New Energy Economy’s Files Red Line Version of Bogus Strategic Water Supply “Feasibility Study”

Organization Press Release – From New Energy Economy

October 18th, 2024 – Santa Fe, New Mexico – In September the New Mexico Environment Department circulated a draft feasibility study of the Governor’s Strategic Water Supply proposal, a plan to use $500M in public funds to purchase the oil and gas industry’s liquid fracking waste and incentivize the creation of a treatment and reuse industry, which is being marketed as a solution to the projected 25% water shortage expected in New Mexico by 2050.

The feasibility study was prepared by Eastern Research Group, which received a $1M contract from NMED, and was based on responses to the Request for Information (RFI) issued in January. Responses to the draft were solicited.

Today New Energy Economy and Norm Gaume, retired professional Civil Engineer and former Director of the NM Interstate Stream Commission, submitted our responses (attached). We took issue, first, with the failure of the study’s authors to identify the real motivation for the Governor’s proposal – The US oil and gas industry generates 3 billion gallons of oilfield wastewater a day, and over 1 trillion gallons a year. In New Mexico and Texas the industry is running out of disposal options for all of its toxic radioactive waste.

Injection via salt water disposal (SWD) wells is inducing dangerous seismicity and literally gushing back up to the surface; in October 2024, after 5 earthquakes in Reeves County, Texas – one hour from the New Mexico border – a 100 ft. geyser of chemical-laden produced water shot up for more than 9 straight days – as of 2 days ago it was still erupting.

The health of area residents are at risk from hydrogen sulfide, hydrocarbons and other toxins (arsenic, radium, and salt), the surrounding properties have in an instant become worthless, and clean water sources could be forever contaminated.

As oil and gas production in the Permian continue to increase, these blowouts and related earthquakes have been and can be expected to continue until another disposal solution is identified. The Strategic Water Supply is the Governor’s answer to the oil and gas industry’s problem.

As we noted in our cover letter included below, the Eastern Research Group study fails to document clearly and unequivocally the scientific basis for safe and effective treatment of produced water for reuse outside the oilfield. This precondition for any authorization of reuse has not yet been established and therefore, any analysis of economic feasibility is moot.

Said Mariel Nanasi, “There is no evidence that reuse of produced water can be effectively and safely treated at scale to protect human health and the environment. The study fails to address radioactivity, residual waste and the stupidity of buying the oil and gas industry’s liability for its hazardous waste disposal.”

Said Norm Gaume, “The so-called ‘Strategic Water Supply’ concept is fatally flawed. The evidence is clear but you won’t find it in the so-called draft feasibility study that the Environment Department’s million-dollar sole-source contract with the Eastern Research Group produced.  You won’t learn that desalination of 100,000 acre-feet of Permian Basin produced water called for in the Governor’s 50-Year-Water Plan, would require all the energy generated by multiple San Juan Generating Stations.  You won’t learn that desalination of that amount of brackish water would require three times the El Paso/Ft. Bliss Key Bailey Hutchison plant’s total capacity. The ERG report is a dishonest, expensive abomination intended to mislead, not to inform.”

New Energy Economy Cover Letter to New Mexico Environmental Department Secretary:

Honorable Secretary James Kenney,

Attached please find our comments on the draft “Strategic Water Supply Feasibility Study” authored by the Eastern Study Group and based on responses to the New Mexico Environment Department (NMED) Request for Information (RFI) issued on January 19, 2024. We have not gone line by line to correct all the inaccuracies and deficiencies in the study. New Energy Economy’s redline, attached, is a meta review of the draft study and a summary of our feedback is included below.

Our most important feedback on this draft “study” and the Strategic Water Supply (SWS) proposal itself is that the timing of both is backward. The Produced Water Act and the Water Quality Act require a credible scientific basis for any off oilfield uses first, with full public disclosure. Any consideration of economic feasibility or rulemaking to authorize reuse for the purpose of facilitating the Strategic Water Supply before scientific research and data has proven its safety and efficacy is contrary to law and fails to protect the land, water and people of New Mexico.

Without a scientific basis, any authorization of produced water reuse outside the oilfield constitutes illegal experimentation on New Mexico and New Mexicans. Without proof that treatment and reuse is safe, the question of economic feasibility is moot.

Importantly the so-called “study” also fails to adequately address numerous significant issues that it mentions in passing while still attempting to sell the idea that produced and brackish water “offer the potential to offset reliance on freshwater resources.” The study makes assertions and omissions that appear to cherry pick from existing evidence, reflecting an obvious bias towards approval and funding of the Strategic Water Supply. These include:

1. The study repeatedly references “closed-loop” projects but fails to fully address the increased risk of accidental spills and discharge to land and water as a result of the SWS. During the Water Quality Control Commission (“WQCC”) hearing NMED gave sworn testimony that, according to the “notice of intent” process in its proposed produced water rule, authorized “closed-loop projects” are “not necessarily non discharge.” (WQCC 23-84, 5/16/24, Fullam, at 77.) Discharge includes spills and leaks that are inevitable at industrial scale, as well as the certainty of spills during transport of large quantities of produced water outside of the oil field. The study also fails to note that NMED gave sworn testimony that the illegal and inadequate “notice of intent” process in the pending Wastewater Reuse rulemaking has no size limitations or restrictions on location, adding to the risks associated with discharge. (WQCC 23-84, 5/16/24, at 106-110.)

