In the last Water Management column, we discussed the formation of the Seismic Response Areas (SRAs) by the Railroad Commission (RRC). These are geographical areas where the RRC is monitoring seismic activity and promoting restrictions if needed, ultimately expecting operators within these SRAs to take further actions, or the RRC will. There have been two SRAs defined: the Gardendale SRA and the North Culberson-Reeves SRA. Typically, disposal in these areas is limited to 10,000 bpd, with a goal of limiting seismic events to less than magnitude 3.5 for 18 months.
Since then, Gardendale has not stopped shaking, and the disposal limitations have been extended to no disposal in Gardendale in the deeper zones, basically no more Ellenberger disposal or, more technically accurate, anything below the top of the Strawn formation. This would eliminate approximately 33 wells, but it would allow continued disposal in the San Andres formation, a famously over-pressurized and more shallow formation. More on this later.
In addition to this change in the Gardendale SRA, we are seeing the development of a new SRA, the Stanton SRA, after an increase in seismic activity there, as well. It appears that as long as we see continued seismic events, we will see further restrictions within SRAs and the creation of new SRAs.
Solutions. As mentioned in my last column, there has been a call for more recycling of produced water. Unfortunately, with only modest growth in well completions, recycling is not going to provide the relief to removing a significant amount of disposal capacity off the market. Further complicating things, completion activity will be tied to oil price, meaning the well completion activity can be volatile and not the reliable continuous outlet for produced water that we would like it to be. So where do we go for solutions?
I mentioned surface evaporation, which can control salt dispersion, as a solution we have developed that is a growing sector for us, but I think we need to make a bold statement here that may not be popular. Although I may not like some of the left-leaning policies in New Mexico, their Produced Water Act created some novel concepts that we can apply to Texas. Specifically, I am referring to the ability to cancel all binding fresh and brackish water sales that limit produced water recycling. In New Mexico, this was an easier pill to swallow, since the majority of oilfield lands are state or federally owned, so this legislation didn’t have a tremendous impact on private landowners. Now, in Texas, the majority of oil fields are on private lands, and private landowners generate revenue selling water, but this also provides incentive to restrict produced water recycling, to allow for the sale of more brackish or fresh water.
There has to be a compromise here, to allow for more recycling while eliminating the continued use of brackish or fresh water. We currently generate over three times the volume of produced water needed for well completions, and even in the heyday of increased well completions, this number was two times more produced water than needed for well completions. We could easily go to no use of fresh or brackish water and solely use produced water. Not only will this upset landowners but also the service companies and midstream firms that generate revenue selling water. There needs to be some compromise here, but it is definitely a step in the right direction, even though it may be an unpopular one.
I have mentioned this before, but also predicted that the landowner lobby in Texas would never allow this to happen. But we are in a new day, and seismic activity is increasing, and it’s time we take some bold steps to solve this problem.
Even though, as stated earlier, recycling is not the solution, increased recycling will help the capacity shortfall and eliminate all use of fresh and brackish water, and is the right thing to do. We still have to dig deeper and find new outlets for produced water from novel evaporation to discharge quality, and everything in-between.
San Andres. The trend toward deeper Ellenberger wells was a result of the San Andres being famously over-pressurized, and problems were caused when drilling through the San Andres because of the over-pressurization. One of the options provided for the Gardendale SRA restrictions is to amend the disposal permit for more-shallow San Andres injection, putting further strain on this over-pressurized formation. Another recent event gaining traction is the blowout of an abandoned water well that is now spewing produced water. This event is being blamed on shallow disposal wells and poor cementing, among other things. So, is increasing shallow disposal really the solution?
This is a complex issue with many layers, but it is also one getting more and more notoriety. CBS locally aired “What Lies Beneath,” addressing some of these issues, and The Wall Street Journal among other national publications is picking up the West Texas seismicity story. It is time for bold steps and action, and while we will continue to see further SRAs and restrictions within SRAs, we cannot falter. This will further drive disposal costs higher, as new disposal wells will have to be drilled outside of the SRAs and pipelined further distances. One report I recently read established the cost of trucking to new disposal wells for some of the affected operators within these SRAs, with annual projections of $50 million to $60 million. But this doesn’t address the increase in emissions from trucking at a time when everybody is committing to decreasing emissions. Pipelines are the solution here to reduce emissions, but that takes planning and time.
We are in the beginning of a critical juncture, and oilfield water management has to make the right moves to avoid this problem from getting larger. The time is now, and we must act.
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