SPE-170398-MS

Water: Regulatory and Community Impacts

Lauren Leatherby, National Oilwell Varco; Natalie Wagner, Misty Mountain Consulting; Lauren Grabski,
David Bonno, and David Justiniano, National Oilwell Varco

Copyright 2014, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Middle East Health, Safety, Environment & Sustainable Development Conference and Exhibition held in Doha,
Qatar, 2224 September 2014.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
As water conservation becomes an increasingly prevalent issue, both in the oilfield and in other industries,
many governments are creating new regulations to control the treatment, disposal, and storage of produced
water, as well as the regulations around water sourcing. As often happens with new regulatory require-
ments, the unintended consequences of the regulations can be sometimes beneficial, and sometimes worse
than the original problem they were designed to mitigate. The importance of investigating the effects of
regulatory requirements before implementation cannot be overstated.
This paper outlines several examples of the unintended consequences, both positive and negative, of
recent regulations designed to improve water conservation. Specifically, we review water storage and
treatment challenges set by Australian regulation before the large-scale development of coalbed methane.
In contrast, an overview of the regional rules, diverse water sources, and quality requirements
developed for the western US unconventionals boom is provided. Additional insights regarding water use
in the Middle East and long-term field development strategies for managing water for stimulation and
production are discussed.
Throughout, this paper investigates and compares, through case studies, how the International Standard
Organization (ISO) 14001 Environmental Management Standard can be effectively used to provide
guidance for appropriate regulations, while maintaining the quality and standards representative of the oil
and gas industry.

Introduction
Regulation surrounding water conservation and treatment has always been a consideration in the oil and
gas industry, but with the recent increase in hydraulic fracturing, the issue has risen to the forefront for
many companies. Key concerns and the corresponding regulations vary by country, and sometimes within
a given country. By understanding the existing regulations and the intent behind them, we can get a clearer
picture of how they affect the oil and gas industry and the general population. Further, by understanding
how certain regulations are applied in localized areas, lawmakers in other areas can plan accordingly,
learning from past successes and preventing future problems.
2 SPE-170398-MS

Water sourcing regulations

Many industries worldwide require large amounts of water for their daily operations, and the oil and gas
industry is among these. Drilling requires substantial amounts of water and is often performed in areas
where water is not readily abundant, making water sourcing regulations particularly important for oil and
gas companies. Over the years, many countries have developed regulations based on historic and expected
future uses of water. The United States and the European Union, in particular, have well-defined water
sourcing regulations, as outlined here. Historically, groundwater rights have been the basis for numerous
lawsuits, and specific regulations have been put in place to govern groundwater sources. Regulations
surrounding surface water sourcing differ from those governing the use of groundwater, but many of the
same considerations apply, particularly regarding rivers that run through multiple states and man-made
structures that divert water flow to other locations.
U.S. water sourcing regulations
In the United States, there are four different types of common law doctrines governing groundwater
sourcing. Most of these doctrines were developed more than a century ago and are not designed to address
the scale of water shortages as seen today (Baxtresser, 2010). Water allocation is governed at the state
level, with hugely differing legal doctrines developed largely as a result of varying freshwater supplies.
The first type of legal groundwater doctrine, the Doctrine of Capture, dictates landowners are permitted
to capture as much groundwater as they please (Baxtresser, 2010). Courts only attach liability in
circumstances of malicious withdrawals or pollution, but apart from that, a landowner can do anything
with the groundwater once it is captured. Because of the inefficient use that this doctrine encourages,
many states have abandoned this type of rule; however the Doctrine of Capture still persists in Texas,
Maine, and Connecticut. (Baxtresser, 2010)
Many states that have abandoned the Doctrine of Capture have instead adopted the second form of
groundwater governance, the American Rule, which is also known as the Reasonable Use Rule (Bax-
tresser, 2010). This doctrine allows unlimited extraction as long as the result does not damage other wells
or aquifer systems, and it typically provides priority to historical use, preventing new uses that interfere
with historical uses. The determination of who gets to use the water is decided by a court or regulatory
body and depends on the reasonableness of the desired use. Water rights are appropriated based on an
aquifers sustainable yield, and after that is reached, no further permits will be issued.
A third type of common law doctrine governing groundwater use is the Doctrine of Correlative Rights,
an arguably more equitable doctrine (Baxtresser, 2010). This doctrine requires that groundwater be shared
equally among all landowners, meaning that during a shortage, all landowners have equal right to a tracts
groundwater commensurate with their share of the tract.
The final type of groundwater appropriation rule is the Doctrine of Prior Appropriation. The Doctrine
of Prior Appropriation is the main common law doctrine governing surface water in the Western United
States, and some Western states, such as Idaho, North Dakota, New Mexico, Colorado, and California also
apply the rule to groundwater sourcing (Sax, 2006). The doctrine asserts that the rights to groundwater are
obtained by putting it to good use, have a specified point of diversion, can be lost for non-use, and can
be transferred as long as other water rights holders are not harmed (Sax, 2006). In essence, the first owner
to put the water to use has first rights to it.
A demonstration of both the positive and ill effects of groundwater regulation lies in the example of
Arizona. Arizona depends on groundwater to supply nearly 40% of the states annual water demand,
according to the Arizona Department of Water Resources.
Arizona previously abided by a form of the Prior Appropriation Doctrine of groundwater management,
which resulted in four decades of groundwater overpumping. The U.S. Geological Survey estimated that
groundwater levels in some parts of metropolitan Phoenix had dropped 220 feet from approximately 1940
to 1980 (McKinnon, 2009). As aquifers compacted, the ground sunk slowly or in abrupt sinkholes.
SPE-170398-MS 3

