As if WTI oil prices in the low $60s per barrel aren’t enough to slow production growth at America’s top producing shale basin, the Permian, new guidelines for permitting saltwater disposal wells could raise the costs for operators, especially smaller producers with limited resources.
The Railroad Commission of Texas, the energy regulator of the top U.S. oil-producing state, has new guidelines – effective June 1 – for permits for disposal of wastewater, or “produced water”, which is a byproduct of oil and gas production laden with high concentrations of salt, heavy metals, and hydrocarbons.
The new guidelines strengthen the Commission’s current disposal well permitting requirements by focusing permitting efforts on ensuring that injected fluids remain confined to the disposal formations.
The amended guidelines limit maximum injection pressure at the surface and limit how much water can be injected based on reservoir pressure.
As a result of strengthened rules for saltwater disposal permits, small operators may have to transport the produced water to sites further from production and provide additional data on disposal wells to meet the regulatory requirements. This would add to costs, small independent producers and petroleum engineers tell Reuters.
The water-to-oil ratio in the Permian is much higher than in other basins. On average, four barrels of water are produced for each barrel of oil, according to data from oilfield water analytics firm B3 Insight.
While the Permian crude production is set to exceed 6.5 million bpd in 2025, up from more than 6 million bpd in 2024, the basin “is simultaneously generating an unprecedented volume of produced water—a costly and complex byproduct of hydrocarbon extraction,” B3 Insight said earlier this year.
“E&P operators, midstream providers and regulators are all grappling with how to ensure produced water takeaway doesn’t become the bottleneck for Permian oil and gas development,” Patrick Patton, Vice President Product Management at B3 Insight, said last month.
“After all, if produced water cannot be managed, oil can’t be produced.”
Potentially higher costs of saltwater disposal would be yet another headwind to U.S. oil production growth as lower oil prices have already resulted in a pullback in drilling activity.
By Tsvetana Paraskova for Oilprice.com
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