1. CWAG 2010 WATER LAW CONFERENCE The Broadmoor
Colorado Springs, Colorado
April 29 – 30, 2010

2. Produced Water in Colorado
Impact on Existing Water Rights
Kevin Rein, P.E.
Assistant State Engineer
Conference of Western Attorneys General
April 29, 2010

3. Summary of Presentation Ground water is produced from oil and gas wells in Colorado. That production must be reconciled with Colorado water law.
Geologic Perspective
Understanding Tributary and Nontributary Ground Water
Findings of the Colorado Supreme Court, Case 07CA293, Vance v. Wolfe
Produced Nontributary Ground Water Rules
Water Rights Issue

5. Idealized Cross Section showing Geologic Features
and Gas Producing Formation
Shale
Sandstone
Gas Producing
Formation
Shallow Aquifer

6. Coal Seam in Geologic Cross-Section

7. Shale
Sandstone
Gas Producing
Formation

8. Shale Sandstone Gas Producing Formation Domestic Well Gas Well
3000’
300’
Shallow Aquifer

9. Tributary and Nontributary -
It’s all about ground water’s interaction with surface water

11. Great distance to stream
Tributary
Nontributary ?
Clay
Aquifer

12. Findings of the Colorado Supreme Court Case 07CA293, Vance v. Wolfe

13. Shale Sandstone Gas Producing Formation Domestic Well Gas Well
3000’
300’
Shallow Aquifer

14. Vance v. Wolfe (Supreme Court)
Supreme Court affirmed Water Court’s ruling that removal of produced water for the purpose of coal bed methane production is an “appropriation” of water for “beneficial use.”
Supreme Court affirmed Water Court’s ruling that the State Engineer needs to prevent injury to water rights caused by withdrawal of water by oil and gas wells.

15. What does Vance v. Wolfe mean?
Coal bed methane wells that remove produced water do “appropriate” water for a beneficial use and, therefore, must obtain water well permits from State Engineer
If produced water is from a tributary source, the operator must replace injurious out-of-priority stream depletions

16. What does Vance v. Wolfe mean?
Potential for State Engineer to require many water well permits – for coal bed methane and for conventional production
Potential for State Engineer to require plans to replace water – for coal bed methane and for conventional production
If the subject ground water is nontributary, state law provides for this situation

17. Tributary versus Nontributary Ground Water
Tributary ground water (Supreme Court)
All ground water is presumed tributary to natural surface streams
Withdrawal of tributary ground water impacts the surface streams and, therefore, senior water rights on the surface streams
Wells that withdraw tributary ground water must operate according to a plan to replace stream depletions

18. Tributary versus Nontributary Ground Water
Nontributary ground water is so isolated from surface water that the impact is minimal.
Colorado statute acknowledges this type of ground water and provides a quantitative standard.
Nontributary ground water, by statute, is not administered according to the prior appropriation system.

19. Significance of Nontributary Ground Water in Oil and Gas Production
Since nontributary ground water, by statute, is not administered according to the prior appropriation system and…
Since, by statue, many of the wells producing nontributary ground water while producing oil and gas do not require well permits…

20. Significance of Nontributary Ground Water in Oil and Gas Production
A determination of nontributary ground water is beneficial
It eliminates the well permitting requirement in many cases,
It eliminates the requirement to replace depletions in all cases

21. “PRODUCED NONTRIBUTARY GROUND WATER RULES”
RULES AND REGULATIONS FOR THE DETERMINATION OF THE NONTRIBUTARY NATURE OF GROUND WATER PRODUCED THROUGH WELLS IN CONJUNCTION WITH THE MINING OF MINERALS or
“PRODUCED NONTRIBUTARY GROUND WATER RULES”
2 CCR

22. Produced Nontributary Ground Water Rules
Objectives
Documents allowable approaches to making nontributary determinations
Delineates geographic areas for which the ground water in certain underlying formations meets the statutory nontributary standard.

23. Gas Well
Non-tributary
Tributary

24. Well Permit and Administration Requirements
This legal delineation allows:
Decisions on whether a well permit is required for a well at a geographic location
Decisions on whether replacement to the stream is required due to pumping from that well

25. Water Rights Issue for Produced Nontributary Ground Water

26. Nontributary Water Rights
1973 Law (SB213)
Not oil/gas-specific
The water right is land ownership-based
The water right must be quantified
The water right’s use is apportioned over time

27. Nontributary Water Rights
1985 Law (SB5)
Specific to mining minerals
Coexists with the 1973 law; did not negate the legal effect of the 1973 law for landowner
Premised on incidental withdrawal (dewatering of a geologic formation)
This necessarily limits the amount that can be withdrawn
This necessarily limits the duration

28. Nontributary Water Rights
Therefore…
The 1985 law that allows the withdrawal of nontributary ground water by an oil and gas well does not negate the landowner’s legal right to the ground water underlying the land, as provided by the 1973 law.

29. Questions?

30. CWAG 2010 WATER LAW CONFERENCE The Broadmoor
Colorado Springs, Colorado
April 29 – 30, 2010