Posted by Gabriel Collins, “The Emerging Battle over Produced Water Ownership in Texas: A Legal and Practical Roadmap for Courts, Groundwater Owners, and Energy Producers,” Tex. J. Oil Gas & Energy L. 16.1, 2021
Summary:
Water occurring in oil and gas-bearing formations belongs to the surface estate as a matter of law in Texas. Contemporary water midstream acreage dedication transactions now create a challenge because under a conservative estimate, nearly a billion dollars in cash and equity have changed hands in Texas alone since 2017 but without any compensation to the landowners who actually own the produced water pledged in the deals. This omission exposes many of the transactions to potential legal challenges. If a legal challenger prevailed, the oil and gas producers that made the dedications would likely need to make compensatory payments, and in some instances, potentially restructure contracts. On the positive side, large-acreage water owners’ increasing desire to monetize their produced water resources sets the stage for practical solutions that would respect water owners’ rights and facilitate oil and gas development activity.
Texas Water Intelligence 