In 1980, Arizona Governor Bruce Babbitt signed the Groundwater Management Act into state law.
Water planning and regulation (except water quality) was governed by one state agency. The four areas
where groundwater overpumping was most significant were classified as Active Management Areas.
Shortly after its adoption it was called the most comprehensive groundwater code in the country and
perhaps the most important law in the history of the state (Staudenmaier, 2006).
After the 1980 implementation of the Groundwater Management Act, the water supply situation in the
Active Management Areas is considerably better that it was before the 1980 law (Staudenmaier, 2006).
In Arizona there are still supply concerns for the areas outside of the Active Management Areas, where
water use regulation is much less rigorous. However, the benefits of the act, in opposition to the Prior
Appropriation regulations, demonstrate the significant effects of water regulations on a population.
Another example of the effects of groundwater regulation lies in the San Pedro River Basin, Arizona.
As a result of more than 40 years of groundwater overdrafts and the environmental destruction that
ensued, a National Conservation Area was set up in 1988, putting authority of the area under the U.S.
Bureau of Land Management. The basins designation as a conservation area brought about even stricter
groundwater regulation than the regulations of the 1980 Groundwater Management Act.
Groundwater flow models show that groundwater discharge into the San Pedro River is only about
30% of levels prior to 1940 (Stromberg, 371387). Groundwater extraction increased sharply in the 1940s
for agricultural purposes and persisted until the area was designated a national conservation area in 1988,
after which pumpage rates for irrigation declined. Though this sharp decline in groundwater extraction
plateaued more than 25 years ago, effects of the extraction are still felt today.
The decline in groundwater levels was sufficient enough to convert the stream reach from perennial to
intermittent, stripping the river of much of its riverine and marsh communities (Stromberg, 371387).
Small changes in groundwater levels can have significant effects on the riparian environment, especially
if levels are near the threshold for vegetation change, as is the case with the San Pedro River. For example,
in the Northern part of the San Pedro Riparian National Conservation Area, the water table levels are at
a low threshold for survival of the Cottonwood and Willow tree breeds. A further small decline in the
water table could cause this environment to shift from the intermediate condition class to the dry condition
clas. (Stromberg, 371387).
Though the decline in groundwater levels has somewhat plateaued from the previously sharp decline,
a growing population in the area is also causing cones of groundwater decline. As regulators seek to
protect the area within the San Pedro Riparian National Conservation Area borders, groundwater pumping
beyond the borders continues to affect the regions groundwater supply and flow paths (Stromberg,
371387). The lagging effects of past pumping on groundwater flow paths and streamflow rates can
persist for centuries (Stromberg, 371387).
While surface water is more visible, ownership rights are not necessarily clearer. Diversion from
water-rich areas to arid regions for irrigation and other uses is very common in the U.S. One of the primary
examples of surface water diversion in the U.S. is the Hoover Dam, which primarily transfers water from
the Colorado River to California. Although the dam serves other purposes, almost one third of the power
generated is used to pump water to California, which leads the world in water consumption. While
beneficial to California, it is important to note that water diversion projects ultimately move water from
one ecosystem to another, rather than actually creating new water for consumption (Shiva, 2002).
Separate from the Hoover Dam, the Colorado River has a rich history in regulation. Local regulation
in Colorado has been heavily driven by competing uses for the rivers water, even before Colorado
became a state in 1876. The State Constitution uses the prior appropriation doctrine explained above.
Compared to other Western states, Colorado has many water sources, due to the rivers that begin in
Colorados mountain ranges. But despite the total annual volume of water available, Colorado still faces
seasonal shortages, as more than 60% of the annual water flow occurs during the late spring and early
summer months. This results in not only a shortage of water for local citizens in times of drought, but a
4 SPE-170398-MS

