The Wyoming Oil and Gas Conservation Commission announced Monday it will update the procedural rules regulating underground disposal wells used by oil and gas operators to pitch produced water. The amendments come in response to recent action taken by the Wyoming Legislature.
A new law, Senate Enrolled Act 0012, passed during the Legislature’s 2020 budget session, endowed the commission with authority to regulate both commercial and non-commercial underground disposal wells. These are the wells used to collect oil field waste, like produced water.
Historically, the commission had the authority to regulate oil and gas disposal wells, but only non-commercial wells. Non-commercial wells are disposal wells owned and managed by oil and gas operators for their own benefit. Commercial wells are defined by the commission as wells “operated primarily for profit.”
The change made in state statute earlier this year was prompted by the oil and gas commission in May 2019.
Once adopted, the Oil and Gas Conservation Commission’s updated procedures will likely increase efficiency in the management of produced water for industry and regulators, while also reducing the use of injection wells. What’s more, it moves Wyoming’s regulations more in line with other states, the commission said.
Unlike Wyoming, the federal Safe Drinking Water Act does not distinguish between a commercial and non-commercial well.
The state’s statute distinguishing the two types of wells limited the oil and gas commission. It could only regulate non-commercial disposal wells. Commercial wells required an additional class 1 permit from the Department of Environmental Quality.
Why does this matter?
State regulators proposed the change because some operators can’t justify the cost of permitting and managing their own non-commercial disposal well to discard waste.
Oil and gas operators produce massive amounts of hazardous, briny water — to the tune of 2.4 billion gallons a day nationwide.
A company with produced water on its hands may have to look toward commercial wells for disposal, if it doesn’t own its own well. To do so, it often must travel longer distances, even if operators with non-commercial disposal wells are nearby.
That’s because, though an operator with its own disposal well could dispose of its waste in that non-commercial well, other companies could not.
The recent changes enacted by state lawmakers removes that restriction. It enables third parties, or midstream water companies, to operate a commercial well that accepts produced water or other oil field waste, brought by operators.
More specifically, the revisions proposed by the commission on Monday would broaden the definitions of a class 2 disposal wells, to include non-commercial and commercial, along with the definition of water retention pits. The amendments also add bonding requirements for these wells.
Comments on the proposed changes will be accepted until Oct. 5. The Oil and Gas Conservation Commission will then consider adopting the amendments at 9 a.m. on Oct. 13 during its monthly hearing.
Production still low
This comes as the oil and gas commission also released updated statistics on the amount of oil and gas produced in the state in May.
Wyoming operators produced just over 5 million barrels of oil in May, down 30% from the month before, and over 40% less than the same time last year, according to a new supervisor report published Tuesday.
Natural gas output stayed steady into May with 121.4 million Mcf produced, down just 4% from April, according to Supervisor Mark Watson. The continued spread of the COVID-19 pandemic and less demand for fuel has severely constricted the industry.
This week, the total rig count has inched back up to one rig, after dipping briefly to zero for only the second time since 1884. Last year at this time, the rig count was at 36 oil and gas rigs.
Follow the latest on Wyoming’s energy industry at @camillereports