Locke Lord QuickStudy: Produced Water Management: Is EPA Laying the Foundation for More Options or More Regulation?

In mid-May 2019, the Environmental Protection Agency (EPA) released for public comment its draft Study of Oil and Gas Extraction Wastewater Management under the Clean Water Act. The purpose of the study was to document EPA’s interactions since the spring of 2018 with various stakeholder groups as EPA sought to determine whether existing waste water management approaches permitted under the Clean Water Act for the onshore oil and gas extraction industry adequately meet current and future state and tribal requirements and policies. In particular, EPA sought input regarding whether support existed for potential federal regulations that would permit a broader discharge of treated produced water to surface waters. EPA is accepting public comment until July 1, 2019, and intends to finalize the study and announce future actions regarding the subject matter later in 2019.

Background

The oil and gas production industry uses large amounts of water, particularly in unconventional drilling, with much of the water coming from existing or potential useable water sources. Similarly, the industry generates significant wastewater volumes that are expected only to increase over time. Most produced water is currently managed by disposal in underground injection wells, where the water is disposed at depths below geologic units containing useable groundwater, thus, at least in part, removing water what was once a potential resource from the available water cycle. With water scarcity representing a growing concern for dozens of states, EPA is asking whether current wastewater management options sufficiently meet states’ and tribes’ policy needs, and whether produced water should be viewed more as a potential resource and not only as a waste requiring disposal.

The oil and gas industry has been asking itself these same questions over many years, thus explaining the growing trend of recycling produced waters for re-use in exploration and production operations within the oil and gas field where the produced waters originated. Other beneficial reuses of produced waters are however limited, with EPA noting only a few other examples of such re-uses, including (i) using produced water for dust suppression and deicing (with some states now reconsidering the wisdom of this option), and (ii) using produced water in the irrigation of crops (primarily in California). According to EPA, the discharge of treated produced waters to surface waters was rare, and primarily consisted of (i) limited discharges as permitted under 40 CFR Part 435, Subpart E (primarily in Wyoming, for agriculture and wildlife propagation), (ii) discharges from publicly owned treatment works (POTWs) that accepted produced waters from certain types of wells, a practice that will be, however, fully prohibited in August 2019 for pollutants from unconventional oil and gas extraction activities,¹ and (iii) treated discharges from centralized waste treatment facilities that accept produced waters from multiple facilities for treatment, mostly in the Marcellus and Utica shale areas of Pennsylvania, Ohio, and West Virginia.

The Stakeholders and Themes Expressed by Them

As part of its study, EPA met with a variety of groups, including states agencies with responsibility for aspects of produced water management, state agencies with interests in the use of water for agricultural purposes, tribes, oil and gas industry members, non-governmental organizations (NGOs), members of academia, POTWs, technology vendors and services providers.

Many state agencies, some tribes, and many industry representatives were supportive of the concept of allowing produced water to be regarded as an additional source of water to supplement existing surface and groundwater supplies. EPA reported that one agency was even evaluating the recovery and re-use within the oil and gas sector of produced water already injected into disposal wells. These agencies observed that many ancillary benefits could arise from allowing producers to treat and discharge produced water, including reducing the need for expensive installation and maintenance of road and pipeline infrastructure, potentially reducing emissions from truck traffic, conserving disposal capacity of underground disposal formations, and reducing the risks associated with potential induced seismicity arising from injection operations. Some state agencies raised issues, however, concerning the ownership of produced water, and whether issues regarding the payment of royalties related to such water, or minerals extracted from the water during treatment, may arise from broad re-use of produced water.

Not all state agencies or industry representatives were supportive of providing additional discharge options to producers, believing that existing management methods were sufficient. These parties believed that long term liability concerns and the generally higher cost of pre-discharge treatment counseled against more broadly available discharge options. Some agencies, NGOs, and academics also expressed concern about how little is known regarding the composition of produced water, given that the chemistry associated with different oil and gas formations may vary and thus prevent the application of uniform treatment requirements and discharge limitations that would adequately address toxicity, human health and ecological risks. Fracking and drilling fluids also contain many compounds, some under proprietary formulas, with chemical compositions that are not always well understood. Moreover, both state agencies and industry representatives voiced concerns regarding whether individual discharge permit application processing times could adequately address the speed and nimbleness with which the oil and gas industry frequently operates. Field wide general discharge permits, which can authorize categories of discharges for persons who file notice of their intent to be covered by such general permits and then comply with the general permit’s conditions, may be an option to alleviate the timing concern.

Implications

Many of the stakeholders that EPA interviewed expressed the view that increased treatment and discharge options could potentially be a positive development for the oil and gas industry and for public agencies as they develop policy to address water scarcity. However, a recurring theme from many stakeholders was that the lack of data regarding produced water chemical composition and the potential effects associated with those chemicals could represent a significant impediment to implementation of broader discharge options. With states facing growing water needs, diverting more produced water from disposal to re-use may become an even more pressing priority. Faced with this reality, concerns regarding the protection of health and the environment from risks associated with the discharge of produced water may trigger the need for accumulation and analysis of data from individual producers and injection well disposal facilities. Such data could guide the development of future treatment guidelines and discharge parameters. EPA’s recent study may serve as an initial step in justifying those data accumulation efforts, and perhaps requiring the collection and transmittal of such data through regulation.

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1. 81 Fed. Reg. 41845; 81 Fed. Reg. 88126