supply that may be unsustainable for future developments and is likely to cause numerous engineering and
legal challenges in the near and long term in regard to water storage, use and allocation. Even with the
seasonal shortages, Colorado is a net water exporter; the main stem of the Colorado River provides almost
five million acre-feet of water for other states, which is only half the total annual exported volume (Water
in Colorado, 2014). There are extensive water rights agreements between Colorado and neighboring
states, as well as specific definitions of what water is actually included in the river, and thereby regulated
through such agreements.

International water sourcing regulations

With several pieces of legislation dating back to the 1980s, groundwater sourcing law in the European
Union (EU) was collectively consolidated in 2000 with the establishment of the Water Framework
Directive (2000/60/EC). This main directive is a set of steps, guidelines, and regulations leading countries
toward a goal of sustainable and clean sources of ground and surface water by 2015. The Water
Framework Directive (WFD) is enforced by the European Commission, which directs member states in
the EU towards a cleaner aquatic environment through implementing specific tasks and procedures that
began in 2004. Procedures embodied by the Water Framework Directive include member states clearly
defining bodies of water that are in danger due to pollution, overdrawing of water sources, and other
harmful practices. Protected sources of water that are covered under sub-directives of the WFD must be
registered, while River Basin Management Plans were required by 2009. Essentially the WFD aims to
establish a program of measures that control groundwater extraction, discharges into the groundwater
source, and contamination of groundwater from pollutants.
While the WFD is a broader set of mandates, the Groundwater Directive (2006/118/EC) takes into
consideration the particular attributes of specific regional water sources. This directive thoroughly
establishes monitoring and protection, while also operating in sync with the WFD. The original piece of
legislation, Directive 80/68/EEC, was superseded by the Groundwater Directive in 2006. Under the
Groundwater Directive, Directive 2455/2001/EC lists thirty-three priority substances that are considered
harmful to aquatic life. This directive calls to prevent the use of these substances in relation to any kind
of dumping or discharge into groundwater supplies.
Several sub-directives, precursors to the Water Framework Directive and the Groundwater Directive,
are now encompassed under the two main legislations. The Nitrates Directive (96/676/EEC) established
in 1996, aimed to reduce pollution to groundwater caused by nitrates from agricultural developments.
Countries in the Southern European Union Member States (SEUMS) must measure and publish data
concerning water sources that are susceptible to nitrate levels greater than 50mg/L. The Urban Wastewater
Treatment Directive (91/271/EEC) established in 1991, is similar in form to the Nitrates Directive while
targeting nitrates released by urban and manufacturing projects instead. Numerous other directives exist
pursuant to the Water Framework Directive regarding such things as approved pesticides (Biocides
Directive 98/8/EC), and landfill waste (Landfill Directive 99/31/EC).
With competing demands on water sources, the refining side of the oil and gas industry also faces
challenges with reuse and wastewater minimization. Roughly 80 million barrels of petroleum are refined
into fuel everyday, and it takes an average of one to two barrels of water for each barrel of crude; currently
less than 1% of that water is recycled (Cope, 2012).
Between the 1950s and the fall of the Berlin Wall in 1989, Eastern Germany ceased to be the industrial
region that it had been. Since the fall of the wall, Germans have been using less water and the water table
has been rising (so far by about 0.5 meter or 1.5 feet). This is causing the basements and lower levels of
historic buildings to be flooded in numerous locations around town and leading to significant spending on
pumping the water (Water in Berlin, 2014).
SPE-170398-MS 5

