A state bill that will make it easier for oil and gas companies to use “produced,” or recycled, water for their operations won the unanimous approval of the House of Representatives Friday and has a few days to be considered by the New Mexico Senate before the 2019 session closes.
The “Produced Water Act” is being watched closely by oil and gas producers and agricultural industry members as the Senate Judiciary Committee considers amendments. This year’s session ends Saturday afternoon.
“We are monitoring it now because it may be amended,” said Jim Winchester, executive director of the Independent Petroleum Producers of New Mexico, “but conceptually, we supported it as it was passed by the House.”
A few provisions of the bill, sponsored by Reps. Nathan Small (D-District 36) and Rod Montoya (R-District 1), include the invalidation of any contract after July 1 that prohibits the use of produced water by oil-and-gas well operators and the clarification of which state agencies have jurisdiction over produced water on various sites.
The current version of the bill gives the New Mexico Energy, Minerals and Natural Resources Department authority over produced water on oil and gas sites, while the New Mexico Environment Department would regulate produced water used in other industries or for other purposes.
Winchester estimated that 40 percent of southeastern New Mexico oil and gas operators already use produced water, but he said the House bill creates clear “pathways” regarding the use and ownership of produced water and likely would encourage more facilities to be developed to distribute or recycle produced water.
Matthew Gonzales, government affairs director for the New Mexico Farm and Livestock Bureau, said the group, as well as some related agricultural and conservation groups he has talked with, supported the House version of the bill because it would provide more fresh water to agricultural producers.
“We see it as an opportunity, one, to clean up produced water in that area, which we see as being a benefit to the state,” he said. “A lot of our ranchers and farmers rely on fresh water to put on their crops, so if you have these oil and gas companies that are using more of the produced water, that will free up more of the fresh water for crops.”
He added that at some point in the future, if technology and infrastructure regarding produced water improves, then agricultural lands might be able to use the water for farming and ranching purposes, something he said is not possible now due to both lack of pipelines or storage and distribution facilities and because treatment of the water has not reached the point where produced water is a viable option for agriculture in New Mexico.
Both the Energy Department and the Environment Department reported to the Legislative Finance Committee that the bill would create considerably more demands on their agencies, with more employees or budgetary resources needed in coming years if the bill passes. However, the Fiscal Impact Report produced by the Legislative Finance Committee did not quantify what the state budget implications might be.
A couple of other bills also have been introduced in the Senate, although they have not yet reached the Senate floor by press time, that would give the state Environment Department authority over most aspects of produced water.
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at email@example.com.