Texas is giving away revenue and taking New Mexico’s waste | Opinion
Enable Midstream operates 14,000 miles of natural gas, crude oil, condensate and produced water gathering pipelines.Take a drive on U.S. Highway 285 southeast from Carlsbad, N.M., heading to Pecos in West Texas and you’ll be driving atop a portion of the largest proven oil reserves in the United States. Along the drive, much of the scenery will look the same. Drilling rigs are numerous and tower high above thinly rooted desert shrubs.
Why the disproportionality between Texas and New Mexico? The explanation is simple: regulation. Permitting SWDs in Texas is easy and quick compared with in New Mexico. This is one of the reasons why each day an estimated 1.8 million barrels of New Mexico produced water is sent to any one of the numerous SWDs across the Texas state line. The volume is growing daily.
The Texas Railroad Commission, by contrast, has no prohibition on new shallow SWDs, and the time required to obtain an injection permit is markedly faster. That disparity created business opportunities for hungry companies with an appetite for interstate produced water logistics. Deep disposal is not restricted in New Mexico but formations with suitable geology are so deep this option is typically viewed as risky and uneconomic.
The state of New Mexico continues to receive tax revenue from continued hydrocarbon development. This is made possible only by Texas and its laissez-faire attitude regarding shallow disposal. In return, Texas asks for nothing. Accordingly, Texas should impose an import tax on New Mexico produced water. This is not uncommon in the industry. In Ohio, out-of-state produced water disposal is taxed at a hefty 20 cents per barrel, much higher than the 5-cent-per-barrel duty for water originating in-state, according to an Ohio Department of Natural Resources fact sheet.
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