In the Middle East, there has been increased interest in the use of alternative fuels to process and move
water for both domestic and oil and gas use. One example is in Saudi Arabia, where they are looking to
replace the fossil fuel used to run the water plant (Hoff, 2013).
Although the specifics vary by region, it is clear that water sourcing and access rights are a universal
concern.

Wastewater regulations
The history of federal regulation of water pollution leading up to the 1972 Clean Water Act can be divided
into four periods, beginning in 1899. The first period is the longest, but least active. It runs from the 1899
Rivers and Harbors Act (more commonly known as the Refuse Act), which prohibited the dumping of
refuse into navigable waters without permit until the enactment of the 1948 Federal Water Pollution
Control Act (Hines, 2012).
During the second period, spanning from the 1948 adoption until the enactment of the 1965 Water
Quality Act, interest grew in developing a meaningful federal role in water pollution. The 1965 Water
Quality Act, which issued water quality standards for interstate waterways, represented a much more
active federal role in overseeing the creation of water quality standards (Hines, 2012).
The third period is one of a quickly growing interest in environmentalism, during which many of
todays most important programs to protect and preserve environmental resources were first adopted. This
period runs from the 1965 Act to the 1972 Clean Water Act, which remains the primary federal law in
the United States that governs water pollution (Hines, 2012). During this third period, societys heightened
concern about environmental pollution also led to the establishment of the Environmental Protection
Agency (EPA) and the countrys first Earth Day in 1970. Two years after the establishment of the EPA
and Earth Day, the Clean Water Act was passed with the objective of maintaining the chemical, physical,
and biological integrity of the nations waters (Hines, 2012), bringing us into the fourth and current phase
of federal regulation of water pollution history.
The Clean Water Act protects what is described as the waters of the United States, a term that makes
protection of certain streams and wetlands confusing and complex. Governments and policymakers have
asked for clarity in what precisely comprises the waters of the United States (EPA, 2014).
For example, in March 2014, the EPA and the Corps of Engineers released a proposal for a revised
definition of waters of the United States and navigable waters. This would change the federal
jurisdiction for permitting under the Clean Water Act and affect nine different regulatory programs.
About 60% of stream mileage in the United States flows only seasonally or after rain, according to the
EPA, and about 117 million people, one in three Americans, get their drinking water from systems that
rely on such streams (EPA, 2014).
The proposed clarification would include seasonal and rain-dependent streams, wetlands near rivers
and streams, and other waters analyzed on a case-by-case basis, according to the EPA. It would add
tributaries and adjacencies to the Traditional Navigable Waters definition, expanding the regulation
(Whittecar, 2014). In a practical sense for the oil and gas industry, this means more stringent requirements
on where produced water can be discharged and could potentially affect rights to source water, particularly
in the Western U.S.
Opponents of the clarification claim it will expand the EPAs reach, perhaps bringing about the need
for additional permits, stifling economic growth (Baum, 2014). Advocates of the clarification say it will
not expand the reach of the Clean Water Act, but it will merely provide a much-needed clarification to
facilitate the laws interpretation to continue to keep U.S. waters of the highest quality.
While it is still too early to tell if there will be any effect on farmers as the clarifications have not yet
gone into effect, the waters of the United States clarification represents a prime example of the necessity
of analyzi ng every angle of a given policy before implementation.
6 SPE-170398-MS

