In California, Big Oil Finds Water Is Its Most Prized Commodity

(Bloomberg) -- California’s epic drought is pushing Big Oil to solve a problem it’s struggled with for decades: what to do with the billions of gallons of wastewater that gush out of wells every year.

Golden State drillers have pumped much of that liquid back underground into disposal wells. Now, amid a four-year dry spell, more companies are looking to recycle their water or sell it to parched farms as the industry tries to get ahead of environmental lawsuits and new regulations.

The trend could have implications for oil patches across the country. With fracking boosting the industry’s thirst for water, companies have run into conflicts from Texas to Colorado to Pennsylvania. California could be an incubator for conservation efforts that have so far failed to gain traction elsewhere in the U.S.

Drillers may have little choice. The state’s 50,000 disposal wells have come under increased scrutiny this year, after regulators said they’d mistakenly allowed companies to inject wastewater near underground drinking supplies. Environmental groups sued the state to stop the practice at 2,500 sites considered most sensitive.

A win for environmentalists could drive up disposal prices and delay drilling by months for Chevron Corp., Linn Energy LLC and other companies, according to a June 12 report by Bloomberg Intelligence analysts Brandon Barnes and Matthew Kerner.

Conservation Rising

Conservation is “suddenly leaping to the forefront,” said Laura Capper, founder of Houston-based CAP Resources, which advises the industry on water use. “You’re going to see a lot of retrofit programs. If they’re not already recycling, they’ll be adapting.”

Sarah Nordin, a spokeswoman at Linn, didn’t immediately return messages seeking comment on the lawsuit. Cam Van Ast, a Chevron spokesman, declined to discuss it.


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