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New RRC guidance exacerbating SWD permitting delays

Disposal permits are facing greater challenges as regulators respond to concerns

On the second day of Produced Water Society Permian Basin 2019, Laura Capper, founder and CEO of EnergyMakers Advisory Group, presented an overview of internal policies adopted by the Texas Railroad Commission (RRC) for reviewing saltwater disposal well (SWD) permit applications. The new policies stem namely from disposal injection and induced seismicity concerns, as well as injection in geologically complex areas.

Capper explained that under the February 2019 policies, reviewers will score applications based on reviews of 13 criteria pertaining to seismicity, faulting, operational and reservoir factors. The aggregate weighted score will result in a letter grade determined by the individual reviewer’s subjective assessment of these factors. The letter grade, in turn, will determine the RRC’s guidance on maximum allowable injection rates, additional information required, and any required special permit conditions.

Bill Godsey, president and CEO of Geo Logical Environmental Services, expressed concern over the new guidelines and their contribution to delays in SWD permitting. As he sees it, one of the issues is the low seismic activity level restriction observed by the RRC.

“2.0 is a ridiculous [low-magnitude] number, especially in an area with complex structural features like in the Permian and other areas in Texas. That number needs to be looked at and modified, and I think we need to apply pressure to the commission to adjust that,” he said.

As Capper noted, the Delaware Basin has not experienced higher-magnitude seismicity events like those that have occurred in the Texas Barnett and throughout Oklahoma, yet Texas regulators are taking precautions anyway.

“I am not aware of a credentialed seismologist that has opined that disposal injection is causing seismic issues in the Texas Delaware Basin, specifically. We, too, have been unable to find correlation with disposal injection activity in the Pecos/Reeves area,” she remarked.

“You could see that glass as half full, but the regulators are also likely to respond that they can’t, with absolute certainty, rule out a possible correlation, at least currently. It’s definitely kind of a forward-looking, prophylactic, conservative posture, which seems to be resulting in a general restriction of disposal capacity growth in the Permian,” she added.

Godsey, an ex-regulator for the RRC’s underground injection well division, expressed skepticism over the notion that seismic events as deep as 25,000 feet are directly related to water injection occurring at a depth of 5,000 feet. He hopes that science will eventually make that clear and enable the commission to walk back some of its more restrictive seismicity guidelines so that further permitting delays can be avoided.

Stantec’s senior principal, Scott Verhines, said New Mexico regulators generally would prefer the industry work to address potential seismicity problems rather than having to issue new regulations. Speaking with the Secretary of Energy, Minerals and Natural Resources in March 2018, Verhines said regulators in New Mexico anticipate that oil and gas production in their state could create conditions where seismic activity becomes a concern.

“New Mexico and Texas have historically not played well when it comes to water across our state boundaries. To me, there’s a lot of opportunity to play together on the produced water front and in developing a Permian-related set of guidance to industry,” Verhines told the audience.

There is a general desire among industry stakeholders to prevent more regulation in cases where further research and understanding is required to avoid potentially damaging consequences for the industry.

“Some of the changes we could be making could have such implications for industry,” Capper said. “We do need to stay flexible enough to dial it back if we get it wrong.” She concluded by suggesting that “this may be one reason that state regulators may try to work within more subtle policy changes which could be later unwound, as opposed to a more permanent change to the state regulatory code.”

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