In stark contrast with complaints of overreaching legislation are the effects of little regulations or
regulations that are not enforced at all.
Due to weak governance and poor enforcement of regulation in the Niger Delta of Nigeria, devastating
oil spills in the delta over the past five decades will cost $1 billion to rectify and require up to 30 years
to clean up, according to a 2011 report from the United Nations Environmental Programme. The
three-year investigation found heavy contamination of surface and groundwater from spills of up to 40
years ago, soil contamination five meters deep, and hydrocarbon contamination more than 1,000 times the
level allowed by Nigerian drinking water standards, among other things (Environmental, 2011). The spills
have been linked to both negligence on the part of operators working in the area and of pirates hacking
into pipelines, draining crude oil, and refining it deep within the jungle (Vidal, 2011) (Doyle, 2013).
Successful regulations encourage economic growth while shielding the environment from disaster.
Another example of the ill effects of lacking water regulation comes from India. In much of India,
where once mangrove forests existed, roads and aquaculture ponds have taken over (Shiva, 2002). A
movement in the 1990s brought about shrimp farming in existing mangrove forests. Now that shrimp
farms have taken over mangrove forests, one of the results is reduced protection from storm surges and
coastal erosion (Shiva, 2002). Better regulation with the environment in mind could have prevented this
issue.

Effluent Limitation Guidelines in United States

The Effluent Limitation Guidelines (ELGs) for Oil & Gas Extraction Point Source Category (40 CFR 435,
1996, EPA) were developed in 1996 to better enable the National Pollutant Discharge Elimination System
(NPDES), created by the Clean Water Act in 1977, to regulate the related discharges associated with oil
and gas exploration, development, and production. The ELGs are divided into three categories: offshore,
coastal, and onshore. The intent was to review all the areas that were currently involved in oil and gas
activities, so the offshore and coastal categories are further divided into three regions: California, the Gulf
of Mexico, and Alaska.
Historically, the EPA has often deferred to industry organizations, such as The American Petroleum
Institute (API), to determine the standards and accepted environmental practices for their particular
industry. However, in recent years, the EPA has taken a more active role in determining certain
regulations. In 2013, API and other related organizations sent a letter to the EPA to protest the new ELGs
for shale gas, explaining that the existing measures are sufficient and the EPA had no foundation for
changing the legal requirements, based on new technology that is not widely used (Whittecar, 2014).

Hydraulic fracturing wastewater regulations

Historically, the oil and gas industry in the United States has been exempt from a number of EPA
regulations relating to the disposal of hazardous waste (Pierce, 2014). As part of the oil and gas industry,
the hydraulic fracturing, or fracking, industry has fallen under many of these exemptions. Many other
heavy industries are regulated by the federal government, but fracturing regulations vary by state
(Warner, 2013). Although hydraulic fracturing has been around for many decades, it has only received
strong media attention in recent years, primarily due to the recent focus on the shale plays across the
country.
Over the half-century process of hydraulic fracturing development and the evolution of the oil and gas
industry (Kemp, 2014), process improvement and treatment in downstream and extraction processes are
available, but not often explored. In most cases, some parts of waste streams can become sources of value
or revenue, particularly when enhanced oil recovery activities involve contention over a permitted
discharge, or when a parameter of concern or pollutant is viewed as a commodity.
The risk of water pollution is a focal point for critics. Many of the chemicals used in the process are
not regulated under the U.S. Safe Drinking Water Act (Vidic, 2013) and there are exemptions from
SPE-170398-MS 7

