KINGFISHER — A growing fight in the heart of Oklahoma’s oil patch pits local control against state regulators, private property owners against the state’s largest industry and water recycling against fears of spills and liability.
One result so far is that the most active oil producer in Kingfisher County is facing delays and millions of dollars in unexpected expenses and is questioning how much to invest in the county next year.
“We didn’t see this coming,” said Lloyd Hetrick, engineering adviser for Newfield Exploration. “We’ve been doing this for years, and we didn’t know of any concern. Now that we’re in development, it would add tens of thousands of dollars in new costs per well.”
Kingfisher County officials, however, say they are acting to protect local landowners from potential environmental damage if water containing salt and chemicals were to spill.
“The water is dangerous. It destroys whatever it touches,” Kingfisher County Engineer Heath Dobrovolny said. “When you put that stuff in the right of way, you’re giving easy access to the general public where, either by accident or vandalism, there can be a problem. The commissioners’ concern is exposure to liability and exposure to public safety with produced water.”
The conflict centers on the use of water in temporary pipes placed in county rights of way, in the ditches along county roads in Kingfisher County. Oil and natural gas companies for years have used heavy-duty pipes and hoses to transport water to and from well sites during drilling and hydraulic fracturing operations.
Rights to rights of way
But Kingfisher County commissioners say they discovered only this spring that companies have been using the temporary pipes and hoses to transport water of various qualities. New county rules implemented in May allow permits only for freshwater. County officials say the restriction is needed because of concerns over liability for the non-potable water.
“We did hard research,” Dobrovolny said. “We didn’t just stop in Oklahoma. We talked with county commissioners in other states. Our neighbors in Texas and New Mexico agreed with our stance. They felt like it was a huge risk to the county and our taxpayers.”
In New Mexico, a produced water line was cut by a county employee, leaving the county responsible for hundreds of thousands of dollars in cleanup costs. In Kingfisher County, one spill has been documented concerning the temporary water lines, Dobrovolny said. An apparent act of vandalism cut a hole in the line, leading to a water leak. The leak apparently happened two years ago, but Newfield was notified in April, the company said. Newfield cleaned up the site this spring.
Oil industry leaders downplay the liability concerns, pointing to existing state law that requires operators to clean such spills under the oversight of the Oklahoma Corporation Commission. They also say the new county restrictions introduce additional liabilities by leading companies to rely on trucks instead of pipes.
Newfield is in the midst of a development program where it will hydraulically fracture a series of wells over the next three months in an area near Lomega High School.
“We’re not hating on trucks. We love trucks. We need them to move our equipment,” Hetrick said. “But it makes no sense to double, triple or quadruple the number of trucks we’re already using. In Kingfisher County, the loss of one pipeline might increase traffic by 200 or 300 trucks per day.”
Newfield Exploration crews have installed 140 miles of permanent pipe in Kingfisher County alone to move water to and from well sites throughout the area. The company’s water recycling facility can process more than 1.2 million gallons of water a day, and Newfield’s storage facilities in the county can hold about 10.5 million gallons of water.
The in-ground, permanent pipe system transports water throughout the county, but not directly to every well site. Like fire hydrants in a neighborhood, the connections are spaced out — in this case about every four miles — with temporary pipes and hoses to make the connection to the well sites.
“To move a barrel of water in pipe costs pennies now that we have the system in place,” Hetrick said. “To move a barrel of water in trucks costs dollars. We use 400,000 barrels of water for each well for fracking. So now that we have that incremental cost going forward, we’re not going to be able to drill as many wells.”
‘Not a ban’
County officials say they are not banning the use of produced water in temporary pipes, but that companies should negotiate with landowners for the right to transport the water across their land.
“Keep the county out of it,” Dobrovolny said. “The county asked (the oil industry) to move the produced lines out of the right of way and onto private property. If they notify the landowner and some kind of agreement is reached with the landowner, they could move forward in that direction. But they always come back to saying they would rather keep things in the right of way and not deal with landowners.”
Oil industry leaders, however, say they have been using the county rights of way for years without incident and that the change adds new burdens and costs. County rights of way already are used by other industries, including electric utilities, telephone and cable companies and natural gas utilities.
Changing the rules in the middle of an oil development operation could add millions of dollars to the cost of operations, they say.
Oil companies already negotiate with landowners when they install permanent pipe, but the temporary lines typically are in place only for several weeks to a few months before they are rolled up and moved to a new well site, Hetrick said. Dozens of new and unplanned negotiations in the midst of ongoing operations introduce uncertainty, risk and costs, he said.
“When we go into plays, we predict the costs,” Hetrick said. “When new costs come up, they change the economics.”
The Oklahoma Legislature in 2015 passed Senate Bill 809, giving the Oklahoma Corporation Commission exclusive jurisdiction over regulating the state’s oil and natural gas industry. Kingfisher County officials say they are not regulating the industry, but that they do have jurisdiction over the use of county rights of way.
“Nobody is arguing the Corporation Commission doesn’t have the authority over oil and gas industry,” Dobrovolny said. “We don’t believe they have the authority over roads and rights of way. That was granted to the county commissioners. They are chartered with maintaining a public road and right of way for public safety. This particular issue with produced water poses more risks and liability to the general public in the right of way.”
Oil and natural gas industry representatives say the county rules are illegal because they regulate industry practices, since freshwater is allowed but produced water is not.
“They don’t get to regulate what’s in the water,” said Chad Warmington, president of the Oklahoma Oil and Gas Association. “They can regulate the pipeline crossings, but they don’t get to regulate the types of water flowing through it. When they added the check box for produced water, that crossed into the jurisdiction of the Corporation Commission.”
Michele Craig, chief legal council for the Oklahoma Corporation Commission, in May wrote a legal opinion stating that the Corporation Commission has exclusive jurisdiction on the issue, citing SB 809.
“Municipalities, counties and other political subdivisions are expressly prohibited from enacting regulations that effectively preclude produced water disposal, secondary recovery operations, flow and gathering lines or pipeline infrastructure, and the ability to enact such regulations is exclusively within the jurisdiction of the Corporation Commission,” Craig wrote in a letter to Corporation Commission Chairwoman Dana Murphy, which she forwarded to District Attorney Mike Fields in Enid.
In a letter dated June 5, Fields informed the Kingfisher County commissioners of the opinion.
“Upon review of this memorandum, it is clear that the Corporation Commission believes Kingfisher County’s ban of produced water in temporary pipelines in county road rights of way is unreasonable, and therefore, invalid and unenforceable,” Fields’ letter states. “It is this office’s position that Kingfisher County should remove its ban based upon the recent memorandum. Failure to do so will likely result in litigation being filed against the county.”
Kingfisher County officials have hired a lawyer and are preparing for a legal challenge.
“The commissioners are not looking to fight anyone, but that doesn’t mean they are not willing to fight,” Dobrovolny said. “We have hired outside counsel with our district attorney’s permission and are working with that individual as we move forward. But we hope it doesn’t come to that.”
Warmington said his group likely will sue if the issue is not resolved by the end of the month. If a suit is filed, the group likely would seek an injunction on the produced water ban, he said.
“We’ll try to seek clarification on jurisdiction,” Warmington said. “Then we’ll look to compel the commission to come up with a more clear or better regulatory framework the county can point back to. We don’t want 77 regulatory guidelines. They can all use the same Corporation Commission-approved definitions.”
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