Eagle Ford Shale Water Rights Scams Growing

Water is perhaps one of the most important elements required to develop the Eagle Ford shale oil and gas play. Eagle Ford shale wells rely on the technology of hydraulic fracturing, which uses copious amounts of groundwater or surface water. A typical Eagle Ford shale well may require as much as six million gallons of water to drill and complete. Oil companies are so desperate for frac water that they are even buying treated sewage waste water from cities such as Carrizo Springs.

There are now several water companies actively seeking out landowners in the Eagle Ford shale area to make them lease offers for the water rights below their property. Many of these Eagle Ford shale water companies use the age old sales technique of getting farmers and ranchers to first see “dollar signs”, rather than thinking of the impact these large water wells may have on their neighbors and communities. In the Eagle Ford shale area there are several groundwater districts, including Evergreen Underground Water Conservation District and McMullen Groundwater Conservation District. These agencies have little power to regulate how much water is pulled from a well on private land.

The Carrizo – Wilcox aquifer is one of the most important sources of clean drinking water in South Texas, and one of the biggest sources of frac water used by oil and gas companies. Unlike more permeable aquifers such as the Edwards Aquifer (which supplies much of San Antonio’s water needs), water in the Carrizo does not flow quickly through the formation. It may take months or years for water to travel from the point at which it enters the recharge zone to a well.  Thus, it can be hard to prove that any given Carrizo Wilcox water well in the Eagle Ford shale focus area was “the one” that depleted water levels in neighboring wells. Water companies only need approximately four acres for one of these leases, and many new start up firms are actively advertising across South Texas that they are “Leasing Water Rights”.  The company agent will typically begin with talk of how much money the landowner can make, which can be thousands per month, and the fact that the landowner can use all the water they need from the “free well”.  What they do not typically spend much time explaining is how much water these huge wells can draw from the ground, and the fact that the lease is “held by production”, meaning you could be signing a lifetime water lease.

Things To Beware Of To Avoid Eagle Ford Shale Water Lease Scams

Beware of companies who focus only on how much money you could make, instead of on  the details of the contract they are offering. Have an attorney review any contract, and discuss the proposed well with a representative of your underground water conservation district. You may look up your local water conservation district here: List Of Groundwater Conservation Districts

Ask the company if they have done any studies to show what the impact of their well will be on the aquifer in your area, and if the company provides indemnification for damages to neighboring wells. Also, there should be some time limit on the contract, as well as a limit to how many acre-feet the company can extract from under your land. Do not give up all of your surface water rights either. Under some contracts, your stock ponds could be sucked dry, leaving your livestock without water.  Be very cautious of Eagle Ford shale frac water companies who claim to seek “non traditional” sources of water.  For example, if the company tells you they will only drill for “non potable, salty water”, and then use some kind of treatment to make it usable by oil companies, make darn sure that the contract that they offer you specifies exactly what underground zone that the “non potable water” will come from. Many contracts are so full of loopholes that they allow the  company to use any and all water on or above your property, regardless of what their sales pitch is.

As a landowner and member of your community, you should always consider the impact that a large commercial water well may have on your neighbor’s water wells, and also on the municipal water wells in your area. Do you really want to be the landowner who is perceived to be responsible for drying up your community’s well? While it a difficult thing to prove, your neighbors whose wells are drying up may cast a suspicious eye next door to your property, from which huge aluminum water lines originate and  transport well water up to twenty miles or more away.

Also, do not let representatives of these companies tell you that without their water well, oil and gas drilling will not come to your land. Under Texas law, oil companies can rightfully use a reasonable amount of water under your land to drill and complete oil and gas wells, on your property only. (When signing an oil and gas lease, make sure you do not give oil companies the rights to use the water on or underneath your land on any other adjoining properties.)

Again, never sign anything without first consulting with an attorney.

Article by guest writer Jeff Shaw, 1/13/2012.