disclosing chemical use under the Emergency Planning and Community Right to Know Act, due to
companies claims of proprietary chemical combinations (Warner, 2013).
One of the biggest regulatory issues facing oil and gas companies today is how to handle produced
water, the water that comes out of the ground when developing an oil or gas well. Land activities are not
allowed any discharge of any oilfield waste stream (40 CFR 435), hence the current momentum in reuse
and processing of this water. Produced water is the largest byproduct stream of oil and gas production.
Historically, this water was considered waste, but more recently drilling companies are reusing it in other
wells. In Texas, prior to September 2013, produced water was not allowed to be transported between
producing areas. However, a change in regulation by the Texas Railroad Commission now allows
produced water to be transported between shale plays and other potential drilling locations (Pierce, 2014).
Companies have started to view this byproduct as a valuable resource, rather than a waste. New
technologies have been developed to allow for reuse and, where reuse is not feasible, treatment is done
to make the water safe for discharge or injection. There are essentially three options available for produced
water: minimization, reuse (treatment to a level for use in other operations or for other municipal
purposes), and injection once the water cannot be used by the other methods (Management, 2011).
Critics of hydraulic fracturing claim the process is responsible for air and water pollution, blowouts,
earthquakes, and gas leak explosions. Some claim that fracturing causes methane to leak upward through
rock layers and contaminate drinking water. However, many areas, particularly in Pennsylvania and West
Virginia, had methane in their water before hydraulic fracturing began on a wide scale (Ehrenberg, 2012),
and there is no baseline data available on the methane content of the water (Vidic, 2013). Pennsylvania
has enacted recent requirements that include a pre-activity assessment, reports of impacts during activities,
and a post-activity report with additional requirements to restore the drillsite to its previous conditions
(Pennsylvania, 2014).
Proponents argue that hydraulic fracturing itself is actually a very controlled process that does not
cause the above issues. Studies, such as the one performed by the Arkansas Geological Survey in 2010
and 2011, have shown that the link to earthquakes and increased seismic activity is actually tied to the
injection wells used for water disposal after the fracturing process is completed (Ausbrooks, 2012). The
requirement for injection, as established by 40 CFR 435, has lead to the increased use of licensed and
permitted disposal wells or underground injection wells. This increase in injection is mostly of concern
in areas of unconventional development: Pennsylvania, Oklahoma, North Dakota, and Colorado, where
there are not many licensed wells available for use. In 2007, 98% of produced water was injected, with
58% used for water flooding and 39% injected for disposal (Management, 2011). Injection wells can
sometimes hit older unmarked wells that were not properly plugged, which can potentially trigger an
earthquake. The use of seismic monitoring in determining the location of disposal wells could greatly
reduce the risk of earthquakes related to these wells (Ehrenberg, 2012).

Coal seam methane gas wastewater regulations

In Australia, unconventional coal seam methane gas (CSMG) is being produced in high quantities in
addition to conventional oil and gas drilling. Roughly, 90% of Australias onshore proven and probable
petroleum reserves are in the form of CSMG, with most of that being in the Surat Basin (61%) and Bowen
Basin (27%). Coal seam gas in Australia is wet (when compared to coal seam gas in Canada), which
requires separation of the water from the gas.
In 2010, Australias produced water volume was estimated at 8.7 billion gallons per year, with 40%
from unconventional sources. It is expected that this volume will increase to 80 billion gallons per year
(more than half the volume of annual groundwater extraction in Queensland), with 97% from unconven-
tionals. Most of the increase in unconventionals is from CSMG production in Queensland and New South
Wales (RPS, 2011).
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Table 1Possible beneficial use options for co-produced water

Beneficial use Description

Irrigation Irrigation of agricultural or forestry crops with co-produced water

Livestock watering Co-produced water used for stock consumption
Industrial use Industrial uses of co-produced water (e.g. coal washing, drilling
activities, dust control, enhanced oil recovery, fire protection,
slurry piping, cooling water, plant and vehicle washing)
Impoundments Water storages for co-produced water for various uses (e.g. shallow
aquifer recharge, fisheries, recreation, aesthetic purposes, livestock
or wildlife watering)
Water supply Potable water supplies supplemented with co-produced water
Aquifer storage and recovery Storage of co-produced water in aquifers forfuture recovery
Aquifer recharge Recharge of depleted aquifers using co-produced water

