Top Texas shale producers hit by quake-driven well disposal closures -Rystad (updated)

NGL Energy Partners LP

06/01/2022 23:44

(Adds comment from Chevron in parapgraph 9)
    By Liz Hampton
    Jan 6 (Reuters) - Some Texas shale oil and gas producers
could lose as much as half of their wastewater disposal capacity
in key operating areas of the top U.S. oilfield under a growing
state crackdown to stem a surge in earthquakes, energy
consultancy Rystad said on Thursday. 
    The Texas Railroad Commission, which regulates the state's
oil industry, in December suspended deep disposal wells in four
oil-rich counties in West Texas amid a spike in tremors.
Saltwater typically produced with oil and gas production often
is shunted into wells drilled specifically to handle the
wastewater. 
    West Texas experienced nearly 2,000 magnitude 2.0 or higher
earthquakes in 2021, nearly double the prior year's levels,
according to Rystad. The earthquakes have not caused major
damages.
    But the state's new ban will require producers in those
areas to find other options to handle their wastewater,
including piping or trucking it longer distances to wells that
are underutilized on adjacent acreage. 
    "The cost dictates the adoption of such solutions," Rystad
said in the report. 
    A magnitude 4.5 quake near Stanton, Texas, in the last week
of December further raised questions as to whether the regulator
will take new actions to curb water disposal linked to the
quakes. 
    ConocoPhillips  COP.N , Diamondback Energy's  FANG.O 
Rattler Midstream, NGL Energy Partners  NGL.N , Coterra Energy
and Chevron Corp  CVX.N  have disposal wells in areas where the
Texas Railroad Commission is shutting deep injection wells or is
likely to reduce disposal volumes. 
    Those companies could face a loss of as much as 50% of their
saltwater disposal capacity in key acreage positions if the
state's oil regulator takes additional actions, Rystad said. 
    Chevron said it was studying and piloting recycling,
beneficial uses and other options for produced water as
alternatives to underground injection. It is also participating
in water consortiums in Texas and New Mexico, which are aimed in
part at finding alternatives to wastewater injection. 
    Coterra did not immediately comment on the report.
ConocoPhillips, Rattler, and NGL Energy did not immediately
respond to a request for comment. 
    When the state's energy regulator shut the deep wells in an
area northwest of Midland, Texas, in December, it cut top
Permian shale producer ConocoPhillips's disposal capacity by
186,000 barrels per day, Rystad said in the report. 
    Diamondback's subsidiary lost 150,000 barrels per day of
capacity. 

 (Reporting by Liz Hampton in Denver; Editing by Sandra Maler)
 ((Liz.Hampton@thomsonreuters.com; +1 832 571 8115; Reuters
Messaging: Reuters Messaging: liz.hampton.reuters@reuters.net))