In the early 1980s, it wasn’t so uncommon for a visitor to Midland, Texas, to saunter off his private jet and into a Rolls Royce dealership. Eight Midland oil barons made it onto Forbes’ list of the 400 wealthiest Americans, “an amazing statistic considering that the city’s population was only 70,000,” notes Texas Monthly writer Skip Hollandsworth.
It was the height of the oil boom in the Permian Basin, a geologic formation that underlies southeastern New Mexico and West Texas. The Permian was a place where newly drilled oil wells spurted into the sky, producing 600 or more barrels of oil a day. But by 1983, the 10-year energy crisis had ended, Saudi Arabia amped up production and the price of oil dropped. West Texas emptied out, and since then, oil production in the Permian has sputtered.
Now, thanks to horizontal drilling and hydraulic fracturing – the same technology that turned quiet western North Dakota towns into congested cities teeming with roughnecks – the Permian is on its way to another boom. The region’s aging, under-producing vertical rigs are being replaced by new, horizontal drilling operations that can suck crude from hard to reach places.
In the past five years, horizontal drilling in the Permian has exploded: the number of rigs has increased fivefold. Since 2011 alone, companies have drilled over 9,300 new wells. The federal Energy Information Administration expects Permian oil production to surge to over 1.3 million barrels per day in 2014, from just 800,000 barrels in 2007. The basin is now the country’s largest oil producer.
Water is one of the key ingredients facilitating the boom. In the Permian Basin, like many other oil and gas producing regions, water is scarce and over allocated. A new report by Ceres, a Boston-based environmental non-profit focused on sustainable investing and business, found that more than 70 percent of the Permian’s oil wells are in areas of extreme water stress, which means over 80 percent of surface water and shallow groundwater is already allocated.
In the Permian, 1.1 million gallons are needed to frack each well – which isn’t much compared to other parts of the country (wells in the Bakken use twice as much, and in Texas’ Eagle Ford Shale each well averages over 4.4 million gallons). But the sheer number of wells in the Permian means the gallons add up, and with more wells biting into the shale every day, Ceres projects water use in the Permian to double by 2020.
Only two percent of fracking water is recycled in the Permian, says Brooke Barton, the water program manager at Ceres. That’s because Texas, like 32 other states, gives companies a cheaper, easier solution: injecting wastewater into a deep underground well.
“Some companies have tried to do recycling, but they stopped doing it because it costs more money than using a disposal well,” says JP Nicot, a research scientist who studies water consumption in the oil and gas industry for the Bureau of Economic Geology at University of Texas-Austin. “If it’s not sustainable, they’ll stop doing it.”
Still, there is at least one oil company operating in the Permian that’s trying to cut its water use. Apache Corporation recycles fracking water and supplements it with brackish water pumped from aquifers, reducing its consumption of fresh groundwater. But there’s a catch: in some parts of the Permian Basin, there is no fresh water to be found. “Using brackish water looks good on paper, but there is no other choice,” Nicot says. “They could use fresh water, but they’d have to ship it from 15 miles away. So it doesn’t make sense.”
And while using brackish water for fracking may seem like a conservation measure now, that could change. Parched Texas cities like Odessa, Dell City and Abilene are increasingly interested in tapping brackish aquifers for drinking water by building desalination plants. That could lead to competition between industry and residential water users down the line. Water has yet to become a limiting factor for Permian Basin oil companies, Nicot says, but they’re concerned about the future.
As writer Christi Stark puts it in an article for The Permian Basin Petroleum Association Magazine, “Whether it is finding new sources of water, treating and re-using flowback or produced water, or practicing desalination of brackish water – or all of the above – one thing is for certain: Water is the key to the future of the oil and gas industry in the Permian Basin, not to mention the key to the future of West Texas itself.”
The next batch of Permian Basin millionaires may still make their money on oil, but this time, they’ll need to be innovative with water.
Emily Guerin is a correspondent for High Country News. She tweets @guerinemily.