Texas is experiencing one of the worst droughts in over 100 years, which is causing a problem for one of Texas’s biggest industries: oil and gas. When an oil and gas company drills what is known as a horizontal well to retrieve gas in shale formations, the company must use millions of gallons of water to complete the well through a process known as hydraulic fracturing. To complete a horizontal well, a company will drill what is known as the “wellbore” literally in a horizontal direction underneath the ground. The drilling process begins by drilling vertically into the ground, and then the drilling engineers make the wellbore curve at what is known as the “kickoff” point. When the drilling process itself is completed is when water becomes a major issue. In order to retrieve gas from shale formations, the drilling engineers pump water mixed with sand and chemicals to make the rock formations fracture, which then releases the gas. When the drilling engineers pump the water into the wellbore, they must use millions of gallons of water.

Generally, the vast amounts of water required to “frac” has not been an issue because Texas has many underground water aquifers such as the Ogallala, Gulf Coast, and Edwards Aquifers. Many times oil and gas companies are allowed to use the water underneath the ground from which they drill to complete the fracing process, which is often included in the oil and gas lease with the mineral owner. However, due to the drought, water supplies have become scarce. Many city officials throughout Texas have put citizens on water rations. Since water has become scarce, oil and gas companies have had trouble finding water, leading them to resort to other means. Some of the alternatives include recycling water already used to frac for re-use, or buying water from outside sources. Yet, if oil and gas companies do not use alternative methods and use more water than municipal authorities allow while drilling in urban areas, the problem could lead to major litigation.

The 5^th U.S. Circuit Court of Appeals will dictate the most recent chapter in the legal fight over offshore drilling permits this week.  The court will hear arguments in two cases that began over a year as a result of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico. 

Monday, April 26th, a three-jud ge panel considered Gulf Restoration Network v. Salazar and Center for Biological Diversity v. Salazar—both concerning permits that were approved before the April 20, 2011 oil spill.  The cases generally charge that the Department of the Interior’s Minerals Management Service, which issues drilling leases and oversees drilling, violated federal law in 2008 by exempting oil companies drilling in the Gulf of Mexico from disclosing blowout and worst-case spill scenarios and plans for dealing with them before approving the companies' offshore drilling plans.  The first case, Gulf Restoration Network v. Salazar, focuses on the approval of five different exploration plans, two submitted by Cobalt Energy International and Mariner Energy Inc. and one filed by Chevron Corp.  The second case, Center for Biological Diversity v. Salazar, relates to consolidated challenges to 11 different plans submitted in April and May of 2010, including plans filed before and after the spill. Both cases, however, allege that the government violated the National Environmental Policy Act (NEPA) and the Outer Continental Shelf Lands Act in reviewing drilling exploration plans.

These cases are just two of many arising from renewed interest by environmental groups in the wake of last year’s oil spill.  The arguments in these cases are split between environmental groups who believe the government may be moving too quickly to approve permits and oil and gas companies who believe the government is unreasonably delaying the issuance of permits.  While some oil and gas companies have recognized that the Deepwater Horizon disaster was a symptom of a broad failure in safety precautions by industry and government, some still maintain that the event was a one in a million aberration.  The two cases being argued this week constitute just one part of a much broader legal question concerning offshore drilling; other ongoing cases include a third 5th Circuit argument due to be heard in June and another in argument in October.

With government and industry to continuing to make efforts to satisfy the enhanced safety requirements associated with deep-water drilling and the Obama administration recently approving five new gulf drilling permits, it remains to be seen how these 5^th Circuit cases will affect the on-going struggle between maintaining environmental safeguards and advancing oil and gas production from our domestic resources in the Gulf of Mexico.

http://www.nytimes.com/gwire/2011/04/25/25greenwire-appeals-court-to-hear-arguments-on-pace-of-off-16804.html