Tuesday, February 23, 2010

common sense water legislation?

The Senate passed SB 165 35-0 this week. Don’t let anyone tell you that Democrats and Republicans can’t work together to solve problems.

SB 165 is a bill that deals with the water that comes up with natural gas in natural gas wells. The water is called produced water and except for produced water from a separate kind of natural gas wells, coal bed methane wells, this produced water will not be regulated by the state in most cases.

Here’s what happened: some senior water rights holders filed a suit against gas producers from coal bed methane (CBM) wells saying that the water that was pumped up with the natural gas was tributary to a river and since that water was taken out of the ground and moved somewhere else, it didn’t seep out into the river and the senior water rights holders didn’t get as much water as they would have so they were “injured”. The Supreme Court agreed with the water rights holders and the gas companies were told they had to be regulated and would have to replace the water they took. This decision threw every natural gas well that pumps up water into jeopardy. Would all gas wells have to replace that produced water? There are tens of thousands of them and if so, it was going to be very expensive.

Everyone went to work to prove that all or almost all of the non-CBM wells were non-tributary, meaning that the water that was pumped up with the gas would never enter into our river or surface water network. Almost all of the water used for agriculture and drinking comes from this surface water network, rivers and shallow wells, so protecting it is a big deal.

After spending millions on engineers, the state and the gas companies agreed that the water that is with the gas is non-tributary in almost all cases.

As a side note, you should know that water lawyers who make their living suing people for injuring senior water rights holders hate this decision. They might have completely pure motives and think that the water that is 2000-10,000 feet deep is part of the surface water system or they might just want to retain the ability to make a boat load of money suing natural gas corporations. Could go either way.

Then the state, which means Governor Ritter’s Department of Natural Resources, did something really unusual. They decided to reward natural gas companies who use this produced water to offset the use of other surface water.

That’s right; Governor Ritter actually did something good for the oil and gas industry.

Some of the natural gas companies effectively recycle this produced water and offset the need for water from another source, mainly surface water. Doing this reduces the amount of water they would use from the river systems, it reduces truck traffic that would be needed to haul the water and it’s responsible. Now the state is actually rewarding companies for doing this.

The only case in which this produced water will be regulated by the state is when the water is used for some other purpose; in that case, the use will be treated just like every other instance where non-tributary water is put to beneficial use.

I worked a lot behind the scenes on this issue. It is really nice to see everyone’s efforts rewarded with common sense legislation.

1 comment:

  1. Hello,

    You know that the majority of CBM produced water is good usable water. It is a shame it is disposed of in the process of gas production.

    Usually there are other gological formations that exist above or below the coal seam that the good produced water can be injected into and thus SAVED for future use by the landowner when they need it.

    Under the right circumstances, there is an opportunity to re-inject the "produced water" into another formation (i.e. sand zone, etc.) all within the same well bore (dont even bring the water above ground). Those circumstances require:

    1. the presence of a receiving zone either below or above the gas production zone

    2. and produced water quality that is similar to the receiving zone, or that can be chemically treated to meet those specifications.

    This method of water mitigation is called In-Bore Aquifer Recharge Injection, and is now commonly being used in the Coal Bed Methane world in the Powder River Basin in parts of Wyoming. This method is becoming popular for three primary reasons:

    1. Water can be mitigated at between $0.03 and $0.08 per barrel vs $0.30 to $1.50 per barrel

    2. Regulatory restrictions on surface discharge have forced the Production Companies to find alternatives to historic methods of water management. IE stop discharging the water.

    3. Landowners want to keep any good water that they can on their property for future use.

    While this method does not work in every scenario, some basic geological evaluation can be done to see if it can work. If it is viable, the savings are exceptional. In the CBM plays in Wyoming companies have average saving of $25 million on a 100 well implementation producing water over a five year period. So why dont more companies use this methodology for handling water.

    1. They already have infrastructure in place for "disposal" of the water.

    2. They have the regulatory permits in place that "allow" them to continue with surface discharge.

    3. They dont want to have to do any work to save millions of gallons of good water.

    It is a sad situation really. Probably 90% of the GOOD USABLE water produced from the Powder River Basin could be saved. NO PIPING. NO EVAPORATION PONDS, LIMITED SURFACE DISTURBANCES, NO PROBLEMS in winter months.

    Eliminating surface discharge does NOT have to stop gas prduction, WE can still produce gas and SAVE our water.

    All my best,

    Tom Wharton