Colorado oil and gas producers are working to meet another new set of regulations by year’s end — only this time, the rules are concerned not with cutting gaseous materials they emit into the air but reducing liquid materials they store in the ground.
The Colorado Energy and Carbon Management Commission approved a requirement this spring that at least 4% of water that operators use in extraction by Jan. 1 be recycled produced water — a percentage that will grow to 10% by 2030, 20% by 2034 and 35% by 2038. The rules stem from a 2023 law seeking to cut down on fresh water used at drilling sites in this dry state and boost reuse of produced water that is brought up from underground formations but then typically buried in disposal wells.
Oil and gas producers in different parts of Colorado vary wildly in terms of the percentage of recycled water they use right now, largely based on the infrastructure that is available for them to employ the produced water in their activities. In the Piceance basin on the Western Slope, it’s not unusual for 85% to 95% of water used in production activities to be recycled, while in the Denver-Julesburg basin stretching south from Weld County, only 2% of such water now is reused.
A consensus rulemaking
Lynn Granger is president and CEO of the Colorado Oil & Gas Association.
The process for setting the new requirements stretched nearly two years, but it slowed as the rules were finalized, as a consortium of industry leaders, environmental organizations and other experts delayed a final vote for months to find a solution acceptable to everyone. The result was a rare state rulemaking lauded by both oil-and-gas producers and climate defenders for being “both protective and workable,” as ECMC member John Messner said at the time.
“We appreciate the collaborative approach ECMC staff maintained throughout the rulemaking process, which ultimately led to a well-balanced consensus draft,” Colorado Oil & Gas Association President/CEO Lynn Granger said in a statement. “We look forward to continuing our work with staff as they evaluate how these requirements will be implemented and refined in the coming years.”
The oil-and-gas sector uses less than 1% of the water consumed in Colorado — versus the roughly 85% that is used by the agricultural sector — but nonetheless has gotten significant attention from legislators looking for ways to conserve the resource. The 2023 law established a consortium to study current operations methods and the roadblocks to increased use of recycled water, and that group came up with what it called realistic requirements that can increase in time only as technology and infrastructure improves.
Beginning on Jan. 1, producers must include in their oil and gas development plans — working frameworks for each well location that must be OK’d by the ECMC — a plan to recycle and reuse a certain percentage of water used in downhole operations. They also must report fresh and recycled water usage by location and the number of vehicle miles they traveled to transport fresh or recycled water to a location.
Recycled water requirements increase over time
While a 4% recycling goal is realistic now, the 10% mark will be achievable as the state lets producers replace the disposal wells where they dump produced water permanently with storage wells from which they can retrieve that water to use in hydraulic fracturing. Hope Dalton, director of the produced water consortium, explained to the ECMC last fall that transporting the water to fracking sites within a five-mile radius of the storage wells also can reduce travel by trucks, which now haul water to disposal wells further away.
In order to incentivize Western Slope producers to not backslide on requirements that they are far exceeding, the ECMC also created a recycled produced water credit-trading system like the systems it is developing to spur industrial greenhouse-gas emissions cuts. Producers that exceed recycled-water targets can generate credits that they then can sell to other producers who need help meeting their requirements.
To meet the more stringent targets over the next 12 years, producers said, they must build out pipeline and storage infrastructure to transport produced water to new wells. But a ban on construction of water-treatment plants and storage facilities in the disproportionately impacted communities occupied by lower-income populations could force producers to truck water longer distances, which would boost transportation-based emissions.
What’s next
Colorado Energy and Carbon Management Commission Chairman Jeff Robbins speaks at a 2024 event where Gov. Jared Polis signed several environmental regulations into law.
Because of that, the ECMC established two working groups to continue studying the issue — one focused on disproportionately impacted communities and the other regarding air emissions associated with produced water. COGA leaders said they look forward to participating in these discussions, while American Petroleum Institute Colorado officials added they will commit through them to advancing “responsible produced water management and recycling.”
“I’m galvanized by the consensus-building collaboration that made (this) rulemaking possible,” ECMC Chairman Jeff Robbins said after passage of the regulations. “Produced water is a complex matter and stakeholders advocated for disparate perspectives — and we collectively found common good that puts in place protective measures.”
The produced-water rules are set for enactment as oil-and-gas companies also are dealing with separate new regulations requiring them to reduce emissions in DICs and cut pollution specifically emanating from pipelines and compressor stations. Meanwhile, the Colorado Air Quality Control Commission has scheduled a September rulemaking to set new health-based standards on five priority toxic air contaminants, some of which come specifically from drilling operations.