RECYCLING

to accelerate as the new laws take effect. Last week, the Midland oil company Concho Resources entered into a joint venture with the Houston water management firm Solaris Water Midstream with the aim of recycling more wastewater from the oil field. Financial terms were not disclosed.

“Encouraging recycling makes sense,” said Mark Patton, president of the Conroe oil field waterrecycling company Hydrozonix. “Everything you recycle is that much less water that goes into disposal wells. You’re keeping it in the hydrological cycle on the surface for a lot longer.”

Three new laws

Wastewater is produced in the oil field in two main ways — through fracking, which uses millions of gallons of water for each well, and drilling, which brings up brackish water left behind by the ancient inland sea that covered central North America in the days of the dinosaur. As many as 15 barrels of water are produced for each of the 4.2 million barrels of oil per day that come out of the Permian.

What to do with all that water has become a problem, particularly in the Permian, where the vast amounts of wastewater — most of it pumped underground into deep disposal wells — are testing the geological limits of the basin. Disposal wells also are blamed for the increase in earthquakes near oil and gas fields, particularly in a 50mile corridor between Fort Stockton and Pecos.

The Texas and New Mexico legislatures began addressing water issues in the oil field this year. Although the states share the Permian Basin and various aquifers, their water laws vary greatly.

Texas is a capture state, in which a landowner can drill a water well and keep or sell all the water captured. Following the Spanish colonial tradition and because of its large amount of state and federal land, New Mexico is a water rights state, in which the government issues a permit setting the parameters of how much water can be drawn.

The different approaches to water rights created a gray area and raised new legal questions about the wastewater — called produced water — that comes to the surface with oil and natural gas. Specifically, if produced water can be treated, sold and reused, who owns it? Could a Texas landowner claim it as theirs under rule or capture? Or could the government claim it under water rights in New Mexico?

Passed into law this spring, New Mexico House Bill 546 and Texas House Bill 3246 determined that oil and gas operators own the produced water and they could sell it to recyclers, who then take over legal responsibility for the toxic brine. The New Mexico law went into effect July 1 while Texas law goes into effect Sept. 1.

John Tintera, president of the oil industry trade group Texas Alliance of Energy Producers, said 50 water management companies of all types — pipeline operators, disposal companies, recyclers — operate in the Permian Basin.

Over the past year, Tintera said, he has fielded up to a dozen calls from private equity firms each seeking to invest $100 million in Permian Basin water operations, but questions about who owned produced water led them to hesitate. “This transfer of ownership was one of the things that had been identified as a potential risk for investors,” Tintera said. “At what stage, does who own what? These statutes clarify that. It’s a green light to bring those investment dollars in. We’re open for business.”

‘Ocean under the desert’

During the first two months of an oil well’s life, most of the water that comes to the surface is known in the industry as “flowback,” water used during the drilling and hydraulic fracturing process. But after that, most of the water that comes up was already present inside the geological formation.

With the Permian Basin part of an inland sea during prehistoric times, the decayed organic matter that became oil and natural gas over millions of years is also locked underground with ancient seawater that has become hypersaline and mixed with hydrocarbons, heavy metals and other compounds.

“There’s an ocean under the desert in the form of this produced water, but it’s a very salty brine that can be used for very little else outside industrial uses,” said Jason Jennaro, CEO of Breakwater Energy Partners.

Headquartered in Houston, Breakwater buys and moves freshwater to drilling and hydraulic fracturing sites. The company also recycles around 7 million gallons of produced water per day.

The treated water is reused in the oil field, meaning that companies do not have to find new sources of fresh water in the desert region. Although recycled water is still a proverbial drop in the bucket for the Permian Basin’s overall water consumption, Jennaro believes the new laws in Texas and New Mexico will change that.

“It’s a sea change of regulation that will open the door to much more recycling across the Permian Basin,” Jennaro said.

New Mexico advantage

Recycling has an economic advantage on the New Mexico side of the Permian Basin, where the Houston company Solaris Water Midstream has emerged as the largest independent water recycler. Solaris Water CEO Bill Zartler said freshwater for oil field operations generally costs 40 to 65 cents per barrel on the Texas side of the Permian Basin, compared to $1 to $2.25 per barrel sourced in New Mexico.

With recycled water selling for 75 cents to $1.25 per barrel, it is more economical for operators to recycle in New Mexico. The company’s Pecos Star System, Lobo Ranch and Bronco facilities in New Mexico receive produced water from nearby operators, treat it and, if needed, blend the recycled water with nonpotable water before sending it back out for use in the oil field.

“We’re not talking about water going to drinking standards or even irrigation standards, because there’s still a lot of salt left in it,” Zartler said. “But with today’s frac chemistry, the salt is not as big of an issue.”

Unsuitable for life

For the moment, the water-recycling efforts remain limited to reuse in the oil field, but some in the industry see the potential of using recycled oil field water for dust control at construction sites, industrial cooling and irrigation at golf courses.

But that’s unlikely to happen easily. Colin Leyden, senior manager of regulatory affairs for the Environmental Defense Fund’s Austin office, said his group supports oil field water recycling, but the organization wants more studies before the water is used outside the industry.

“If we don’t get the science right before proceeding with this, the industry is potentially creating a huge liability,” Leyden said. “History suggests it will be the public and environment that pays the cost.”

In the 1920s, an oil field accident near Big Lake in Texas sent billions of gallons of produced water to the surface, making the land unsuitable for vegetation and animal life. Known as the “Texon Scar,” the damage can still be seen from outer space nearly 100 years later.

“Any landowner will tell you that they’d rather have an oil spill on their land than a produced water spill,” Leyden said. “It’s much easier to clean up an oil spill. Produced water has salts and other compounds that are difficult to remove.”