Friday, December 3, 2010

Changing Use of Water - Irrigation to Oil & Gas

A recent issue on-going in the West is that of irrigators selling their water to oil companies instead of irrigating with it - at least for a year or two. The articles are coming out of Wyoming of late and cite pretty salubrious dollar returns by doing so.  In one case a Wyoming groundwater user figured he could get paid $41,000.00 for the 11.5 acrefeet of water it would take to drill one Niobrara gas well - if he could get $.42 per barrel for the water.  The article cites 500,000 gallons of water needed for the regular drilling, and 4.5 million gallons needed for the radial drilling and fracking.  This is nothing new in Kansas as we've had oil and gas activity in the state for a very long time.  Of course, our activity has been the more conventional drilling (no radial wells yet in our neck of Kansas) which uses less than 500,000 gallons per well. 

The point I'd like to make is that Kansas water rights are for a specific purpose - for example irrigation - so there almost always needs to be some work done on the water rights before anyone can legally start selling it for any non-irrigation use.  This is done by an application to the state to change the use made of water - from whatever it is currently - to industrial use (supplying water for oil and gas drilling operations).  This process insures that the consumptive differences in these uses are accounted for in the converted quantity of water under the right, and, makes sure that the existing water right doesn't get fully used for both purposes.  These points weren't covered in the Wyoming articles, so I don't know if they exist there or not.  I should think they do.

Moreover, in Kansas the drilling companies can easily enough get their own water right (a temporary permit) for the relatively small amounts of water they need, so having to rely on existing wells and water rights is not required, but remains an option. In NW Kansas, several irrigation water right owners have converted a portion of their irrigation rights to industrial use and are prepared to market and sell oil and gas drilling water legally. If they decide later this is not what they want to do, the now industrial portion of their former water right can be changed back to irrigation use or any other use for that matter - with another change application.

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