• April 9, 2020

Pecos ranchers, in rare deal, to pump brackish water to the oilfield - Odessa American: Inthepipeline

Pecos ranchers, in rare deal, to pump brackish water to the oilfield

Developers roll forward despite oil price drop

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Posted: Thursday, May 14, 2015 7:00 pm

A rancher and his Lubbock business partner will proceed apace with a plan to start pumping up to about 3.2 billion gallons of brackish water a year from the Eagle Pass area to the oilfield, despite the slowdown in oil and gas activity that has curbed water use in West Texas.

The Middle Pecos Groundwater Conservation District OK’d a permit to export the water in March requested by Pecos SS, a company formed by rancher Steve Chapman and partner Gary Harrell in Lubbock.

Chapman said the plan is to build a pipeline after lining up oilfield clients to buy the water.

“No one is going to buy anything from us until we build a pipeline,” Chapman said. “They ain’t going to commit to us. The other side of that is the price is down right now, and everyone is negative. We do have a pipeline company that is there for us, and they have the money to build it. The question is where to build it to.”

The plan today is to ready six wells to start pumping the water but wait to build a pipeline until they near deliveries. The permit requires the company to start exporting the water within 18 months.

“I expect a year,” Chapman said. “That’s what we all expect. And we are prepared.”

The permit allows Pecos SS to pump 10,000 acre-feet of water a year from the Edwards-Trinity aquifer. An acre-foot refers to the volume of water it would take to sit a foot deep on an acre of land. One acre-foot works out to 325,851 gallons.

Each day, the company will be able to pump about 212,000 barrels of water, or about 8.9 million gallons. A barrel is 42 gallons.

The pipeline, as envisioned today, would be about 50 miles long and end near FM 1492 northeast of Crane, with feeder lines running to oilfield leases, Chapman said. The entire thing could take 15 months, so the developers might build a portion of the pipeline to meet the timeline required by the permit to start selling water.

 The ranch is on a 10,000-acre tract about two miles north of Highway 67 and Owego Road in Pecos County. Pecos SS bought in December 2013 and began seeking the permit in the next few months.

The brackish water, at a rate of 50 cents per barrel, would be worth about $40 million a year. That is what Chapman says they hope to get for the water.

The groundwater district will collect an export fee per 1,000 gallons that would work out more than $81,000 a year if Pecos SS pumps at the export limit, per the terms of the permit. The district will invest that money to improve groundwater monitoring, Weatherby said.

Chapman said the water is ideal for the oilfield because it is “very minimally brackish” at less than 5,000 TDS, or total dissolved solids. That means it will require little if any treatment to use for industrial purposes. Seeking brackish water instead of fresh water proved an easier road with the district, Chapman said

“The water district would have never let us take that water out of the county,” Chapman said.

The Pecos SS plan stands out because the groundwater district grants few export authorizations. Theirs is the third export permit issued in 40 years.

 The oldest allows the Upton County Freshwater District to supply potable water to McCamey. Another allows exporting water from the Capitan Reef for washing out salt domes in the Coyanosa area.

“We’ve had few submitted,” said Paul Weatherby, the groundwater district’s general manager. “. . . That’s it.”

The groundwater district is considering another export authorization from STW Water Resources in Midland, which hopes to take water from the Capitan aquifer and sell it to municipalities and other consumers, including those in the oilfield.

Only one member of the 10-member groundwater district opposed the project in March.

That was John Dorris, the board vice president representing Pecos County Precinct 3, which includes Iraan and Sheffield. Dorris did not respond to a request for comment from the Odessa American, but told the Fort Stockton Pioneer he cast the lone dissenting vote because of concerns from his constituency.

But few challenged the idea before the groundwater district once Chapman and his partner paid for a third-party 50-year study that showed their water usage would have minimal impact on aquifer levels or affect taste, Weatherby said.

“There wasn’t anybody upset,” Weatherby said.

And the company proved that the oilfield potential for the water meets a requirement of “beneficial use.” That, along with no evidence to suggest pumping the water would be harmful, meant the groundwater district had to allow the project.

“Philosophically, it doesn’t concern us as long as it meets the beneficial use definition,” Weatherby said. “We don’t argue that point. If you wanted 10,000 acre-feet to water two cows, I would probably argue with you. You better be reasonable with your request.”

The groundwater district will regularly monitor quality and quantity of water in the aquifer to oversee the effects of moving the water, Weatherby said.

“It would be very surprising if that many million gallons went down a pipeline 24 hours a day, seven days a week,” Weatherby said. “Simply because when you use oil and gas wells, you use a certain amount of water and you use a certain amount to frack with, and then you are done. And then it might be two weeks before you spud another well.”

Midland oilman Clayton Williams' company Fort Stockton Holdings had contested the Pecos SS application to export water from the aquifer.

Williams has been in an ongoing lawsuit against the district since 2010, when the board denied his request to pump more than 42 million gallons a day of Edwards Trinity water from his farm southwest of Fort Stockton to sell to Midland and other customers.

Weatherby declined to comment about the Fort Stockton Holdings opposition, citing the ongoing litigation, except for saying Williams’ 2010 request to export water is an “apples to oranges” proposal compared to the Pecos SS agreement.

“It’s just not the same deal,” Weatherby said.

As it stands, the drop in oil prices stands to decrease demand for water used by the oil industry in drought-stricken West Texas. In March, IHS Energy forecast water requirements for fracking Permian Basin wells to drop from 551 million barrels a day last year to 422 million barrels in 2015.

Before the price drop, the firm’s analysts predicted demand for water in completing wells to grow by 20 percent. The men behind Pecos SS say they see their investment as long-term and expect demand for alternative water sources to grow as oil prices rebound.

 “The day is coming when they can’t use fresh water anymore,” Chapman said.