Permian Basin oilfields threatened by toxic drilling wastewater, Texas agency warns

A Texas agency overseeing 13M acres of state land is warning that toxic waste fluid from shale drilling threatens to contaminate oil wells in the Permian Basin, Bloomberg reported Monday.

The General Land Office of Texas said plans by Pilot Water Solutions to add three wastewater disposal wells in the Permian near New Mexico would damage its nearby oil reserves.

ConocoPhillips (NYSE:COP) agrees that Pilot Water's proposal to add wastewater disposal wells would damage nearby oil reserves and render recoverable oil and gas reserves "permanently left in the ground," and said it only produced 37% of the oil it expected as of March 2024 while also generating almost double the amount of water in the area near Pilot’s proposed disposal wells.

Conoco's (NYSE:COP) protest is pending in the hearings division of the Texas Railroad Commission, which regulates the oil industry in the state and warned recently that wastewater from fracking is causing a "widespread" increase in underground pressure that could harm oil reserves and freshwater resources.

Coterra Energy (CTRA) warned investors last week not to expect any oil production this year from wells that were contaminated by wastewater leaks.

Previously, closely held New Mexico producer Stateline Operating Co. filed suit against Devon Energy (DVN) and Aris Water Solutions (ARIS), alleging that toxic water leaked from the companies' disposal wells into its production zones and rendered its reserves worthless.

Crescent Energy (CRGY) had argued in a November filing that four disposal wells proposed by Aris Water Solutions (ARIS) could leak dirty water into its production zone and "create mass degradation" of its oil and gas resources nearby; last week, Aris said it would not move forward with the four wells.