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Mitigating a Tragedy of the Commons

4/29/2019 | ROB BRUANT

Mitigating a Tragedy of the Commons

Mitigating a Tragedy of the Commons

In 1968, Garrett Hardin published the manuscript “The Tragedy of the Commons”. In his essay, Hardin described a hypothetical open pasture, where cattle owners maximize individual financial gain by growing the size of their herd. However, as each cattle owner increases the number of cattle, so increases the aggregate amount of grazing on the pasture. Initially, the negative effects of increased feeding (i.e., less available grass) are not well understood or costly enough to affect continued cattle population growth. However, as Hardin notes, “a finite world can support only a finite population” – as the cattle owners continue to act according to their own self-interest in pursuit of additional financial gain, the pasture reaches a point at which it can no longer support the grazing of any of the herds.

The notion and result of a “tragedy of the commons”, the conflict between shared (or unregulated) use of a finite resource and interests of the individual users, appears in many real-world situations, from overfishing fish populations to clear cutting of forests. And the concept is not limited to just taking from a shared system. For example, in the case of air or water pollution, a tragedy of the commons can occur by addition of harmful constituents to a resource that users collectively breath or drink. Or similarly, in the Permian Basin of West Texas and Eastern New Mexico, excess water from oil and gas production disposed into subsurface formations of finite capacity can lead to deleterious consequences for further oil and gas development.

A substantial amount of associated water is produced with conventional and unconventional Permian Basin oil and gas extraction. In 2017, greater than six billion barrels was produced, more than four times the produced volume of oil and gas (in oil equivalents). In contact with surrounding rock and organic matter for millions of years, this water contains a highly concentrated assemblage of dissolved organic and inorganic constituents (several times the salt concentration of seawater), of which some are toxic, carcinogenic, and/or radioactive. Consequently, current opportunities for utilization outside oil and gas applications are small. But despite the hundreds of thousands of barrels of water needed to hydraulically fracture each new horizontal well (for which produced water could be used), there remains as much as 30 billion of barrels of excess water expected to be produced within the next decade.

Currently, the predominant disposition strategy for excess produced water in the Permian Basin is subsurface disposal. Water is primary disposed into two shallow Permian-aged horizons within the Permian Basin: the Delaware Mount Group, associated with the Delaware Basin sub-basin, and the San Andres formation, associated with the Midland Basin sub-basin. Deeper Ordovician-, Silurian-, and Devonian- aged zones in the Midland Basin are also increasingly utilized.

While the capacity of these zones for produced water disposal is fundamentally dictated by accessible and available rock pore volume, operationally, the primary capacity constraint is subsurface pressure. The pressure state of the Permian Basin disposal zones results from a combination of the natural, pre-development pressure of the system (i.e., static pressure), the slow increase in pressure resulting from cumulative water disposal (i.e., pseudo-static pressure), and the more rapid pressure changes occurring near an injection well or wells (i.e., dynamic pressure). In order to maintain formation integrity and minimize risk of fluid migration from the disposal zones, the rate and volume of water injection must be managed to keep fluid pressure below the fracture pressure of the rock, which represents the absolute capacity for disposal.

Other factors beyond capacity also affect the efficacy and suitability of subsurface disposal. Even below fracture pressure, increased pressure due to produced water injection has been linked to increased seismicity in the Permian Basin. Measurements from Texas’ Bureau of Economic Geology seismic monitoring network (TexNet) show a significant increase in the frequency of near-term seismic activity – of the 141 recorded events in the Texas extent of the Permian Basin since 1980, 135 occurred after 2013. Additionally, elevated pressure in shallow disposal zones, located above the main petroleum-bearing unconventional horizons, has led to general drilling delays, increased stuck pipe events, more wellbore failures, and extra casing strings, adding hundreds of thousands of dollars to drilling and completion costs for individual wells.

In Texas and New Mexico, the Railroad Commission and the Oil Conservation Division, respectively, manage the disposition of produced water. This includes oversight of permitting, construction, operation, inspection, and reporting of monthly injection volume and pressure for Underground Injection Control (UIC) Class II disposal wells (both Texas and New Mexico have UIC primacy). Nevertheless, there is growing concern that business-as-usual water disposal may result in suboptimal use of limited subsurface disposal capacity, more widespread, frequent, and powerful seismic events, and/or elevated subsurface pressure that jeopardizes the economic viability of Permian Basin oil and gas development.

The Nobel-Prize winning economist Richard Thayler and Cass Sunstein note in their seminal book “Nudge” that environmental problems are often exacerbated by misaligned incentives or lack of information and disclosure. As in the case of a tragedy of the commons, the actors or activities that cause negative outcomes (e.g., elevated pressure, increased seismicity) often do not know or bear the full cost of the result, and those affected generally do not have recourse to direct change. For such a situation, implementation of a disposal tax or cap and trade system can be highly effective approaches to motivate alternative approaches to, and mitigate the adverse consequences of, subsurface produced water disposal. Clearly, however, such approaches are politically and legislatively difficult to implement.

On the other hand, improving how data is collected and disseminated provides a relatively straightforward means to increase system understanding and salience regarding actions. Despite regulatory requirements to report volume and pressure, the resulting data is generally not provided in an easily available or real-time manner (public access can be delayed up to fifteen months from the date of record). Increasing recording and reporting frequency of injection volume and pressure, in addition to providing data in digital format, could lead to material improvements in collective subsurface capacity and pressure management. For instance, high frequency data could be used to better understand the relative contributions of static, pseudo static, and dynamic pressure to subsurface pressure conditions, leading to improved quantification and utilization of available capacity or understanding relationship to seismic events. Additionally, knowing the real-time pressure effects from nearby disposal wells can improve pre-drill planning, potentially reducing non-productive time events and optimizing well construction.