 million barrels of crude pumped daily from the ground in West Texas, at least three barrels of extremely salty water are produced.
The vast majority of this water is injected into 2,300 active disposal wells across Texas. Last year, 11.5 billion barrels of saltwater were pumped into these wells across the country, and that figure is expected to rise to 13.4 billion barrels by 2026, according to Rystad.
The Texas Railroad Commission, the state’s oil and gas regulator that has been monitoring the rising seismic activity in West Texas, recently limited the amount of saltwater that can be injected into disposal wells to curb what it called an “unprecedented” increase in earthquakes.
In September and October, the commission mandated that oil producers in two “seismic response areas” in the Permian Basin cut by half the amount of saltwater they put into disposal wells, and imposed a one-year moratorium on new permits that would allow producers to inject saltwater into disposal wells in these areas.
Last month, the commission ordered the suspension of deep saltwater injections in a particularly seismic area of the Midland basin, pulling permits for 33 disposal wells indefinitely. This action stripped 14 companies, including Houstonbased ConocoPhillips and Midland-based Rattler Midstream owned by Diamondback Energy, of the ability to dispose of nearly 1 million barrels of saltwater.
More restrictions
Several large earthquakes that hit West Texas in late December have raised the specter of more saltwater disposal constraints in the Permian.
The Railroad Commission on Friday said it plans to impose more restrictions on oil companies injecting saltwater into disposal wells near Stanton, where 4.6- and a 4.2-magnitude earthquakes hit on Dec. 28 and 31, respectively. The two earthquakes were some of the biggest to hit the region in the past decade and were among the nine large earthquakes to hit the area in recent months.
Oil trade groups and companies said they support the Railroad Commission’s restrictions on disposal capacity in the most seismically active areas of the West Texas oil patch.
Ben Shepperd, president of the Permian Basin Petroleum Association, said he appreciates that the Railroad Commission isn’t “painting the whole area with a broad brush” but is being very targeted with its restrictions.
“None of us want any seismic activity, and so we support that action,” Shepperd said. “We live and work in the Permian Basin. We want to see these instances reduced and ameliorated.” Staples and Shepperd said they are confident that these restrictions will eventually curb seismic activity in the Permian but won’t affect the region’s crude production or company profits.
Promise of recycling
The rise in Permian earthquakes also is spurring significant interest and investment in water recycling facilities, which could help divert saltwater from disposal wells and mitigate seismic activity.
The recycled water can be reused to in oil production to fracture shale to produce crude oil and natural gas, instead of freshwater from local aquifers in a drought-prone state like Texas. There are some proposals to use recycled water to irrigate crops fed to livestock.
The Texas Legislature last year passed Senate Bill 601, introduced by Sen. Charles Perry and Rep. Dustin Burrows, both Republicans from Lubbock, that created a produced-water consortium to promote innovation and responsible water development in the Permian.
Meanwhile, more oil companies are recycling water in West Texas.
Occidental Petroleum last year said it increased its water recycling by 30 percent during the third quarter, allowing the Houston oil company to eliminate disposal of the saltwater at some of its operations.
ConocoPhillips, which under the recent Railroad Commission restrictions saw the biggest suspension of its saltwater disposal capacity in the Permian, said it is increasing reuse of treated saltwater and is exploring new water partnerships and additional recycling opportunities.
“Our goal is to maximize water recycling across the Permian Basin,” spokesman Dennis Nuss said. “By collaborating with thirdparty partners and internal experts, we have the necessary infrastructure — like pipelines and storage facilities — to improve efficiency and safely scale recycling operations across the Permian Basin.”
Water recycling companies treated 1.9 billion barrels of saltwater last year, 16 percent more than the 1.6 billion barrels in 2020. Still, only about 9 percent of the saltwater produced in U.S. shale fields was recycled last year, Rystad found.
A cottage industry of water treatment providers is cropping up in the Permian Basin in response to this growing demand for recycling facilities.
Houston-based Breakwater Energy Partners last year opened Big Spring Recycling System, its first commercial water recycling plant in the Permian Basin. The facility can treat more than 300,000 barrels of saltwater per day and has processed 20 million barrels of water since its inception. Breakwater recently broke ground on its second commercial recycling plant in the Permian, which will be able to process more than 200,000 barrels per day of saltwater produced from shale wells. The company has plans to develop three more recycling facilities in the region this year.
CEO Jason Jennaro said he has seen increased interest in the company’s water recycling services from oil companies after the recent increase in earthquakes. In fact, an earthquake hit during a recent call that Jennaro had with a customer in Midland, who cut the call short to check on her children.
“Responsible management of deepwater injection is clearly a public health concern now,” Jennaro said. “We must more responsibly manage our water supply chain to see less of this water in deep well formations. We must be better stewards of that resource.”