Gabriel Collins, J.D., “Oilfield Produced Water Ownership in Texas: Balancing Surface Owners’ Rights and Mineral Owners’ Commercial Objectives,” February 2017, Baker Institute for Public Policy, Center for Energy Studies.
–The surface estate owns produced water as a matter of law in Texas. However, if a
producer transfers produced water to another party for the purpose of treating that
wastewater for “subsequent beneficial use,” the water becomes the property of the
person who takes possession of it. (Chapter 122 of the Texas Natural Resources Code).
–A key flaw in the statute is that Chapter 122 does not address how, if at all, the
producer would need to split revenues with the surface owner for a sale or a forvalue
transfer of produced water.
–Barring contractual arrangements to the contrary, a producer would likely only
need to split those revenues from the sale of produced water remaining after
subtracting treatment and handling costs necessary to make the water marketable.
–Strong policy and economic drivers support greater reuse of produced water.
–For instance, recycling larger volumes of produced water and integrating it with
other non-potable supplies such as brackish water and municipal effluent would
displace the use of potable fresh water for fracs, increasing local water security and
extracting greater value from produced water that would otherwise have been
injected into a deep disposal well.
–Recycling a larger proportion of produced water can also reduce—or ideally,
preempt—problems with induced seismicity related to produced water disposal.
–Landowners who make money from freshwater sales and saltwater disposal well
royalties may oppose greater produced-water recycling.
Title and Liability Transfer Points for Oilfield Produced Water in Texas
**This analysis reflects the author’s personal assessments and opinions. It is not intended to provide legal advice and does not create an attorney-client relationship between the author and reader.**
The research and views expressed in this paper are mine alone and do not necessarily represent the views of the James A. Baker III Institute for Public Policy.