Under rules adopted by the Texas Railroad Commission (Commission) on March 26, 2013, effective April 15, 2013, Texas hydraulic fracturing operators may recycle fracturing fluids on their own leased or owned land used for fracturing activities or may transfer the fluids for recycling on the land of another operator without a permit. According to the adopting press release issued by the Commission, the amended Rule § 3.8 of the Texas Oil and Gas Division regulations governing this “non-commercial fluid recycling,” as it is defined under the rule, was designed to encourage Texas operators to “continue their efforts at conserving water used in the hydraulic fracturing process for oil and gas wells.”
The key operative provisions of amended Rule § 3.8 enable on-site, permit-free storage of fluids awaiting recycling or treated fluids in “non-commercial fluid recycling pits,” subject to various pit construction, use, maintenance and operation requirements. The Commission also adopted a binary approach to the permissible reuse of recycled fluids. Recycled fluids may be reused without a Commission permit in (i) oil and gas operations and (ii) non-oilfield related uses other than discharge into the state’s waters if the use occurs pursuant to another state or federal permit or the fluid is in the form of distilled water.
In addition, the Commission adopted parallel amendments to the commercial fluid recycling permitting rules. Those revisions clarify the application requirements and expand the two existing permit categories to five, with a view toward more accurately facilitating the range of recycling practices utilized in the industry.
While the Commission notes that hydraulic fracturing operations and mining together only account for one percent of fresh water use in Texas, Commissioners quoted in the press release acknowledge that water use has been a primary concern, and that the aim of the new rules is to encourage oil and gas operators to recycle by removing regulatory hurdles. But resource conservation is not the only incentive to expand the practice of fluid recycling. The streamlined regulatory requirements may better position oil and gas outfits to reap significant cost savings from reduced water use. Considering the often steep expense associated with fresh water and fluid disposal transportation, an energy analyst quoted in a recent Wall Street Journal article predicts that fluids recycling has the potential to be a multi-billion dollar industry.
As the political and regulatory environment continues its shift toward natural resource protection and use constraints, other states may follow Texas’ lead in adopting pro-recycling regulations. This blog will continue to monitor the states’ efforts in this space.
