Oil & Gas News

New Mexico Seeks $500MM to Buy Oil & Gas Wastewater

New Mexico, Wastewater, Oil, Gas

By: Adrian Hedden – Carlsbad Current Argus – About half a billion dollars could fund a reserve of treated oilfield wastewater if a proposal from New Mexico Gov. Michelle Lujan Grisham is approved by lawmakers in the legislative session upcoming in January.

Lujan Grisham on Tuesday announced the creation of a “strategic” water supply during the COP 28 United Nations Climate Change Conference, that would be used to provide water to various “clean” energy projects like storing renewable energy or building electric vehicles.

In a news release, Lujan Grisham’s office also listed developing hydrogen, building microchips, and generating wind turbines and solar panels as potential uses for the water.

She said she would ask the Legislature for $250 million to fund the initiative in its upcoming session, and another $250 million in the 2025 session.

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The move was intended to address increasingly scarce water supplies in New Mexico, Lujan Grisham said, by using treated produced water – a byproduct of oil and gas production.

Produced water is a combination of water brought to the surface with oil and gas from underground shale formations, and flowback from drilling fluids used in hydraulic fracturing or “fracking.” It’s high in brine and other toxic materials, unfit for human consumption. Up to 10 barrels of this liquid can be generated per barrel of oil in the Permian Basin.

“In arid states like ours, every drop counts. A warming climate throws that fact into sharper relief every day,” Lujan Grisham said. “This is innovation in action: We’re leveraging the private sector to strengthen our climate resiliency and protect our precious freshwater resources.”

The State of New Mexico was researching ways the wastewater could be treated and reused in other industries, instead of the traditional act of disposing of it underground via injection wells. The research was ongoing by the New Mexico Produced Water Research Consortium, a partnership between the New Mexico Environment Department and New Mexico State University.

A public comment period on standards devised by the consortium concluded in November, and NMED would next petition the Environmental Improvement Board to begin a rulemaking process.

The funds requested by Lujan Grisham would be used by the State to buy produced water from companies to build up the supply, with the NMED planning to issue guidance for those seeking such contracts in 2024.

Contractors will receive assurance that New Mexico will buy their water and can then begin generating capital of their own for the projects.

The State will then make the water available for use in clean energy projects.

Mineral Rights, Sell Mineral Rights“While New Mexico is doing everything we can to reduce climate-warming emissions, it is equally important to focus on water resiliency,” said NMED Cabinet Secretary James Kenney. “Water reuse safeguards freshwater for communities while offering opportunities for clean energy expansion and green manufacturing.”

Up to 4 billion acre-feet (AF) of water could sit beneath New Mexico, according to the State’s estimates, and about 2 billion barrels – about 42 gallons a barrel – of produced water was generated by oil and gas production in 2022. Officials said 1.2 billion barrels were disposed of through injection, and that diverting 3 percent of that to hydrogen production could power up to 2 million homes annually.

However, environmentalists argued against the State of New Mexico’s efforts to prop up the hydrogen industry, contending producing the element from energy development would still amount to pollution. This is because most of U.S. hydrogen production involves the use of extracted natural gas, which some worried could only increase the state’s – and nation’s – reliance on fossil fuels.

Ennedith Lopez with the environmental group Youth United for Climate Crisis Action (YUCCA) said using public funds for the project would prolong oil and gas development in New Mexico, stymying a transition to less-pollutive forms of energy.

“A true climate leader does not co-op a just transition and diverts public funds to prolong an extractive economy and incentivize the use of oil and gas waste for false solutions like green hydrogen,” Lopez said.

“She (Lujan Grisham) was elected to actively work on the issues that impact our frontline and overburdened communities, not to secure another market for the same corporations responsible for polluting our scarce water resources in the first place.”

Mariel Nanansi with New Energy Economy said produced water should continue being treated as a waste product of the extraction industry, a byproduct that can only be reduced by curbing oil and gas production.

“Fracking waste disposal is a problem without a solution,” Nanansi said. “While financial pressure is mounting to find opportunities for the conversion of toxic and radioactive fracking waste there is no scientifically proven beneficial re-use.”

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