Water from CSMG wells tends to be of poor quality, characterized by high salinity, high sodium
adsorption rations (SAR), and the presence of contaminants. Water quality and volume often determine
whether and how produced water is used, how it is treated, and where it can be discharged (Wagner,
2012).
Australia has taken a slightly different approach to looking at produced water, as the government is
determining potential beneficial uses for produced water before the development of unconventional
resources has fully matured. This proactive approach will likely be beneficial in the long term (Wagner,
2012).
Possible beneficial uses for produced water, as can be seen in Table 1, include irrigation, livestock
watering, industrial use, impoundments, water supply, aquifer storage and recovery, and aquifer recharge
(not all currently used). Possible disposal options include deep injection into non-potable water reservoirs,
the direct discharge to land surface or direct surface water discharge, and impoundments (not all currently
used). Reinjection is used in the Cooper and Otway basins to maintain reservoir pressure (after pretreating
water to a suitable standard) (RPS, 2011)(Wagner, 2012).
Produced water has a range of options for beneficial use, as demonstrated in the Powder River Basin,
Wyoming. In addition to the aforementioned options for beneficial water use, a possibility exists that
would allow certain CSMG water to offset the effects of drought on water management and the ecosystem
(such as sustaining waterways and wetlands) in dry areas like the Eagle Ford, Texas and Australia, where
water resources are often limited and droughts are common. Currently, Australia is pursuing beneficial use
options of produced water. Table 2 shows various uses and basins for reference (RPS, 2011) (Wagner,
2012).
Tables 1 and 2: Possible and current beneficial uses of co-produced water in Australia (Wagner,
2012).
Deepwater wastewater regulations
Offshore, a number of legislative entities regulate the marine environment. In the European Union, the
OSPAR convention, which began in 1972 with the Oslo Accord against Dumping and managed by the
OSPAR commission, manages the maritime quality and welfare of the Northeast Atlantic Ocean. In
monitoring the level of pollution in the area, the Northeast Atlantic Environment Strategy was established
to combat such pollution and put tighter restrictions on wastewater discharge from several oil facilities.
The strategy consisted of two parts: the Ecosystem Approach and an accumulation of smaller strategies,
each with a specific agenda to tackle harmful dumping (OSPAR, 2010).
A more recent change in offshore regulation came about in 2012. The OSPAR Recommendation
2012/5 is a risk-based approach in managing produced water discharge more meticulously. This risk-
based approach will affect 100 installations with produced water discharge permits in the UK Continental
Shelf. The approach is an assessment conducted at each facility in correspondence with the Department
SPE-170398-MS 9

Table 2Current beneficial uses of co-produced water in Australia (2010)

Petroleum
Beneficial use Description Resource Class Basin

Irrigation Irrigation of agricultural or forestry crops with Conventional and Perth (WA), Surat (Old),
co-produced water unconventional Bowen (Qld),
Gloucester (NSW)
Livestock watering Co-produced water used for stock water at cattle Unconventional Surat (Qld)
feedlot
Industrial use Onsite use of co-produced water for construction, Conventional and Numerous
operations and maintenance, and drilling unconventional
activities
Enhanced oil recovery trials Conventional Cooper-Eromanga (SA)
Maintenance of reservoir pressure using co- Conventional Perth (WA), Otway
produced water (Victoria)
Power station use for cooling and steam raising Unconventional Surat (Old)
Coal washing Unconventional Surat (Old),

of Energy and Climate Change. The scheduled assessments for the number of facilities in the UKCS will
span from 2014 2018, while the assessments themselves will be evaluated every five years for accuracy
and legitimacy. The RBA process is as follows: a bi-annual sampling of the facilitys chemicals used in
drilling fluid and its wastewater discharge are taken. The discharge then undergoes a series of tests to
measure the toxicity. The chemicals whole effluent toxicity is measured at 500m below the surface of the
ocean using the dilution factor to gauge the effect or harm the chemical could place on the surrounding
environment. The next test is identical; however, the dispersion model is used in place of the dilution
factor. The chemicals are characterized, and if no harm is caused by using said chemicals, the facility
passes and keeps their OPPC permit. The RBA assessment enforces stricter guidelines to oil installations
in the UK, further preserving marine and human health (Taylor, 2013).
Oil-based drilling fluids were previously the main source of oil discharge to the sea until their use was
banned in 1992 (OSPAR, 2010). Currently there is zero tolerance for the discharge of oil-contaminated
cuttings in Europe, and all traces of oil must be removed. Although the amount of produced water and
displacement water discharged is steadily increasing in the North Sea, the elevated cost of dumping
oil-based mud has led to a decline in the total quantity of dispersed oil discharged to the sea (OSPAR,
2010).
Similarly, the offshore and coastal discharging of oil-based mud-contaminated cuttings is also not
allowed in U.S. waters. The general permits for wastewater discharge in federal waters off the coast of
California (NPDES General Permit for Oil and Gas Activities, CA 280000) and the Gulf of Mexico
(GOM) (NPDES General Permit for Oil and Gas Activities: Western Portion of the Outer Continental
Shelf of the Gulf of Mexico, GMG290000) cover all oil and gas discharges, with produced water and
drilling muds/cuttings allowed to be discharged with limits (40 CFR 435.13). For activities in coastal
waters (three miles or less from shore), produced water, mud and cuttings are not allowed to be discharged
and must be taken to shore and processed or re-injected (NPDES General Permit TXG330000 and 40 CFR
435.43).
Comparatively, Alaskan coastal waters are exempted, and produced water and drilling muds/cuttings
can be discharged, with limits similar to those in federal waters. The exemption was based on technical
and economic challenges that were presented at the time of development. (40CFR435, Subpart A). The
limits on discharges in Coastal Cook Inlet and U.S. Federal waters are similar to those in the North Sea
(OSPAR, 2000) (Bakke, 2013).
To bring the produced water discharges into context of annual production and state spending, Table
3 below shows the ranking of the top US oil and gas producing states. Cook Inlet, Alaska, produces in
10 SPE-170398-MS

