Earthquakes in heart of Texas oil basin spur water crackdown

By Ryan Collins and David Wethe on 12/6/2018

HOUSTON (Bloomberg) -- Texas is considering new restrictions on how shale explorers dispose of wastewater from oil drilling as earthquakes rattle the largest oil-producing American state. 

The new rules would target how much and at what pressure briny water that emerges from oil wells is injected back into the ground, Jared Craighead, chief of staff for the Texas Railroad Commission, said by telephone Wednesday. The rules haven’t been finalized amid ongoing talks that include representatives from academia and the shale industry.

The restrictions may be released within weeks, Craighead said. A negative side effect of the shale boom has been a huge increase in volumes of contaminated water that are typically disposed of in so-called injection wells. In cases where those wells touch fault lines, earthquakes have flourished. Neighboring Oklahoma began clamping down on injection wells in recent years after a massive increase in the number and intensity of quakes.

“We’re being very diligent and sensitive to concerns regarding seismicity,” Craighead said. “We are definitely doing things to provide more scientific basis for our decisions as it relates to permitting saltwater disposal.”’

Oklahoma forced oil explorers to throttle back the speed and volume of their wastewater disposal after earthquakes measuring at least 3.0 surged from two in 2008 to about 900 seven years later. In some cases, state regulators ordered disposal wells there to shut completely.

Quakes Triple

In the Permian basin, where America’s busiest oil patch produces enough water in a year to cover Rhode Island nearly a foot deep, the costly treatment and disposal has given rise to a more specialized water-handling industry.

At the same time, earthquakes measuring at least 2.5 in the Permian region of West Texas and New Mexico have tripled to more than 60 in a year, according to the U.S. Geological Survey. The Permian hosts more than half of all the rigs drilling for crude in the U.S., according to Baker Hughes.

“The Texas Oil & Gas Association continues to be supportive of research and actions that are rooted in sound methodology, which is essential to understanding natural and induced seismicity and to inform science-based policy," Todd Staples, president of the association, said in an emailed statement. "Use of existing tax revenue for important research on issues such as this is a worthwhile and warranted investment."

The commission is particularly interested in Reeves County in the epicenter of Permian shale, Craighead said. The county is home to wells drilled by marquee explorers such as EOG Resources, Concho Resources and Occidental Petroleum.

Representatives of EOG, Concho and Occidental didn’t respond to messages seeking comment.

The new rules are likely to lead to more special conditions on drilling permits that could limit an operator’s ability on pressure and volume, but that will be done case-by-case, Craighead said.

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