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Permalink Reply by Skip Peel - Mineral Consultant on September 13, 2023 at 7:39

Thanks, Keith.  This brings up questions for mineral owners that we have covered somewhat.  Who owns the produced water?  In Texas, the mineral owner does, not the well operator.  And standard form oil, gas & mineral leases do not specify rights to produced water nor what a lessor would be paid for it.  Then there is the definition question.  I've always thought of "produced water" as "formation water" (it is contained in the pore spaces of the rock grains) and the water used in completion operations as "frac water".  The Haynesville Shale is dry so the water that flows back in completion operations is frac water.  In formations where there is formation water, how do you tell which is frac water and which is formation water?  Many Cotton Valley wells produce prodigious volumes of formation water.  Then comes the question of water volume.  It takes a certain amount of volume along with a minimum concentration level of lithium to make a specific source economic.

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Permalink Reply by Joe B. Lovelace on September 13, 2023 at 12:07

Skip, this is an interesting Court of Appeals decision regarding "produced water" in Texas.  I suspect the Texas Supreme Court will have its say later.  Cactus Water Services v. COP Operating — Who Owns Produced Water?

Cactus%20Water%20Services%20v.%20COP%20Operating%20--%20Who%20Owns%...

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Permalink Reply by Skip Peel - Mineral Consultant on September 13, 2023 at 12:18

Thanks, Joe.  I think the courts will have a hard time coming up with a cogent definition of what is "frac water" and what is "produced water".  I think it would be hard if not impossible to say this percentage is produced and this percentage is frac.  When a legal question is extraordinarily hard to determine by reasonable means, I think the courts err on the side of the O&G industry.  So all the water that returns from a fracked well will likely belong to the well operator.  The rest of the legal question remains: does an existing O&G lease entitle the well operator to the benefits of the water however defined?  If so, does the royalty clause in the lease cover lithium for the benefit of the mineral owner?

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Permalink Reply by Rock Man on September 15, 2023 at 15:35

The viability of this whole process is the lithium concentration in the water. Not all waters are the same and there is definitively a minimum Lithium concentration needed to make any extraction process economic.

One is also assuming that much of the produced post frac water is coming from the formation and not the water that is used as part of the frac process.

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