American Oil and Gas Reporter - April 2020 - 69

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IssuesUpdate: Texas Alliance of Energy Producers

Produced Water's Potential
Piquing Interest In Texas
By Danny Boyd
Special Correspondent
WICHITA FALLS, TX.-Leaders of
the Texas Alliance of Energy Producers
are pushing for solutions to reuse produced
water, fund additional transportation improvements in producing areas and quantify volumes of flared and vented natural
gas, but optimism about getting answers
is tempered partly by concerns about the
timetable for transferring some federal
regulatory authority to the state during a
presidential election year.
State issues take on added importance
as the Texas Legislature conducts interim
studies in preparation for a session set to
start in January 2021, and industry opponents' criticism of natural gas flaring gets
louder in the midst of a Texas Railroad
Commission race.
The Alliance is keeping close tabs on
an interim legislative study by the state
House Energy Resources and House Ways
& Means committees that may yield proposed incentives and statutory and regulatory changes to spur recycling and reuse
of produced water, reports Alliance Chairman Jim Beck.
Success in Austin could build on the
Alliance's work to tout water policy solutions during an October trip to Washington in which members presented a
white paper titled "Sustainable Produced
Water Policy, Regulatory Framework,
and Management in the Texas Oil and
Gas Industry: 2019 and Beyond" to the
U.S. Environmental Protection Agency,
the Department of Energy and members
of Congress in hope of spurring federal
action to promote increased treatment
and reuse, says Beck, president of Tiger
Eye Resources LLC in Houston.
"One thing we really emphasized, of
which neither DOE nor EPA were aware,
was that the new midstream market for
water had become a major growth area,
with the investment community anxious
to invest in these midstream businesses
that handle water, clean it and supply it
for reuse to farmers, producers and others,"
Beck says.
Previous attempts at advancing state

legislation were unsuccessful, but discussions among industry, policymakers
and regulators may change that, says Alliance Executive Vice President Karr Ingham. Currently, he estimates, Texas operators inject about 85%-90% of their
produced water because the practice is
cost-effective and options for recycling
and beneficial reuse remain very limited.
With produced water output exceeding
oil production by a few multiples, using
it to meet all upstream water demand
still appears likely to consume only a
fraction of that produced water, Ingham
says, which may set the stage for a potentially enormous asset for Texas communities and industries.
"The idea behind our involvement in
water issues is that we fully understand
what this looks like and we want to
inform everyone about its scope as we
anticipate that produced water very likely
will be an issue in the 2021 Texas Legislature," Ingham says.
The Alliance wants to ensure that
water issues, in and of themselves, do
not become an impediment to oil and
gas development in Texas, he said.
With its produced water output on the
rise, Texas is a leader in promoting produced water reuse, says incoming Alliance
Chairman Cye Wagner, and the Alliance's
white paper is a crucial part of building
on that leadership by promoting incentives
that make it affordable to recycle and
reuse, she suggests.
"It is going to be imperative that we
lower produced water treatment costs," says
Wagner, exploration manager at a small,
private family producer in Fort Worth. "That
will affect our membership when everyone
can help recycle and take advantage of the
beneficial reuses of produced water. That
will help our state conserve water resources,
but if it is not affordable, our members
can't do it. There are incentives that can
help make that happen."
A Big Issue
During the legislative interim, lawmakers continue to ponder possible solutions to differences over eminent domain
after bills failed the past two sessions,

Ingham says. "Eminent domain has everything to do with making it possible to
put pipelines in place and expand takeaway capacity from the Permian Basin,
primarily, so operators can get that gas
to market," he says.
The debate over flaring has intensified
during the RRC election campaign, which
saw incumbent GOP Commissioner Ryan
Sitton unseated in the March 3 primary
by Jim Wright. In the Democratic race,
Chrysta Castaneda and Roberto Alonzo
finished first and second, respectively, in
the Democratic primary but since neither
secured a majority, the two will face each
other in a May 26 runoff.
"It is safe to say that is an issue in the
RRC election and will be an issue in the
coming legislative session," Ingham relates.
"It is hard to imagine a legislative session
in 2021-with the increasing attention toward everything climate change-in which
this won't somehow be an issue."
Meanwhile, the state is in the process
of trying to identify the precise volumes
of gas that actually are flared and vented,
he says. "A lot of data out there does
not agree with other data, so we are participating in some processes that will
help us define the situation," Ingham
says. "This is going to take place during
the next six months. No one can deny
there is a spotlight on the state of Texas
because of oil production increases and
all the things that come along with that,
including higher amounts of gas venting
or flaring and the opportunity for industry
opponents to use that issue potentially
to stifle activity and give the industry a
black eye."
Relative to total natural gas production,
the total volume of natural gas being
flared or vented is relatively low, probably
around 2%-3%, he estimates. And while
vented/flared gas is an even smaller share
of total greenhouse gas emissions, there
is no denying the volumes have increased
as oil and gas production has increased.
Beck, whose career experience includes
working in the industry abroad, says a
lack of market access often leads foreign
producers to flare a much greater share
of their gas than U.S. operators. "I think
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