The Nickel Report

With produced water volumes on the rise as a result of the growth in oil and natural gas production and various areas of the country experiencing water scarcity, states and stakeholders are increasingly looking for ways to reuse, recycle and beneficially use waters originating from the oil and gas industry. Two recent initiatives are likely to significantly advance policy decisions related to produced water management.

At the federal level, the US Environmental Protection Agency (EPA) is now evaluating whether to move forward with development of federal regulations allowing broader discharge of produced water to surface waters. These steps include the initiation of its Study of Oil and Gas Extraction Wastewater Management and the revisiting of two technology-based regulations that govern the discharge of oil and gas extraction wastewaters; (i) the oil and gas extraction effluent guidelines at 40 CFR Part 435 (Oil and Gas Extraction Point Source Category) and (ii) the centralized waste treatment effluent guidelines at 40 CFR Part 437 (Centralized Waste Treatment Point Source Category). With some exceptions (e.g., discharges for beneficial reuse west of the 98th meridian), the oil and gas extraction effluent guidelines generally prohibit discharge of pollutants in wastewaters from both conventional and unconventional wells directly to surface waters. In addition, the discharge of pollutants from unconventional extraction activities to publicly owned treatment works is prohibited. As a result, produced water commonly is disposed of in Class II Underground Injection Control (UIC) wells Centralized waste treatment (CWT) facilities may accept for treatment a variety of wastes and wastewaters, including oil and gas extraction wastewaters, for discharge either directly to waters of the US or indirectly via publicly-owned treatment works (POTWs). EPA has noted however that since the CWT effluent limitation guidelines were not developed specifically for wastes from oil and gas extraction, the technology basis and effluent limitations may not adequately control those wastewaters. See Detailed Study of the Centralized Waste Treatment Point Source Category for Facilities Managing Oil and Gas Extraction Wastes (May 2018).

Over the past year, EPA has been holding in-person meetings with interested stakeholders including state regulatory agencies and members of industry, academia, tribes and non-governmental organizations. In October of this year, EPA also held a public meeting to report on the results of the input it has received to date on its ongoing study of the management of wastewater from conventional and unconventional oil and gas extraction at onshore facilities and take additional input from stakeholders on providing new approaches for produced water management. See EPA’s October 8, 2018 Public Meeting Presentation. Topics discussed covered a broad spectrum and included: (i) the benefits of adding water to the hydrologic cycle; (ii) the potential for reduced wastewater management costs; (iii) the need to maximize (rather than reduce) management options; (iv) produced water variability; (v) knowledge gaps that might affect produced water characterization; and (vi) concerns regarding discharges, including impacts to water quality. EPA expects to issue a white paper on these issues in the first quarter of 2019 and anticipates that it will make a decision on what, if any, regulatory changes it will initiate by the summer of 2019.

In the meantime, on November 9, 2019, pursuant to a Memorandum of Understanding entered into earlier this year, EPA and the State of New Mexico released, for public input, a draft white paper outlining opportunities to streamline existing federal and state regulatory frameworks and facilitate produced water management in New Mexico. EPA and New Mexico anticipate finalizing the draft white paper by the end of the year.

For the oil and gas industry, it will be important that any future EPA and state actions achieve the goals of regulatory and permitting flexibility as well as certainty. We will continue to monitor and report on these developments.