As you know, the Texas Rail Road Commission has announced they are going to begin limiting pressure and volume allowances on salt water disposal wells and more restrictions are going to come.
But, why do regulators care and why do they establish a limitation on salt water disposal volume and pressure (i.e. allowance)?
Well, the subsurface zones the water is injected into is finite and the availability of capacity in these zones only recharge at a certain rate. Because these zones are available to anyone who can drill a hole into the ground, the government sets limits to ensure that the injection of produced water is sustainable and not overburdened by one individual or company. There are several other reasons that we will discuss further into the article.
So what is a “pressure and volume allowance” in the first place?
Technically, an allowance is a limitation on how much volume (in barrels) and how much pressure (PSI) you can inject into a well in a given month. These “allowances” are set on the H1/W14 permits.
For example, an allowable limit for given disposal well could be 5,000/bbl per day and the pressure limit could be 2,500 PSI. So, all disposals, by law, cannot inject more volume or pressure than is allowed by the H1/W14 permit even if the respective disposal could technically take more volume or pressure.
But, how do the regulators know whether the required allowances have or have not been adhered to?
The regulators require all injection wells in Texas and New Mexico to report their pressure and injected volumes on a monthly basis by well.
This is done through the H10 form (in the case of the Texas Rail Road Commission). The report is filed annually in Texas and a different form serving the same purpose is filed monthly in New Mexico. In Texas, the annual report still line items the previous 12 month’s monthly injection volumes and pressures.
In 2010, Texas regulators moved the reporting system online so that salt water disposals wells could more easily report their activity.
In addition to ensuring that the subsurface is not overburdened by one company’s injection activity, there are several other key reasons why regulators step into regulate salt water disposals.
One reason is that disposals have been the culprit of dramatically increased produced water cuts in certain areas, especially for shallow well disposals in the Northern Delaware (West Texas and South East New Mexico in Lea and Eddy County).
Injected produced water migrates from the disposal injection zone it originally was injected into and can travel up to 20 miles to move through the rock and impact a producing zone.
This sounds crazy, but we have clients who have put tracers on their injected water to test their internal wells that have been experiencing massive water cuts. The tracers are then tracked from the injection site all the way to the production site where the produced water comes out of the well. In short, the tracers proved the hypothesis to be true and the rest is history.
Note: Access your free tour of Sourcewater’s online water intelligence platform. Schedule yourself on our calendar by clicking here.
So, what is the result of these findings? What actions have been taken?
In short, disposals have been shut in and permits for these shallow disposal wells have been cut off in these areas.
But the regulations are not the first to act…
Operators will stop sending water to facilities that they believe are causing these issues and disposal owners are quick to shut down the wells to limit liability. All parties are very focused on reducing risk.
The implication of these drastic actions is that future availability of salt water disposal capacity in high risk areas will be constrained. This is especially concerning given the rising tide of produced water volumes in the very areas that are having issues with shallow well disposals.
The problem becomes even more severe considering that logistics (moving the produced water) is the largest operating expense in the industry. This limits the movement of water from producing well to disposal well to a tight geographic area (typically no further than 5-10 miles away from the production site). In other words, you cannot move the water very far before the economics of moving the water gets in the way.
The growing produced water midstream is helping solve this problem, but the water midstream industry is still in its infancy despite billions of dollars of private equity capital flooding the market.
The question becomes: where do we put the produced water? This question is the very question that keeps the entire industry up at night.
Billions of dollars of oil production depend on this answer!
Another reason regulators regulate salt water disposals is because of the much more publicized seismicity events impacting the oilfield. Salt water disposals are in the middle of the cross hares of the public gaze and the regulators watch.
But, as with the shallow disposals wells, operators and disposal owners are the first to act.
Every operator meeting I go into, there is a heavy emphasis on tracking seismicity events.
So, at Sourcewater.com, we have created a seismicity layer in our online mapping platform. This allows operators to see all seismicity events by time, location, and magnitude.
The key, then, is to overlay the injection wells alongside these events and to look at the subsurface zone the well is injecting into.
Before a new would be salt water disposal owner or a new start up or established energy operator files for a disposal permit or new drill permit in a given area, he should look closely at the historical results of disposal injection in the area and prior seismicity events.
All of this can be done on sourcewater.com.
Why risk millions of dollar of investment, potential law suits and failed business ventures, when a simple search on Sourcewater.com can eliminate the risk of operating or drilling a salt water disposal in a high risk area?
I put together a free case study that reveals how you can track where operators are currently sending their produced water to salt water disposal wells for every producing oil and gas lease.
Check it out below: