Midland settles with company to drill wastewater wells near the city’s drinking water supply

Sign up for The Brief, The Texas Tribune’s daily newsletter that keeps readers up to speed on the most essential Texas news.

---

MIDLAND — City leaders fought a yearlong battle to keep a company from drilling wastewater disposal wells too close to their drinking water. This week, they settled with the company instead, in a decision they say was a last resort.

Pilot Water Solutions, a Houston-based company, is planning to build nine disposal wells to store saltwater that surfaces to the ground during crude oil extraction, a waste byproduct known as produced water. The company hoped to install these wells near T-Bar Ranch, an underground water reservoir from which the city gets a third of its drinking water for more than 132,000 residents.

“Maybe we shouldn’t say this is the safest saltwater disposal system in the country … but it’s safer now because of what we did,” said Midland City Council Member Scott Dufford, referring to the settlement.

In 2022, Midland awarded Pilot licenses that authorized the company to transport produced water to land neighboring T-Bar Ranch. City leaders say they didn’t know Pilot was planning to submit applications with the Railroad Commission of Texas to drill 18 disposal wells in the vicinity of the groundwater.

“We asked them if they planned to apply and [Pilot] said no,” said Carl Craigo, director of utilities for the City of Midland.

Shortly after the city granted the licenses, Pilot began to drill four wells in land close to T-Bar Ranch.

Pilot did not respond to requests for comment.

The city challenged the applications and asked the Railroad Commission — which regulates the oil and gas industry in the state — for a hearing. In a plea to the commissioners, Midland Mayor Lori Blong argued the proposed location of the wells was in dangerous proximity to the city’s drinking water.

The Railroad Commission eventually agreed to a hearing, which was scheduled for this month. But days before the hearing, city officials negotiated directly with the company — eliminating the Railroad Commission as an intermediary — and reached a settlement that would pay the city $400,000 annually, plus $4.5 million every ten years, based on the amount of produced water Pilot injects into the wells. City officials said they will use that money to fund new water infrastructure projects.

Pilot agreed to some concessions, including bringing down the number of saltwater disposal wells from 18 to nine; installing and financing monitoring systems that would detect any chemicals in the drinking water; and agreeing to give the city “unlimited access” to the tools monitoring the flow of water underground. The company also agreed to plug two abandoned saltwater disposal wells in T-Bar Ranch.

City officials said the settlement they reached with Pilot was the best-case scenario given the circumstances. They argued that following through with the Railroad Commission hearing would have prolonged the dispute and that the commissioners’ ruling would not have guaranteed the concessions they obtained through the settlement.

Initially, local officials told state regulators that the city should be able to contest Pilot’s applications given how close the wells would be to Midland’s drinking water supply.

That changed with the settlement. Now, they say, the reduced capacity of the wells — half of the amount originally proposed — would not pose a dire risk of contamination for the groundwater. Pilot also agreed to drill the nine wells further away from the drinking water. Pilot’s proposed underground storage units will reach 7,500 feet in depth. The groundwater is 600 feet below the ground.

City officials said they would shut down both the drinking water and saltwater disposal wells if the monitoring systems detected contamination.

“If there is even an inkling of an issue, we’ll find out about it because all the safeguards are in place,” Dufford said. “But it would be very hard [for the produced water] to get from [the western side of the ranch], where there is no reservoir, to our reservoir.”

Virginia Palacios, executive director of Commission Shift, an environmental watchdog group, said that regardless of the concessions reached through the settlement agreement, the saltwater disposal wells could continue to pose a risk for Midland.

“I think in the greater context, we’re seeing a lot of problems with these underground injection wells,” Palacios said. ”It seems like something that’s not safe to do so close to the water supply.”

The settlement comes as Texans across the state face an intricate mix of water challenges that has strained their water supply — from aging infrastructure to the impacts of climate change. In the Permian Basin and West Texas, the question is where to store millions upon millions of gallons of produced water without compromising the ever-waning groundwater supply.

For years, oil and gas companies have used saltwater disposal wells that are buried deep underground. According to the Railroad Commission, there are over 26,100 disposal wells where produced water is injected.

It has created problems. Scientists and experts agree that the number of underground disposal wells has contributed to increased seismic activity. The number of earthquakes increased in frequency, prompting the Railroad Commission to further regulate disposal wells and design a map that tracks earthquakes.

In December, regulators directed major companies with operations in the Permian Basin — including Chevron and BP Water — to cease disposing of produced water in Reeves and Culberson counties because of the earthquakes, and revoked 23 permits.

Pilot operates over 30 miles of underground pipelines and 25 saltwater disposal wells in the Permian Basin alone, according to its website.