The Legal Intelligencer
(by: Kevin Garber and Casey Snyder)
Background: Oil and Gas Produced Water Management
Drilling and operating oil and gas wells, especially unconventional wells, generates a significant amount of flowback and produced water that must be managed properly under federal and state environmental laws (for this article, “produced water” will refer to all oil and gas extraction water). There are multiple produced water management strategies—and trends in the industry vary. The EPA’s newly released draft study, “Study of Oil and Gas Extraction Wastewater Management Under the Clean Water Act,” EPA‐821‐R19‐001 (May 2019), collected stakeholder input on produced water management options nationwide as part of its effort to determine whether future actions are appropriate to permit additional options to manage produced water.
Reviewing current management practices nationally, the EPA determined that injecting produced water into underground injection control (UIC) wells is the most common disposal option. Injection may be for disposal (Class II-D wells) or for enhanced oil recovery (Class II-R wells). The EPA and states with delegated authority implement these programs pursuant to the Safe Drinking Water Act. Pennsylvania has not applied for and does not have primacy to implement the federal UIC program in the commonwealth. Other management options include using produced water to hydraulically fracture new wells; using evaporation ponds or seepage pits in some states to contain produced water and subsequently collect precipitated solids for disposal or sale; using produced water from conventional operations for dust suppression and deicing; treating produced water onsite in mobile treatment units or treating it off site at centralized water treatment facilities (CWTs); disposing produced water from conventional operations at publicly owned treatment works (POTWs); and, in states west of the 98th meridian, discharging to surface water where suitable for agriculture or wildlife.
Pennsylvania is a major producer of oil and gas, especially from unconventional operations in the Marcellus and Utica shale formations. Pennsylvania was the second largest natural gas producer in 2017 with 5,463,888 million cubic feet of gas produced, next only to Texas. A study of recent Pennsylvania Department of Environmental Protection (DEP) data tracking oil and gas waste management in Pennsylvania reported approximately 57 million barrels of liquid waste were produced in 2017, 95 percent of which was produced water.
Produced water management in Pennsylvania has changed over time. In 2012, operators in Pennsylvania transported 52% of produced water to out-of-state UIC disposal wells. However, in 2017, only 7% of liquid waste was disposed of out of state. Reuse is the primary management option in Pennsylvania for both conventional and unconventional operators. The Pennsylvania Department of Environmental Protection’s beneficial reuse general permit, known as the WMGR123 permit, allows produced water from one well to be used to develop or hydraulically fracture another well under certain circumstances. In the early years of the unconventional play in Pennsylvania, operators sent produced water to CWTs and even to a few POTWs for treatment and disposal, but by 2015, over 90 percent of unconventional operators reported reusing produced water as a water management strategy. Conventional operators sent an estimated 7.9 percent of their produced water to POTWs in 2017. A recent EPA rulemaking (discussed in Section III) is likely to end that practice in August 2019.
Produced Water Management Draft Study
Beginning in 2018, the EPA solicited comment on management options for produced water and held a public meeting for stakeholders on Oct. 9, 2018. to address an expected increase of oil and gas production coupled with water shortages experienced by a number of states. The EPA published the draft study in mid-May 2019. The public comment period closes on July 1. The EPA plans to evaluate this study as it determines the next steps for produced water management, suggesting additional consideration is ongoing.
Stated goals of the study were to analyze approaches to oil and gas produced water management at the state and federal levels and to determine whether additional onshore discharge options are necessary. The draft study summarizes applicable regulation and collects stakeholder input but does not reach a conclusion on whether or how the EPA might expand disposal or management options. State agency and industry stakeholders support additional discharge options and offer specific suggestions, including allowing discharges to augment surface and groundwater supply, allowing treatment and discharge options at or closer to well sites, creating a general permit for as-needed discharges, incentivizing CWT facilities that accept produced water from multiple production operations, and revising CWT effluent limitation guidelines (ELGs) to provide additional flexibility for treating oil and gas water, such as permitting CWTs to accept produced water via pipeline. Public interest stakeholders are concerned about constituents of produced water and whether current or expanded treatment options will adequately treat constituents of concern.
2016 Zero-Discharge Effluent Limitation Guideline
In a related development of a few years ago, the EPA amended the federal ELGs at 40 CFR part 435 for the oil and gas extraction point source category on June 28, 2016, to prohibit the discharge of wastewater from unconventional oil and gas extraction to POTWs, effective Aug. 29, 2016. The EPA defined “unconventional oil and gas” to include “crude oil and natural gas produced by a well drilled into a shale or tight formation (including, but not limited to, shale gas, shale oil, tight gas, tight oil).” The EPA concluded that its zero discharge limitation was technologically available and economically feasible because no operators were discharging wastewater to POTWs by 2016. However, that statement was incorrect because conventional operators were discharging to DEP-approved POTWs. In 2015-2016, approximately one million barrels of produced water from conventional operations were sent to POTWs. To the extent conventional operators are covered by the rule, the EPA’s record was incomplete. Recognizing that some POTWs were still receiving produced water from unconventional sources, as defined by the EPA to include conventional operators, the EPA extended the compliance deadline of the rule in December 2016 to Aug. 20, 2019.
The Pennsylvania Grade Crude Oil Coalition, a conventional industry trade group, filed a petition for review of the rule in U.S. Court of Appeals for the Third Circuit in November 2016, which is still pending. The conventional industry seeks to exclude tight oil and gas formations from the EPA’s definition of unconventional oil and gas, which would recognize the Pennsylvania industry’s historical distinction between conventional and unconventional operations. However, absent a revision to the rule, Pennsylvania conventional oil and gas operators may no longer send produced water to POTWs for treatment after Aug. 20, 2019.
Outlook
The EPA’s produced water study does not reach any conclusions on whether the EPA will expand produced water management options for oil and gas operators. The study’s purpose was to collect stakeholder opinion and current management options for reference in ongoing consideration. The EPA does not specify when a final decision is expected. However, the study suggests the EPA is considering whether to expand management options, which would be welcome news because additional flexibility to manage produced water while protecting and possibly benefiting the environment, especially improvements that are implemented at the state level, would promote development of oil and gas resources.
For the full article, click here.