On March 12, The Colorado Energy & Carbon Management Commission (ECMC) adopted new rules that require a statewide reduction in the percentage of fresh water used for oil and gas operations — and a corresponding increase in usage of recycled produced water. Produced water refers to the water that is extracted from underground formations and brought to the surface during the process of oil and gas production.
See the ECMC press release here.
The rules do the following:
- Establish produced water recycling targets for 4% and 10% starting in 2026 and 2030, respectively. Then a rulemaking is to take place in 2028 to re-evaluate later targets. If that rulemaking doesn’t take place, then the targets of 20% and 35% starting in 2034 and 2038, respectively, will stand.
- Allows for alternative water sources to produced water to be used to meet the recycling targets, called produced water alternative. These water sources are water sources that are so contaminated, like produced water, that they would not be returned to the hydrological cycle.
- Creates a recycled produced water credit trading system that allows those operators that recycle produced water above the regulatory target to sell those excess credits to those operators that cannot meet the target through their operations.
- Maintains the statutory prohibition on new centralized waste recycling facilities in Disproportionately Impacted Communities.
- Allows for deferred compliance. Basically, if the operator doesn’t meet the targets it has to submit a compliance plan. If the compliance plan shows that it will not meet the targets, then future permits are conditioned upon the operator meeting the targets. The compliance period is 4 years. So basically they can kick this can down the road for 8 years.
The credit trading system was widely opposed by environmental and community groups, including CHC.
Read the final rules and statement of basis and purpose.
More on the produced water rules in the Inside Climate article.