2. The study provides examples of produced water treatment and reuse in other states but fails to note the resulting environmental and health impacts resulting from those uses. For example, the study points to NPDES discharge permits for treated produced water that have been issued in other states, citing specifically Eureka Resources in Pennsylvania, but fails to note that all of Eureka Resources three “treatment” facilities have been shuttered, its fourth planned one has been shelved and the company is on the verge of bankruptcy. The Eureka Resource facilities have left a wake of contamination, pollution and harmed workers, including one who died. The study mentions the discharge of treated and untreated produced water into streams in Wyoming, where it notes the high quality of the produced water in the state without also documenting the fact that affected waterways in Wyoming are now deemed “incapable of supporting aquatic life” and Pennsylvania, where treated produced water discharged into streams and rivers delivered high doses of radium to downstream organisms.

3. The study briefly mentions the problem of residual waste without any serious discussion of the costs and risks related to disposal of the significant hazardous waste streams generated by the proposed treatment methods. It notes that:

All treatment methods eventually require disposal of residual constituents. For produced water, the primary residual constituent is brine (salt), however other constituents found in the source water will also need to be disposed of. Disposing of these residual constituents is a nontrivial factor that can be very costly. (pg 20)

Those other constituents include Naturally Occurring Radioactive Materials (NORM), PFAS and other components of fracking fluids, organics, ammonium, and heavy metals, all hazardous to human health. The study provides no quantitative or qualitative data about this hazardous residual waste stream and proposes no solutions for safe disposal.

4. The study mentions the presence of radionuclides in produced water but fails to address the significant ramifications and worker safety risks inherent in the processing, transport and disposal of radioactive waste. The Produced Water Research Consortium Director of Research, Pei Xu, published a paper documenting an average 195 pcL of Radium in produced water from the Permian, three times the level at which a liquid is characterized by the EPA as radioactive waste. The study omits any examination of the costs or feasibility of safety protocols for workers at treatment plants, and importantly the disposal of materials and equipment contaminated with radioactive waste. It also fails to address the importance of testing and standards to ensure that any treated waste being reused for “closed loop” or eventual environmental discharge of treated waste does not cause widespread radioactive contamination of New Mexico, as has occurred in other states where produced water reuse has been authorized.

5. The economics don’t make any sense. The study explains how the SWS proposes to use state funds to purchase liability for the significant economic and environmental risks inherent in produced water handling, transport and treatment processes from the oil and gas industry, but fails to make a convincing economic argument as to why the state should adopt that risk. It notes:

The SWS addresses investment risk by committing to purchasing treated water at a given price, with risks related to the volatility of a potential market for treated water being transferred to the State. This assumption of risk has important implications for the state, especially if a potential end user identified as the off-taker for a project either is no longer operational (for existing facilities) or fails to materialize.

It then proceeds make the following economic projections based on the RFI responses received:

Every project included is projected to cost significantly more than it could be expected to recoup. The feasibility study notes that “It is this gap between the price that water treatment facilities would need and the price that end users would accept that the SWS might support to incentivize private sector investment.”(pg 45)

Presumably the “new water” the plan purports to generate is the actual value that the state would receive in return for assuming these enormous liabilities for the oil and gas industry at such a tremendous loss, but that “new water” is extremely unlikely to meet the projections in the Governor’s 50-Year Water Action Plan. It is more likely to leave a legacy of contamination, damaged aquifers, hazardous waste, stranded assets and harms to workers and public health. Which brings us to our final point:

6. The study is not a serious solution to the issues of water scarcity raised by its proponents. The Governor’s 50-Year Water Action Plan, calls for 100,000 acre-feet per year of ‘new water’ by 2028 and 150,000 acre-feet by 2035, but there is no real plan to achieve these goals, nor any credible analysis of the hurdles that must be overcome. One treatment plant in El Paso, for example, the Kay Bailey Hutchison brackish water treatment plant, took six years to build and cost $90M, with concentrate disposal costing $19M per year. This plant produces just 33 acre feet of water per year. Not only would it not be possible to plan and construct three of these plants to reach the Governor’s proposed 100,000 acre feet of ‘new water’ by 2028, or to provide the enormous amount of energy necessary to run such plants, the investment of public funds into projects of this size is cutting against the funding and attention necessary to properly implement the 2023 Water Security Planning Act, the 2019 Water Data Act, and the resources, staffing and modernization necessary to pursue the straightforward actions and investments that have already been identified as priorities to conserve water in New Mexico.

Most importantly, as noted above, the “study” fails to document clearly and unequivocally the scientific basis for safe and effective treatment of produced water for reuse outside the oilfield. This precondition for any authorization of reuse has not yet been established and therefore, any analysis of economic feasibility is moot.

Respectfully submitted,

Mariel Nanasi

Executive Director

New Energy Economy