Over the past year, the Permian Basin has experienced an increase in seismic activity. According to seismologists, the most probable culprit is the injection of saltwater into underground formations for disposal. This saltwater is produced in the oil and gas extraction process, separated from the oil and gas, and often disposed of underground. In response to such seismic activity, the Railroad Commission of Texas (RRC) has implemented certain measures and may enact more with respect to saltwater disposal in the Permian Basin.
If oil and gas operators in the Permian Basin are unable to find alternative methods of disposal to deep formation injection, such operators may need to curtail hydrocarbon production pending implementation of a commercially reasonable solution.
Potential alternatives to injection of wastewater into deep formation saltwater disposal (SWD) wells include (a) using shallow formation SWD wells, (b) recycling produced water, (c) treating wastewater for beneficial reuse, (d) trucking produced water to SWD wells outside of seismic response areas, and (e) building out infrastructure to use deep formation SWD wells in areas not affected by seismic activity. Each of these alternatives may be feasible but may also create other issues, including significant cost increases and additional regulatory hurdles.
What does this increase in seismic activity mean for companies operating in the Permian Basin? This client alert addresses several potential implications. We focus on (a) parallels to be drawn from similar seismic activity in Oklahoma, (b) the RRC’s responses to date and potential future measures, and (c) the potential impact of existing and future limits on underground saltwater disposal in the Permian Basin, including force majeure implications and other potential liability issues.
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