West Texas Board Approves Contentious Water Project to Feed Fracking Operations

By David Hunn, The Houston Chronicle

03 August 17

West Texas board unanimously approved a contentious new project to drill into a desert aquifer near Van Horn, build a 60-mile pipeline and ship 5.4 million gallons of water a day from the Apache Mountains to the heart of the nation’s most prolific oil field, the Permian Basin, to feed thirsty hydraulic fracturing operations.

The Culberson County Groundwater Conservation District voted on Wednesday to allow oilman and land baron Dan Allen Hughes to proceed with his multi-million dollar project, called Agua Grande.

“We’ve dug our heels in for six months,” said Blaine Saathoff, the effort’s chief operations officer and a petroleum engineer for Dan A. Hughes Co. “We’re very excited.”

Ranchers, farmers, residents and environmentalists have protested the application vigorously, packing the project’s June hearing, sending the district dozens of letters, and again arguing on Wednesday that the project could steal water from cattle and crops, or dry up the famous spring-fed pool at nearby Balmorhea State Park.

Some have promised to file suit to stop Hughes.

Agua Grande, however, is likely just the start of the fight over West Texas water. Several companies see a new market in the Permian, where water use in hydraulic fracturing operations has risen six-fold since the start of the shale oil revolution, from more than 5 billion gallons in 2011 to almost 30 billion last year. Energy research firm IHS Markit predicts that demand will double again by the end of this year.

Hughes, based out of San Antonio, runs his father’s oil company, Dan A. Hughes Co., which operates all over the world, but largely in South Texas. He is also one of the country’s large landowners, with 390,000 acres in Texas and Montana, including the 140,000-acre Apache Ranch, near Van Horn.

Hughes knew he had vast water reserves in the Capitan Reef aquifer under the desert mountains there and, not long ago, asked his staff to investigate ways to make money off the water.

In March, Hughes submitted an application to the Culberson County Groundwater Conservation District, asking to drill seven wells on the ranch. Such activity would not have required a permit just to drill. But Hughes also wants to build a 60-mile pipeline northeast, to the heart of the Permian's Delaware Basin.

Twenty oil and gas companies are interested, the application said, including some of the biggest names in the play: Anadarko Petroleum Corp. and EOG Resources, of Houston, and Midland’s Concho Resources.

Agua Grande argued to the district board that the Capitan Reef did not provide a significant quantity of water to the San Solomon Springs, which feed the Balmorhea State Park pool, and that the company’s pumping would not deplete rancher and farmer wells.