Policy analysis of produced water issues associated with in-situ thermal technologies: Topical report: October 1, 2009 to December 31, 2010

Commercial scale oil shale and oil sands development will require water, the amount of which will depend on the technologies adopted and the scale of development that occurs. Water in oil shale and oil sands country is already in scarce supply, and because of the arid nature of the region and limitations on water consumption imposed by interstate compacts and the Endangered Species Act, the State of Utah normally does not issue new water rights in oil shale or oil sands rich areas. Prospective oil shale and oil sands developers that do not already hold adequate water rights can acquire water rights from willing sellers, but large and secure water supplies may be difficult and expensive to acquire, driving oil shale and oil sands developers to seek alternative sources of supply. Produced water is one such potential source of supply. When oil and gas are developed, operators often encounter ground water that must be removed and disposed of to facilitate hydrocarbon extraction. Water produced through mineral extraction was traditionally poor in quality and treated as a waste product rather than a valuable resource. However, the increase in produced water volume and the often-higher quality water associated with coalbed methane development have drawn attention to potential uses of produced water and its treatment under appropriations law. This growing interest in produced water has led to litigation and statutory changes that must be understood and evaluated if produced water is to be harnessed in the oil shale and oil sands development process. Conversely, if water is generated as a byproduct of oil shale and oil sands production, consideration must be given to how this water will be disposed of or utilized in the shale oil production process. This report explores the role produced water could play in commercial oil shale and oil sands production, explaining the evolving regulatory framework associated with produced water, Utah water law and produced water regulation, and the obstacles that must be overcome in order for produced water to support the nascent oil shale and oil sands industries.