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Is This The Next Major Threat For Oil Demand?

Is This The Next Major Threat For Oil Demand?

Manufacturing growth in the United…

Texas Clampdown On Disposal Wells Hits Oil Producers

Oil producers in some of the most prolific parts of the Permian could lose up to half of their wastewater disposal wells as the Texas Railroad Commission targets the quake-inducing reservoirs in a bid to stem anxiety about increased seismic activity.

According to a Rystad report quoted by Reuters, companies including ConocoPhillips, Diamondback Energy, Chevron, Coterra Energy, and Rattler Midstream could lose up to half of their wastewater storage capacity amid the Railroad Commission's crackdown on deep reservoirs.

Also according to the report, ConocoPhillips had already lost some 186,000 bpd worth of wastewater disposal capacity.

In December 27, a 4.5-magnitude struck Texas, with the epicenter in the Permian. The tremor followed a series of weaker ones and was followed by more, spurring the Railroad Commission into swift action.

The action involved suspending the injection of wastewater from well-drilling and fracking into deep underground reservoirs, and now well operators in the areas with the suspension will need to find an alternative way of disposing of the fluid. According to energy consultancy Rystad, "The cost dictates the adoption of such solutions," which include trucking the wastewater to another location or sending it away via pipelines.

Reuters reported that Chevron was considering recycling the wastewater and reusing it, and it was discussing alternatives to underground injection with other businesses in Texas and New Mexico.

The problem of increased seismic activity has been a major weapon in the arsenal of opponents to the U.S. shale revolution. The link between shale oil drilling and increased risk of quakes has been proven by the U.S. Geological Survey but not where activists have claimed it was: in the process of fracking rock formation.

Instead, the increased seismic activity risk comes from wastewater disposal in huge underground wells, which if deep enough and full enough, could cause an increase in seismic activity. The risk has grown in parallel with the growth in the amount of water used in shale oil wells in recent years as horizontal laterals became longer and longer.

By Charles Kennedy for Oilprice.com

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