Is It Legal For Oil Companies To Take Water From Surface Owners?
The Eagle Ford shale is one of the newest oil and gas discoveries in the U.S. In fact, it has been called the largest in over forty years. To drill and complete oil and gas wells in the Eagle Ford shale requires massive amounts of water. According to Chesapeake Energy, over six million gallons of water are needed to drill and complete one Eagle Ford shale well, which involves hydraulic fracturing. Other studies have shown even higher amounts due to multi – stage frac jobs. Eagle Ford shale water sales by landowners is becoming commonplace these days. Sales of either surface water or groundwater can be a great financial windfall for those landowners who don’t own Eagle Ford shale mineral rights. In Texas, even if the landowner does not own the mineral rights, they generally have the right to “capture” the water beneath their land. This means they do “own” so to speak, water beneath their land. On the other hand, a “reasonable amount of groundwater” can be used by the oil and gas company doing the drilling, but only on that property. This is what I was told by an attorney at the Texas Railroad Commission, the agency that regulates oil and gas drilling in the Eagle Ford shale and the rest of Texas. The oil company cannot drill a water well and use any of that water for other wells not on the lease. Before signing an oil and gas lease, consult with an attorney and see if you may be able to add a clause to your lease specifying that once they are done with drilling on your land you must be compensated for any groundwater pumped out of the well and used elsewhere. You could stand to make some money, but if your price per barrel is too high the oil company will simply drill another well on the lease where they need the water.
Below is a summary of Texas water law, in a nutshell, from a Texas A&M University report.
“Generally, Texas groundwater belongs to the landowner. Groundwater is governed by the rule of capture, which grants landowners the right to capture the water beneath their property. The landowners do not own the water but have a right only to pump and capture whatever water is available, regardless of the effects of that pumping on neighboring wells.”
As for surface water, ranchers and farmers can profit by selling surface water to oil companies drilling for Eagle Ford shale oil and gas, either on their property, or nearby, as long as it does not come from a “waterway” or stream. Water that flows through creeks or streams is owned by the State of Texas. If you are the surface owner of land in South Texas where Eagle Ford shale drilling is occurring, be aware that typical well spacing is anywhere from one well ever 120 acres to one every 80 acres. Each well may use several million gallons of water during the drilling and completion phases. Consult with an oil and gas attorney before making any deals with oil companies to sell them groundwater or surface water. You may also contact the Texas Railroad Commission at the number below for a clarification of the laws regarding “reasonable use” of groundwater by an oil company. In the past, South Texas landowners were simply happy to get a good, deep Carrizo aquifer water well as a bonus from oil and gas drilling. Now with Eagle Ford shale drilling requiring so much water, and the demands of growing cities, the water itself may someday be more valuable than oil and gas.
Eagle Ford Shale Surface Water Sales
Surface water that lies in farm ponds or “tanks” as they are called in South Texas, belongs to the landowner. Some landowners in the Eagle Ford shale drilling area are selling this valuable water to oil and gas companies. (Note: The recent drought has almost completely depleted all sources of surface water in South Texas). To find out how much to charge, consult with neighboring landowners and an oil and gas attorney in your area.
How Dangerous Is Texas Water Law?
While water sales in the Eagle Ford shale can benefit a landowner greatly, the fact that Texas courts have refused to adopt the law of “reasonable use” used throughout the rest of the United States is disturbing. Special water districts now have greater powers, such as the case of regulating water use by a fish farm that used millions of gallons of water from the Edwards aquifer near San Antonio. The Carrizo Wilcox aquifer, which lies under a large part of the Eagle Ford shale is under the jurisdiction of several water districts such as the Wintergarden GCD, Evergreen GCD, etc. So far these water districts do not heavily regulate landowner use of well water or its sale to other parties. The law of the “biggest pump”, as Texas water law has been called, means that one landowner may drill a giant well and sell as much water as they please to whomever they choose. This may deplete other property owner’s wells, causing them to have to keep lowering their pumps, or leaving their wells dry. There will most likely be some major lawsuits and possibly changes in Texas water law as a result of Eagle Ford shale drilling and water demands from cities such as San Antonio.
Below is a map of South Texas water districts.
To contact the Texas Railroad Commission call 877-228-5740 To contact the Texas Water Development Board call 512 – 463-7847
For more one use of water for Eagle Ford shale well drilling and disposal of frac water, see: Eagle Ford shale frac water disposal.