Why Midland, Texas’ oil capital, is challenging wastewater drilling permits

Attorneys for the city of Midland, the oil capital of Texas, made an unusual request to state regulators this year: Could they please be allowed to challenge drilling permits?

The Railroad Commission of Texas, which regulates oil and gas drilling and disposal wells, agreed in June to give Midland standing to challenge the permits. The case will go before a Railroad Commission administrative judge in January 2024. The dispute highlights two rising challenges in West Texas: where to dispose of billions of barrels of toxic oil and gas wastewater and how to get enough freshwater to keep the taps flowing.

Midland Mayor Lori Blong, herself the co-owner of the oil and gas company Octane Energy, traveled to Austin in June to appeal to the Railroad Commission in an open meeting.

“Midland has an independent and friendly relationship with the oil and gas industry,” Blong told the commissioners, adding disposal wells are “essential” to that industry. 

“However, I also understand that all SWD (saltwater disposal) well construction procedures and applications are not created equal, and across Texas, they must demonstrate that groundwater is protected,” Blong said.

Zachary Neal, Pilot Water Solutions’ executive vice president, said the company has introduced multiple layers of protection in the proposed wells and will take groundwater samples to monitor the safety of the community’s water supply. Neal said these steps “exceed regulatory requirements.”

Midland’s water woes are nothing new. In 1965, the city bought the 20,229-acre T-Bar Ranch in Winkler County, a rural part of the Permian Basin near the New Mexico state line, for future water supply. 

That decision proved prescient after the drought of 2011 in the Permian Basin. That year reservoirs dipped lower and lower and Midland and Odessa introduced water restrictions for the first time. Midland, the quintessential oil boom town, acknowledged that development would grind to a halt if there wasn’t enough water to go around.

After squeaking through 2011, Midland decided it was time to tap into the T-Bar Ranch water. A 67-mile pipeline was completed by May 2013 at a cost of over $200 million to connect the T-Bar Ranch to Midland. The T-Bar Ranch was also designated as Midland’s emergency water supply.

That’s why a series of permit applications to drill wastewater wells adjacent to the ranch caught the attention of Midland officials. According to Midland’s protest letter, the city owns the groundwater under Sections 15 and 16, Block C-23, which are adjacent to the T-Bar Ranch and where Pilot intends to drill the wells.

Between June and November 2022, Pilot Water Solutions applied for permits to drill 18 disposal wells there with a combined capacity of up to 567 million gallons of produced water per month. Disposal wells, also known as injection wells, receive the huge volumes of produced water that come up alongside oil and gas in the drilling process. 

Fracking a single oil or gas well can require tens of millions of gallons of water. According to its website, Pilot operates 126 disposal wells and more than 850 miles of water pipelines.

On Dec. 2, 2022, attorneys for the city of Midland protested the applications for five of the wells  with the Railroad Commission. Pilot was proposing to inject up to 24,900 barrels of produced water per day, per well, within 1,000 feet of Midland’s water wells, according to the city. 

The lawyers wrote that the city had completed 42 water wells in the T-Bar Ranch area  that provide between 30% and 35% of the city’s freshwater supply. 

“The City of Midland is entitled to protest as an affected person in order to protect its critical water supply and long-term investment of the water supply distribution system,” they wrote.

The Railroad Commission at first rejected Midland’s request for standing in the case. But after Blong appealed to the commissioners in June, the city was allowed to challenge the permits.

The City of Midland and its attorneys declined to comment on the pending case. 

A Railroad Commission spokesperson said that its permitting rules protect ground and freshwater and make sure that wells are properly constructed “to ensure that the fluid is confined to the proposed injection or disposal interval.” 

Neal of Pilot Water Solutions said that the proposed wells were designed with three strings of steel casing, which are each protected by cement to the surface. Pilot would also install wellhead automation to monitor for leaks and shut in injection if any leaks are detected.

“Pilot is continuing to do its part and working with the City of Midland and the surrounding communities to address any concerns they may have,” he said in a statement.

Neal said Pilot identified and studied all wellbores within a half-mile radius of the proposed disposal wells, including abandoned or plugged wells. He said the Railroad Commission verified “there were no concerns that any abandoned wells within a 1/4 mile radius were not adequately plugged.”

The Railroad Commission spokesperson did not confirm whether or not abandoned wells have been identified within a quarter mile radius of the proposed Pilot disposal wells but acknowledged any such wells must be “properly plugged.”

The administrative hearing for Midland’s challenge to Pilot’s permit applications is scheduled for Jan. 8-11 in Austin. Two Railroad Commission administrative judges will decide whether to deny or modify the permits or approve them as is.