VAN HORN, Texas -- A west Texas land baron and oilman is on the verge of pumping 5.4 million gallons of water a day from far under the desert mountains and piping it 60 miles to the nation's most bountiful oil field, the Permian Basin, where hydraulic fracturing has fueled a renaissance of U.S. oil and gas production.
The Houston Chronicle reports that with water in short supply and demand high, Dan Allen Hughes Jr., one of the largest landowners in the United States and president of his father's eponymous oil company, plans to tap an aquifer under his 140,000-acre Apache Ranch.
But Hughes has run into a wall of opposition from west Texas farmers, ranchers, residents and environmentalists, who worry that he will steal water from their cattle, dry up their crops and deplete the spring that feeds the famous pool at Balmorhea State Park.
"That's a lot of water," said Bill Addington, a rancher and conservationist from neighboring Sierra Blanca. "Believe me, there's many people who have plans to sue if this goes forward. We will sue."
Hughes' project may well just be the start of a much larger fight -- over the ownership of west Texas water, the future of oil and gas production, and the fate of agricultural lands and ecologically sensitive habitats. It's a conflict that runs throughout the history of the West, between farmers and ranchers, conservationists and industry, neighboring cities, adjacent states. Whiskey is for drinking, they say. Water is for fighting.
Texans have fought over water for many decades, said Larry French, groundwater director for the Texas Water Development Board. Oil and gas production is another competitor for a scarce resource.
"The Permian Basin is basically a desert, and that immediately presents challenges in finding adequate water," French said. "You can do without a lot of things. But you can't do without water."
At least three other companies in the region are selling or planning projects to sell water to energy companies that use it by the billions of gallons to crack shale rock, and release oil and gas. Water use in the Permian Basin has increased sixfold since the start of the shale oil boom, from more than 5 billion gallons in 2011 to almost 30 billion last year. Energy research firm IHS Markit predicts that demand will double by the end of this year, to 60 billion gallons, and more than triple by 2020, to almost 100 billion.
But west Texas' network of aquifers is interconnected; water pumped from one can reduce flow in another. Some worry that all of these proposed water wells could dry up aquifers that supply west Texas ranches, farms and cities.
It's not an unreasonable fear. Few in west Texas forget when oilman Clayton Williams Sr. and west Texas farmers pumped the prodigious Comanche Springs, just east of Balmorhea, to barely a trickle.
Hughes, a former chairman of the Texas Parks and Wildlife Commission, and his team were seeking approval of their plans from the Culberson County Groundwater Conservation District. Officials there expected many others to apply to pump local aquifers.
"Water," said district general manager Summer Webb. "It's the next oil."
A place to make money
More than a decade ago, U.S. drillers began coupling two long-used oil production techniques, horizontal drilling and hydraulic fracturing, to revolutionize oil production, transforming the U.S. from an energy has-been to a key global producer.
Companies slowly realized that the Permian Basin held great promise. Its multiple underground layers of rock hold unfathomable quantities of oil. With crude prices still low, the Permian Basin has become one of the few places where drillers can make money. The number of drilling rigs there has almost tripled, from fewer than 140 last spring to almost 380 by late July.
Companies habitually bore horizontal shafts that run at least 10,000 feet -- double the distance drilled four years ago -- and pump 20 million gallons of water, or more, into each to produce longer, wider fractures in the shale. Explorers, meanwhile, have ventured south and west, into a more remote section of the Permian Basin, called the Delaware Basin, with thicker, deeper veins of oil and gas, but less groundwater. That created a market for water like no other U.S. shale field.
"There are going to be literally tens of thousands of wells drilled in the southern Delaware," said Toby Darden, CEO of one of the water startups, Wolfcamp Water Partners of Fort Worth. "Water is a critical resource. It's one of the major logistical considerations for development in shale."
Darden's Wolfcamp Water has leased 31,000 acres in the foothills of the Davis Mountains, drilled into the Capitan Reef aquifer and gathered investors. The seven-employee company plans to break ground on wells, catch basins and a 65-mile pipeline by the end of the year, and pump more than 8 million gallons a day for 20 years, about 2 percent or 3 percent of the estimated 2.3 trillion gallons in the aquifer.
Layne Christensen, The Woodlands water and well company, has purchased an old cotton farm on 800 acres outside of Pecos, tapped the Pecos Valley aquifer, and by the end of July, finished a six-well, 4.2 million-gallons-a-day pipeline that runs 20 miles to the heart of the Delaware Basin. And, last month, east Texas consultants Aperion Energy Group asked the city of Balmorhea to lease a small mountain lake and pipeline for $50,000, in total, for 50 years, starting in mid-August. The company declined to comment.
Many in the area support the water company efforts. "It's good for communities," said John Davis, the mayor of Balmorhea and an oilfield construction supervisor. "Especially communities that don't have a lot of revenue coming in."
An unusual place
Hughes' father, Dan Allen Hughes Sr., started prospecting for oil more than 60 years ago. His firm, Dan A. Hughes Co., worked from New Mexico to Australia. It was an early explorer in the Barnett Shale gas field around the city of Denton, and later south Texas' Eagle Ford.
Hughes Sr. saw land as a good investment and started buying ranches, especially on good hunting grounds. The family now owns 390,000 acres in Texas and Montana, including Apache Ranch, an expanse of white dirt, prickly pear and thorny mesquite surrounded by the rocky Apache Mountains northeast of Van Horn, and home to game, including elk, pronghorn antelope and exotic aoudad sheep.
Apache Ranch is unusual. The heart of the Delaware Basin is largely a bathtub of clays and salt, perfect for holding oil, but with little groundwater. The ranch is outside of that clay tub, formed by limestone and dolomite, porous rocks that hold about 1.6 trillion gallons of water in the Capitan Reef.
In March, Hughes submitted an application to the Culberson County Groundwater Conservation District in the name of his new company, Agua Grande, asking to drill seven wells on the ranch and build a 60-mile pipeline northeast to the heart of Delaware, where 20 companies, including Anadarko Petroleum Corp. and EOG Resources of Houston and Concho Resources of Midland, are interested in buying the water, according to the application.
Agua Grande made its pitch to Culberson County officials on June 7. The company's hydrogeologist Steve Finch, from the New Mexico environmental firm John Shomaker & Associates, tried to persuade the board that the Capitan Reef aquifer provided relatively little water to Balmorhea's famous San Solomon Springs. Finch has studied groundwater there for 17 years and spent six months examining it anew for Agua Grande. He created a computer model to analyze the effect of the pumping on the San Solomon Springs. The result: "I see zero impact," he said.
But he also acknowledged that no one knows quite how the aquifers interact in the Delaware Basin. "It's probably one of the most studied basins in the world, for oil and gas," he said. "But the groundwater portion, we're still figuring the pieces out."
Opponents of the project argued that the size of the withdrawals, almost 2 billion gallons a year, and potential impact on the network of aquifers threaten their livelihoods. They rely on the water to feed cattle, grow crops, fill the natural swimming pool at Balmorhea State Park and attract tourists. Several area springs have already dried up, they said, or produce less water.
"Mr. Hughes inherited Apache Ranch. He is very well-off," said Addington, whose grandfather arrived to farm and ranch at Sierra Blanca more than century ago. "When are they satisfied that they have enough money? It's offensive to us. It affects the future health and sustainability of the entire region."
Hughes' team remains hopeful, but its members also understand the worries.
"Water," said Will Hughes, Dan Jr.'s son and a land manager for the oil company, "is the key to everything out here."
SundayMonday Business on 08/06/2017