Sucking Up Water and Sand in the Quest for Natural Gas

For folks in the sandy hills northwest of Dallas, it's a devil's bargain for gas, water and jobs.

This year alone, EOG expects to have 250 of these types of oil wells completed and another 250 in 2012. Their recent second-quarter net income of $295 million earned them the designation of a "Hot Stock" by The Wall Street Journal. On an August 5 conference call, EOG's Chief Executive Officer Mark Papa discussed those earnings with nine Wall Street analysts listening in. To close out the meeting, Papa said this, according to a transcript from SeekingAlpha.com:

"I'm really just befuddled. Why anybody in the industry pays the slightest attention to natural gas growth in North America is beyond me. And I continue to see particularly well-sided write-ups that say, 'This company is growing at this rate.' In my mind, it doesn't matter if you're growing at that rate if your primary driver of your growth is natural gas, which is barely profitable at best."


Which brings us back to the issue of the parched land, empty ponds and a stressed aquifer. For the people around Saint Jo, this is a battle of David versus Goliath, and the fight is for clean land, air and water.

Residents near Saint Jo organized quickly in opposition when they learned a sand mine was being constructed near their homes.
Mike Mezeul
Residents near Saint Jo organized quickly in opposition when they learned a sand mine was being constructed near their homes.
They fear for their water supplies and dread the big trucks that'll be hauling down their county roads.
Mike Mezeul
They fear for their water supplies and dread the big trucks that'll be hauling down their county roads.

In a recent interview in the Muenster Enterprise (near Saint Jo), two EOG representatives attempted to smooth tensions by answering questions from locals about the sand mine. In a futile effort to get an invite to a potluck, they mentioned twice that EOG was listed on Fortune's list of 100 Best Places to Work.

Around the same time, Papa remarked on his Wall Street conference call that they have a new sand mine in Wisconsin that will be up and running by the fourth quarter. He added that by self-sourcing frack sand, " ... we expect to save about $1 million per well."

If EOG is able to save money by shipping sand from Wisconsin into Texas, one could only guess how much more they could save on transportation with Saint Jo frack sand.

There's always a bottom line.

As Amy Hardberger wrote in her article, "Water For Gas: A Tradeoff Texas Needs to Consider":

"Proponents of fracking argue that the water amount per unit of energy produced is smaller than other types of fuel. Others point to the lucrative nature of drilling to defend its importance. While both of these statements may be true in a vacuum, it will provide little solace to a region whose water supply is depleted by gas development."

All of these forces met on August 23 in the Muenster High School cafeteria when the TCEQ held a public hearing as part of the air quality permitting process. Filling in every seat and inch of wall space, locals had the chance to ask EOG representatives questions with state officials moderating and observing.

To the surprise of many, half of the audience was there in support of EOG. They stuck together in groups in the back; some had families with them; and almost all of them were employees or subcontractors of EOG from different cities around North Texas.

Even though the focus was supposed to be on air issues, since the application with the TCEQ is strictly for an air permit, locals pelted EOG representative Curt Parsons with questions about pollution monitoring, sand, truck routes, creek run-off and, of course, water.

At one point in the two-hour long informal comment period, Ivers Lusis stood at a microphone in the middle of the packed cafeteria and asked Parsons about sustainable brackish water supplies.

"A study done for the Texas Water Development Board by LBG-Guyton Associates," Lusis said, "determined that Region C [an area from the Red River to Freestone County south of Dallas] brackish water availability is moderate and productivity is low. Based on this, what contingency plans does EOG have for processing at the mine?"

"We made a good estimate that we think there will be enough water," Parsons answered.

"So, you're spending $25 million on this project," Lusis persisted, "and you have no contingency plan if you run out of brackish water?"

After a pause Parsons responded, "I've answered your question."

"If you run out of brackish water, you have nothing stopping you from using fresh water," Lusis stated, looking pointedly at Parsons.

"Is that a question?" Parsons asked dryly.

"Yes," said Lusis. "There's nothing legally stopping you from using fresh water, right?"

"That is correct," Parsons answered.

Wylie Harris was up next. With a dry stock pond in the middle of his pasture, he pressed further, asking detailed questions about pump capacity in their brackish water wells.

Referring to rumors that EOG intends on as many as 40 wells over the Trinity Aquifer, Harris persisted, "Do you have a specific number of wells you'll need? Not just one, two, three, a handful?"

"I've answered your question," said Parsons.

"Handful isn't an answer," Harris pointed out.

Now air permit application number 95412 is awaiting technical review and it's possible there will be another public hearing. For now, it's in bureaucratic limbo, which is better than in their backyard for many residents of Cooke and Montague counties.

By exploiting one premium resource to recover another, where do we literally draw a line in the sand? Where does the value of water exceed that of energy?

One weathered Saint Jo resident saw the question this way: "If worst comes to worst, I can ride my horse to town. But I can't drink oil."

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6 comments
Ben
Ben

The same people complaining are first ones to cry "big government" when they start restricting water usage, just like the farmers suing The Edwards Aquifer Authority!

Mmev
Mmev

What did the fire ( and fire threats still existing!) do to the water demands needed to fight the Montague/Cooke County fires? How much increase and where weree the sources for the firefighters??

Harris
Harris

Corruption in America is causing its demise and it has roots in Texas LawInjustice.com exposes a really disturbing case

Nasty
Nasty

Poor guys.

Too bad the Trophy Club MUD and every other entity in North Texas with a penny to spend are drilling like crazy in a race to complete wells into this depleted aquifer before the regulatory agencies introduce restrictions.

We're drinking each others milkshake and suing Oklahoma at the same time in one of the greatest eras of piss poor planning mankind has ever seen.

LaurenDrewesDaniels
LaurenDrewesDaniels

Ben, you hit on the irony of the EAA case. The farmers are saying, 'we need more water.' However, if a gas/oil drill goes up over the aquifer (or sand mine) within a mile of their farms and there were no restrictions, then what would happen to their water supply?

To be honest, in all the conversations I've had and at the hours of questions I sat through at the public meeting, no one was complaining about "big government." Instead, they were asking why the TCEQ wasn't monitoring the mine more. Example, the TCEQ would rely on EOG to monitor their own air pollution levels. Locals are opposed to that. They want the TCEQ to monitor the pollution.

I understand your point, but haven't seen much evidence of that in this case.

Ben
Ben

You don't think it's a Republican county? It's certainly a red state!

 
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