January 2022

Executive viewpoint

Shaky ground: Railroad Commission takes much-needed stand on oil field earthquakes
Jason Jennaro / Breakwater Energy Partners

On the cloudy afternoon of Dec. 15, I was in Houston, speaking to a colleague on the phone in Midland, Texas, when a 3.6-magnitude quake shook the oil-rich town. She nearly fell out of her chair, quickly ending the conversation by saying, “I need to check on my children.” It was one of 15,000 earthquakes to hit West Texas’ Permian basin in the last five years.

The Permian basin has been a prolific economic engine for Texas and is a vital energy resource for the U.S. The basin is the center of the U.S. shale revolution; utilizes half of all U.S. drilling rigs; produces almost 5 MMbopd; and boasts the planet’s largest oil shale reserve base. Its resource is deep and geographically vast, with one of the world’s thickest hydrocarbon structures, spanning 300 mi from Big Lake, Texas, to Carlsbad, New Mexico.

But the Permian basin has a problem: a 15-MMbpd problem. Approximately 3 bbls of brackish water are produced for every barrel of oil, and this wastewater needs to go somewhere. Much of this water is disposed of into thousands of deep injection wells known as saltwater disposals. Many of these injection wells were drilled on or close to ancient but historically inactive fault lines. Scientists have warned for years that deep water injection can pressurize these faults and induce quakes. With 5,200 West Texas quakes in 2021, double those observed in 2020, this is no longer a theoretical discussion.

Earthquakes now impact West Texas cities, spanning from Pecos to Big Spring, on a weekly basis. The Texas Railroad Commission (RRC), the principal regulatory body for Texas oil and gas, has responded in a pragmatic and data-driven way by severely limiting wastewater disposal in parts of six counties, impacting how millions of barrels of oil are produced daily.

The storied RRC was established in 1891, to first regulate railroads and then the nascent oil industry. For 130 years, the RRC has had the central role in safeguarding the state’s place as the unofficial American energy capital, and in protecting its environment and communities. Earthquake data employed by the RRC are gathered by the TexNet Seismic Monitoring Program. In 2015, the Texas legislature under Gov. Greg Abbott passed a law that established TexNet to scientifically determine the causes of increased seismic activity via continual data collection and analysis. The rapid rise in West Texas earthquakes has prompted the RRC’s data-driven regulatory action to mitigate induced seismicity while still facilitating development of the state’s most important energy asset.

Over the last two years, the RRC regulated and encouraged development of multi-customer produced water recycling and storage facilities. These facilities repurpose produced water for use in the completion process and thus reduce dependence on deep-well injection into basement formations where fault lines exist. The RRC also developed stringent commercial recycling permitting standards, known as Division 6-H11 (“Div.6-H11”). These rules are essential, because they protect West Texas’ aquifers, waterways and ecosystems from produced water contamination. Produced water typically contains oil, residual chemicals from the fracing process, and suspended solids. Commercially permitted recycling facilities operating under Div.6-H11 are held accountable by stringent reporting, bonding, engineering, monitoring and other standardized RRC regulations.

Over the final months of 2021, the RRC responded more forcefully with first-of-kind Seismic Response Actions that severely limit deep-well produced wastewater injection into seismically active areas, particularly around the population center of Midland-Odessa. These actions encouraged wastewater to be recycled safely or, at a minimum, redirected away from population centers and seismic clusters.

To understand these actions, it’s important to understand how Permian basin operators have managed billons of barrels of fresh and wastewater over the last decade, and how it has evolved.

Permian basin water supply chain (2010s). In the early 2010s, operators used fresh water from local aquifers to frac single-well developments. Upon completion, the wastewater byproduct was trucked to local disposal wells for injection. In the early days of shale, there were very few earthquakes, so induced seismicity was understandably not a consideration. By the late 2010s, multi-well development techniques materially improved efficiency, but they also increased the demand for freshwater for fracing and deep-well injectors for the disposal of wastewater.

Permian basin water supply chain (2020s). While additional water infrastructure was built to handle increased industry demands, the water reservoirs supporting the Permian basin started to signal distress: freshwater aquifers began to decline, and injection formations started tremoring. The RRC was quick to act. Today’s water supply chain relies less on freshwater aquifers and more on consuming recycled produced water. Produced water now moves almost exclusively via pipeline, not by truck, to recycling facilities, or to disposals further away from population centers or concentrated areas of seismicity.

Make no mistake, deep-well saltwater disposals are here to stay. With over 2,000 active disposals in Texas, they are essential in managing produced wastewater. However, with data-driven regulation and thoughtful oversight, the RRC has encouraged operators to be better stewards of the Permian basin, either by recycling produced water when it is possible, or moving it to disposals outside of population centers, or seismic clusters when it is not. Thank you, Chairman Wayne Christian, Commissioner Christi Craddick and Commissioner Jim Wright for your thoughtful stewardship of the Permian basin, its citizens and its resources.

About the Authors
Jason Jennaro
Breakwater Energy Partners
Jason Jennaro is CEO of Breakwater Energy Partners, which has constructed the largest commercially permitted produced water recycling facilities in Texas. He holds master’s degrees from Harvard University and Georgetown University. Mr. Jennaro serves on the board of directors of Make-a-Wish Gulf Coast and lives in Houston, Texas.
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