Table 3State Total Energy Rankings, as of 2011. From Energy Information Administration

one year what the rest of the US produces in a day. Alaska overall produces in a year roughly 2% of total
U.S. production (EIA).
While changing water regulation can present a challenge for some companies, it also serves as an
opportunity for the development of new technology. For instance, a mobile water treatment system takes
some of the pressure off with an on-location solution for treating and reusing precious water resources,
managing frac flowback, slop water and produced water. Such a system is designed to process up to
10,000 bbl/day of liquid waste in a small-footprint configuration. Because it relies on vibration, mem-
branes used for separation remain much cleaner than standard filtration systems, continually keeping the
path clear for unrestricted flow-through of proportionally larger fluid volumes.

The ISO 14001 Standard

In addition to government-enforced water regulation, there also exist voluntary systems of environmental
management, such as the ISO 14001 standard, that can be used by any organization regardless of its
activity or sector, including oil and gas companies. These standards can help companies comply with
existing regulations, and the more that companies voluntarily set their own environmental standards, the
greater the likelihood that further water regulations with negative community impacts will be avoided. The
ISO 14001 standard sets out the criteria for an environmental management system. While it doesnt state
specific requirements for environmental performance, it provides a framework that a company or
organization can follow to set up an effective environmental management system.
The essence of the ISO 14001 standard requires an organization to set goals, track progress towards
goals, and engage colleagues to be active participants in achieving the goals and sharing updates on
progress. Once a goal is obtained, the organization will then re-assess and set new goals, with emphasis
on managing time and resources within the system to track progress towards reaching new goals. [ISO
14001:2004] specifies requirements for an environmental management system to enable an organization
to develop and implement a policy and objectives which take into account legal requirements and
information about significant environmental aspects. It should be noted that [ISO 14001:2004] does not
establish absolute requirements for environmental performance beyond the commitments in the environ-
mental policy, to comply with applicable legal requirements and with other requirements to which the
organization subscribes, prevention of pollution and to continual improvement. To achieve environmental
objectives, the environmental management system can encourage organizations to consider implementa-
SPE-170398-MS 11

tion of the best available techniques, where appropriate and where economically viable and fully take into
account the cost-effectiveness of such techniques (Plus 14000, 2004, ISO).

Conclusion
While, in general, water regulations are needed to safeguard communities and prevent environmental
disaster, the importance of investigating the effects of regulatory requirements before implementation
cannot be overstated. The negative effects of well-intending water regulation can be far-reaching and
detrimental if not analyzed before implementation, as is evident from examples around the globe. Even
regulatory changes that seem relatively small can have an unexpected impact.
Changing regulations can be a challenge for drilling companies, but also provide an opportunity for
companies providing treatment solutions for discharged water, as certain wastewater technologies can
help companies comply with wastewater regulations.
Metrics such as the International Standard Organization (ISO) 14001 Environmental Management
Standard represent an opportunity to effectively guide appropriate companys environmental standards as
they navigate water regulations. The essence of the ISO 14001 standard, which includes goal-setting,
tracking progress, engagement, and reassessment, can serve as a good model for the creation of effective
environmental standards.

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