Following the 5.4 M earthquake on November 16,2022, the Northern-Culberson Reeves Seismic Response Area (NCR SRA) has been subtly expanded, and a response plan has been amended to reduce injection volumes by 50%. The new restrictions mean New Mexico operators will have to expand their business relationships to get water further into Texas. We’ll be more reliant on pipeline networks to navigate the PW to receptive areas.
Note the outer SRA Boundary, now extending up to the border.
Perhaps most importantly is the action plan if another high magnitude earthquake occurs. This, we at EnergyMaker’s believe, may be the real news. Should a future 4.5M+ event occur within the 9 km. boundary identified on December 9, 2022, deep wells within the 9 km. boundary will shut in for 24-months from the date of the event.
In our opinion, the possibility of an event of 4.5M is a very real possibility, statistically. Absolute shut-in of deep wells in the area would cause significant logistics issue to maintain oil and gas production levels in some of the most productive oilfield in New Mexico and West Texas. We suspect the industry will be scrambling to develop a plan “B” in the event that unfolds. Looking forward, we will need to be more nimble in the rapid development of infrastructure, recycling programs, and ultimately beneficial reuse of all this surplus water, in order to avoid impairment of oil production in the region. Regulatory Agencies will need to facilitate and encourage a more nimble response for these new initiatives underway.
And we would logically expect to see a price increases for disposal well services going forward, based on obvious supply/demand logic.
Details of the new policies:
In a plan released on December 12, the RRC staff and disposal well operators within the SRA have committed to speeding up the plan, and further reducing deep injection volumes down to 210,000 bbl/d by March 31, 2023. The original goal was to reduce deep injection volumes to 298,000 bbl/d by June 30, 2023. If an operator has one SWD, the max daily injection volume is now 10,000 bbl/d (previously 15,000 bbl/d). Note: there have been NO changes to Shallow SWD restrictions. See below for more information.
This EnergyMakers’ blog expands on a recent article written by Liz Hampton published by Reuters https://www.reuters.com/business/energy/earthquake-adds-new-hurdle-slowing-texas-oil-output-gains-2022-12-16
