In arid New Mexico, rural towns eye treated oil wastewater as a solution to drought

JAL, New Mexico, Sept 11 (Reuters) - Flying over the desert landscape of southeastern New Mexico in a four-seat helicopter, Stephen Aldridge could count around a dozen man-made lagoons brimming with toxic wastewater glistening between drill rigs and pumpjacks.

While it is a growing hazardous waste problem from the region’s booming drilling industry, the mayor of the tiny town of Jal - nestled near the border with Texas in the heart of U.S. oil country - viewed the sweeping scene as an opportunity: a source of water in the second-biggest oil producing state suffering from worsening drought.

"Our future is going to depend on the future of that produced water," he said.

Aldridge is among a growing group of New Mexico politicians who want the state to develop regulations allowing for the millions of gallons of so-called produced water gushing up daily alongside the Permian basin's prolific oil and gas to be treated and used, instead of discarded, and who are encouraging companies to figure out how to make it happen cheaply, safely and at scale.

In 2022, the oil and gas industry in New Mexico produced enough toxic fracking wastewater to cover 266,000 acres (107,650 hectares) of land a foot (31 cm) deep. While the state’s drillers reuse over 85% of their produced water in new oil and gas operations, the rest is pumped underground.

With injection wells filling up, however, New Mexico has begun restricting deep-underground disposal, which has triggered earthquakes. The state is now expected to export over 3 million barrels of that water per day by the end of 2024 - a strange dynamic in a water-scarce state.

Around 10 wastewater treatment firms in New Mexico are taking up the challenge under a state-supported pilot program, opens new tab that has so far spurred projects to grow crops like hemp and cotton and irrigate rangeland forage grasses.

While completed pilots have shown the technology works, it is currently too expensive for widespread adoption.

The companies and their backers also face a tough political battle. The debate over how this water should be used is one of the most divisive political questions facing New Mexico, with opponents mainly worried about the unintended human health consequences and subsidizing the oil industry's waste issue.

New Mexico’s Democratic Governor Michelle Lujan Grisham introduced legislation late last year that would have created a strategic water reserve out of treated produced water. The bill was defeated by state lawmakers but will be brought up again in the next legislative session in January.

Neighboring Texas is also dealing with growing problems around wastewater disposal, including an epidemic of exploding orphan wells as subsurface pressure rises, raising worries about a potential crackdown there too. The Permian basin, w...
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