eNews October 2020

Utton Transboundary Resources Center Completes Analysis on Regulatory and Legal Framework of the Produced Water Act

By Robert Sabie, Jr., NM WRRI Research Scientist

Each month NM WRRI is featuring an eNews article describing an individual research focus of the ongoing New Mexico Universities Produced Water Synthesis Project (NMUPWSP). This month we are featuring the research project entitled, Analysis of the relationship between current regulatory and legal frameworks and the “Produced Water Act,” being performed by Staff Attorney Stephanie Russo Baca and Research Assistants Ambrose Kupfer and Sarah McLain at the Utton Transboundary Resources Center.

The large volumes of produced water generated in New Mexico through oil and gas production every year remain a management challenge. According to the New Mexico Oil Conservation Division (OCD), in 2019, 163,137 acre-feet of produced water was generated. One of the many challenges of managing produced water has been regulatory uncertainty. In order to overcome this challenge, New Mexico passed the Produced Water Act in 2019, formally known as House Bill 546, to provide jurisdictional and legal clarity.

The objective of the completed research project by Russo Baca and team was to enhance the dialogue of produced water legal and regulatory aspects in New Mexico. Specifically, their final report highlights how the Produced Water Act affects produced water reuse, ownership, water rights, liability, standard practices, fresh water conservation and protection, and changes to previous regulations.

The report explains the different roles of the OCD, Environment Department (NMED), and Office of the State Engineer (OSE), as well as the Water Quality Control Commission (WQCC) and United States Environmental Protection Agency in regulating produced water and ensuring the protection of the state’s precision freshwater resources. While produced water is currently only permitted for reuse or disposal within the oil and gas industry, the Produced Water Act tasked NMED and WQCC to establish standards based on scientific criteria for potentially using treated produced water outside of the oil field – a topic of much concern and continued discussion. Generally, these standards must protect the health of humans, animals, and the environment.

Another interesting point the report describes is how the Act encourages the oil and gas industry to reuse produced water for hydraulic fracturing, thus limiting freshwater use.  According to the report, “Any contract entered into, on or after July 1, 2019, is against public policy and void if it requires freshwater resources to be purchased for oil and gas operations when produced water, treated water, or recycled water is available and able to be used.” On May 6, 2020, OCD filed an application to amend rules to implement statutory additions to the Oil and Gas Act with a new requirement for disclosing and reporting of water use of all sources of water in the completion of the hydraulic fracturing of a well. The sources of water are classified by four categories: (1) produced water, (2) water other than produced water that has 10,000 or more mg/l total dissolved solids (TDS), (3) water other than produced water that has more than 1,000 mg/l TDS but less than 10,000 mg/l TDS, and (4) water other than produced water that has 1,000 mg/l TDS or less. This information would be helpful for better understanding water budgets and accounting of water use in New Mexico.

Changes to New Mexico’s regulation of produced water based on the passage of the Produced Water Act are forthcoming as the science, technology, and discussions of public acceptability move forward. This report will be made available on NM WRRI’s website in the next few months after peer-review.